MAGHENDRA PAL TYAGI versus JAYANT DAVAR AND ORS.

Citation: [2008] 9 S.C.R. 1096 · Decided: 05-06-2008 · Supreme Court of India · Bench: C.K. THAKKER · Disposal: Dismissed

Judgment (excerpt)

[2008] 9 S.C.R. 1096 
'( .. 
A 
MAGHENDRA PAL TYAGI 
v. 
JAYANT DAVAR AND ORS. 
(Civil Appeal Nos.3034-3036 of 2005) 
JUNE 5, 2008 
B 
[C.K. THAKKER AND LOKESHWAR SINGH PANTA, 
., 
JJ.] 
r-
Special Courts (Trial of offences relating to transactions 
c in Securities) Act, 1992: s. 3(2) -
Transfer of shares to notified 
person - Appellant held shares of the Company - He applied 
for issue of duplicate shares on the pretext that these shares 
were lost - Consequently duplicate share certificate was is-
sued- These shares were then sold to first respondent- When 
D first respondent sold these shares in open market, they were 
~ 
returned to him as bad delivery- It was found that these shares 
.. 
were kept in abeyance as they were seized by CBI at the time 
of Share Transfer Scam -Application by First respondent that 
he is owner of these shares and entitled to corporate benefits 
E 
-Allowed by Special Judge - Justification of- Held: Justified 
- These shares were attached by CBI in proceedings initiated 
against the notified party and hence could not be transferred 
to any party - Appellant got the duplicate shares on the basis 
of misrepresentation - Therefore Special Judge was right in 
~ 
directing the appellant to pay to first respondent the amount 
.. 
F received from him along with interest@ 18% p.a. - Share 
Transfer Scam. 
The appellant held 200 shares of fourth respondent 
company, which purportedly were lost. He applied to the 
G fourth respondent company for issue of duplicate certifi-
cates in lieu of his lost shares. Pursuant to this, Fourth 
respondent company issued public notice in newspaper 
calling for objections if any against issue of duplicate 
shares to the appellant. Having not received any objec-
H 
1096 
MAGHENDRA PAL TYAGI v. JAYANT DAVAR 
1097 
y 
AND ORS. 
.. 
tions, duplicate share certificates were issued to him. 
A 
On 8th July 1994, the appellant transferred these 
shares in favour of first respondent. The first respondent 
sold/transferred 200 shares which he got from the appel-
lant and 50 Bonus Shares consequently acquired by him, 
B 
but the fourth respondent-company did not register the 
said transfer. This was done on the asking of the CBI, 
which was investigating the Share Transfer Scam, and 
~-
advising the first respondent and the transferee to ap-
proach the Custodian-second respondent. 
c 
The transfer agent received a letter from second re-
spondent-Custodian regarding stop transfer of shares in 
favour of any person without permission of the custodian 
and also held in abeyance all the benefits accruing on 
t 
those shares as the said shares were seized by the CBI 0 
~ 
at the time of raid laid on the places of deceased Harshad 
S. Mehta. The letter also revealed that deceased Harshad 
S. Mehta and his group were notified by custodian on 
8.6.1992 under the provisions of the Act and all proper-
ties belonging to them stood attached simultaneously E 
with the issue of notification and fourth respondent was 
informed not to deal with those shares including trans-
fer, pledge, issue of duplicate shares. The letter of 8th 
~ 
October, 1997 revealed that the list furnished by the sec-
,, 
ond respondent-Custodian regarding properties of noti-
tied person included original shares of the appellant which 
F 
he allegedly lost. The fourth respondent-company, there-
fore marked "stop transfer" against the duplicate shares 
which were transferred in the name of the first respon-
dent and advised him to approach the stock exchange 
through whom those shares were purchased so that G 
through proper channel, the introducing broker as well 
" 
as the share holder, i.e. the appellant could be asked to 
replace the said shares with good shares. 
Before the Special Judge, the first respondent filed 
H 
1098 
SUPREME COURT REPORTS 
[2008] 9 S.C.R. 
A an application claiming that he is the real and only owner 
of these shares and, the shares were registered in his 
name accordingly, all corporate benefits accrued thereon 
since the date of registration of the 250 shares in his name, 
be paid to him in the interest of justice. The principal 
s prayer in the application was for lifting of attachment on 
these 250 shares. 
The Special Judge allowed the application filed by 
first respondent holding that appellant sold the shares t9 
the notified party and that taking advantage of fact that 
C the notified party because of notification could not apply 
for transfer of the shares, appellant applied

Excerpt shown. Read the full judgment & AI analysis in Lexace.