SHARE CERTIFICATES goes missing – Learning from a Law suit
Ideally Shareholders should keep this document safe, but things going missing is rare but plausible. This article talks about how entrepreneurs should act when your share certificates goes missing. The certificates act as physical proof of the ownership of the shares and transfer of a share certificate generally was legally recognized as transfer of the equivalent amount of company stock.
Learning from a real case: Smt. Kulwant Kaur vs Unitech Ltd on 13 October, 2015
- Kulwant kaur is a original allottee of 100 shares
- Kulwant claimed that in June, 2006, the original sharecertificate were misplaced by her
- Kulwant informed the police about the misplacing of the sharecertificate.
- Kulwant made repeated requests to the company board for issuance of duplicate sharecertificate,
- However, the company paid no heed to her request,
- The present suit is filed for directions that the company board be directed to issue the duplicate sharecertificates to Kulwant.
- Kulwant also prayed that the company board shall be restrained from the alienating, selling or transferring the 100 shares certificatesto any other indented purchaser.
- Kulwant had details of document registered folio no. 9354
OBSERVATIONS BY THE COURT:
- After hearing the submissions of both the parties and after going through the pleadings, documents and evidence, it is observed by the Court that the main ground for seeking the direction from the Court is that the original sharecertificate have been lost.
- As per Section 84(2) of Company Act, 1956 is the relevant provisions which deal with the issuance of duplicate share certificate.
- It was clear that the Share holders usually trade shares through share broker and after receiving the consideration amount from share broker share holder hands over the share certificate to the share broker along with signed blank transfer deed.
- It was also admitted by Kulwant that she was not aware as to whom the share broker further sell share certificate.
- The abovementioned admission on the part of the plaintiff comes within the ambit of existence of course of business under Section 16 of Indian Evidence Act.
- The combined effect of facts that the police complaint is very vague and has not provided anything as to at what time or on what date or as to where the documents have been lost, Kulwant has admittedly not made any further complaint to any police or any authority when admittedly a person called her and conveyed that he had original share certificates with him .
- Kulwant has suppressed the same fact from the court and also has not made that person as party to the suit despite the fact that the defendants revealed the name of that person who is having the original share certificates with him, gives a primafacie indication that the share certificates might have been handed over to some share broker after taking consideration and the present suit has been filed against the company to obtain duplicate share certificate without any basis.
We at Wazzeer have been helping entrepreneurs in dealing with many such complications for years now. We would be happy to serve you and support you in any legal or accounting or compliance matters. Remember to ‘Get a Wazzeer’!