CRB CAPITAL MARKETS LIMITED (IN PROVISIONAL LIQUIDATION) THROUGH ITS EX DIRECTOR MR. C. R. BHANSALI vs BIHARI LAL SARAF AND ORS.

2024-05-28 Information

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on: 01.03.2024
Judgment pronounced on: 28.05.2024

+ CO.APP. 19/2023 & CM APPL.41099-100/2023 & 49197-98/2023
+ CO.APP. 20/2023 & CM APPL.41101-102/2023 & 49202-03/2023 & 1102/2024
+ CO.APP. 21/2023 & CM APPL.41103-104/2023 & 49195-96/2023 & 1101/2024
+ CO.APP.22/2023 & CM APPL.41105-106/2023 & 49191-92/2023 & 1100/2024

CRB CAPITAL MARKETS LIMITED (IN PROVISIONAL
LIQUIDATION) THROUGH ITS EX DIRECTOR MR. C. R.
BHANSALI ….. Appellant
Through: Mr. Vivek Sibal, Senior Advocate with Mr. Bhuvan Gughani, Mr. Gaurav Kejriwal and Mr. Rupender Sharma, Advs.

versus

ANOOP JAIN AND ORS. …. Respondents
BIHARI LAL SARAF AND ORS. …. Respondents
MURARI LAL SARAF AND ORS. …. Respondents
BANWARI LAL SARAF AND ORS. …. Respondents
Through: Ms. Devika Mohan, Mr. Anirudh Sharma, Mr. Ankit Banati, Mr. Abhay Agnihotri, Mr. Vikram Choudhary and Mr. Akshay Ringe, Advocates for R-1 in Item No.1
Mr. Karan Bharioke, Mr. Ankit Banati, Mr. Abhay Agnihotri, Mr. Vikram Choudhary and Mr. Akshay Ringe, Advocates for R-1
Ms.Ruchi Sindhwani, Senior Standing Counsel with Ms. Megha Bharar, Advocate for OL.

CORAM:
HON’BLE MR. JUSTICE SURESH KUMAR KAIT
HON’BLE MS. JUSTICE SHALINDER KAUR

JUDGMENT

SHALINDER KAUR, J
1. The present Company appeals bearing no. 19/2023, 20/2023, 21/2023 & 22/2023 have been filed under Section 483 of the Companies Act, 1956 on behalf of the ex-management of CRB Capital Markets Ltd. & Anr. (in provisional liquidation) impugning the judgment and order dated 25.07.2023 passed by learned Single Judge in CA No. 783/2006 in Company Petition no. 191/1997 whereby the appellants were directed to transfer total of 7000 equity shares in the name of the respondents collectively.
2. These connected company appeals are being disposed off vide common judgment as the legal and somewhat similar factual background in all four of them is essentially the same.
3. The appellants herein were respondents before the learned Single Judge of this Court.
4. The learned Single Judge has dealt with the factual matrix of the matter in hand in detail, however, for ease of understanding, this Court finds it appropriate to again place the chain of events briefly on record. Vide prohibitory order dated 09.04.1997 passed under Section 45 MB (2) of the Reserve Bank of India Act, Reserve Bank of India (RBI)/respondent no. 4 herein directed CRB Capital Markets Ltd.(CRB)/ appellant no. 1 to not to sell, transfer, create charge or mortgage or deal in any manner with its property and assets without the written assent of RBI. Subsequently, winding up petition being Company Petition no. 191/1997 was instituted against CRB Capital Markets Ltd. by RBI. In this very petition vide an ad-interim ex-parte order dated 22.05.1997, the learned Company Court appointed an official liquidator as a Provisional Liquidator qua CRB Capital Markets Ltd. The Provisional Liquidator was directed to take into custody all properties, books of accounts, records and documents of the company.
5. While the aforesaid company petition was pending adjudication several applications were filed by creditors of appellant no. 1 claiming rights over certain shares. Applications bearing CA No.782/2006 by Murari Lal Saraf, CA No.783/2006 by one Bihari Lal Saraf, CA No.784/2006 by one Banwari Lal Saraf, and CA No.1232/2005 was instituted by one Anoop Jain. Bihari Lal Saraf, Banwari Lal Saraf and Murari Lal Saraf are brothers.
6. It is the case of the respondents that they were investors in Reliance Industries Ltd. The amount payable against purchase of the shares, works out to be Rs. 4,48,134/- by Murari Lal Saraf, Rs. 1,79,253.60 by Bihari Lal Saraf and Rs. 2,68,880.40 by Banwari Lal Saraf. Anoop Jain purchased 4000 shares in open market transaction through DSE Broker M/s Ravi kapur & Co., Bihari Lal purchased 600 shares at the then prevailing rate of Rs.298.75 (including brokerage & service tax) per share, Murari Lal Saraf purchased 1500 shares at the rate of Rs.298.75 (including brokerage & service tax) per share and Banwari Lal Saraf purchased 900 shares at the rate of Rs.298.75 (including brokerage & service tax) per share respectively through M/s. AG Vidyasagar & Co., a Member Broker transacting on the Delhi Stock Exchange on 25.04.1997 through open market transactions of Reliance Industries Ltd. (RIL). The Sarafs claim to have paid the consideration for the said purchased shares through account payee cheques.
7. It is further the case of the respondents that they lodged the said shares with M/s. Karvy Consultants Ltd./respondent no. 3 herein, the Registrar & Share Transfer Agent of Reliance Industries Ltd. along with duly executed and stamped transfer deeds. The Sarafs in their respective applications said that the shares were held by CRB Capital Markets Ltd. prior to being purchased by them. Upon lodging the said shares, M/s. Karvy Consultants Ltd vide letter dated 20.06.1997 informed the respondents that in view of order dated 22.05.1997 passed by this Court in CP No.191/1997 all assets of the appellant were frozen and that a Provisional Liquidator had been appointed with respect to its assets. In the meantime, Anoop Jain, Murari Lal Saraf, Bihari Lal Saraf and Banwari Lal Saraft filed application seeking an order in their favour with the direction to Karvy Consultants Ltd. to transfer and register the shares in their name. The notice was issued to Anoop Jain by this Court on the said application on 06.09.2005 and to the rest of the 3 respondents on 05.07.2006 and thereafter, the applications remained pending for next 17 years.
8. Bihari Lal Saraf, Murari Lal Saraf and Banwari Lal Saraf filed another application bearing CA No. 228/2020, before this Court praying that the said application be allowed so that they can subscribe to the Rights Offer of Shares floated by Reliance Industries Limited. Vide order dated 22.05.2020 learned Company Court was not persuaded to accept that rights entitlement ought to be renounced in favour of the above-mentioned respondents & therefore, directed the Official Liquidator to sell the rights entitlement in open market and freeze the proceeds in a fixed deposit to ensure to the benefit of successful applicants. Subsequently, Official Liquidator filed a subsequent application bearing CA No. 348/2020 seeking permission of the learned Company Court to publish a General Public Notice seeking deposit of physical shares with it for the purposes of de-materialization. The same was allowed vide order dated 06.07.2020. Thereafter, Bihari Lal Saraf also filed another application bearing CA No. 499/2020, Murari Lal Saraf filed CA No. 501/2020, Banwari Lal Saraf filed CA No. 505/2020 and Anoop Jain filed CA No. 503/2020 before this court whereby the learned Company Court vide order dated 31.08.2020 directed them to deposit the entire shares in original with the Official Liquidator while holding that their interest is squarely protected in terms of order dated 22.05.2020. Vide the same applications, respondents except Anoop Jain also, placed copies of the share certificate along with share transfer deeds on record.
9. All the parties put forth their arguments and vide impugned order the learned Single Judge allowed the applications of all the four applicants, which are being contested by the appellants before this court.
SUBMISSIONS OF THE APPELLANTS
10. The primary concern raised by Mr. Vivek Sibal, learned Senior Counsel for the appellants is that impugned order wrongly and erroneously places reliance upon such documents which were placed on record after the oral arguments in the matter were concluded and the matter stood reserved for orders. The learned counsel for the appellants contended that it is evident from the filing details as available on the Delhi High Courts website that certain documents were filed by Bihari Lal Saraf, Murari Lal Saraf and Banwari Lal Saraf on 20.07.2023 i.e. one day after orders were reserved by the learned Single Judge. Moreover, the bill dated 02.05.1997, evidencing delivery of subject shares in question, was not on record at the time when the arguments were addressed before the learned Single Judge. The same was placed on record along with an index dated 20.07.2023, after the hearing had concluded on 19.07.2023 and the application was reserved for orders. Further, no opportunity was afforded to the appellants to address arguments on the said documents which even on a prima facie consideration raises doubts with respect to the averments made by the above-mentioned respondents. Additionally, respondent Anoop Jain had failed to even place on record contract note, bills for delivery of possession of shares, proof of having paid consideration. It is a matter of record that only share certificates and share transfer deeds were placed on record by Anoop Jain subsequently, however other essential documents were never placed on record. It was submitted that hence, the impugned order is not sustainable as it impairs the basic principle of natural justice.
11. The learned counsel for the appellants submitted that the documents relied upon by the respondents except Anoop Jain even on a prima facie look show the irregularities and anomalies in their averments and the learned Single Judge presumed the correctness and veracity of the purported documents relied upon by them and erroneously concluded the bonafide of their transaction. Learned Single Judge failed to appreciate that the shares in question were admittedly bought by the respondents in open market on 25.04.1997, however, vide a letter dated 12.04.1997 addressed to Reliance and submitted to Karvy Consultants Ltd., respondents sought transfer of shares they had allegedly bought from A.G. Vidyasagar & Co. Thus, there could not have been any occasion for him to have shared the certificates with Karvy Consultants Ltd. / RIL for transfer. It is also most relevant to notice that as per the record, A.G. Vidyasagar and Co, had purportedly purchased the said shares only on 17.04.1997 and respondents could not have sought any transfer of the same after 12.04.1997. The above-mentioned facts were sufficient for doubting the veracity and authenticity of the transaction claimed by the respondents.
12. It is submitted by Ms. Devika Mohan, learned counsel for respondent Anoop Jain that, learned Single Judge failed to appreciate that CA No. 1232/2005 was grossly delayed and was beyond the period of limitation. It is an admitted stand that Anoop Jain became aware of the restraint imposed vide order dated 22.05.1997 and communication dated 20.06.1997, yet the present application was preferred only in 2005 i.e. after a gap of 8 years from the date of first knowledge. Thus, the Impugned Order is liable to be set aside for Anoop Jain.
13. The learned counsel for the appellants submitted that Bihari Lal Saraf, Murari Lal Saraf and Banwari Lal were purchasers of the subject shares on 25.04.1997. The alleged contract note is of the date 25.04.1997 however, the same cannot in any manner be construed as a contract note for the reason that it does not have the details which are mandatory for it to be called a contract note like the settlement number, trade no., trade time etc. The alleged sale bill placed on record is of 02.05.1997 which states that the subject shares are being handed over to the above-mentioned respondents on the said date. For proving the same, the appellants have placed reliance on the letter placed on record by respondents by virtue of which the subject shares were sent to Karvy Consultants Ltd., the Registrar & Share Transfer Agent of Reliance Industries Ltd. is of the date 12.04.1997 and the stamp of Karvy acknowledging receipt of that letter is dated 30.04.1997. The said dates are wholly contrary to the case of Bihari Lal Saraf in as much as it is his case that the subject shares were purchased in open market transactions on 25.04.1997 and delivered on 02.05.1997, then under what conditions and circumstances, could respondents have lodged the shares with Karvy on 12.04.1997 is unexplained. Similarly, the letter bears a stamp of Karvy dated 30.04.1997 while the purported sale bill (evidencing alleged delivering of shares) relied upon by the applicant is a bill of sale dated 02.05.1997 which shows that the subject shares were delivered to the applicant on or after 02.05.1997. Moreso, the only document placed on record by Anoop Jain was a purported payment list of DSE for the period 12.04.1997 to 25.04.1997. However, the said document does not inspire any confidence as it neither bears any stamp of DSE nor does it even disclose the payment details or even the date of such payment. Thus, learned Single Judges conclusion as to similarity in factual scenario between CA Nos. 782-784/2006 and CA 1232/2005 is erroneous and does not emanate from the record and the impugned order is liable to be set aside and quashed.
14. It was contended that all these suggest that the entire docket of documents filed and relied upon in support of ownership are forged and fabricated, yet the applications have been allowed by the learned Single Judge.
15. The learned counsel for the appellants further submitted that learned Single Judge failed to appreciate that the alleged sale bill also refers to a hand written note thereupon which mentions CRB Corporation Ltd. and not CRB Capital Markets Limited. This fact indicates that CRB Capital Markets Limited (In Provisional Liquidation) has not received any consideration towards the sale of subject shares.
16. The learned counsel for the appellants further submitted that the impugned order is liable to be set aside as it has allowed the applications without ascertaining the date of purchase, which necessarily has to be done prior to issuance of prohibitory order, the application of the above-mentioned respondents could not have been allowed. It is submitted that impugned order nowhere ascertains the date of purchase of the said shares but merely proceeds on a statement by the Ex-management in a factually different context and scenario of M/s Vikram Commercial Limited wherein the facts revealed sale purchase of shares to be 24.01.1997; i.e., before the issuance of prohibitory order of 09.04.1997.
17. The learned counsel for the appellants further submitted that the Reserve Bank of India issued the prohibitory order under section 45MB (2) of the Reserve Bank of India Act. The said provision is non-obstante overriding provision, which overrides anything contrary in law or any agreement between the parties to the contrary. Essentially, the order dated 09.04.1997 being passed under non-obstante overriding provision, makes the share transfer form and other share transaction documents relied upon by respondents as null and void. Even assuming that the share transfer form purportedly dated 12.04.1997 is genuine and taken on face value is a blunder, as it is nothing more than a piece of paper recording an agreement to transfer shares between the transferor and transferee having coming into effect after the issuance of prohibitory order of Reserve Bank of India.
18. The learned counsel for the appellants further submitted that no share transfer is complete until the contract note is executed which in this case is dated 25.04.1997. It is submitted that it is not the case of the respondent that they had purchased the shares prior to 09.04.1997 or contact note was issued or paid the share purchase consideration prior to the issuance of prohibitory order issued by the Reserve Bank of India. It is submitted that if on mere averments such issues are decided, then the true import and intent of the power vested with the Reserve Bank of India to issue such prohibitory orders in the larger public interest would stand negated and become a mere formality.
19. The learned counsel for the appellants further submitted that learned Single Judge did not appreciate and take note that provisions of Sale of Goods Act also apply to sale/purchase of share transactions and for the purpose of ascertaining the effective date sale/purchase of the shares, the intention of the parties was necessarily required to be ascertained by virtue of Section 19 of the Sale of Goods Act, 1930. The rules contained in Section 20 to 24 are to determine the intention as to the time at which the property in the goods is to pass to the buyer. In the present factual scenario, there is nothing on record or otherwise to depict or even remotely suggest that the applicant purchased the shares any time before the issuance of prohibitory order dated 09.04.1997. There can be no presumption that property in the shares was to pass to the respondents prior to the execution of contract note dated 25.04.1997 when the respondents contend to have bought the shares.
20. The learned counsel for the appellants further submitted that in their account statements, Bihari Lal Saraf and Murari Lal Saraf showed debit of Rs. 179,253.60 and Rs. 448,134/- from their bank account. It is submitted that the bank statements of Bihari Lal Saraf and Murari Lal Saraf do not show to whom these payments were made. Further the statement of M/s. AG Vidyasagar & Co., does not reflect credit entries of these payments received from Banwari Lal Saraf (Rs. 179,253.60) and Murari Lal Saraf (Rs. 448,134/-). In case, these payments were in fact encashed in the account of M/s. AG Vidyasagar & Co., the credit entries would have reflected separately as credits of Rs. 179,253.60 and Rs. 448,134/-. It is also pertinent to point out that bank statement of Banwari Lal Saraf has not been filed by Sarafs before this Court, leading to an adverse inference that the payment is not reflecting in his account statement.
21. It is submitted that the learned Single Judge erred in holding that the order passed in application bearing C.A. No. 176/1998 would apply to the present case. The facts of both the cases are completely different. In the case of Vikram Commercial Ltd., it was held that the shares were purchased by Vikram Commercial before the interim order was passed by RBI. While in the present case, the 3000 RIL shares are stated to have been purchased on 25.04.1997 i.e., after the RBIs restraint order date 09.04.1997 under Section 45 MB (2) of the Reserve bank of India Act, 1934. Further it is not the case of Sarafs that they have purchased the shares from CCML or that any payment in respect of the same was made by M/s. AG Vidyasagar & Co. to CCML. As mentioned above, M/s. AG Vidyasagar & Co. has averred that he had purchased the shares from CCL, and not CCML on 17.04.1997 and 21.04.1997. In view of the aforesaid facts the decision of Vikram Commercial would not apply to the instant case mutatis mutandis as has been held by the learned Single Judge.
22. Learned counsel for the appellants have relied upon the following judgments:
(i) V.K Sharma v. Official Liquidator & Ors. (Co. Appeal No. 24/2018)
(ii) R.K Aggarwal v. Official Liquidator & Ors. (Co. Appeal No. 10/2020)
SUBMISSIONS OF THE RESPONDENTS
23. Ms. Devika Mohan, learned counsel for respondents confutes the submissions and states that none of the restraint orders on transfer of the allegedly tainted shares held by CRB would apply to the present case, as CRB had sold the shares forming subject matter of dispute much prior to any such restraint being put in place, either by this Court or by the RBI. As such, the right of the respondents to transfer the shares in their favor is concerned, it is contended, that the same cannot be affected either by the orders passed by this Court or by the Circulars issued by the RBI.
24. It is submitted that it is trite law, that upon appointment of a Provisional Liquidator (PL), the management and control of the affairs of a Company in liquidation passes to the PL, and any claims for, on behalf of, and /or against the Company are to be conducted by the PL. This is as per Rule 106 of Company Court Rules, 1959. All books and records of the company are with the PL under 106 of Company Court Rules, 1959. Thus the appellants making any submissions on the basis of any records cannot be believed. Moreover, Official Liquidator, who was appointed as the PL, has neither filed a reply before the learned Single Judge, nor has he preferred to appeal the order impugned in the present appeals. In such a scenario, the former Directors of the company in liquidation, have no locus to file and/or maintain the present appeals.
25. It is further submitted on behalf of respondent Anoop Jain that he got the delivery of all 28900 shares on 02.05.1997. All shares accompanied with blank transfer deeds, however, for the present case the blank transfer deeds of 4000 shares are relevant which were duly signed by the authorized signatory of CRB Capital Markets. It is submitted that the above case is exactly the same as that of Vikram Commercial Ltd. where the settlement cycle was between 12.04.1997 to 25.04.1997. The previous owner of shares was also CRB Capital Markets Ltd. hence, in view of the above, the application moved by Anoop Jain deserves to be allowed.
26. It is submitted on behalf of Anoop Jain that he has original shares certificates as well as share transfer deeds and therefore he is the owner of the said shares. Thereafter, original share certificates were deposited with the Official Liquidator on 07.09.2020 as per the Notice published in Newspaper dated 28.07.2020, regarding the deposit of the physical share certificates of Reliance Industries Ltd. held in the name of CRB Capital Markets Ltd. for converting the same to dematerialized form. This notice had been published by Official Liquidator in compliance of the various Orders passed by this Court in C. P. No. 191 of 1997.
27. It is submitted that the appellants have sought to divert the respondents to file a claim against the stock broker i.e. AGV. It is thus admitted that 10000 shares of RIL had been purchased by AGV from CCL and AGV became absolute owner of the said shares. Given the aforesaid, the appellants and/or any other party cannot have any grievance to sale of 3000 shares by AGV to the Saraf Brothers or any other party. It is pertinent to note that AGV has never disputed the sale to the Saraf Brothers. The appellants having no relation to the said transaction of sale by AGV to the Sarafs, has no locus to raise any objections qua the same.
28. It is further submitted that on 10.08.2023, the appellants only took one objection i.e., there is no bank statement on record to show that Murari Lal Saraf has transferred monies for purchase of shares. The said objection is of no consequence inasmuch as the bank statement of AG Vidyasagar & Co. is on record which shows that monies were duly paid to AG Vidyasagar & Co. However, Murari Lal Saraf filed his bank statement to show that monies were paid to AG Vidyasagar & Co. In any event, once CRB sold shares to AGV, and AGV became the absolute owner qua those shares, the only person who can have any objection to the sale to Saraf Brothers is AGV. Moreover, Murari Lal Saraf has original shares certificate and therefore he is the owner of the said shares.
29. The appellants have same objections in respect of Banwari Lal Saraf also, to which the response on behalf of Banwari Lal Saraf was also made that the said objection is of no consequence as the monies were duly paid by Saraf Brothers to A.G. Vidyasagar & Co. However Banwari Lal Saraf filed bank statement to show that monies were paid to A.G. Vidyasagar & Co. and therefore the present application was filed seeking clarification/ vacation of order dated 10.08.2023. Moreover Banwari Lal Saraf has original shares certificates as well as share transfer deeds and therefore he is the owner of the said shares. Thereafter, original share certificates were deposited with the O.L. on 07.09.2020 as per the Notice published in Newspaper dated 28.07.2020, regarding the deposit of the physical share certificates of Reliance Industries Ltd. held in the name of CRB Capital Markets Ltd. for converting the same to dematerialized form. This notice had been published by O.L. in compliance of the various orders passed by this Court in C. P. No. 191 of 1997.
30. It is submitted that Official Liquidator i.e. the main contesting party has not filed any appeal till date and admittedly as per various Judgements of the Honble Supreme Court of India, the appellants does not have any locus to challenge the impugned order. In view of the above, the order dated 10.08.2023 deserves to be vacated and the present appeal deserves to be dismissed.
31. Learned counsel for respondent no. 2 submitted that there is no documentary evidence on record evidencing sale purchase of the shares of RIL held by the company (in Provisional Liquidation) i.e. M/s CRB Capital Markets Limited. There is also no document on record evidencing any flow of consideration between the applicant and the company.
32. Learned counsel for respondents relied upon the following judgments:
(i) R.K Aggarwal v. Official Liquidator & Others, 2020 SCC OnLine Del 2667
(ii) V.K Sharma v. Official Liquidator & Others DHC CO.APP. 24/2018
(iii) Standard Chartered Bank & Anr. V. Custodian & Anr. (2000) 6 SCC 427
(iv) Classic Ispat Pvt. Ltd. Janak Steel Tubes Ltd. 1998 SCC OnLine P&H 501
(v) Maneokji Pestonji Bharucha v. Wadilal Sarabhai & Co. 1926 SCC OnLine PC 10
(vi) Commissioner of Income Tax v. R. Dalmia 1980 SCC OnLine Del 355
(vii) Bacha F. Guzdar, Bombay v. Commissioner of Income Tax Bombay (1955) 1 SCR 876

33. At the outset an objection has been raised by the Responding No. 1 on the maintainability of the present appeal on the ground that the Appellant No. 1 being a company in liquidation as such an appeal filed by ex- management/directors/shareholder is not maintainable. It is contended by the counsel for the appellants that the appellant No. 2 is the ex-director and is also a contributary of the appellant No. 1 as enshrined in Section 428 of the Companies Act 1956. Since matter has been heard on merits and we are remanding the matter as such we are at present not going into the question of maintainability of the appeal.
34. As noticed above, the two relevant dates in the present case are 09.04.1997 and 22.05.1997. The Reserve Bank of India (RBI) had on 09.04.1997 passed a prohibitory order under section 45 of RBI Act directing the appellants company not to sell, transfer, create charge or mortgage or deal in any manner with its property and assets without prior written permission of RBI for a period of 6 months from 09.04.1997. Upon filing of the Company Petition against the Appellant No. 1, the Learned Company Court vide it’s order dated 22.05.1997 while appointing the Professional Liquidator, restrained the company, it’s directors, servants, and agents from disposing of, alienating and/or parting with possession of any of the assets of the company. Thus, the crucial date in the present cases is 09.04.1997 followed by 22.05.1997.
35. In the case pertaining to Mr. Anoop Jain, it is a matter of record that the transaction pertains to prior to 22.05.1997. It is the case set up by Mr. Anoop Jain that between 12.04.1997 to 25.04.1997 he purchased a total 28900 shares of Reliance Industries Limited (RIL) from the open market through Delhi Stock Exchange registered broker i.e. Ravi Kapoor and company. It is also contented that out of all these 28900 shares 4000 shares were in the name of appellant No. 1. All these 28900 shares were sent to Karvy for registering the shares in the name of Mr. Anoop Jain and while out of 28900, 24900 shares were registered and 4000 shares were not registered because appellant No. 1 was the owner of these shares and there was a restrain order against it.
36. It is an admitted position that the original share certificates of 4000 RIL shares (96 in number) along with transfer deeds are in possession of Shri Anoop Jain. Now the only issue raised is of consideration for these 4000 shares. Shri Anoop Jain has relied on Delhi stock exchange register within the cycle 12.04.1997 to 25.04.1997 to show that he had paid the consideration. He also stated that he got the delivery of the shares on 02.05.1997 along with the original shares and blank transfer deed. He also states that through his proprietorship concern Jain and company, Mr. Anoop Jain made the payment to Delhi Stock Exchange.
37. However, the appellants contents that the contract notes, bills for delivery of possession of shares and proof of having paid the consideration are not placed on record by the respondent No. 1.
38. The CO. APP pertaining to Mr. Murari Saraf, CO. APP pertaining to Mr. Banwari Lal Saraf and CO. APP pertaining to Mr. Bihari Lal Saraf (three SARAF Brothers): The above named three brothers have contended that they purchased a total 3000 RIL shares (60 in) number from the open market through the Delhi Stock Exchange Registered Broker i.e. A. G. Vidyasagar & Co. on 25.04.1997. The contract notes for purchase of the shares issued by A.G. Vidyasagar is dated 25.04.1997. It is further contended that as a matter of practice, without payment of this contract note, the stockbroker does not deliver the share scrips and only upon receipt of payment, delivery is made. It is further contended that the payment was made vide Cheques all dated 29.04.1997. It is further contended that they got the delivery of all 3000 RIL shares along with Blank Transfer Deeds duly signed by CRB Capital Markets Limited, being authorized signatory on 30.04.1997. Thus, here also it is an admitted position that the original share certificates of 3000 RIL shares (60 in number) along with transfer deeds are in possession of three Saraf Brothers.
39. Incidentally, Delhi Stock Exchange Registered Broker i.e. A. G. Vidyasagar & Co. had filed an application, though was dismissed for non prosecution, in which he had stated on oath that he had purchased 10000 shares of RIL (including 3000 shares, which were sold by it to Saraf brothers) from CRB Corporation Limited and paid consideration to CRB Corporation Limited between 16.04.1997 and 30.04.1997.
40. Appellant No. 1 has already made a statement which has been accepted by the learned Company Court that it had not sold any shares of Reliance Industries Limited after issue of the order dated 09.04.1997 passed by RBI. It is also admitted position that the original share scrips and original blank transfer deeds are/were in possession of each of the respondent No. 1. Thus, in effect the appellants’ sole objection is that there is discrepancy in the timeline when the shares were sold by the appellant No. 1, and thereafter sold by broker to the respondent No. 1 in each appeal and that in Mr. Anoop Jain’s case the contract notes, bills for delivery of possession of shares and proof of having paid the consideration is not coming forth and in Saraf brothers’ case the contract notes, bills for delivery of possession of shares and proof of having paid the consideration were placed on record by them after the order was reserved by the learned Company Court but they did not get any chance to rebut the same.
41. Thus, it is necessary to attain satisfaction as to when the 4000 shares subject matter of transfer to Mr. Anoop Jain; 1500 shares subject matter of transfer to Mr. Murari Saraf, 900 shares subject matter of transfer to Mr. Banwari Lal Saraf and 600 shares subject matter of transfer to Mr. Bihari Lal Saraf brothers were sold by the Appellant No. 1, CRB Capital Markets Limited. Once it is established that CRB Capital Markets Limited had sold these shares prior to 09.04.1997, then the only satisfaction is to be obtained is the dates of contract notes, bills for delivery of possession of shares and proof of respondent No. 1 in each appeal having paid the consideration for these shares stated to have been purchased.
42. Without disturbing the decision of the learned Company Court, the matter is remanded back to the learned Company Court only for the limited purpose to inquire when the 4000 shares subject matter of transfer to Mr. Anoop Jain; 1500 shares subject matter of transfer to Mr. Murari Saraf, 900 shares subject matter of transfer to Mr. Banwari Lal Saraf and 600 shares subject matter of transfer to Mr. Bihari Lal Saraf brothers were sold by the Appellant No. 1, CRB Capital Markets Limited and to whom; and that Mr. Anoop Jain, Mr. Murari Saraf, Mr. Banwari Lal Saraf and Mr. Bihari Lal Saraf have paid the consideration for these shares. Once it is established that appellant No.1 had divested itself of the rights in these shares and sale was concluded before 09.04.1997; and that the consideration is paid by the respondent No. 1 in each appeal to the broker from whom they purchased these, the effect of the impugned order shall follow.
43. In view of above, the present appeals are disposed of with pending applications, if any.
44. The parties are directed to appear before learned Company Court on 03.07.2024 for directions.

SHALINDER KAUR, J.

SURESH KUMAR KAIT, J.
May 28, 2024
SS/SU

CO. APP 19 of 2023 & connected matters Page 12 of 20