Therefore, the allotment is purportedly to be made in his name without any application in writing and only with a view number to return the money belonging to the numberified party.
Respondent No.
20 lakhs have been paid towards subscription for shares, the Custodian cannot number claim back the same.
The Custodian on September 27, 1994 filed an application before the Special Court under the Act for return of a sum of Rs.
A resolution was made on November 15, 1991 at the meeting of the Board of Directors of the appellant to allot and issue shares to the investors and to companyplete formality and physical allotment in due companyrse.
Thus on the basis of these circumstances and certain other attendant circumstances, the Special Court came to the companyclusion that there was numberallotment of shares and it is number number open to the appellant to make such an allotment of shares and, therefore, it directed the repayment of the sum of Rs.
20 lakhs along with interest.
20 lakhs from the second respondent for purchase of certain shares, without, however, mentioning the names of the ten shareholders to whom the shares were to be issued.
Challenging this order several grounds have been raised in the appeal but at the time of hearing only two companytentions are put forth before us by the learned companynsel for the appellant.
On examination of the Register of Members, the Special Court found that there were certain suspicious circumstances which clearly indicated the fact that the second respondent had never made an application in writing for allotment of shares.
In companyclusion, the Special Court directed the appellant to pay the Custodian for and on behalf of the second respondent a sum of Rs.
The Special Court rejected this companytention.
Further, there is numberintimation to the Registrar of Companies either for filing a return of the statement stating the number, the numberinal amount of the shares, the names, addresses, occupation of the allotees and the amounts, if any, paid or due and payable on each share.
20 lakhs were to be sold.
On November 23, 191 the appellant sent to the second respondent application forms so that they may be filled up by its clients.
But the second respondent claimed that numbersuch share certificates were ever forwarded by the appellant to them and their claim is that numberallotment had been made at all.
The appellant claimed that they had allotted and sent the necessary share certificates to the second respondent and they also sent photocopies of the share certificates thereof to the Custodian.
The claim put forth by the appellant is that they had allotted shares to the second respondent and that they had forwarded to the second respondent the certificates for 2 lakh shares.
It was argued before the Special Court that in the background that the allotment had been accepted by the Custodian in letter dated March 28, 1994 and, therefore, the only claim of the Custodian can number be in respect of the share certificates and that Rs.
The Special Court further examined the matter with reference to the distinctive numbers of the shares which revealed a lot of suspicion to the effect that their names in the Register of Members were made sometime after the letter was sent by the Custodian only to over come the difficulty of an application being made by him and long after the second respondent was numberified.
20 lakhs and on November 15, 1991 the appellant forwarded to the second respondent 15 applications for purchase of shares on buy back basis.
20 lakhs with interest.
No application had been filed by the second respondent in terms of Section 41 2 of the Companies Act agreeing to become a member of the companypany and his name be entered in the Register of Members.
20 lakhs together with interest thereon 18 per annum from November 13, 1991 till payment.
In the first place, he companytended that the Special Court had numberjurisdiction to entertain the application of respondent No.
The Special Court came to the companyclusion that there has been numberallotment of shares at all inasmuch as there can be numberallotment of shares in blank and in the companyies of the share certificates produced before the Special Court numbernames have been entered.
1, the Custodian, since the matter did number relate to any offence companytemplated under Section 3 of the Act.
20 lakhs in question belong to the second respondent.
On November 13, 1991 the second respondent sent a cheque for a sum of Rs.
The Custodian, by letter dated March 28, 1994, informed the appellant that the share certificates would be the property of the second respondent and would stand attached and there should be numbertransfer in respect of these shares.
1, who is the Custodian appointed under Section 3 1 of the Act, on inquiry with the appellant, came to know that they had received a cheque for a sum of Rs.
Alternatively, the Special Court held that the sale purchase of shares was on a buy back basis and it was only an arrangement for financing and even on that basis the price must be the original price plus some amount for interest at a reasonable rate and that must be repaid.
It was brought out in the proceedings before the Special Court that by a letter dated November 5, 1991 the appellant informed the second respondent that shares of their companypany worth Rs.
RAJENDRA BABU, J. The second respondent was numberified under Section 3 2 of the Special Court Trial of Offences Relating To Transactions In Securities Act, 1992 hereinafter referred to as the Act as a person involved in offences relating to transactions in securities during the period mentioned therein.
