ORDER
S. Balasubramanian, Chairman
1. A summary of this petition filed under Section 111A of the Companies Act, 1956 is that : that 1st petitioner is a Charitable Trust created by a Deed of Trust dated 30/04/1952 and that the petitioners 2 to 4 are the trustees of the Trust. By a resolution dated 30/06/1957, one Shri Jhabarmal Saraf, a trustee was authorized to invest in shares and hold the shares in his name on account of the Trust. In terms of this resolution, shares of the respondent company impugned in the petition, were purchased out of the funds of the Trust in the name of Shri Jhabarmal Saraf sometime thereafter. Shri Jhabarmal Saraf expired on or about 10th August, 1972. Thereafter, on or about 01/02/1977, the other trustees of the Trust applied to the company along with a deed of indemnity in favour of the company against all claims and demands and suits in respects of the said shares, for transferring 4,000 shares of the company in the joint name of four other trustees. By a letter dated 24/02/1977, the company informed the trustees that the company did not recognize any Trust and that Late Jhabarmal Saraf was registered as the absolute owner of the said shares and sought for legal proof of title regarding above shares. Inspite of the Trust furnishing all the information by a letter dated 14/03/1977, the company once again by a letter dated 25/04/1977, sought for legal proof of title from a competent Court of Law. By a letter dated 10/05/1982, the trustees once again wrote to the company enclosing therewith the succession certificate of Late Jhabarmal Saraf wherein these 4,000 shares have not been shown as a part of his assets as they were purchased out of the funds of the Trust and he was holding the shares not a an absolute owner, but as a trustee. The trustees filed a petition under Section 155 of the Companies Act seeking for rectification of the register of members and the Calcutta High Court by an order dated 11/08/1980, declined to pass any order, but gave liberty to the trustees to file a suit against the company. Accordingly, the petitioners filed a suit and the same is still pending. Having been advised that for rectification of register of members, recourse to Section 111A was the appropriate course of action, the trustees have filed this petition.
2. The stand of the company is that the shares were held in the name of deceased Jhabarmal Saraf as the absolute owner and the company was never given any notice of any Trust expressed, implied or constructive till his death. The petitioners have not furnished any proof regarding the ownership of the shares by the Trust/trustees. The company has also taken the stand that since petition under Section 155 of the Act has been dismissed by the Calcutta High Court, the petitioner cannot invoke the recourse of Section 111A and that since a civil suit seeking similar relief is pending, the petitioners cannot institute a parallel proceedings before the Company Law Board (CLB).
3. The Ld. Advocate for the petitioners and the Authorized Representative of the respondent have reiterated their respective stand per the pleadings of their clients. The admitted position in this case is that the impugned shares were registered in the name of Late Jhabarmal Saraf, while according to the company he was the absolute owner of the shares, it is the stand of the petitioners that he held the shares in his capacity as a trustee of the Trust. The fact that the Trust is in existence is evident from the Trust deed dated 30/04/1992 (Annexure “P-1”) and it is also evident from the minutes of the meeting of the Trustees (Annexure “P-2”) that Late Jhabarmal Saraf was authorized to make investment and hold them in his name on behalf of the Trust. From the Balance Sheet of the Trust as at 03/04/1973, it is seen that the impugned shares have been shown as a part of the assets of the Trust. None of legal heirs of Late Jhabarmal Saraf has sought for transmission of the shares in his favour and as a matter of fact, the succession certificate issued in their favour, does not include the impugned shares. Further, during nearly 30 years there have been no claim for these shares from any one. These shares are in limbo after the death of Late Jhabarmal Saraf.
4. Under these circumstances, I do not find any justification in refusal of the company to register the shares in the names of the trustees of the Trust, as sought for. Legally it is permissible for a trustee/trustees to hold the property of a trust in his/their name/names. Even though the company has relied on the order of the Calcutta High Court dated 11/08/1980, to state that the petitioners cannot move this petition under Section 111A, I find that the said order of the Calcutta High Court is not a speaking order in the sense that the said petition was disposed off in the following terms without going into the merits of the case – “…..It is ordered that said applicant shall be at liberty to file a suit against the said company and this Court doth not think fit to make any order of this application and also as to costs of and incidental to this application”. Therefore, the order of the Calcutta High Court cannot be considered to be res judicata. As far as the civil suit is concerned, the contention of the petitioners is that CLB alone has the jurisdiction in the matter of rectification of register of members and therefore, filing of the civil suit in a Court without jurisdiction cannot be a bar to institute the present proceeding before the CLB. Since this Board exercise equitable jurisdiction,without entering into the merits of the contention of the respondent in this regard, subject to the stipulation that the petitioners will withdraw the suit within 30 days of this order, I propose to dispose of the petition on merits.
5. While doing so, I have taken note of the order of the Calcutta High Court in C.P. No. 235 of 1988 where a similar issue also arose with regard to the same respondent and the High Court directed the company that the shares held in the name of a trustee, on his demise, to register the same in the names of other trustees. The High Court further directed that all the legal heirs of the trustee in whose name the shares were registered originally to file an indemnity bond in favour of the company. I am of the view that similar order could be passed in the present petition also. Accordingly, I direct as follows:-
6. The present trustees or the Trust shall pass a resolution seeking for registration of the impugned shares in the names of the trustees and forward the same along with an indemnity signed by all the trustees and also an indemnity signed by all the legal heirs of Late Jhabarmal Saraf. On receipt of these documents, the company will register the shares in the names of the trustees as per the resolution of the Trust, within 30 (thirty) days from the date of receipt of these documents. All the unpaid dividends due on the impugned shares shall also be paid within 20 (twenty) days of the registration of the shares in the names of the trustees.
7. The petition is disposed of in the above terms without any order as to cost.