The court upheld the entitlement of the applicants to transfer the shares purchased in the open market, originally held by CRBCML, despite the proscriptions by the RBI and the court order.

JUDGMENT

CO.APPL.782/2006 [By Murari Lal Saraf]

1. Viewed from the point of view of dispensation of speedy justice, this case presents a somewhat sorry picture.

2. This application was preferred by the applicant 17 years ago. The applicant claims to have purchased 1500 equity shares of Reliance Industries Ltd (RIL) from the open market on 25 April 1997. Aggrieved at the fact that the shares were not being transferred in the applicant's name, purportedly owing to certain orders passed by this Court, the present application was filed in 2006. We are now towards the end of 2023, and the application continues to languish undecided.

Facts

3. Chronologically, it is necessary, before adverting to the purchase of RIL equity shares by the applicant, to refer to a communication, dated 9 April 1997, from the Reserve Bank of India (RBI) to CRB Capital Markets Ltd ("CRBCML", hereinafter), in which the following proscription found place:

"5. Further, the Reserve Bank of India on being satisfied that it is necessary so to do in the public interest, hereby directs your company in accordance with the provisions of section 45 MB (2) of the Reserve Bank of India Act, 1934 not to sell, transfer, create charge or mortgaged or deal in in any manner with its property and assets without prior written permission of the Bank for a period of six months from the date of this Order."

Be it noted, even at this juncture, that the above communication dated 9 April 1997 from RBI to CRBCML was never communicated to the applicant, and finds place for the first time in the reply filed by Karvy Consultants Ltd ("Karvy", hereinafter) to the present application of the applicant.

4. The applicant purchased 1500 RIL equity shares, through M/s. A.G. Vidyasagar & Co. ("AGV", hereinafter), a broker registered with the Delhi Stock Exchange ("DSE", hereinafter), on 25 April 1997, @ Rs.298.75 per share. Payment was made by the applicant through account payee cheques in favour of AGV, which were duly encashed. The applicant has placed on record the Contract Note under which the shares were purchased, as well as the Bank Statement of AGV, evidencing payment of consideration by the applicant to AGV, towards proof of legitimate purchase of the shares by the applicant from AGV.

5. Apart from the 1500 equity shares purchased by the present applicant, 600 equity shares of RIL were purchased by Bihari Lal Saraf and 900 shares were purchased by Banwari Lal Saraf, in each case @ Rs.298.75 per share. Bihari Lal Saraf, Banwari Lal Saraf and the present applicant are brothers. The amount payable against purchase of the shares, therefore, works out to Rs.4,48,134/- by the present applicant, Rs.1,79,253.60 by Bihari Lal Saraf and Rs.2,68,880.40 by Banwari Lal Saraf, working out to a total of Rs.8,96,268/-. The bank statement of AGV, placed on record with the present application, indeed discloses credit, into the account of AGV, of an amount of Rs.8,96,268/- on 1 May 1997.

6. Karvy was appointed as the Registrar/Share Transfer Agent of RIL, to maintain records in respect of the shares of RIL and effect transfer thereof. The applicant, having purchased 1500 equity shares of RIL through AGV, lodged the shares with Karvy on 30 April 1997, along with duly executed and stamped transfer deeds, for transfer of the shares in the name of the applicant. The applicant has placed, on record, the receipt issued by Karvy to the applicant.

7. Karvy, vide response dated 20 June 1997, expressed its inability to transfer the shares in the name of the applicant, citing an order dated 22 May 1997, passed by this Court in the present Co Pet 191/1997 (in which the present application has been filed), whereby all assets of CRB were frozen and a Provisional Liquidator had been appointed to deal with the said assets. Karvy's letter read thus:

"Date: 20th June, 1997

Dear Sir,

UNIT: RELIANCE INDUSTRIES LTD

As Share Transfer Agents of Reliance Industries Ltd ("Reliance"), we have received shares of Reliance as descri