The National Company Law Appellate Tribunal (NCLAT) has directed leading real estate player DLF Ltd to register transfer of 60,000 shares to the legal heirs of one of its deceased shareholders and has imposed a cost of Rs 5 lakh for "harassing the poor investors". A three-member bench observed that DLF insisted again and again for affidavit and indemnity bond in spite of having a Letter of Administration for succession, and the action by the real estate firm deserved penal action.
"We note that the appellant (DLF) is a listed company in real estate and is very well aware of legal formalities. By insisting affidavit and indemnity bond again and again, in spite of Letter of Administration issued clearly establish that the Appellants (DLF and Rajdhani Investments) are harassing the poor investors," said a three-member NCLAT bench.
It added: "The act of the appellants deserves some penal action. We also note that the respondents are entitled for 60,000 shares as per entitlement on payment of consideration."
The appellate tribunal order came over a petition filed by DLF and one of its promoters Rajdhani Investments & Agencies, in which the real estate firm has challenged the order of the Chandigarh bench of the National Company Law Tribunal.
The NCLT had on December 11, 2018 directed to register to transfer 60,000 shares after payment of Rs 2 per share in the name of respondents - sons of its deceased shareholder in accordance with the terms of Letter of Administration issued by the District Judge.
The NCLAT asked the respondents Satya Bhushan Kaura and Subhash Chander Kaura to make payment for transfer of membership within 15 days from the date of receipt of this order and directed DLF to transfer 60,000 shares within 30 days.
"Respondent will make payment of consideration to the appellant company within 15 days from the date of receipt of this order and he shall be entitled to the benefit of the membership from the date of payment," said the NCLAT adding "appellant company (DLF) will transfer/arrange for transfer 60,000 shares to the respondent within 30 days from the date of receipt of payment."
Moreover, the appellate tribunal also imposed a cost of Rs 5 lakh on DLF.
"A sum of Rs five lakh - costs is imposed on appellants to be deposited with National Defence Fund within 15 days from the date of this order," said the NCLAT adding "Proof of depositing the same will be submitted to the Registrar of this Appellate Tribunal within a week thereafter".
Proof of depositing the same will be submitted to the Registrar of NCLAT within a week thereafter, the order passed on January 13 said.
Late Devki Nandan Kaura, father of the respondents held 150 equity shares of Rs 10/- each of DLF, which were subsequently converted into 6,000 equity Shares of Rs 2 each after giving effect of split and bonus issue. He passed away in 1987.
On December 29, 2005 DLF came out with the Rights issue and the offer was available to all existing shareholders. Following this scheme, Kaura family was entitled for 60,000 shares on convertible debentures issued on right basis.
Following which they approached the company and sought transfer of 66,000 equity shares.
However, it was denied by DLF contending that it was beyond the limitation period and contended that his legal heirs has not informed the company of his demise for about 20 years.
DLF had raised the issue of limitation and argued that convertible debentures on rights basis are not heritable.
Moreover, as per its Red Hearing Prospectus, the outer limit for submission of the requisite documents was by the close of working hours of September 26, 2007 and no relaxation in the date was possible.
However, the respondents submitted before the appellate tribunal that when they approached DLF, it on August 6, 2007 DLF through a letter asked them to procure order from competent court in his favour for succession certificate/Letter of Administration and to execute Affidavit-cum-Indemnity Bond.
They complied DLF's instruction and applied for letter of administration with respect to their father's will and got a decree regarding it on April 25, 2012 and was submitted to DLF.
However, it was rejected by DLF, following which they moved to NCLT.
Rejecting DLF's submission, the NCLAT said DLF never informed the respondents that they have not approached them within the limitation period.