The National Company Law Appellate Tribunal on January 19, 2020 decided in favour of the respondents in the DLF case who are the investor’s legal heirs. The tribunal directed that the appellant company Delhi Land and Finance (DLF) Ltd.
should register a transfer of 60,000 shares to the deceased shareholder’s legal heirs. Besides this the tribunal also imposed an amount of Rs. 5 lakhs as costs for ‘harassing the poor investors’.
The decision was given by a three judge bench. The order came in a petition filed by the DLF company and one of its promoters challenging the order given by the Chandigarh Bench of National Company Law Tribunal (NCLT). The NCLT in December, 2018 had given similar directions based on theterms of the Letter of Administration issued by the District Judge. The facts of the case are as follows: Devki Nandan Kaur, father of the respondents held 150 equity shares of Rs.10 each with the company which were subsequently converted into 6000 equity shares of Rs. 2 each. The father died in 1987. In 2005 the company gave rights issue to all the existing holders. When the deceased shareholder’s legal heirs claimed the same, the company rejected their claim stating that the company was not informed about the shareholder’s demise and it exceeded the limitation period. DLF had submitted the same before the appellate court and argued that the convertible debentures on rights basis are not inheritable. The respondents on the other hand submitted that when they approached DLF, the company asked them to procure a court order in their favour for Letter of Admission and to execute the Affidavit cum-Indemnity Bond. The respondent followed the same and got a decree in 2012, however it was rejected by DLF. After which they moved the NCLT.
The bench said “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”.
It also added that the the act of company deserves a penal action and said “A sum of rupees five lakh - costs is imposed on appellants to be deposited with National Defence Fund within 15 days from the date of this order
…Proof of depositing the same will be submitted to the Registrar of this Appellate Tribunal within a week thereafter
". It even stated that the respondent should pay for the transfer within 15 days of the order and the company should transfer all 60,000 shares within 30 days of receipt of payment. Thus the appellate tribunal rejected the company’s submissions and said the company never informed the respondents about the limitation period. Author: Meher Mansi