RAJ KUMARI JAINversusTHE CUSTODIAN AND ORS.

                                                                               -SPMA-18-2025-.DOC




                                      IN THE SPECIAL COURT AT BOMBAY
                         Constituted under the Special Court (Trial of Offences Relating to
                                       Transactions in Securities) Act, 1992


                                MISCELLANEOUS APPLICATION NO. 18 OF 2025


                      Raj Kumari Jain,
                      Age – 85 years,
                      11, Dhan Devi Khanna Road,
                      Phool Bagan, Kolkata, 700054.
                      Contact No. 9830623861                                      ...Applicant

                            Versus

                      1. The Custodian,                                        …Respondent
                      10th Floor, Nariman Bhawan,
                      227, Vinay K Shah Marg,
                      Nariman Point, Mumbai – 400 021.

                      2. Reliance Petrochemicals Limited
                      6/4, Nariman Point, Mumbai – 400021.

                      3. Ashwin Mehta,
ARUN
RAMCHANDRA            12, S. Khattry and Co, 03/511,
SANKPAL
                      Crooked Lane (2nd Floor), Kolkata – 700 069.
Digitally signed by
ARUN
RAMCHANDRA
SANKPAL
Date: 2026.03.27
22:46:57 +0530        4. Hitesh Shantilal Mehta
                      5. Pratima Hitesh Mehta,
                      Both Residing – 3R2H+CP7KC Marg,
                      Reclamation Bandra (West),
                      Maharashtra, Mumbai 400 050.

                      6. Calcutta Stock Exchange,
                      7, Lyons Range, Dalhousie,
                      West Bengal
                      Kolkata – 700 001.




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Mr. Tapish Jain, for the Applicant.
Mr. Gandhar Raikar, i/b Ms. Shilpa Bhate (through VC), and Aditi
      Pandey, for the Custodian.
Mr. Ashwin S Mehta, for Notified Party.
Mr. Sandeep Dhangar, i/b Vipul Shukla, for Respondent No.2.


                            CORAM : N. J. JAMADAR, J.
                                     Judge, Special Court
                       RESERVED ON : 13th MARCH 2026
                  PRONOUNCED ON :           27th MARCH 2026



JUDGMENT:

1.    Heard the learned Counsel for the parties.

2.    This is an Application for certification of 600 shares bearing

Certificate Nos. 05159910—9915, distinctive numbers 237434450—

5049 and Folio No. 59013483 of Reliance Petrochemicals Limited

(“RPL”) (R2) and direct the Custodian (R1) and/or RPL-R2 to release

the subject shares along with all the accruals and dividends thereon.

3.    The Applicant avers that on or about 8 th June 1992, the Applicant

had purchased 600 subject shares from M/s Ballabh Das Daga, a

registered stock-broker at Calcutta Stock Exchange for a valid

consideration of 28,800/-, which was paid in cash. In the wake of the

securities scam that broke out in 1992, and the enactment of The

Special Courts (Trial of Offences Relating to Transactions in Securities)

Act, 1992, (“TORT Act, 1992”), the subject shares could not be

trasnsferred in the name of the Applicant. The Applicant made an effort

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to have the subject shares de-materilised. However, the said effort did

not materialise as the Applicant was informed that the subject shares

formed part of a larger bach of tainted shares and were statutorily

attached. In the year 2023, when the Applicant approached Custodian,

the Applicant was advised to file an Application before this Court for a

declaration that the Applicant is the bona fide purchaser of the subject

shares.

4.    A Certification Report is filed by the Custodin (R1). After

evaluating the Applicant’s claim and the documents tendered in support

thereof, the Custodian, inter alia, contends that the Custodian has

verified the documents in accordance with the procedure delineated by

this Court by orders dated 27th and 31st July 1992 in Miscellaneous

Petition Nos. 1, 2 and 3 of 1992. It transpired that the Applicant had

submitted the original share certificate Nos. 05159910—9915, which

were initially allotted in the names of Hitesh Shantilal Mehta and

Pratima Hitesh Mehta, the notified parties; a transfer form, bearing the

stamp of the stock broker overleaf, and a bill dated 25 th May 1992

(Exhibit “B”), purportedly issued by Ballabh Dass Daga, showing

purchase of total 1000 shares, including the subject 600 shares, wherein

the details of the subject shares of RPL (R2) are found transcribed. The

Applicant has, however, not produced the contract note, proof of

payment and proof of delivery in stock exchange. Nor the Applicant has


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produced proof of price being not lowr than the lowest ruling price on

the date of purchase of stock exchange.

5.    In addition, the Custodian has contended that from the perusal of

the bill purportedly issued by Ballabh Dass Daga, the exact date of the

transaction does not become clear. The bill bears the date 25 th May

1992, on the top. Whereas at the bottom, the date of 8 th June 1992

finds mention. Since the certification procedure covers the transaction

in respect of the settlement dated 6 th June 1992 onwards, if the

transaction in question was effected on 25 th May 1992, the Application

for certification may not be maintainable. The Custodian has also

adverted to the fact that, there is gross delay of over 33 years in filing

the Application for certification, though the transfer from was

purportedly executed on 8th June 1992, itself.

6.    The Custodian has, however, furnished the details of the accruals

on the subject 600 shares of RPL (R2), including the dividends received

thereon and credited to the attahced account of the notified party.

7.    In Rejoinder, the Applicant has made an effort to account for the

absense of the contract note and proof of payment. The delay was also

sought to be explained on account of the situation in life of the

Applicant and the misplacement of the original shaes due to shifting of

the residence.




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8.    I have heard Mr. Tapish Jain, the learned Counel for the

Applicant, Mr. Gandhar Raikar, the learned Counsel for the Custodian

(R1) and Mr. Ashwin S Mehta, for Notified Party.

9.    Mr. Raikar, the learned Counsel for the Custodian, would submit

that proof of payment is sacrosanct for certification of the shares as

bonafide acquisition. In the case at hand, the Applicant claims that, the

consideration was paid in cash. The sanctity of this claim is eroded by

the Bill (Exhibit “B”) purportedly issued by Ballabh Dass Daga, itself.

The Bill (Exhibit “B”) contains a note in clear and explicit terms:

“PLEASE PAY BY PAYEE CHEUE ONLY ”. In the face of the aforesaid

stipulation, Mr. Raikar would urge, the claim of the Applicant that,

purchase price was paid in cash does not merit acceptance. Nor there is

any other evidence to show the payment by the Applicant to stock

broker. Mr. Raikar would further submit that, the bill (Exhibit “B”)

indicates that the Applicant had purchased about 1000 shares of RPL

(R2). Thus, the Applicant cannot said to be a small time investor.

Therefore, the absence of contract note and proof of payment cannot be

brushed aside.

10.   Mr Ashwin Mehta, for the notified party, supplemented the

submissions of Mr. Raikar. Emphasis was laid on the fact that there is no

proof of payment whatsoever. If the Applicant desired the Court to

believe that the payment was made to the stock broker in cash, the


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Applicant ought to have joined Ballabh Dass Daga, as party-Respondent

to this Application. Nor there is a confirmation from the said stock

broker about the receipt of consideration in any form whatsoever, urged

Mr. Mehta.

11.   Mr. Jain, the learned Counsel for the Applicant, joined the issue

by canvassing a submission that, in the context of the time at which the

transaction was effected, it was not inconceivable that the payment

could be made in cash. Till date, there is no grievane by the seller that

the price of the subject shares was not received.

12.   Mr. Jain further submitted that, the stipulation that payment be

made through “account payee cheque” did not necessarily imply that

other forms of payment were totally countermanded. Having regard to

the age of the Applicant and the situation in her life, Mr. Jain would

urge, the Application deserves to be allowed.

13.   Under the Scheme of the Act, 1992, with the notification of a

party under sub-Section (2) of Section 3, all the property of such

notified party stands attached simultaneously and automatically, under

sub-Section (3) of Section 3 of the Act, 1992.      The attachment of the

property of the notified party is by operation of law. No formal order of

attachment is necessary. Neither the situs of the property nor the

identity of the person who holds the property, has any bearing on the

statutory attachment. The entire property of the notified party stands


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attached, and, once attached, can only be dealt with in the manner

ordained by the Act, 1992, and by the orders of the Special Court.

14.   The procedure of certification was necessitated as the attachment

of the property of a notified party, which also comprised genuine and

bona fide shareholdings of small investors, was causing enormous

hardship to such small investors. To ameliorate the hardship of genuine

and bona fide small time investors, by its orders dated 27 July, 1997

and 31st July, 1997 passed in MA Nos.1 of 1992, 2 of 1992 and 3 of

1992, the Special Court had delineated the parameters for certification

of securities as bona fide and genuine, and release the same from

attachment. This Court has further clarified that process of certification

was to be followed in respect of settlement dated 6 th June 1992

onwards.

15.   In the case at hand, a dispute is sought to be raised about the

actual date of the transaction. As noted above, on the top of the bill

issued by Ballabh Dass Daga (Exhibit “B”), the date is mentioned 25 th

May 1992 and at the bottom the date of 8 th June 1992 finds mention.

The controversy is, however, resolved by the transfer form which

indicates that the said document was executed on 8 th June 1992 at

Calcutta. In the totality of circumstances, since the settlement appears

to have taken place on 8th June 1992, this Court is inclined to hold that

the claim for certification cannot be thrown overboard.


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16.   It is true, apart from the original share certificates, transfer form

and the bill purportedly issued by Ballabh Dass Daga, the Applicant has

not placed on record any other document. The bill (Exhibit “B”) issued

by Ballabh Dass Daga, contains the particulars of the subject shares

which were purchased by the Applicant. The price at which the shares

were sold finds mention therein.

17.   The share transfer form,assumes importance. Firstly, the share

transfer form (Exhibit “C”) lends credence to the claim of the Applicant

in material particulars. Secondly, the particulars of the shares including

the certificate number and distinctive numbers find mention therein.

The name and the signature of the notified parties as the transferors

also find mention. Thirdly, and most importantly, the name of the stock

broker from whom the Applicant claimed to have purchased the subject

shares is reflected in the column “the name of delivery broker”. In fact,

the name of Ballabh Dass Daga is shown as the last delivery broker. It

seems that the shares changed hands; starting from Ashwin Mehta, the

first delivery broker, to two more stock brokers before they came in the

hands of Ballabh Dass Daga. Conversely, it does not appear that there

was any further delivery of the subject shares.

18.   The aforesaid factors substantiate the claim of the Applicant that

she had purchased the subject shares from Ballabh Dass Daga as

evidenced by the bill (Exhibit “B”), in a large measure.


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19.   There is another factor which provides support to the claim of the

Application. The share transfer form was revalidated by the Assistant

Registrar of the Companies, West Bengal, Calcutta on 21 st January 1998

for a period of one month. This factor implies that the share transfer

form was in existence prior to 21st January 1998 and efforts were made

to revalidate the same. If this factor is considered in juxtaposition with

the   fact that Ballabh Dass Daga, was the last delivery broker, an

inference about the genuineness of the claim of the Applicant becomes

sustainable.

20.   It is true, the claim of the Applicant that she had paid the

consideration   in   cash   does   not   find   support     in   any   other

contemporaneous material. Yet, at this juncture, it is necessary to

appreciate the nature of the property in the shares. Under section 82 of

the Companies Act, 1956 the shares, debentures or other interest of any

member in a company shall be movable property, transferable in the

manner provided by the Articles of the company. Sub-section (1) of

Section 84 of the Companies Act declares that a certificate under the

common seal of the company certifying any shares held by the member

shall be prima facie title of the member to such shares.

21.   Where the transfer of the shares is effected by the delivery of

share certificate and/or by signing the Transfer Deed, the title in the

shares passes to the transferee, notwithstanding the fact that the name


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of the transferor continues to be reflected in the register of members. In

such a case, if transferor continues to receive the accruals and dividends

on the shares which he had already sold, he is considered to be a trustee

for transferee. This position in law is enunciated in the cases of

Mathalone vs. Bombay Life Assurance Company Ltd. 1 and M/s. Howrah

Trading Company Limited vs. Commissioner of Income Tax, Central,

Calcutta2.

22.   The observations in the paragraph 7 in the case of M/s. Howrah

Trading Company Limited (Supra) are material and hence extracted

below :

              “7]   The position of a shareholder who gets dividend when
              his name stands in the register of members of the company
              causes no difficulty whatever. But transfers of shares are
              common, and they take place either by a fully executed
              document such as was contemplated by Regulation 18 of
              Table A of the Indian Companies Act 1913, or by what are
              known as blank transfers'. In such blank transfers, the name
              of the transferor is entered, and the transfer deed signed by
              the transferor is handed over with the share scrip to the
              trans- feree, who, if he so chooses, completes the transfer by
              entering his name and then applying to the company to
              register his name in place of the previous holder of the
              share. The company recognizes no person except one whose
              name is on the register of members, upon whom alone calls
              for unpaid capital can be made and to whom only the
              dividend declared by the company is legally payable. Of
              course, between the transferor and the transferee, certain


1     AIR 1953 SC 385.
2     AIR 1959 SC 775.
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               equities arise even on the execution and handing over of 'a
               blank transfer', and among these equities is the right of the
               transferee to claim the dividend declared and paid to the
               transferor who is treated as a trustee on behalf of the
               transferee. These equities, however, do not touch the
               company, and no claim by the transferee whose name is not
               in the register of members can be made against the
               company, if the tranferor retains the money in his own
               hands and fails to pay it to him.
                                                   (emphasis supplied)




23.   A useful reference can also be made to the decision of the

Supreme Court in the case of Life Insurance Corporation of India vs.

Escorts Ltd. And Others3 wherein the distinction between the

effectiveness of transfer of shares qua the transferor and transferee, on

the one part, and the transferee and the company, on the other part,

was expounded. The observations in paragraph No. 84 read as under:-

      84) … … ... A share is transferable but while a transfer may be
      effective between transferor and transferee from the date of transfer,
      the transfer is truly complete and the transferee becomes a
      shareholder in the true and full sense of the term, with all the rights
      of a shareholder, only when the transfer is registered in the company's
      register. A transfer effective between transferor and the transferee is
      not effective as against the company and persons without notice of the
      transfer until the transfer is registered in the company's register.
      Indeed until the transfer is registered in the books of the company, the
      person whose name is found in the register alone is entitled to receive
      the dividends, notwithstanding that he has already parted with his
      interest in the shares. However, on the transfer of shares, the
      transferee becomes the owner of the beneficial interest though the

3     (1986) 1 SCC 264.
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       legal title continues with the transferor. The relationship of trustee
       and ceatui que trust is established and the transferor is bound to
       comply with all reasonable directions that the transferee may give. He
       also becomes a trustee of the dividends as also of the rights to vote.
       The right of the transferee "to get on the register" must be exercised
       with due diligence and the principle of equity which makes the
       transferor a constructive trustee does not extend to a case where a
       transferee takes no active interest "to get on the register".
                                                      (emphasis supplied)
24.    The aforesaid being the position in law, in the instant case, the

transfer form, with its intrinsic evidence, coupled with the concomitant

factors, referred to above, justifies an inference of transfer of the shares

for a consideration. Thus, the absence of proof of payment does not

detract materially from the claim of the Applicant.

25.    In view of the decision of the Supreme Court in the case of L.S.

Synthetics Limited Vs Fairgrowth Financial Services Limited & Anr, 4 the

period of limitation does not apply to the proceedings under the TORT

Act, 1992. Thus, mere delay in approaching the Court seeking

certification of the shares, by itself, cannot be a ground to reject the

application, if the claim is found to be otherwise genuine and bonafide.

26.    Hence, the following order:

                                    :ORDER:

(i)    The Application stands allowed.

(ii)   The prayer for certification of 600 shares, bearing Certificate

Nos.05159910-9915; Distinctive Nos. 237434450-5049; having Folio

4      (2004) 11 SCC 456.
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No.59013483 standing in the name of Reliance Petrochemicals Limited

(R2) stands allowed.

(iii)   The Custodian (R1) shall take necessary steps to transfer the

aforesaid subject 600 along with all accruals and dividends, as indicated

in paragraph 9(g) and (h) of the Certification Report, in favour of the

Applicant within a period of eight weeks from today.

(iv)    The Application stands disposed.



                                             [N. J. JAMADAR, J.]




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