What If You Have Lost Your Debenture Certificate?

Rajendra C. Butala Vs Mayur Uniquoters Limited (NCLT Jaipur)

Under the Companies Act, 2013, the issuance of duplicate debenture certificates is governed by rules similar to those for shares. This article delves into the provisions and legal implications, referencing the case of Rajendra C. Butala Vs Mayur Uniquoters Limited before the NCLT Jaipur.

Queries Related to the Debentures

Query no. 1- Can duplicate debenture certificate can be issued?

Ans- Yes.

The Companies Act, 2013 and rules thereunder provides for the issue of duplicate Share certificates. However, the Act is silent about the issue of duplicate Debenture Certificate. So, it is deemed that these provisions are also applicable for the issue of duplicate Debenture Certificate.

As per Section 46 read with Rule 6 of Companies (Share capital and Debentures) Rules, 2014:

1. A Duplicate share certificate in lieu of those that are lost or destroyed can be issued by company only after the approval of the Board of Directors.

2. Board of Director shall impose such fees, as they think fit, for issuing duplicate share certificate lieu of those that are lost or destroyed. The fees imposed by the board shall not be more than rupees fifty per certificate.

3. Board of Directors shall prescribe certain reasonable conditions before issuing duplicate certificate such as furnishing supporting evidence and indemnity and the payment of out-of-pocket expenses incurred by the company in investigating the evidence produced.

4. In case of unlisted companies, the duplicate share certificates shall be issued within a period of three months, from the date of submission of complete documents with the company respectively.

Note: Article of association may mention additional requirement for issuing duplicate share certificate which are consistence with conditions mentioned under the provisions of Section 46 read with Rule 6 of Companies (Share capital and Debentures) Rules, 2014. Further, if no such procedure is mentioned in “Article of Association” for issuing duplicate share certificate in lieu of those that are lost or stolen then Company can prescribe the procedure to the shareholder consistent with the provisions of Section 46 read with Rule 6 of Companies (Share capital and Debentures) Rules, 2014.

Conclusion: The NCLT’s decision in Rajendra C. Butala Vs Mayur Uniquoters Limited highlights the importance of compliance with procedural requirements in issuing duplicate debenture certificates. It underscores the legal recourse available to debenture holders facing refusal from companies, emphasizing the need for proper documentation and adherence to statutory provisions.

Documents Required for Issuing the Duplicate Share Certificate

• Indemnity bond agreement on a non-judicial stamp paper.
• An affidavit on a non-judicial stamp paper, attested by the Notary Public/Special Executive Magistrate.
• I.R filed with the police containing the following information about the lost share certificate:
• Name on the share certificate.
• Share certificate number.
• Folio number on the share certificate.
• Distinctive number of shares.
• Proof of identity and residence of the shareholder.

Query No. 2- Remedies available in the Law if a Company say no to issue duplicate certificate?

Ans.- The Debenture-holder can go to the NCLT if the company refuses to issue duplicate certificate.

Reference Judgements:- In the matter of Rajendra C. Butala v/s Mayur Uniquoters Limited

FULL TEXT OF THE NCLT JUDGMENT/ORDER

1. This Appeal, CA No. 03/59/JPR/2022, was filed vide Diaiy No. 38/2022 dated 04.01.2022 whereunder the Rajendra C. Butala and Ms. Sheetal R. Butala (`Applicants’PAppellant’) have sought directions against the M/s Mayur Uniquoters Ltd and M/s Beetal Financial & Computer Services Pvt Ltd. (`Non-Appellants’PRespondents’) for issuance of Duplicate Share Certificates of M/s Mayur Uniquoters Ltd and consequently rectification in the register of members.

2. The Appellants have presented this Application on the basis of the following set of facts:

2.1. The Appellants purchased 1900 shares in the Respondent No. 1 Company, which is a Public Limited Company registered under the Companies Act, 1956. The Appellants were allotted 19 Share Certificates of 100 shares each at the time of initial purchase. The Respondent No. 2 is the authorized agent cum Registrar and Transfer Agent of the Respondent Company to handle the process of issue, transfer and transmission of shares of the Respondent No. 1. The details of the Share Certificate Nos. are as below:

The captioned petitioned has been filed for issuance of duplicate share certificates for the aforementioned 1900 shares.

2.2. It is submitted that the Respondent Company vide letter dated 11.08.2012 informed the Appellants that bonus shares are being issued for one equity share of Rs. 10/- each for every existing one equity share of Rs. 10/- each for the shares held on 07.08.2012. As the appellants owned 1900 shares on 07.08.2012, the Respondent No. 1 Company allotted 1900 shares in folio no. 8608 and issued Share Certificate No. 52327 having distinctive nos. 5681721- 5683620.

2.3. Subsequently, vide Letter dated 27.09.2013 the Respondent No. 1 Company informed the Appellants that sub-division of equity shares of the Company of the face value of Rs. 10 each to Rs. 5 each has been approved with 26.09.2013 as the record date for implementing the sub­division. Hence, in Folio No. 8608, the Appellants were holding 3800 shares and now the fresh equity shares allotted would be 7600 having Share Certificate No. 2547-2548 and distinctive nos. 932481-940080. It was mentioned in the matter that the Appellants had to surrender their old share certificates to Respondent No. 2 so that new certificates can be issued.

2.4. In response to the letter, the Appellants vide letter dated 28.10.2012 inquired the procedure for issuance of duplicate share certificates as the earlier share certificates were misplaced by the Appellants. In response, the Respondent No. 2 via letter dated 15.11.2013 requested the Appellant No. 1 to apply for the duplicate by submitting certain documents including the attested copy of FIR lodged with Police Station.

2.5. Hence, the Appellants submitted a letter dated 04.12.2013 in D B Marg Police Station, Mumbai stating the loss of the 1900 shares. The Appellants sent all the relevant documents to the Respondent Agent via letter dated 13.12.2013. The Respondent No. 2 raised certain objections vide letter dated 26.12.2013. Subsequently, the Appellants sent two separate letters both dated 06.01.2014 wherein in one letter clarification was sought regarding the submission of documents as required by the Respondent No. 2 and in another letter the Appellants submitted for exchange of Bonus Share Certificate No. 52327 in Folio No. 8608 having distinctive no. 5681721-5683620 for bonus 1900 shares issued on 07.08.2012.

2.6. As the original shares could not be surrendered on account of being lost, the Respondents have not issued the new share certificate for 3800 shares to the Appellants till date. The Police Station issued a missing report dated 05.02.2014 wherein the details of the 1900 shares were recorded and the necessary entry was made vide Missing Register No. 159/14. A letter dated 14.02.2014 was preferred to the Respondent No. 2 stating that all the documents along with the above certificate have been provided. A reminder was send vide letter dated 11.06.2014 but as the Respondents failed to address the issue of the Appellants, a legal notice was preferred dated 31.07.2014. Later, Appellants were sent postal ballots on few occasions in which the no. of shares recorded in the name of Appellants is 15200 but the Share Certificate No. 2547 for 3800 shares has not been issued till date.

3. A similar Appeal has been filed numbered as Appeal No. 02/59/JPR/2022 by the Appellant No. 1 and his son namely, Amar Butala informing the loss of jointly held 1100 shares. It is remarked that the Appellants have annexed certain documents in regard to the loss of 1100 shares and 1900 shares in the present Appeal and certain documents for the loss of 1100 shares and 1900 shares in the Appeal No. 02/59/JPR/2022. The same is the case with the Replies filed by the Respondents in both the matters. Therefore, for the purpose of this Appeal, we will be considering the pleadings specific to the 1900 shares owned by the Appellants herein.

4. This Authority vide Order dated directed the Appellants to file a detailed tabulation of the shares. The Appellant complied with the same by providing the following details:

5. Consequent to the issuance of notices, the Respondents filed their reply interalia delineating the following:

5.1. The Folio No. 8608 is jointly owned by the Appellants. The appellants could not surrender the original 1900 shares due to loss of certificate and hence, the Respondents could not issue the alleged share certificates. The Appellants have not filed a proper FIR for the loss of the shares.

5.2. The summary of the allotment of shares has also been provided which is as below:

5.2.1. On 12.08.1996, the Appellants were allotted 1900 shares bearing Share Certificate No. 31103 to 48611.

5.2.2. On 11.08.2012 bonus shares of 1900 shares were allotted bearing Share Certificate No. 52327 and Distt No. 5681721 to 5683620. Total No. of shares on 11.08.2012 being 3800 shares.

5.2.3. On 26.09.2013 shares were sub-divided (from Rs. 10 to Rs. 5 sub division) into shares bearing Share Certificate No. 2547­2548, Distt No. 932481-940080. Total number of shares as on 26.09.2013 being 7600 shares.

5.2.4. On 15.11.2014 bonus shares of 7600 were allotted bearing Share Certificate No. 4228, Distt No. 22547081-22554680. Total number of shares as on 15.11.2014 being 15200 shares.

6. We have heard the Ld. Counsels for the parties and perused the averments made in the Interlocutory Application and reply along with the documents enclosed with the application.

7. The Appellants have preferred this Application under Section 59 read with Section 46 of the Code. Section 46 of the Code states that a duplicate certificate of shares may be issued if such certificate is proved to have been lost or destroyed and the manner of issue of the duplicate are to be entered in the register of members. Section 59 of the Code deals with rectification in the Register of Member.

8. This particular Appeal has been field as the Appellants lost the Share Certificates for the initially held 1900 shares, which became 15200 over a period of time, held in the Respondent No. 1 Company and thereafter, could not obtain the Share Certificate on account of non-filing of FIR.

9. It is seen that vide letter dated 15.11.2013 the Respondent No. 2 had requested the Appellant No. 1 to submit certain documents to avail the duplicate share certificate which included an attested copy of the FIR lodged with the Police Station. The Appellants informed the Police Station through Letter dated 04.12.2013 and obtained a certificate from the office of the Sr. Inspector of Police, D.B. Marg Police Station dated 05.02.2014 stating that necessary entry has been made vide Missing Register No. 159/14 dated 05.02.2014 for loss of the 1900 Share Certificates of the Appellants. The Appellants had complied with the letter dated of the Respondent No. 2 dated 13.12.2013 by annexing the Original Copy letter dated 04.12.2013 along with other documents. Multiple letters were preferred by the Appellants but the Respondents were not able to issue the duplicate share certificates to the lost shares.

10. It has been acknowledged by the Respondents in their Reply that on account of non-filing of FIR, the Appellants were not issued the Share Certificate, which became 15200 Shares over a period of time. It is apparent from the Certificate dated 05.02.2014 issued by the Senior Inspector of Police, G.B. Marg Police Station that the Share Certificates were lost by the Appellants. There is no reason for the Appellants to be deprived of their assets. The documents annexed by the Appellants and ownership of the Shares with the Appellants is not denied by the Respondents.

11. In view of the foregoing, the Respondents herein are directed to issue the Duplicate Shares Certificate in respect of the impugned 1900 shares. The Appellants shall execute or submit an indemnity bond and will also comply with other requirements of the R-1 Company as per the provisions of the Act in relation to the issuance of Duplicate Share Certificates. The Appellants are entitled to rectification of the Register of Shareholders maintained by the Respondent No.1 Company in Folio no. 8608 as the rightful owner of the 1900 shares. The Appellants would also be entitled to all dividends declared on the aforesaid shares, if any, which have not been passed on to them. Consequently, they are entitled to any bonus shares or other benefits that may have accrued on these shares. All the compliances shall be made within a period of 1 month from the date of this order.

12. Therefore, this Appeal is allowed and disposed off accordingly.