Nadar Mahajana Share Investors Forum v. Nadar Mahajana Sangam
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 27-03-2025
CORAM
THE HONOURABLE MR JUSTICE S. S. SUNDAR AND THE HONOURABLE MR JUSTICE C. SARAVANAN IN CS NO. 491 OF 2007 Nadar Mahajana Share Investors Forum Rep.By Its Presidium Member 246, Anna Salai, Chennai 600 002 Applicant(s) Vs Nadar Mahajana Sangam Rep.By Its General Secretary G.Karikolraj No.2, South Chitral St., Madurai AND 30 OTHERS Respondent(s) PRAYER To direct the 31 st Respondent/Garnishee in this Application to deposit the share certificate in C.S.No.491 of 2007, morefully described in the Schedule to the judges Summons to the Registrar, Madras High Court, to be dealt with further as per orders of this Court.
CS No. 491 of 2007 PRAYER To declare that the shares transferred by the defendants 1, 5 to 7 and 20 and 22 in favour of the defendants 2, 3, 8 to 19 and 23 to 29 as null and void and not binding on the plaintiffs consequentially grant a decree of permanent injunction restraining the defendants from transferring the shares of 4th defendant namely TNMB to any third parties, grant a decree of permanent injunction restraining the defendants 2, 3, 8 to 19, 23 to 29 their men or agents or nominees or any person claiming under them form claiming any right under the shares of the 4th defendant transferred to them by the deft 1, 5 to 7 and 20 and 22. For Applicant(s):
M/s.K.Mohanamurali For Respondent(s):
Mr.Vijay Narayan Senior Counsel for Mr.T.Poornam for R5 Mr.P.Giridharan for R3 M/s.T.Kokilavane for R4
ORDER
(Order of the Court was made by S.S.Sundar J.) This application is filed for issuance of a direction to the 31 st respondent/Garnishee in this application to deposit the share certificate in C.S.No.491 of 2007, more fully described in the Schedule to the Judges Summons, to the Registrar, Madras High Court, to be dealt with further as per orders of this Court.
2.It is stated in the application that the physical custody of the shares are in the hands of M/s.Standard Chartered Bank, the 31 st respondent, who had taken custody on 13.05.2007, pursuant to the agreement between the owners of the shares. It is admitted that M/s.Standard Chartered Bank is holding the shares, which are standing in the name of defendants 23 to 29, as escrow agent and the Bank has no interest or lien in respect of such shares. 3.This application is opposed only by the 5 th respondent/Tamil Nadu Mercantile Bank (4 th defendant in the suit). The 5 th respondent, in its counter affidavit, has stated that the 31 st respondent Bank is presently prosecuted by the Enforcement Directorate and a penalty of Rs.
34 Crores was imposed on the Standard Chartered Bank, as 1,12,151 shares of the 5 th respondent, including the shares which are subject matter of the suit, are kept in the escrow account, which was opened without prior permission of Reserve Bank of India. It is further stated that consent of Standard Chartered Bank is immaterial for depositing the shares and that the 31 st respondent is under cloud.
stated that, since the Bank had kept the shares in escrow account in violation of FEMA, willfully, with an ulterior motive, and is deliberately seeking to perpetuate its violation which is a serious issue and now the Enforcement Directorate has seized of the matter, the application cannot be sustained. 4.This application for direction is not for transfer of shares, but for transfer of physical possession of the shares from the 31 st respondent which is now holding the shares as an escrow agent without holding any other right. The st respondent has no objection for handing over the shares to the Court.
In such circumstances, this Court is of the view that, without prejudice to the rights of the 5 th respondent and the Enforcement Directorate or any other law enforcing agencies questioning the original transaction by which the Standard Chartered Bank was given custody of the shares or any other proceedings in relation to the shares in question, this application can be ordered. It is also noticed that there is an order dated 23 rd August, 2017, in A.No.5128 of 2016 in C.S.No.736 of 2016, insofar as deposit of 1180 shares as in Schedule to the Judges Summons.
5000 shares as found in the Schedule to the Judges Summons and the deposit shall be made with the Registrar General of this Court, within a period of three weeks from today, and the Registrar will hold the custody of shares until further orders. This order is without prejudice to any proceedings that have already been initiated by the Enforcement Directorate/Reserve Bank of India or the rights and defence in any such proceedings or any other proceedings that may be laid against the 31 st respondent Bank.
5.Post the matter for reporting compliance on 25.04.2025. (S.S.SUNDAR J.)(C.SARAVANAN J.) 27-03-2025 Note to Registry : Issue order copy on or before 04.04.2025 Index:Yes/No Speaking/Non-speaking order Internet:Yes mkn
To 1.The Standard Chartered Bank Securities Services, 3rd Floor, Cresenzo Plot No.C-38, G Block, Bandra Kurla Complex, Bandra East (e) Mumbai 400 051.
2.The Chairman of the Board of Directors, Tamil Nadu Mercantile Bank Ltd., 57, V.E.Road, Tuticorin.
S.S.SUNDAR J.
AND C.SARAVANAN J.
mkn IN CS NO. 491 OF 2007 27-03-2025