Custodian Set To Appeal In Ril Tainted Shares Case

The Reliance episode comes in the wake of a major fact-finding exercise, which revealed that a substantial number of shares of major companies, which bore the stamp of a notified party on the transfer deed, did not undergo certification.

The custodian recently filed cases against three companies on the same grounds.

On the basis of information received through various sources, the custodian filed cases against J K Industries and Chettinad Cements in addition to an earlier one against Uttam Galwa Steels before the Special Court.

According to sources, the custodian is giving the final touches to the RIL case and will file an application before the Special Court.

 

The process is virtually complete and we will file our application in two weeks time, a top official at the custodians office said.

The exact number of RIL shares in question was, however, not revealed.

If the application is approved by Justice S N Variava, who heads the Special Court, stock exchanges can be called on to reactivate the certification process.

The specific cells at major bourses had already completed most of the certfication work and stopped accepting fresh forms from July 31, 1995.

``We await directions from the special court. Our prayer is that the normal procedure of certification must be followed for these shares or else the companies must make good the loss, the official said.

The cases filed are MP 69/96 against J K Industries and MA 40/93 against Uttam Galwa Steels.

The case against Chettinad Cements has been filed at court but a number is yet to be allotted, officials said.

According to the custodian, the main argument presented while gathering information is that a large chunk of shares which bore the stamp of notified parties did not undergo certification on grounds of `oversight.

According to a market source, while the certification process had been initiated early on at the Bombay Stock Exchange (BSE) - alongside other bourses - the process would have been affected by factors like non-availability of full documents, brokers non-co-operation with the exchange and incomplete verification.

In a statement in mid-July this year, Reliance Consultancy Services (RCS) had said there were 14 lakh such shares transferred in all, where the stamps of notified persons appeared on the transfer deeds and went uncertified. Of this, 6.25 lakh pertained to the switched lot of shares.

The custodian had asked Reliance Consultancy Services (RCS), registrars to the Reliance group, for a list of Reliance shares that have passed through notified persons to determine the quantum of uncertified tainted shares in the share switch case.

According to highly placed sources, the custodians office also asked for photocopies of both sides of the transfer deeds for these shares to determine exactly how many are uncertified and tainted.

The custodian has taken into account the detailed Sebi investigation into RCS records relating to the RIL share-switch case, which revealed that about 5.63 lakh shares transferred to Unit Trust of India (UTI), Canfina and Canbank Mutual Fund bear the names of notified persons.

According to the custodian, it was the registrars responsibility to ensure that the shares transferred went through the certification process.