There is more to the dispute between YSR Congress party president Y S Jagan Mohan Reddy and his sister and Andhra Pradesh Congress president Y S Sharmila with regard to the transfer of shares of his company than what meets the eye.
A close look at the petition filed by Jagan and his wife Y S Bharati before the National Company Law Tribunal (NCLT) has revealed that Sharmila not just tried to get the shares of her mother transferred in her name, but also sought to usurp the shares of Jagan and Bharati as well.
In the petition, Jagan alleged that on July 6 this year, Sharmila had illegally got a resolution passed in the board of Saraswati Power and Industries, transferring the entire shareholding of Jagan and Bharati and also that of another shareholder (Classic Realty) in the name of her mother.
Subsequently, Sharmila wanted to get these shares transferred in her name.
The transfer of shares was done without following the rules and in violation of a Memorandum of Understanding (MoU) signed earlier, without the submission of duly executed share transfer forms or the original share certificates, as required under Section 56 of the Companies Act, 2013.
Jagan apparently feared that the transfer of his shares in the name of Vijayamma might lead to legal complications and might lead to cancellation of his bail, as it amounts to violation of rules in transferring the shares to his mother.
He said in the petition that in 2019, out of love and affection for his sister, he had signed a Memorandum of Understanding (MOU) to allocate a portion of his self-acquired assets, including shares in Saraswati Power Company, to her.
“However, since these assets were under attachment by the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) due to ongoing legal cases, the MOU explicitly stated that the transfer would only happen once the legal issues were resolved,” he said.
Despite being aware that the assets were legally attached and under court restrictions,
Sharmila allegedly transferred shares from their mother Vijayamma’s name, citing the MOU. This action potentially put Jagan in a legally precarious position, as these assets were not supposed to be transferred under court restrictions.
Jagan's legal team cautioned him that this illegal share transfer could cause significant legal issues, especially with political opponents potentially using the situation to seek a revocation of his bail.
The lawyers warned that his association with the disputed transfer could harm his legal standing in ongoing cases.
Following legal advice, Jagan immediately objected to the share transfer and took steps to safeguard himself from further legal complications. He moved to legally distance himself from the unauthorized actions.