TaxTMI 
TaxTMI 
2002 (10) TMI 420
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....na), Citi Bank had ceased to have any further interest in the proceedings before the CLB, which proceedings should therefore be terminated by this Court. The original proceedings before the CLB have been stayed in this Appeal in terms of Orders dated 15-3-1995. Citi Bank has not put in any representation after 12-4-1999. Mr. V.N. Kaura, Learned Counsel for Canfina has contended that even in the absence of Citi Bank/Respondent No. 1, Canfina should be heard in the Appeal as it now represents Citi Bank No. 1 in the capacity of its assignee, by virtue of an Agreement between these two parties dated 10th January, 1995. It is his further contention that Canfina has full legal authority and standing to prosecute the original proceedings before the CLB as the assignee of Citi Bank. An affidavit on behalf of Citi Bank dated 5-8-1996 has been filed in these proceedings by which a copy of the said Agreement has been placed on record. Mr. Kaura's contention is that the plea presented by Mr. Rohatgi should properly be addressed to the CLB. I have also heard arguments on the point of whether Canfina should at all be permitted to address arguments in this Appeal for the reason that Citi Bank had....
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....e controversy on the point whether any payment was received by Powergrid from Canfina. If none was received, prima facie the Letters of Allotment would suffer from the vice of absence of any consideration and would therefore not command legal efficacy. It has however been submitted by Mr. Kaura that Canfina was to invest Rs. 60 crores in the then booming share market, and this was the reason for the floating of the 'Bonds'. There is also an averment by Canfina that Rs. 120 crores was paid by it against the Bonds. Meanwhile anticipating the issuance of the Bond Certificates, Canfina sold them for the value of Rs. 30 crores to Citi Bank. 4. It was in this sequence of events that Citi Bank invoked section 111 of the Act and prayed for these reliefs:- "(a)The Respondent No. 1 be ordered and directed to transfer the bonds stated below in the name of the Petitioner: AllotmentDistinctiveFolioNo. ofLetter No.No.No.Bonds NPTC/19/90-91A-1000001 toT 00000121,00,000A-1100000 NPTC/20/90-91A-1100001 toT 00000121,00,000A-1200000 NPTC/21/90-91A-1200001 toT 00000121,00,000;A-1300000 (b)the Respondent No. 1 be ordered and directed to rectify the register of bond holders and dele....
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....fina and Citi Bank entered into the aforementioned Agreement dated 10-1-1995. The salient features are that Canfina 'with a view to continue good business relationship with Citi Bank have approached the Citi Bank for purchase of the said PGCIL Bonds pending the disposal of the Company Petition filed by Citi Bank (i.e., before the C.L.B.). It had further been agreed between these two parties that "Canfina with full knowledge of the dispute relating to the transfer of bonds have purchased right, title and interest in the said Bonds and Citi Bank do not in any way warrant for the title of the said PGCIL bonds". Clause 6 of the Agreement is of considerable importance since the action contemplated therein has admittedly not been taken by CANFINA, and is reproduced below: "6. It is hereby agreed that the Company Petition filed by Citi Bank against PGCIL as described above shall be suitably amended to enable CANFINA to pursue their remedies against PGCIL. It is further agreed that Citi Bank shall relinquish all their right, title and interest whatsoever in the said Bonds. It is also further agreed that CANFINA shall pursue such legal remedies available to them and also get themselves t....
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.... filing. I find no justification for granting such leave at this stage especially since it will have the consequence of dislodging rights which have become entrenched with the passage of time. 9. The first contention of Mr. Kaura is that the appellant must approach the CLB with its contention that with the so-called transfer of Bonds by CITIBANK to CANFINA, the lis pending before it no longer subsists. It cannot be overlooked that CITIBANK has transferred all its interests in the Bonds in favour of CANFINA and that the latter was obliged to apply for their transfer. Failure to do so shall have fatal consequences. Two situations can emerge, either that the initial transfer from CANFINA and CITIBANK is effaced and rendered nugatory, or that second transfer from CITIBANK coincidentally to CANFINA validly occurred. In the first situation, once the transaction itself is obliterated, the action under section 111 must also automatically come to an end. In the second situation, CANFINA ought to have applied for the transfer of the Bonds to its name, which was essential in view of Powergrid's forfeiture action. It has failed to do so and it barred by principle of limitation from initiati....
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....ial discretion to determine all questions urged in order to render complete justice between the parties. The Court should not refuse to exercise that discretion on mere technicalities." 11. It will be seen from the above that in the petition before the CLB no relief had been claimed from or directed towards Canfina. Therefore, it was only a proforma party, and powergrid could have taken objection to such joinder. It has been put to Mr. Kaura that since Canfina was at best only a proforma party, it ought not to have been heard as of right by the Company Law Board, and should not be allowed audience before this Court. In reply thereto section 146 and Order XXII Rule 10 of the Code of Civil Procedure have been relied upon. 12. As far as the latter provision is concerned it must at once be noticed that, even assuming that a valid assignment has taken place in favour of Canfina, the latter ought to have obtained the leave of the Court to continue proceedings in place of Citi Bank. Having failed to obtain the leave of the Court, Canfina cannot be heard as a necessary and proper party in substitution of the original applicant and as the first respondent in these proceedings. I am mi....
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....itle of Citi Bank. Section 108 was introduced into the statute to check the currency of blank transfer forms. Logically, only Citi Bank (as the transferee) was eligible to claim the registration of the 'Bonds' in its name on the strength of the Letters of Allotment, which cannot be equated with or be held to be synonymous to shares, bonds or debentures which are inherently and per se negotiable. The object and intent of section 108, the compliance of which has been held to be mandatory in Mannalal Khetan v. Kedar Nath Khetan AIR 1977 SC 536, would be frustrated if Letters of Allotment exchanged between two persons would attain infinite currency and transferability. In my view section 108 cannot be availed of by Citi Bank, (to whom it was not addressed), in the role of a transferor. Citi Bank has at best merely a 'right to sue', which cannot be transferred under section 6(c ) of the Transfer of Property Act. The protection of this section would inure only to the benefit of the person to whom the Letter of Allotment is issued, otherwise it would itself attain the attributes of shares, bonds, debentures and be freely transferable. Letters of Allotment are not a negotiable instruments.....