TaxTMI 
TaxTMI 
2013 (9) TMI 1270
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....posed of by this common order. The brief averments and pleadings made by the applicants are mentioned as under: (i) On being asked to pay the entire sum together with interest due towards redemption of debenture to the applicants, the company has stated as follows: The entire assets of the company were taken over by the Board on 1st December, 1996, the respondent-company could not and was neither in a position to repay the said debentures. (ii) The above statement made by the company is misleading because the undertaking of "Karbi Langpi Project" (with all assets and liabilities under the said project) of the company has been acquired under Bharat Hydropower Corporation Ltd. (Acquisition of Transfer of Undertaking Act, 1996) and accordingly, neither the company has been acquired nor the entire assets of the company were taken over under the said Act of 1996. The balance sheet of the company would show that the debentures continued to remain a liability of the company and the company has acknowledged the obligation, in fact, the balance sheet for the year ended 31st March, 2011 and the annual return for the financial year 2011-12, filed o....
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....reserve for the redemption of such debentures, to which the adequate amount shall be created, from out of its profits every year until such debentures are redeemed. From the language used in the aforesaid text, the provisions of section 117C are having retrospective effect, because it speaks about issue of debentures after the commencement of this Act, means after commencement of the Act and not after the amendment of the Act in 2000 effective from 13th December, 2000. It was mandatory to create DRR by the company after 13th December, 2000, even if the debentures had been issued prior to that date which the company has failed to do. Thus, non-creation of DRR is not a tool in the hands of the company to defeat the provisions of section 117C, but it is an additional default committed by the company. (viii) As regards the allegation of the respondent-company that the present application is barred by limitation, it has been submitted that the liability to pay to the debenture holders on redemption appears in the books of account of the company, i.e., the balance sheet for the year ended 31st March, 2011 and the list of debenture holders filed with the annu....
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....ich shall be so converted. (ii) The company sent notice to all debenture holders on 4th October, 1995 indicating its decision to redeem the convertible debentures with effect from 1st November, 1995 on receiving an express request to that effect from debenture holders. If the company does not receive specific request within 31st December, 1996, the debentures would automatically convert into equity shares of Rs. 10 each at any time after 1st January, 1997, but before 31st March, 1997. (iii) The applicants never sought redemption of the debentures by the said date. The applicants, however, sent a letter intimating consent to redeem the debentures dated 24th December, 1996, which was received by the company on 4th January, 1997. The company had duly redeemed the debentures of several debenture holders who had sought early redemption by 31st December, 1996. (iv) On 30th November, 1996, the State of Assam promulgated the BHPCL (Acquisition and Transfer of Undertaking) Ordinance, 1996 (Ordinance) acquiring the project of the company. The Ordinance was subsequently replaced by BHPCL (Acquisition and Transfer of Undertaking) Act, 1996 (BHPCL Ac....
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....f the proceedings, as prayed by the company. (vii) The applicants have further filed an application against the order dated 31st August, 2007 for vacation of the stay order passed by the hon'ble Gauhati High Court. The applicants have also approached the CLB on 23rd March, 2005 for relief under section 117C of the Act. Thus, a clear case of forum shopping can be deduced from the chain of events put forth above. (viii) Section 117C of the Act was inserted into the statute book only with effect from 13th December, 2000 and by that time, the claim of the applicants was already time barred. Section 117C cannot apply to debentures issued before the insertion of the law and under no circumstance can apply to such matters which were already time barred at the time of insertion of the law. The applicants cannot come to the hon'ble CLB for passing of order for payment of debentures in the instant case, particularly because the applicants have clearly lost their right to seek redemption. (ix) The present claims of the applicants are barred by limitation under Part X, article 113 of the Limitation Act which provides that "The period of limi....
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.... There is nothing in the annual return as regards the amount owing, if at all, to any debenture holder including the applicants. 3. I have considered the pleadings and submissions, both oral and written made on behalf of the company as well as the applicants. The facts not in dispute are that the debentures covered by applications in CP No. 143/2005, CP No. 257/2005 and CP No. 258/2005 were all issued on 3rd April, 1995 and the offer of redemption vide notice dated 4th October, 1995 (redemption notice) has been sent to all debenture holders of the company indicating the intention of the company to redeem the convertible debentures with effect from 1st November, 1995, on receiving express request to that effect from debenture holders. In the redemption notice it has also been indicated that if the company does not receive any specific request within 31st December, 1996, the debentures would automatically convert into equity shares of Rs. 10 each at any time after 1st January, 1997, but before 31st March, 1997. One of the applicants sent letter to redeem the debentures dated 24th December, 1996 which was received by the company on 4th January, 1997 and this was clearly beyond the ....
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....n to hold the same view that the provisions of section 117C(4) are applicable to all debentures whether issued prior or after the introduction of the Amendment Act, 2000, i.e., 13th December, 2000 and pending redemption. In this regard clause (d) of Circular No. 9/2002-No. 6/3/2001 -CL.V dated 18th April, 2002 of Department of Company Affairs, relied by both sides, is very pertinent and resolves the issue in no uncertain terms by indicating as under: Section 117C will apply to debentures issued and pending to be redeemed and as such DRR is required to be created for debentures issued prior to 13th December, 2000 and pending redemption subject to clarifications issued herein. Further, it has been held in the said decision of CLB, quoted supra, "that the provisions of section 117C(4) being analogous to section 58A(9) of the Act and section 45QA(2) of the RBI Act, 1934 as amended by RBI amendment Act, 1997, are beneficial provisions intended to protect the interest of debenture holders. Such a provision, in my view, should be exercised in favour of aggrieved investors". The above view taken by CLB cannot be lost sight of and the interest of the aggrieved debenture ho....
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.... identifiable from balance sheet. Similarly, the annual return merely mentions the name of the debenture holders and it does not distinguish between amount of debentures due for redemption or conversion. There is nothing in the annual return to show that the debts are owed by the company to the debenture holders including the applicants. Therefore, it has been urged that the plea of the applicants in this regard should be rejected. 7. From the above pleadings, it appears that the respondent-company is hell bent on refusing the right of the applicants to get relief under section 117C of the Act by resorting to either Limitation Act or alleging inordinate delay on the part of the applicants for pursuing litigations in parallel proceedings or laches to pursue the proceedings in CLB within stipulated time of arising of necessary cause of action. As already mentioned earlier, there is a clear disclosure in the balance sheet for the period from 1st April, 2010 to 31st March, 2011, about 14 per cent convertible debentures as under: Apart from above, the names of the debenture holders being the applicants along with numbers of debentures held by them are duly disclosed in the annual ....