TaxTMI 
TaxTMI 
2024 (7) TMI 1218
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...., Advocate for OL JUDGMENT SHALINDER KAUR , J 1. The present Company appeals bearing no. 19/2023, 20/2023, 21/2023 & 22/2023 have been filed under Section 483 of the Companies Act, 1956 on behalf of the ex-management of CRB Capital Markets Ltd. & Anr. (in provisional liquidation) impugning the judgment and order dated 25.07.2023 passed by learned Single Judge in CA No. 783/2006 in Company Petition no. 191/1997 whereby the appellants were directed to transfer total of 7000 equity shares in the name of the respondents collectively. 2. These connected company appeals are being disposed off vide common judgment as the legal and somewhat similar factual background in all four of them is essentially the same. 3. The appellants herein were respondents before the learned Single Judge of this Court. 4. The learned Single Judge has dealt with the factual matrix of the matter in hand in detail, however, for ease of understanding, this Court finds it appropriate to again place the chain of events briefly on record. Vide prohibitory order dated 09.04.1997 passed under Section 45 MB (2) of the Reserve Bank of India Act, Reserve Bank of India ("RBI")/respondent no. 4 herein directed CRB C....
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....held by CRB Capital Markets Ltd. prior to being purchased by them. Upon lodging the said shares, M/s. Karvy Consultants Ltd vide letter dated 20.06.1997 informed the respondents that in view of order dated 22.05.1997 passed by this Court in CP No.191/1997 all assets of the appellant were frozen and that a Provisional Liquidator had been appointed with respect to its assets. In the meantime, Anoop Jain, Murari Lal Saraf, Bihari Lal Saraf and Banwari Lal Saraft filed application seeking an order in their favour with the direction to Karvy Consultants Ltd. to transfer and register the shares in their name. The notice was issued to Anoop Jain by this Court on the said application on 06.09.2005 and to the rest of the 3 respondents on 05.07.2006 and thereafter, the applications remained pending for next 17 years. 8. Bihari Lal Saraf, Murari Lal Saraf and Banwari Lal Saraf filed another application bearing CA No. 228/2020, before this Court praying that the said application be allowed so that they can subscribe to the 'Rights Offer of Shares' floated by Reliance Industries Limited. Vide order dated 22.05.2020 learned Company Court was not persuaded to accept that rights entitlement ought....
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....ity was afforded to the appellants to address arguments on the said documents which even on a prima facie consideration raises doubts with respect to the averments made by the above-mentioned respondents. Additionally, respondent Anoop Jain had failed to even place on record contract note, bills for delivery of possession of shares, proof of having paid consideration. It is a matter of record that only share certificates and share transfer deeds were placed on record by Anoop Jain subsequently, however other essential documents were never placed on record. It was submitted that hence, the impugned order is not sustainable as it impairs the basic principle of natural justice. 11. The learned counsel for the appellants submitted that the documents relied upon by the respondents except Anoop Jain even on a prima facie look show the irregularities and anomalies in their averments and the learned Single Judge presumed the correctness and veracity of the purported documents relied upon by them and erroneously concluded the bonafide of their transaction. Learned Single Judge failed to appreciate that the shares in question were admittedly bought by the respondents in open market on 25.04....
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....7, then under what conditions and circumstances, could respondents have lodged the shares with Karvy on 12.04.1997 is unexplained. Similarly, the letter bears a stamp of Karvy dated 30.04.1997 while the purported sale bill (evidencing alleged delivering of shares) relied upon by the applicant is a bill of sale dated 02.05.1997 which shows that the subject shares were delivered to the applicant on or after 02.05.1997. Moreso, the only document placed on record by Anoop Jain was a purported payment list of DSE for the period 12.04.1997 to 25.04.1997. However, the said document does not inspire any confidence as it neither bears any stamp of DSE nor does it even disclose the payment details or even the date of such payment. Thus, learned Single Judge‟s conclusion as to similarity in factual scenario between CA Nos. 782-784/2006 and CA 1232/2005 is erroneous and does not emanate from the record and the impugned order is liable to be set aside and quashed. 14. It was contended that all these suggest that the entire docket of documents filed and relied upon in support of ownership are forged and fabricated, yet the applications have been allowed by the learned Single Judge. 15. T....
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....ank of India. It is submitted that if on mere averments such issues are decided, then the true import and intent of the power vested with the Reserve Bank of India to issue such prohibitory orders in the larger public interest would stand negated and become a mere formality. 19. The learned counsel for the appellants further submitted that learned Single Judge did not appreciate and take note that provisions of Sale of Goods Act also apply to sale/purchase of share transactions and for the purpose of ascertaining the effective date sale/purchase of the shares, the intention of the parties was necessarily required to be ascertained by virtue of Section 19 of the Sale of Goods Act, 1930. The rules contained in Section 20 to 24 are to determine the intention as to the time at which the property in the goods is to pass to the buyer. In the present factual scenario, there is nothing on record or otherwise to depict or even remotely suggest that the applicant purchased the shares any time before the issuance of prohibitory order dated 09.04.1997. There can be no presumption that property in the shares was to pass to the respondents prior to the execution of contract note dated 25.04.199....
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....ions and states that none of the restraint orders on transfer of the allegedly tainted shares held by CRB would apply to the present case, as CRB had sold the shares forming subject matter of dispute much prior to any such restraint being put in place, either by this Court or by the RBI. As such, the right of the respondents to transfer the shares in their favor is concerned, it is contended, that the same cannot be affected either by the orders passed by this Court or by the Circulars issued by the RBI. 24. It is submitted that it is trite law, that upon appointment of a Provisional Liquidator (PL), the management and control of the affairs of a Company in liquidation passes to the PL, and any claims for, on behalf of, and /or against the Company are to be conducted by the PL. This is as per Rule 106 of Company Court Rules, 1959. All books and records of the company are with the PL under 106 of Company Court Rules, 1959. Thus the appellants making any submissions on the basis of any records cannot be believed. Moreover, Official Liquidator, who was appointed as the PL, has neither filed a reply before the learned Single Judge, nor has he preferred to appeal the order impugned in ....
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....at monies were duly paid to AG Vidyasagar & Co. However, Murari Lal Saraf filed his bank statement to show that monies were paid to AG Vidyasagar & Co. In any event, once CRB sold shares to AGV, and AGV became the absolute owner qua those shares, the only person who can have any objection to the sale to Saraf Brothers is AGV. Moreover, Murari Lal Saraf has original shares certificate and therefore he is the owner of the said shares. 29. The appellants have same objections in respect of Banwari Lal Saraf also, to which the response on behalf of Banwari Lal Saraf was also made that the said objection is of no consequence as the monies were duly paid by Saraf Brothers to A.G. Vidyasagar & Co. However Banwari Lal Saraf filed bank statement to show that monies were paid to A.G. Vidyasagar & Co. and therefore the present application was filed seeking clarification/ vacation of order dated 10.08.2023. Moreover Banwari Lal Saraf has original shares certificates as well as share transfer deeds and therefore he is the owner of the said shares. Thereafter, original share certificates were deposited with the O.L. on 07.09.2020 as per the Notice published in Newspaper dated 28.07.2020, regardi....
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....had on 09.04.1997 passed a prohibitory order under section 45 of RBI Act directing the appellants company not to sell, transfer, create charge or mortgage or deal in any manner with its property and assets without prior written permission of RBI for a period of 6 months from 09.04.1997. Upon filing of the Company Petition against the Appellant No. 1, the Learned Company Court vide it's order dated 22.05.1997 while appointing the Professional Liquidator, restrained the company, it's directors, servants, and agents from disposing of, alienating and/or parting with possession of any of the assets of the company. Thus, the crucial date in the present cases is 09.04.1997 followed by 22.05.1997. 35. In the case pertaining to Mr. Anoop Jain, it is a matter of record that the transaction pertains to prior to 22.05.1997. It is the case set up by Mr. Anoop Jain that between 12.04.1997 to 25.04.1997 he purchased a total 28900 shares of Reliance Industries Limited (RIL) from the open market through Delhi Stock Exchange registered broker i.e. Ravi Kapoor and company. It is also contented that out of all these 28900 shares 4000 shares were in the name of appellant No. 1. All these 28900....
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....he had stated on oath that he had purchased 10000 shares of RIL (including 3000 shares, which were sold by it to Saraf brothers) from CRB Corporation Limited and paid consideration to CRB Corporation Limited between 16.04.1997 and 30.04.1997. 40. Appellant No. 1 has already made a statement which has been accepted by the learned Company Court that it had not sold any shares of Reliance Industries Limited after issue of the order dated 09.04.1997 passed by RBI. It is also admitted position that the original share scrips and original blank transfer deeds are/were in possession of each of the respondent No. 1. Thus, in effect the appellants' sole objection is that there is discrepancy in the timeline when the shares were sold by the appellant No. 1, and thereafter sold by broker to the respondent No. 1 in each appeal and that in Mr. Anoop Jain's case the contract notes, bills for delivery of possession of shares and proof of having paid the consideration is not coming forth and in Saraf brothers' case the contract notes, bills for delivery of possession of shares and proof of having paid the consideration were placed on record by them after the order was reserved by the l....