TaxTMI 
TaxTMI 
2012 (9) TMI 1255
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....ed by Board for Industrial and Financial Reconstruction (BIFR for short) and rejected the appeal preferred by present petitioner. 3. The relevant facts involved in and leading to present petition are as mentioned below: 3.1. It emerges from the record that somewhere in April 2006 a Private Limited Company M/s. Reachwell KSM Properties Pvt. Ltd. (respondent no.3 herein) lodged 3582422 shares with the petitioner company for transfer. 3.2. The petitioner company rejected the request for transfer of said shares under its communication dated 27.06.2006. 3.3. At this stage, it is necessary to mention that so far as the respondent no. 3 who lodged the said shares with request for transfer is concerned, it has claimed that actually the said shares were pledged by the petitioner company with respondent no.3. The respondent no.3 has asserted that during the period between August 2003 and July 2004 the respondent no.3 had placed certain inter-corporate deposits with the petitioner company and that the petitioner company had executed security deposits which included resolution of the Board, Demand Promissory Notes and pledging of equity shares of the petitioner company. 3.4. It ....
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....and execution of order dated 11.09.2006 (directing winding up of the petitioner company) was granted by the Division Bench. 3.13. In pursuance of the permission granted by the learned Company Judge under Section 446 of the Act, the respondent no.3 preferred application before CLB under Section 111(A) read with Section 113 of the Act. The said application was registered as Application No.22 of 2007. 3.14. Somewhere in February 2008, the Division Bench passed further order in OJ Appeal No.101 of 2006 directing that since reference was pending before BIFR, the winding up proceedings shall remain stayed and Official Liquidator should handover possession of the company to its erstwhile management. 3.15. It is claimed that in compliance of the direction by the Division Bench to make payment of the outstanding charges etc., it completed the payment of the entire outstanding amount and consequently the possession of company's record and assets was handed over to the management. 3.16. On the other hand, the CLB initiated the hearing of Company Application No.22 of 2007 filed by the respondent no.3 wherein the petitioner company raised defence on ground of the proceedings pending....
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....ck on their resolutions, agreements and undertakings. The grounds cited by the Respondent No.1 in refusing to register the share transfers reflect and confirm my view. Under the circumstances I am fully convinced that the grounds of objection raised by the Respondent No.4 are a camouflage and with definite motive of depriving the petitioner his entitlement to the shares. I may incidentally point out that the Sick Industrial Companies (Special Provisions) Act, 1985, has also been repealed by the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (Act 1 of 2004) to which assent of the President has already been received on January 1, 2004 and published in the Gazette of India dated January 2, 2004. Now only date of coming into effect of repeal is pending to be notified." 3.19. Aggrieved by the said order dated 15.05.2008 passed by CLB, the petitioner company preferred appeal being OJ Appeal No. 31 of 2008 under Section 10(F) of the Act. 3.20. At this stage, it is also appropriate to take note of another related aspect mentioned by the petitioner company i.e. the petitioner company has filed a complaint under Section 409, 380, 406, 420, 467, 468, 471, 411, ....
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....eedings came to be restored, certain developments took place. It transpires that the review application which was preferred by present petitioner pursuant to the order dated 25.03.2010 passed by Division Bench in OJ Appeal No.31 of 2008, came to be rejected by CLB under its order dated 24.02.2011. 3.29. The petitioner has claimed that when the petitioner tried to place the subsequent development of Special Civil Application No.9947 of 2010 it was observed that it would be appropriate if the petitioner filed fresh composite petition narrating all relevant facts and details and that therefore the said petition was withdrawn with a liberty to file fresh petition. Accordingly, the petition came to be disposed of under order dated 16.06.2011. 3.30. It has also emerged from the record that somewhere in 2011 the petitioner had taken out application praying for revival of OJ Appeal No.31 of 2008. In view of delay caused in preferring such application, application praying for condonation of delay was also preferred. The said applications were considered by the Division Bench and under order dated 16.02.2012 the said applications came to be rejected. The said order dated 16.02.2012 rea....
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....nvocation of its right against the shares which were pledged with it. 5. Per contra, learned Senior Advocate appearing for respondent no.3 has opposed the contention raised on behalf of the petitioner. As regards the contention on the ground that Official Liquidator was not impleaded as party opponent in the proceedings before CLB, the respondent no.3 has heavily relied on order dated 27.06.2007 passed by the Division Bench whereby the winding up order dated 11.09.2006 and the order directing appointment of Official Liquidator was stayed. In light of the said order it is submitted that since the order directing initiation of winding up proceedings and appointment of Official Liquidator was stayed, there was no need to implead Official Liquidator in the proceedings before CLB. It is also contended that the order dated 08.06.2010 by BIFR is not beyond the jurisdiction of BIFR. 6. So as to appreciate rival contentions against the order dated 8th June 2010 by BIFR it is relevant and necessary to keep in focus, primarily, four aspects viz. CLB's observations and directions in the order dated 15.05.2008, the observations and direction by BIFR in order dated 08.06.2010 and the p....
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....m the Respondents No.2 to 8 to the petitioner. The Respondents have also not disputed the signatures of the Respondents No.2 to 8 appearing on the share transfer deeds lodged by the petitioner with Respondent No.1. Further the actions of Respondent No.1 are influenced by the other respondents being promoters, directors and shareholders of Respondent No.1 and I find that the intention of the Respondent No.2 to 8 are reflected in the action of Respondent No.1 and I find that the sole intention of the Respondents No.2 to 8 is to deny the petitioner their rightful does first by defaulting on the repayment of the dues of ICDs accepted by Respondent No.1 and secondly to retain the shares presently standing their names somehow or the other and deprive the petitioner of the same, thus going back on their resolutions, agreements and undertakings. The grounds cited by the Respondent No.1 in refusing to register the share transfers reflect and confirm my view. Under the circumstances I am fully convinced that the grounds of objection raised by the Respondent No.4 are a camouflage and with definite motive of depriving the petitioner his entitlement to the shares. I may incidentally po....
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....bai vide its order dated 15.5.2008 had unequivocally declared the RKPPL as the holder & owner of 35,85,422 Equity Shares of Rs.10.00 each CTCL. CLB had directed the RKPPL to approach BIFR for consent for registration of the share transfers in view of the provisions u/s. 22 of SICA as company's case was pending before the Board. The ld advocate read out the following last 2 paragraphs CLB's order dated 15.5.2008 before the Bench:- "Under the circumstances I am fully convinced that the grounds of objection of objection raised by the Respondent No.4 are a camouflage and with definite motive of depriving the petitioner his entitlement to the shares. I may incidentally point out that the Sick Industrial Companies (Special Provisions) Act, 1985, has also been repealed the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (Act 1 of the 2004) to which asset of the President has already been received on January 1, 2004 and published in the Gazette of India dt. January 2, 2004. Now only date of coming into effect of repeal is pending, to be notified." The undisputed facts are that the company availed of ICD facilities from the petitioner to carry on it....
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....e stated that ARCIL who was holding 70% debt of the company was the major secured creditor. The company was negotiating with its secured creditors. The company had also identified an investor who would infuse who would infuse funds for revival of the company. The ld advocate further stated that permission sought by RKPPL for implementation of order of CPL should not be granted as it would adversely effect the revival process of the company. At this juncture the Bench observed as to how the transfer of shares in favour of RKPPL would affect the revival process and company should implement the directions of CLB. 2.10 After considering the submissions made and the materials made and the materials on record, the Bench issued the following directions:- (i) ................ (ii) M/s. Reachwell KSM Properties Pvt. Ltd. (RKPPL) SG has requested the Board to grant consent for implementation of order dated 15.5.2008 of Company Law Board (CLB), Mumbai. Accordingly, under the provisions of Section 22(1) of SICA the Bench grants consent to the order dated 15.5.2008 of CLB, Mumbai. The company is accordingly directed to register transfer of 35,82,422 Equity Shares of R....
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.... Provided that such declaration shall not be made for a period exceeding two years which may be extended by one year at a time so, however, that the total period shall not exceed seven years in the aggregate. (4) Any declaration made under sub-section (3) with respect to a sick industrial company shall have effect notwithstanding anything contained in the Companies Act, 1956 (1 of 1956) or any other law, the memorandum and articles of association of the company or any instrument having effect under the said Act or other law or any agreement or any decree or order of a court, tribunal, officer or other authority or of any submission, settlement or standing order and accordingly,-- (a) any remedy for the enforcement of any right, privilege, obligation and liability suspended or modified by such declaration, and all proceedings relating thereto pending before any court, tribunal, officer or other authority shall remain stayed or be continued subject to such declaration; and (b) on the declaration ceasing to have effect-- (i) any right, privilege, obligation or liability so remaining suspended or modified, shall become revived and enforceable as if ....
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....istration of shares lodged for transfer. 16. CLB has noticed that the petitioner company failed to show as to how the blank duly signed share transfer forms and share certificates could be available with the respondent no.3 company and that the petitioner company had also not disputed the signatures of the concerned persons i.e. the opponent Nos. 2 to 8 before CLB. CLB has also noticed that the sole intention of the petitioner and the said opponents was to deny the respondent no.3 company its rightful dues of the inter-corporate deposits. 17. Having noticed such aspects CLB has expressly observed and recorded that, "I am of the opinion that enforcement of security by the petitioner (i.e. present respondent no.3) has already taken place in February 2006 after which the shares have been lodged for transfer in the last week of April 2006 prior to the winding up order passed by Gujarat High Court....." (emphasis supplied). 17.1. The CLB has further observed that "I do not find any merit in contention of respondent no.4. The shares in question have already become the property of the petitioner (i.e. present respondent No.3) even before the respondent thought about reference to ....
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....ng maintainability of the proceedings in which the said order dated 15.05.2008 came to be passed) against the said order dated 15.05.2008 cannot be permitted to be raised as the order dated 15.05.2008 has attained finality. 21. It is in this background that the relevant part of the order dated 08.06.2010 by BIFR is required to be considered, which read thus. "(ii) M/s. Reachwell KSM Properties Pvt. Ltd. (RKPPL) SG has requested the Board to grant consent for implementation of order dated 15.5.2008 of Company Law Board (CLB), Mumbai. Accordingly, under the provisions of Section 22(1) of SICA the Bench grants consent to the order dated 15.5.2008 of CLB, Mumbai. The company is accordingly directed to register transfer of 35,82,422 Equity Shares of Rs.10.00 each of CTCL lodged by the RKPPL with CTCL in favour of RKPPL. (emphasis supplied)." 22. It can be seen from the said order that the BIFR has merely and actually granted "consent to the order dated 15.05.2008 of CLB". Thus, under its order dated 08.06.2010 merely initiation of proceedings for execution and implementation of the order dated 15.05.2008 by CLB is permitted by BIFR. The subsequent observations by the BIFR....
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....e now it is not open to question and/or test the said findings and conclusion. 29. Thus, CLB has, as a matter of finding of fact, recorded its finding of conclusion that enforcement of security had taken place in February 2006 i.e. before the order of winding up and/or before the order declaring the petitioner as Sick Industrial Undertaking and even before submission of reference before BIFR. In this context, it would be relevant to recall and take into account some of the relevant events and dates. (1) August 2003 to July 2004 The respondent No.3 placed certain inter-corporate deposits and the petitioner executed certain security documents including the shares in questions which were pledged with the respondent no.3. (2) 25.04.2006 In view of the default by petitioner in making payment towards the aforesaid deposits, the respondent No.3 lodged 3582422 equity shares (which were pledged by the petitioner with respondent no.3) for transfer along with transfer deeds. (3) 27.06.2006 Petitioner did not carry out the request for transfer of said shares and retained the share certificates as well as transfer forms. (4) 03.08.2006 Pursuant....