TMI Blog2015 (4) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... d ground taken by the Answering Respondents for rejection of transfer of shares-in-question is hardly acceptable. There is no challenge that the Respondent No.2 Bank has transferred the shares in favour of the Petitioner for a monetary consideration in accordance with the law. Therefore, the Petitioner as a Transferee has stepped in the shoes of the Transferor i.e. ICICI Bank, As is seen from the scheme of amalgamation sanctioned by the Hon'ble High Court, no restriction was imposed with respect to the transfer of shares in question. In such a situation, there was no need to seek any approval from the Hon'ble High Court, who sanctioned the scheme of Amalgamation. It is a fundamental law that the transferability of shares is subject to the provisions of the Companies Act and no restriction, save and except as provided in law, can be imposed, I do not find any restriction in the transfer of shares, as sought to be contended by the Answering Respondents. Therefore, the ground taken by the Answering Respondents is frivolous, malafide, arbitrary and against the basic principles of law and, hence, liable to be rejected. On a careful perusal of the Board Resolution authorizing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shares were transferred by the ICICI Bank in its favour, along with all attached rights thereto and thus the Petitioner has acquired all the rights, interest and title in the said shares. 2.3 After acquisition of the shares-in-question as aforesaid, the Petitioner lodged the share certificates, along with share transfer forms duly executed by the Transferor and Transferee, In accordance with law, with the Company, along with the letter dated 4/6/2012, which was delivered to the Company on 11/6/2012, In response to the Petitioner's letter dated 4/6/2012 , Mr. Edgar John Kamath, the Director of the Company, issued a letter dated 20/6/2012, for and on behalf of the Company, to the Petitioner, inter alia seeking time for a personal meeting with the Manager of the Petitioner to discuss the issue with respect to transfer of the shares-in- question. However, the Company vide its subsequent letter dated 30/7/2012 raised certain objections regarding transfer of the said shares. Thereafter, the said Director of the Company personally visited the office of the Petitioner and after having discussions, he promised to transfer the shares-in-question. When the Petitioner did not receive an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es on the part of the seller i.e. the Respondent No.2 Bank, while selling the non-performing financial assets i.e. the shares-in-question. 4.3 Because, the erstwhile owner of the shares in question has no authority to sell the said shares, no proper resolution was passed by its Board of Directors, and similarly, the Petitioner has no authority to purchase the said shares, as required by law. 4.4 Because, the seller had not given intimation to the Company before sale of the said shares, as required by Articles of Association of the Company. 5. On the aforesaid grounds, which shall be elaborately dealt with hereinafter in the course of appreciation of the contentions advanced by the Ld. Counsels representing the parties, the Answering Respondents have prayed for dismissal of the petition. In addition to above, the Answering Respondents have sought dismissal of the petition interalia on two preliminary grounds. Firstly, the petition is barred by limitation and secondly, serious question with respect to title of the shares is involved. It may be mentioned here that the Respondent No.2 neither appeared nor filed any reply to the Petition. 6. I have heard the Ld. Counsels app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res does not arise, which could not be tried in a summary manner. The aforesaid decisions, therefore, are inapplicable in the said case. I, therefore, hold that this preliminary objection is also baseless and it is rejected accordingly. 10. Before I proceed further on merits of the case, it is pertinent to mention here that the Respondent No. 2 ICICI Bank, seller of the said shares to the Petitioner, had no dispute whatsoever with respect to the transfer of the said Preference shares, along with attached rights therefor. Now, I proceed to consider the submissions advanced by the rival parties in support of their respective cases. 11. It was submitted on behalf of the Answering Respondents, that sometime in July 1995, a subscription agreement was executed between the Company, on one side, and the SCICI Limited, on the other side, and the latter was allotted 5,00,000 Cumulative Redeemable Preference Shares of ₹ 100/- each for cash at par of the aggregate face value of ₹ 50 Million ranking for dividend from the date of subscription amount. Taking me through the said Agreement, the Ld. Sr. Counsel submitted that as per clause 2.4 of the said Agreement, the Company was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id. According to the Ld. Sr. Counsel, the Respondent No.2 has committed gross contempt of the order passed by the Hon'ble High Court of Bombay, who had sanctioned the Scheme. Lastly, it is submitted that the Respondent No.2 at least ought to have taken the approval of the Hon'ble High Court before dealing with the shares of the Company. 15. Replying to the above submissions advanced on behalf of the Answering Respondents, it was argued by the Ld. Counsel appearing on behalf of the Petitioner, that a bare perusal of the letters exchanged between the parties would reveal that the Company went on shifting its stands and searching fresh and new grounds through roving and fishing inquiries solely aimed at rejecting the application of the Petitioner. The Ld. Counsel contended that while rejecting application for transfer, the decision ought to be based on records. According to him, in the present case, the whole approach of the Company shows hostility and ill-feelling towards the Petitioner. Taking me through the communications exchanged between the Petitioner and the Parties, the Ld. Counsel submitted that a perusal of the pleadings of this petition and the letters exchanged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Hon'ble High Court against the Respondent No.2 and the Petitioner, which admittedly has not been done by the Answering Respondents. Further, the Company has made an attempt and has offered an interpretation of a scheme sanctioned by the Hon'ble High Court, which is erroneous and in any case not within the rights of the Company. 18. Lastly, it was argued on behalf of the Petitioner that the issues regarding the alleged violation of RBI Guidelines and internal procedure within ICICI Bank raised by the answering respondents are completely outside the purview of the practice and law relating to Share Transfer . There is no violation of any RBI Guidelines by the Petitioner and there is no locus standi for the Company to raise any such objection. There is neither any right nor any duty vested in the Company to raise frivolous issues just to deny the transfer of the shares. 19. I have considered the rival submissions. In my opinion, the aforesaid ground taken by the Answering Respondents for rejection of transfer of shares-in-question is hardly acceptable. There is no challenge that the Respondent No.2 Bank has transferred the shares in favour of the Petitioner for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .V. Malya, resigned as Chairman and Mr. H.N. Sinor, was appointed as Managing Director and Chief Executive Officer and the Board passed a resolution dated 30/5/1995 delegating the whole powers; b. That, Mr. H.N. Sinor, pursuant to the powers vested on him by the above board resolution, on 30/05/2002 delegated the power further to Ms. Chanda Kochhar; c. That, the terms and powers of both the resolutions are identical; d. That, on 7/7/2008, Ms. Chanda Kochhar delegated the powers further to the officers of the Bank for signing the Transfer Deeds, According to the Ld. Sr. Counsel, this authority is ultra vires as Mr. H.N. Sinor resigned by that time and by virtue of his resignation, the power cannot be further delegated at a later date i.e. 7/7/2008 to the officer of the company viz. Ms. Chanda Kochhar; 21. Based on the above facts, it was argued on the behalf of the Answering Respondents that the purported transfer is illegal and void, being without valid and proper authority. According to the Ld. Counsel, the persons who have executed the Transfer Deeds were well aware that they have no authority to enter into the said transaction. 22. In addition to the above, accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the post of director of the respondent-company had also been forged. The petitioner alleged that share transfer deeds which were used for the purpose of showing that the petitioner had transferred the shares in question were not meant for transfer of the said shares but were meant for transfer of shares of some other listed companies and respondent No. 3 had fraudulently used the said blank and signed transfer deed for getting the shares transferred and also managed to get the petitioner's signature attested on the said transfer deed by the bank manager and witnessed by B by misrepresentation, With regard to consideration paid for the said shares, the petitioner's case was that respondent No3 fraudulently got an amount of ₹ 1,50,000/- deposited in the bank account of the petitioner by means of two cheques and being the authorized signatory of the said account withdrew the said amount on the very next day, and therefore, the shares having a face value of ₹ 10 per share were alleged to have been sold for Re. 1 per share and even the said consideration was not received by the petitioner. Such matters could not be decided by the Company Law Board in summary juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g as shareholder, and who he has been talking as a self -proclaimed spokesperson on behalf of the Company. 26. It is further submitted on behalf of the Petitioner that admittedly, the Board Resolution dated 15/1/2010 of the Petitioner was sent to the Company, along with original share certificates and share transfer forms. Therefore, on the date of the signing the share transfer deeds dated 12/4/2010, the Petitioner's Managing Director Mr. Rajan Shah was duly authorized to execute the said share transfer forms and additionally a copy of further Board Resolution dated 11/11/2011 was also sent to the Company in order to satisfy the Company that the Petitioner's shares transfer deeds have duly been executed by its managing director. However, conveniently the Answering Respondents have chosen to accept only the Resolution dated 11/11/2011 and disregarded the Resolution dated 15/1/2010. Thus, the person who signed the Transfer Deeds on behalf of the Petitioner, admittedly, had an authority to sign the transfer deeds. 27. I have given my thoughtful consideration to the aforesaid submissions. On a careful perusal of the Board Resolution authorizing to sign the Transfer Deeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under a private party agreement i.e. the subscription agreement dated 14/7/1995. He further contended that since the shares were converted the charter of the preference shares on the happening of the event i.e. by passing of the order of the court while sanctioning the scheme of arrangement, the very nature of the shares was fixed as a debt. The Ld, Counsel submitted that this Board has to first decide whether the shares-in-question are stilt assets in form of shares or converted into a debt on the scheme of amalgamation being approved. It was argued on behalf of the Answering Respondents that it is a debt and the Appellant/Petitioner has not bought the debt and the Bank ought to have followed the guidelines of the RSI Circular Mo.RBI/2005 - 06/54 for sell of shares which are at present converted into debt. 29. Having given my serious thoughts to the above contentions, in my considered view, the above stand taken by the Answering Respondents is also found frivolous. As indicated hereinabove, the shares are always transferable. No restrictions can be imposed regarding the marketability of the shares, save and except provided in law. I do not find force in the contention of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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