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In Re: Royal Airways Ltd. (Formerly Known as Modiluft Ltd.)

2018 (1) TMI 536 - DELHI HIGH COURT

Validity of transfer of shares - Non-registration of pledged shares or subsequent registration - sanctioned scheme for compromise with creditors - Held that:- The sanctioned scheme for compromise with creditors of Royal Airways Limited filed in Company Petition No.385/2003 noted the principal amount due to the respondent No.1 as ₹ 5.00 Crores. This scheme was also upheld and it attained the finality. The Division Bench of this Court in its judgment dated 09.11.2012 rejected the pleas of re .....

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ly categorized as an unsecured creditor in the scheme and now that an amount of ₹ 1.39 Crores has been received as a sale’s consideration it need to be reduced from the principal amount of ₹ 5 crore as recorded in the scheme. Such plea was ignored. The scheme has now attained finality. The debt of respondent No.1 as recorded in the scheme is ₹ 5.00 Crores and 70% amount payable to respondent No.1 has been deposited by the applicant: but the respondent No.1 admittedly is not wit .....

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eneral of this Court pursuant to the sanctioned scheme of compromise, including any interest accrued thereupon, if any. Further, the balance amount deposited in this Court be distributed for second tranche under the scheme of the compromise be also refunded to the applicant together with interest and respondents No.2 to 4 to accept the shares or the amount as the case may be and hence the CA No.1540/2013 stands allowed in terms of above directions. - CO.PET. 385/2003 - Dated:- 11-1-2018 - MR. YO .....

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rms of the judgment and order dated November 9,2012 passed in Company Appeal No.1 and 2/2011 and Company Appeal No.28/2010 passed by the Hon'ble Division Bench of this Hon'ble Court, decide the question of and effect of the alleged sale of the Pledge Shares and purported receipt of consideration of ₹ 1.39 crores by Malanpur on the alleged sale of the Pledged Shares; (b) direct that the alleged transfer of the 55,60,000 Pledged Shares by the Respondent No. 1 to be nonest and void ab .....

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eme of Compromise, be directed to be refunded to the Applicant, together with interest; and (f) direct that the Respondent Nos. 2-4 be directed to accept the shares or amount as the case may be; and/or pass such other and further order or orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case and in the interest of justice. 2. Before coming to the question as to if the reliefs sought need to be granted to the applicant, I may refer to the factual matr .....

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tion against applicant. iii) In April, 1997 Respondent No.1 filed a Civil Suit bearing CS No.161-A of 1997, against the Applicant as well as Respondent Nos.2-4, before the High Court of Kolkata praying, inter alia: a) for decree of sum of ₹ 5,83,96,465/-; b) declaration that the shares of the Applicant standing in the name of the Respondents No. 2-4 are all hypothecated and/or pledged in favour of Respondent No.1; c) a declaration that the Respondent No.1 herein is entitled to sell the sai .....

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, in respect of shares, had all expired. v) On 22.04.1997 I.A. No. GA 1539 of 1997 was filed by Respondent No.1 in the aforesaid suit seeking, inter alia: a. Liberty to sell the shares (pledged shares) and realize the sale proceeds thereof; b. Injunction restraining the Applicant, Respondent Nos. 2, 3 &4, their officers, servants etc. from dealing with the disposing of, alienating and encumbering any of its assets, shares and investments: c. The Respondent No.1 also sought a direction to exe .....

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.09.1997 the High Court of Kolkata passed a judgment and decree upon admission against the Applicant for the entire amount totaling to ₹ 5,83,96,465/- as prayed for by the Respondent No.1. The interim order dated 23.04.1997 was directed to continue. The civil suit No.161A of 1997 as regards prayers seeking liberty to sell the pledged shares held by Respondent No. 2-4 was kept pending. viii) On 29.04.1998, an Official Liquidator was appointed by this Court in C.P. No.68 of 1997 for the appl .....

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t of Official Liquidator by High Court of Delhi. xi) On 07.12.1998 Respondent No.1 alleges that it issued a separate letter each to Respondent No. 2-4 informing that the Respondent No. 1 had sold the pledged shares. No details of the alleged sale were averred in the said letter. The letter allegedly called upon the Respondent No. 2-4 to execute the fresh Transfer Deeds. xii) On 19.03.1999 Respondent No.1 alleged that the Respondent No.2 to 4 in turn furnished new sets of Transfer Deeds, in respe .....

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mpany did not affect registration of transfer on the following three grounds: a) original transfer deeds pledged to the Respondent No. 1 had expired; b) interim order dated 23.04.1997 passed by the High Court of Kolkata was subsisting and it restrained the Applicant and Respondent No.2 to 4 from dealing with or disposing off its assets; and c) the Respondents No.2 -4 specifically disputed execution of the alleged fresh transfer deeds now provided by the alleged purchasers. It informed the Applic .....

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id as Respondent No. 1 failed to give the mandatory notice under Section 176 of The Indian Contract Act, 1872 to the Respondent No.2 to 4 before selling the pledged shares. In view of the same, the purported sale is illegal, invalid, null and void. xvi) The purported sale was in violation of the interim orders dated 23.04.1997 and 08.09.1997 passed by the High Court of Kolkata in CS No.161-A of 1997. The Respondent No.1 did not seek prior permission of the Court before carrying out the purported .....

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the charge sheet filed by Police in FIR No.31 0f 2005 on the complaint of respondent No.1. The charge sheet filed by Police in FIR No.31/2005 through record the shares were sold by the Respondent No.1 to Twenty Four Carat Investment Ltd. and RR Stocks and Shares Brokers on 07.12.1998 but it also recorded RR Stocks and Shares Brokers made payments to the Respondent No.1 on 12.04.1999, 20.04.1999, 26.04.1999 and 12.05.1999 and whereas Twenty Four Carat Investment Ltd did not make payments to the .....

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urchasers - 24 Carat Investment Pvt. Ltd, allegedly holding 18,09,000 pledged shares filed a Co. Petition 12/11/99 under section 111A of Companies Act before the Company Law Board praying that Applicant be directed to register the transfer. However, on 13.01.2000 the said petition was dismissed by the Company Law Board vide its order dated 13.01.2000 on the grounds that: a) the transfer deeds, purportedly forwarded along with covering letters dated 15.03.1999, were held to be forged and not genu .....

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he said appeal was dismissed for non-prosecution vide order dated 16.07.2010 and thus finding of the Company Law Board viz the transfer deeds procured in 1999 by the Respondent No. 1 were forged and fabricated attained finality. xx) On 07.03.2000 alleged purchasers got the transfer deeds executed in 1995 revalidated and submitted the same to the Registrar and Transfer Agent, M/s Karvy Consultants Ltd, for transfer and registration of 40,48,200 pledged equity shares on 19.02.2000. The Registrar a .....

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ngly, the Respondent No.2 to 4 filed an application under Section 156(3) of The Code of Criminal Procedure, 1973 seeking direction for registration of FIR against the Respondent No.1 and alleged purchasers. On 24.04.2014, the Metropolitan Magistrate, Saket Court, Delhi directed for the registration of FIR No.375 of 2014 against the Respondent No.1 and alleged purchasers under Section 406, 420 and 468 of the Indian Penal Code, 1860. xxii) The applicant then filed scheme of compromise under Sectio .....

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for direction to the Applicant herein and its transfer agent M/s Karvy Consultants Ltd (hereinafter referred to as Karvy ) to register transfer of 40,48,200 and 15,11,200 shares each in the names of Alleged Purchasers. xxvi) On 03.05.2001, appointment of Provisional Liquidator was recalled in C.P. No. 68 of 1997. xxvii) On 22.08.2001 an order was passed by the High Court of Kolkata in GA 2293/2001 holding the order of CLB was binding on transferees so long as the same was not set aside by High C .....

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plicant Company herein filed C.A. No.265 of 2003 in C.A. 797 of 2000 against Mr. S.K. Modi and Respondents No.24 Companies praying that board meeting dated 31.07.1996 wherein 11624472 equity shares (pledge shares) had been made fully paid up, be declared void. xxx) On 29.07.2003 this court observed that updated scheme in C.A. No. 797 of 2000 was bonafide and reasonable as well as in public interest and should be sent for consideration under Section 397(1) of the Companies Act, 1956. Objections r .....

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pplication was allowed and the accounts of the Applicant were attached. The applicant company preferred an appeal APO.T 469/2005 against the aforesaid Order dated 07.07.2005. The Division Bench of the High Court of Kolkata allowed the appeal on 20.07.2005 and vacated the aforesaid order dated 07.07.2005 as stated herein after. xxxiii) On 15.07.2005 this Court sanctioned the Scheme of Compromise being C.P. No.385 of 2003. The objections of Respondent No. 1 to the scheme of compromise were dismiss .....

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ndent No.1 and it must not proceed with execution proceedings. xxxv) The appeal filed by Respondent No.1 against the Single Judge s order dated 22.08.2001 was heard and orders reserved in December 2003. The appeal was disposed off by the Division Bench of High Court of Kolkata vide its judgment dated 11.07.2005 directing the Applicant and Karvy to register the transfer of 40,48,200 and 15,11,200 shares in the name of respective purchasers. The Applicant and Karvy were restrained from returning s .....

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005 and by an Order dated 12.09.2005 the Supreme Court of India stayed the direction of the transfer of shares as contained in order dated 11.07.2005 of the Division Bench of Kolkata. xxxvi) On 26.11.2008 Memorandum of Settlement was executed between Modi Global Enterprises, Royal Holdings, Applicant and Mr. B.S. Kansagra. The dispute regarding rights shares including pledge shares being partially paid and whereby the parties to the said settlement agreed to settle inter-se their all disputes. I .....

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rs was kept pending subject to determination of SLP No. 17474 of 2005. The Respondent No. 1 was given liberty to raise its contentions in this regard before the Supreme Court. xxxviii) By an order dated 06.07.2009, the Supreme Court disposed off SLP 17474 of 2005 (filed against order dated 11.07.2005) of Division Bench. The respondent No.1 s plea that there is no impediment in transfer of shares was not accepted. The Supreme Court directed this Court to decide the issue of transfer of shares in .....

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le Judge of the High Court of Kolkata in CS 161A of 1997 has after taking note of the order of the Division Bench dated 11.07.2005 held: it is said by the applicants (Respondent No. 2 to 4 herein) that the above shares have till date not been registered. I only observe that if such is the case, any right arising out of such nonregistration or subsequent registration is kept open. xlii) On 09.11.2012, Appeals 1 & 2 of 2011 filed by Applicant and Respondent No. 2 to 4 and cross appeal of Respo .....

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In March 2014, an application bearing Co. Appl No. 5459 of 2014 was filed by the Respondent No.1 before the Division Bench of the this Court seeking clarification of paragraph 32 of Judgment dated 09.11.2012. xliv) On 02.05.2014, the Division Bench of this Court dismissed the clarification application preferred by the Respondent No.1 stating that no clarification was required in the Judgment dated 09.11.2012. xlv) On 10.11.2014, the Metropolitan Magistrate, Saket Court, New Delhi has allowed the .....

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1 argued the question of transfer of shares could not be agitated now as has already been adjudicated upon by the Division Bench of this Court in its judgment dated 09.11.2012 and if the present application is allowed, it shall be reopening of the same issue which has attained the finality in various court proceedings. The respondents No.2 to 4 should not be allowed to reopen the issues which have attained the finality. 5. The argument of learned Senior counsel for respondent seems to be misplac .....

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id orders of the Calcutta High Court and proceedings as it is clearly beyond what is required and mandated by the Supreme Court in the order dated 6th July, 2009. We cannot examine or go into the question on merits relating to the proceedings pending before the Calcutta High Court and the orders passed therein. We express no opinion in this regard. We further clarify that we have not examined or gone into the question of and the effect of alleged sale of shares and purported receipt of considera .....

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filed a clarification application bearing CA No.5459/2014 in Company Appeals No.1 & 2 of 2011 raising the plea of alleged transfer of shares/purported receipt of consideration cannot be re-agitated in view of judgment dated 11.07.2005 of Division Bench of Kolkata but the Division Bench dismissed the said application on 02.05.2014. Hence, the respondent No.1 cannot say the issue qua the sale of shares and receipt of consideration had attained finality. 7. The learned senior counsel for the r .....

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nd its revalidation was subsisting, hence consequential effect thereof ought to have been given and since issue of revalidation has not been challenged before any appropriate forum it could not be the subject matter of challenge in appeal. He also argued the objections raised by the respondents No.2 to 4 of the locus standi of respondent No.1 to defend the proceedings or the issue qua sale being bad for violation of Section 176 of the Indian Contract Act has since been rejected by the Division B .....

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seeking an order on the basis of the revalidated transfer deeds, which were undisputedly executed in the year 1995 on behalf of the respondent No. 1. Therefore, in our opinion, even if an order passed in this proceeding may consequentially render the proceeding before the Delhi High Court infructuous, the subject-matter in issue in the proceeding before this Court and proceeding before the Delhi High Court is not the same. xxx One fact, which is required to be considered, is that the execution .....

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Court so as to make the order fully effective as between the parties. Since the prayer for sale of the shares have been made consequential registration of the same is required to be made so as to make the sale fully effective. In the facts and circumstances of the case justice and equity demands that appropriate order should be passed to perfect the sale by directing registration of shares in favour of the purchasers. xxx With regard to the contention that the appellant has no locus stendi as ti .....

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n of share register has not yet taken place. Therefore, the title would be perfect only when the share register is rectified by inserting the names of the purchasers and not otherwise. xxxxx The shares have been duly sold. Therefore, until and unless the sale is perfected, the whole object and purpose the selling of shares would be rendered infructuous. xxxxx In support of the proposition that the proper forum for registration of shares would be in New Delhi since situs of shares is in New Delhi .....

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be consequential to the main orders as prayed for. Since the sale of shares has already been concluded the only thing remains is to perfect the sale. 9. It is alleged the order dated 11.07.2005 of the Division Bench of Kolkata High Court was based on a premise the sale is valid and the court proceeds from this point to make consequential orders. The Court did not consider issue of validity of sale of shares. The learned senior counsel for applicant rather submits the Division Bench ignored the .....

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ot have territorial jurisdiction over the situs of shares and, thus, could not have adjudicated disputes in respect thereof. J. For That the Hon ble Court has wrongly observed that the subject matter of Appeal pending in the High Court of Delhi is relating to transfer deed which were signed by K.Bhatnagar in the year 1999 and therefore the matter before the Calcutta High Court (which is on the basis of revalidated transfer deed issued in the year 1999) is different. It is submitted that the Hon .....

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s granted in the Impugned Order) is pending. K. For that the Hon ble Court failed to appreciate that it is not the transfer deed which are the subject matter pending in the High Court of Delhi, it is the said partly paid shares which are dealt in the Scheme of compromise. … xxx L. … The Hon ble Court instead of deciding the fundamental question as to whether the Respondent No.1 can sell the partly paid shares or not, directed that the Petitioner should transfer the partly paid shar .....

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er Section 391(1) of the Act. This fact is also recorded and endorsed in the order dated July 15, 2005 sanctioning the scheme. It is submitted that although order dated July 29, 2003 was placed before the Hon ble Calcutta High Court in the appeal the same was not even considered in the impugned order and a finding is given on the bonafides of the Scheme for which the Calcutta High Court has no jurisdiction. The Hon ble Court also failed to appreciate that the order dated July 29, 2003 was not ch .....

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eme filed by the Petitioner, has given a finding that the shares under question are tainted and have been made fully paid by a stratagem device and that the votes in respect of the tainted shares shall be counted separately and further that the right of the petitioner to forfeit the said partly paid shares is pending in the company petition No. 265 of 2003. In view of the above the Calcutta High Court had no jurisdiction to direct the petitioner to transfer the partly paid shares the validity of .....

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d shares as the revalidated transfer deeds were improper and the subject matter of the same is pending in Appeal No.2 of 2002 before the Delhi High Court. Further, there was a direct advice from Bombay Stock Exchange to refuse the transfer of partly paid shares. It is submitted that the Respondent No.1 instead of challenging the BSE order or participating in Appeal No.2 of 2002, malafidely approached the Calcutta High Court to seek direction for rectification of the register to overcome and defy .....

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No.1 in order to over reach the terms of the Scheme has tried selling the shares and recover money in addition to what Respondent No.1 is entitled to in the Scheme. AG. Without prejudice to its rights and contentions it is submitted that Respondent No.1 being only the Pledgee of Partly Paid Shares has no locus standi to seek registration of transfer of the pledged shares as the respondent No.1 has allegedly sold the shares in favour of the Purchases. 11. The judgment dated 11.7.2005 of Division .....

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weeks. 12. Further vide order dated 06.07.2009 the Supreme Court disposed of the SLP (Civil) No.17474/2005 noting:- By order dated 16th January, 2009 the Delhi High Court in C.M. Nos.1469-1470 of 2008 in Co.P. No.385 of 2003 observed that the question regarding forfeiture of shares is pending in the Supreme Court and it would be open to M/s Malanpur Steel Limited to make its submissions before the Supreme Court. Today when the Special Leave Petition came before this Court the above order was sho .....

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order dated 06.07.2009 of the Supreme Court and then came the judgment dated 09.11.2012 passed by the Division Bench of this Court which also left the issue qua the alleged sale of shares and purported receipt for consideration to be decided by this Court. Hence, the reliance on the judgment dated 11.07.2005 passed by the Division Bench of Kolkata, to say it is final, appears to be misplaced. 14. The second argument raised by the learned Senior counsel for the respondent No.1 was the respondent .....

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e pledge on reasonable notice to the pleader, but then one also need to see if Section 176 (supra) was complied with in its true spirit. Section 176 of Indian Contract Act read as under : If the pawnor makes default in payment of the debt, or performance; at the stipulated time or the promise, in respect of which the goods were pledged, the pawnee may bring a suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged, .....

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377; 10/ - each of Modi Luft Limited which have been pledged with us by you as a security against our loan of ₹ 5.00 crores given to M/s Modi Luft Limited. These shares have since been sold by us and we request you to kindly give us fresh transfer deeds in the marketable lots for these shares at your earliest. The notice/letter above cannot by any stretch of imagination be said to be a reasonable notice for sale.It rather disclose the factum of sale of shares. No opportunity was ever given .....

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and the initials purported to be of Kuldeep Bhatnagar. It is significant to note that out of the three, Modi Overseas Investment Ltd. has its office at Hemkund Tower 98, Nehru Place, New Delhi whereas the other two associate companies have their office at the other two associates companies have their office at Maidan Gari, Mehruali. Yet surprisingly all the three letters appear to have been received by Kuldeep Bhatnagar on the same date, as the initials alongwith the stamp appear on each of the .....

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knowledging receipt of the said letter were of Modiluft (P) Ltd. whereas the letters addressed to associate companies having separate offices. It is noteworthy that in their reply the Respondent Company had denied that any letter dated 7.12.98 was received by HDCL. In view of the above, the authenticity of the letter dated 7.12.98 and the receipt thereof by the associate companies is doubtful. So far as the letters dated 15.3.99 sent by the associate companies to HDCL enclosing the transfer deed .....

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ined finality. 17. Secondly, the Respondent No.1 admittedly had elected to file a suit No 161 A/1997 for recovery at Kolkata with a prayer to sell such shares. The respondent no.1 rather prayed for a declaration it is entitled to sell the shares by public auction and/or private treaty and realize the sale proceeds thereof in satisfaction of its claim in the Civil Suit, hence in the absence of grant of such declaratory relief by the Single Judge in Suit No.161 A/1997 the pledged shares could not .....

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dents No.2 to 4 herein from dealing, disposing of, alienating or otherwise encumbering any of the assets, including the pledged shares. As the respondents No.2 to 4 were restrained by Kolkata High Court from effecting any transfer of the shares of the pledged shares, the respondent No.1 could not have asked for issuance of the fresh transfer deeds in view of such restraint order. 19. Further the alleged sale of 55,60,000 plus shares by the respondent No.1 is also hit by the Securities Contracts .....

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26.04.1999, and 12.05.1999 and Twenty Four Carat Investment Limited did not make any payment to the respondent No.1. It was also admitted by the said company in its reply dated 19.09.2005 to the police. In Bhagwati Developers (P) Ltd. V. Peerless General Finance and Investment Company Ltd. & Anr. (2013) 7 SCR 547, the Court held as under : 28. As stated in the preceding paragraph of the judgment, the Company Law Board has held that transfer of shares in favour of Bhagwati was also against th .....

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ion shall, save with the permission of the Central Government, enter into any contract for the sale or purchase of any security specified in the notification except to the extent and in the manner, if any, specified therein. (2) All contracts in contravention of the provisions of sub-section (1) entered into after the date of the notification issued thereunder shall be illegal. 29. From a plain reading of the aforesaid provision it is evident that in order to prevent undesirable stipulation in s .....

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rmission of the Central Government enter into any contract for the sale or purchase of securities other than such spot delivery contract as is permissible under the Act, the Rules, bye-laws and the Regulations of a recognized stock exchange. The appellant, therefore, can come out of the rigors of Section 16 of the Act only when it satisfies that the transaction comes within the definition of spot delivery contract . xxx 33. The second question, therefore, which falls for our determination is as .....

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r the remittance of money therefore through the post being excluded from the computation of the period aforesaid if the parties to the contract do not reside in the same town or locality; (b) transfer of the securities by the depository from the account of a beneficial owner to the account of another beneficial owner when such securities are dealt with by a depository; x x x 34. According to the definition, a contract providing for actual delivery of securities and the payment of price thereof e .....

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s of Peerless purchased from the loan amount and the transfer is in its repayment. However, the agreement dated 21st November, 1994 between Bhagwati and Tuhin which formed part of the compromise decree provides that the sale of shares took place on 30th October, 1987 and in consideration thereof Bhagwati paid a sum of ₹ 10 lakhs on 21st November, 1994 and further the dividend on the entire shares up to the accounting year 1989-90 amounting to ₹ 8,64,850 to be retained by Tuhin. In th .....

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in Company Petition No.385/2003 noted the principal amount due to the respondent No.1 as ₹ 5.00 Crores. This scheme was also upheld and it attained the finality. The Division Bench of this Court in its judgment dated 09.11.2012 rejected the pleas of respondent No.1 challenging the scheme and therefore, the contention of respondent No.1 viz. the liberty granted by the Division Bench was only to determine the dues to respondent No.1 under the scheme is misleading. Admittedly, the scheme, as .....

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plea was ignored. The scheme has now attained finality. The debt of respondent No.1 as recorded in the scheme is ₹ 5.00 Crores and 70% amount payable to respondent No.1 has been deposited by the applicant: but the respondent No.1 admittedly is not withdrawing said amount and continue to withhold the pledged shares, hence is acting contrary to the sanctioned scheme. 21. Admittedly on 15.7.2005 this Court sanctioned the Scheme of Compromise being C.P.No.385 of 2003. The objections of respon .....

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on 15.7.2005 as the transfer had not been recorded. The sanctioned scheme supersedes the judgment dated 11.7.2005 passed by the Division Bench of Calcutta High Court and its effect. 22. On 20.7.2005 the Division Bench of Calcutta High Court vide its subsequent judgment held the respondent No.1 to be in same class as unsecured creditors. The scheme is binding on respondent No.1 and it must not proceed with execution proceedings. The order of the Division Bench of the Calcutta High Court directing .....

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passed by the Division Bench of Calcutta High Court. This order has not been challenged by the respondent No.1 till date. 24. On 9.11.2012 the Division Bench of this Court also did not adjudicate upon the issue of validity of the transfer of shares but rather left the question open to be decided by the Company Court and at paragraph 32 recorded the same as alleged and receipt of consideration as purported . Therefore, the question of validity of alleged sale of shares and purported receipt of c .....

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hdrawn by an order dated 16.01.2009 with a liberty granted to the respondent No.1 to raise an issue before the Supreme Court as a matter of abundant precaution, though, it was not at all necessary as the Malanpur s share were never forfeited in terms of the settlement, hence, it was argued the order dated 06.07.2009 only dealt with an issue of forfeiture of the shares and did not disturb the finding of the Division Bench of Kolkata High Court qua validity of the sale of pledged shares. 26. I dis .....

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order dated 16.01.2009, CA No.265/2003 was dismissed as withdrawn in terms of the memorandum of understanding dated 26.11.2008 and the issue of forfeiture of the shares was put to rest. The respondent No.1 at that stage too had contended there is no impediment in transfer of shares in the name of the transferees and the Company Court granted it liberty to raise such objections before the Supreme Court. However such objection was not accepted and the Supreme Court directed this Court to decide t .....

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ight arising out of nonregistration of the pledged shares or subsequent registration. This order has not been challenged by the respondent No.1 till date, hence, the plea of the learned senior counsel for the respondent No.1 viz., the judgment dated 11.07.2005 validates the transfer of shares and had attained finality is wholly misplaced. 27. Admittedly till date the shares have not entered in the Share Register and hence even otherwise the transfer of the shares is not complete as transferee co .....

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anies. However, she died before the shares could be transferred to the appellant in the books of the companies. The respondent, a nephew of the donor, filed the suit, claiming the shares on the ground that the gift was incomplete for failure to comply with the formalities prescribed by the Indian Companies Act 1913 for transfer of shares. Noticing that in 53 Indian Appeals, 92 a distinction was made between "the title to go on the register" and "the full property in the shares in .....

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ation of the right to get the share certificate transferred in the name of donor became irrevocable by registration as well as by delivery. Either was sufficient. The actual transfer in the registers of the companies constituted more enforcement of this right to enable the donor to exercise the rights of the shareholder. The more fact that such transfers had to be recorded in accordance with the Company Law did not detract from the completeness of what was donated. Referring to Regulation 18 of .....

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uot; The Court referred to the passage in Buckley on the Companies Acts XXXI Edn. Page 813 : Non registration of a transfer of shares made by a donor does not render the gift imperfect", and the passage in Palmar's Common Law : 21st Edn. page 334 : A transfer is incomplete until registered. Pending registration, the transferor has only an equitable right to the shares transferred to him. He does not become the legal owner until his name is entered on the register in respect of these sha .....

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ot; rights in shares, recognised by the Transfer of Property Act, may be antecedent to the actual vesting of all or the full rights of ownership of shares and exercise of the rights of shareholders in accordance with the provisions of the Company law," and that while transfer of property in general was not the subject matter of the companies Act, it deals with "transfers of shares only because they give certain rights to the legally recognised shareholders and imposes some obligations .....

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te any proceedings against respondent No.1 till date which rather show these purchasers are in the name only and respondent No.1 continues to hold such shares and there has been no sale in fact. Secondly, the respondent No.1 though is arrayed as M/s Malanpur Steels Limited, no longer exist as has merged with M/s Hindustan Engineering and Industries Limited. The BIFR vide its order dated 04.09.2012 has sanctioned the rehabilitation scheme of merger of erstwhile M/s Malanpur Steels Limited with M/ .....

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alleged sale of pledged shares, a company petition No. 68/1997 was admitted against the applicant and the Official Liquidator was appointed; hence alleged sale even otherwise is bad per Section 446 of Companies Act, 1956; iii) sending of notice informing sale of shares under Section 176 of Indian Contract Act was even doubted by CLB in its order dated 20.01.2005; the appeal against it was also dismissed, hence attained finality; iv) transfer deeds dated 1999 were held to be forged by Company La .....

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treated as an unsecured creditor and his loan is shown as ₹ 5 crores in the scheme; x) judgment dated 11.07.2005 of Division Bench of Kolkata did not and could not have examined the scheme; xi) judgment dated 11.07.2005 of Division Bench was on a premise the shares have been sold and what is left is the consequential relief to be given. It did not consider the issue of validity of sale of shares; xii) the judgment dated 11.07.2005 of Division Bench of Kolkata was challenged in SLP No.17474 .....

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