TMI Blog1995 (5) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... cquisition and Transfer of Undertakings) Act, 1970, having its head office at Baroda. 2. The main facts of this case are: BoB Fiscal (a wholly owned subsidiary company of Bank of Baroda) was incorporated in 1988. In the same year BoB Fiscal purchased from all-India financial institutions 7,42,400 equity shares of Dunlop. Immediately thereafter during September 22, 1988, to October 4, 1988, all the scrips in respect of these shares were lodged with Dunlop along with duly stamped transfer deeds. According to the petitioner, BoB Fiscal is an investment company within the meaning of Section 372 of the Companies Act, 1956. Pending the transfer of the impugned shares BoB Fiscal entered into contracts for sale of these shares with two brokers at Bombay. After the lodgment, BoB Fiscal enquired from Dunlop about the date by which the transfer deed will be registered. In reply, Dunlop called for a board resolution of the transferors, confirming as to whether the purchase was on its own behalf or on behalf of its clients and, if so, the necessary declaration and permission of the Reserve Bank of India in case the purchase was for any non-residents. These queries were answered by BoB Fisca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to the petitioner, by an arrangement with Bank of Baroda, all the assets, title and interest of the company were vested in the said bank. The bank also applied to the Reserve Bank of India for permission for take over of the assets and liabilities of BoB Fiscal and the same was granted in February 1991. The Reserve Bank of India also stipulated that the said bank may arrange to unload the shares and debentures taken over at a suitable time. The respondent-company was duly informed about the arrangement as well as the Reserve Bank of India approval referred to above, Despite this the respondent-company did not return the shares but called for confirmation from Bank of Baroda that BoB Fiscal is a 100 per cent subsidiary and also for an indemnity. An offer without prejudice was made by Bank of Baroda through its solicitors for sale of the shares to the respondent-company. Despite giving all clarifications, the respondent-company delayed registration but was agreeable to consider returning the impugned shares together with the relevant transfer deed upon compliance with certain requirements. At no stage did the respondent-company refuse to register the shares but it continued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investments made by BoB Fiscal were far in excess of the limits prescribed under Section 372 of the Companies Act and as such was required to be sanctioned by a general body resolution and also required to be approved by the Central Government. It was also required to be sanctioned unanimously by the board of directors. Since all these approvals had not been obtained. Dunlop concluded that the provisions of Section 372 of the Companies Act have not been complied with, The Department of Company Affairs could not be approached by Dunlop due to refusal by BoB Fiscal to supply relevant information. Dunlop further states that there cannot be any arrangement or agreement between Bank of Baroda and BoB Fiscal after the voluntary liquidation nor was Dunlop aware of it. There is also nothing to indicate that even if such arrangement exists it is binding on Dunlop. Dunlop was also not aware of any approval granted by the Reserve Bank of India. It was also pointed out by Dunlop through its solicitors that the petitioner had not complied with the requirement and it was further stated that the draft of the release deed and the discharge deed were forwarded to BoB Fiscal but the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At the hearing held on November 16, 1994, Shri S. B. Mookherjee, senior advocate for the respondent-company, argued on the preliminary objection. He stated that admittedly BoB Fiscal is not the petitioner. The petitioner is one A. V. Sampat who describes himself as the liquidator of BoB Fiscal. A voluntary liquidator cannot be an applicant unless a resolution under Section 512 read with Section 457 of the Companies Act is passed authorising him to institute any proceedings. The copy of the resolution at page 114 of the petition does not confer any authority to initiate legal proceeding in respect of the shares. He further stated that if it is contended that all the rights and obligations in respect of the shares in question are vested in the Bank of Baroda, then BoB Fiscal or the petitioner has no right or interest in the shares nor title to apply for rectification. He, therefore, submitted that due to conflicting claims and assertions as to title this is required to be determined before any order is made for rectification. Shri Mookherjee further stated that Shri A. V. Sampat has sought registration in his name, when the assets have been taken over by the Bank of Baroda. He submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Law Board would also be barred if the applications are made after expiry of the said period. In the above context he also cited (i) Jawahar Mills Ltd. v. Sha Mulchand and Co. Ltd . [1949] 19 Comp Cas 138 ; AIR 1959 Mad 572 ; (ii) Mahadeolal Agarwala v. New Darjeeling Union Tea Co. Ltd ., AIR 1952 Cal 58 ; (iii) Kerala State Electricity Board v. T.P. Kunhaliumma, AIR 1977 SC 282 ; (iv) Raja Bahadur Kamahhya Narayan Singh v. State of Bihar [1962] 46 ITR 516 (Patna) ; (v) CIT v. Bengal Card Board Industries and Printers P. Ltd. [1989] 176 ITR 193 (Cal). 10. Regarding the facts of the case and the other legal issues there is not much of difference in the versions. It is an admitted fact that though the impugned shares were lodged during September 22, 1988, and October 4, 1988, the registration was neither done nor rejected. According to learned counsel for Dunlop, Dunlop insisted on certain information to be provided to satisfy itself that ; (a) BoB Fiscal is an investment company and, therefore, is exempted from Section 372 of the Companies Act. (b) The acquisition by BoB Fiscal is not benami and that BoB Fiscal is not being used as a conduit for funneling funds f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the parties. He further stated that if at all there is any delay it is due to the company marking time by raising one frivolous issue or the other. Having done that now the company cannot take advantage of its own default. He further stated that when there is a continuing wrong there is no question of limitation. In this connection, he cited the Supreme Court decision in Bhagirath Kanoria v. State of M. P., AIR 1984 SC 1688 ; [1986] 68 FJR 98 and Bharathamata Desiya Sangam v. Roja Sundaram , AIR 1987 Mad 183. According to him even if limitation under the Limitation Act is taken into account, it goes up to November, 1991, by which time the amendment has come into force and the jurisdiction has undergone a change. He also confirmed that the petition is made under Section 111(4) of the Companies Act, 1956. 14. With regard to the contention of the respondent-company that there are complicated questions and hence the Company Law Board cannot decide the same, counsel was of the view that there is no such complicated question involved in this case which cannot be decided by the Company Law Board. Still, this is a discretion which is entirely left to the Company Law Board to decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of BoB Fiscal. The prayer of course in the petition is for registering the shares in the name of the petitioner, namely A.V. Sampat. The transfer deeds, however, indicate that the transferee is BoB Fiscal. In these circumstances the point raised by the respondent-company is very relevant. However, during the hearing both the parties fairly conceded that Dunlop cannot register the shares in the name of any one else other than in the name of the transferee as stated in the transfer deed. As such there is no conflict on this score. However, the petition filed by the liquidator of the company needs to be examined. It has been substantiated by the petitioner through a resolution under Section 490(1) passed at the extraordinary general meeting of BoB Fiscal. This resolution not only evidences the appointment of Shri A.V. Sampat as the voluntary liquidator but also indicates his powers. These powers include taking necessary steps/action for outstanding matters and to do all acts, deeds and things as may be deemed necessary for the beneficial winding up of the company. The registration of impugned shares was an outstanding matter. As such in our opinion the liquidator is duly empowered to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the same limitation should apply to the proceedings before the Company Law Board as well. The facts in this case show that the limitation extends up to October, 1991, reckoned on the basis of the cause of action arising in October, 1988. However, in May, 1991, the jurisdiction was shifted to the Company Law Board from the High Court, and as such the limitation had not expired in May, 1991. The petitioner cannot be held back by limitation restrictions when there is a statutory amendment which frees them from the limitation provisions. Of course this is on the assumption that Limitation Act does not apply to the Company Law Board which is examined at length. As such this argument of Shri Mookherjee cannot be accepted. 22. Now coming to the applicability of the Limitation Act to the Company Law Board, Shri Mookherjee submitted that in line with the decision of the Supreme Court in Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhun-jhunwala [1961] 31 Comp Cas 387, the Company Law Board has to adjudicate on the same lines as a court and whatever limitation is applicable to the court will apply to the Company Law Board as well. In our view, the decision of the Supreme Court in this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y when the prescribed period for any application expires on a holiday and the only contingency contemplated is 'when the court is closed'. Again under Section 5 it is only a court which is enabled to admit an application after the prescribed period has expired if the court is satisfied that the applicant had sufficient cause for not preferring the application. It seems to us that the scheme of the Indian Limitation Act is that it only deals with applications to courts, and that the Labour Court is not a court within the Indian Limitation Act, 1963. 24. The Supreme Court in the above case reconsidered its own judgment in Town Municipal Council, Athani v. Presiding Officer, Labour Court, Hubtt , AIR 1969 SC 1335, wherein though the apex court revised one of the two findings under Article 137, it confirmed the other finding, viz., that the limitation under Article 137 applied only to courts. In view of this settled position, we have now only to consider whether the Company Law Board is a court for all intents and purposes or not. In this connection, we have to keep in view a recent judgment of the Supreme Court in Canara Bank v. Nuclear Power Corporation of India Ltd . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the apex court has examined whether a tribunal is a court or not with reference to the context in which the word court is used, This being so in the present case, we have to consider whether the Company Law Board is a court or not in the context of the Limitation Act, 1963. Since the pronouncement of the Supreme Court on this issue is amply clear as reflected in the two judgments cited above specifically on the applicability of Article 137 to tribunals other than courts we are of the view that the omnibus clause under Article 137 of the Limitation Act does not apply to the Company Law Board. Consequently, the petition is maintainable and does not suffer from any infirmity on account of limitation. 27. Having held that the petition is maintainable the next relevant issue is whether there is any unnecessary delay on the part of Dunlop. The fact of BoB Fiscal having become entitled to the shares is undisputed but the contention is that there has been unnecessary delay on the part of Dunlop since the shares were lodged from September 23, 1988, to October 4, 1988, whereas Dunlop was marking time seeking some clarification or the other till September, 1990, i.e., nearly for-two ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as regards listed companies after the decision of the Division Bench of the Madras High Court in Kothari Industrial Corporation Ltd. v. Lazor Detergents Ltd . [1994] 81 Comp Cas 699 (Mad). The Division Bench of the Madras High Court has held categorically that (at page 729 Comp Cas) having regard to the purpose and object sought to be achieved by the introduction of Section 22A of the SCRA and the mischief sought to be remedied as well as deliberate change in the language adopted in the new section we hold that the doctrine of implied repeal will come into play and the provisions in Section 22A will prevail over the provisions of Section 108 of the Act in relation to listed securities to the extent to which they are inconsistent . The High Court has also emphasised on the non obstante clause under Section 22A of the SCRA over the provision of Section 111. It has also emphasised that Sub-section (4) of Section 22A of the SCRA prescribed the time-limit within which a company shall form in good faith its opinion as to whether registration of transfer as applied for ought or ought not to be refused. Thus Section 22A provides a time frame, limited options and rigid grounds for refus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but registration was sought in some other name. Here the transfer is not sought on the basis of vesting. In fact BoB Fiscal has also made it clear that subsequent to the registration in its name it will arrange to transfer the shares in the name of Bank of Baroda. Moreover, Bank of Baroda is the 100 per cent holding company. There is no doubt in this case about the bona fides of BoB Fiscal with regard to the transactions entered into by them. Since the transferors are all financial institutions, there is no possibility of a doubt as to the validity or bona fides of the transactions. Consequently the application of the decision of the Calcutta High Court in Luxmi Cluind v. Bengal Coal Co . [1882] ILR 8 Cal 317, is also ruled out. The question perhaps may be relevant in case BoB Fiscal is already dissolved or there is a subsequent development which renders the rectification illegal or impossible which is not the case here. 33. Dunlop also raised a doubt regarding the legality of the transaction due to a subsequent litigation in which the Supreme Court has held certain transactions entered into by BoB Fiscal as illegal. It is the case of Dunlop that the Supreme Court has observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration could be made only in the name of the person who has submitted the transfer deed in his favour along with the share certificates. In view of this, the company cannot be directed to register the shares in the name of the petitioner. Moreover, since the petitioner has filed the petition in his representative capacity the shares ought to be registered in the name of BoB Fiscal. Accordingly, we direct the company to register the transfer of 7,42,400 equity shares in the name of BoB Fiscal within 30 days from the receipt of a copy of this order. Dunlop shall also pay to BoB Fiscal all the dividends on the above shares for the years 1988-89 and thereafter any dividend which is transferred to the credit of the Government can be claimed by BoB Fiscal from the concerned authorities. BoB Fiscal shall also be entitled to any bonus and rights shares issued in the interregnum. The rights shares/debentures if any shall be offered to BoB Fiscal within 30 days of receipt of a copy of this order and a period of one month shall be allowed for making remittance against these shares. The prayer regarding a direction for enquiry by the Department of Company Affairs is in our opinion unnece ..... 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