Centurion Bank Limited Vs. Bellary Steel and Alloys Limited, - Court Judgment

Excerpt:
1. m/s. centurion bank limited (applicant herein) had filed a petition under section 111a of the companies act, 1956 (the act) in cp. no.11/111a/srb/2003 against m/s. bellary steels & alloys limited ("the company") & 2 others seeking directions for transfer of 12,00,000 equity shares of the company, pledged in favour of the applicant, by the third respondent, pursuant to the default committed by the latter in repayment of the loan amount availed from the applications/petitioner. this bench, while disposing the company petition, by an order dated 23.12.2003 ordered that the company shall transfer the impugned shares in favour of the petitioner within 30 days of lodging of the share certificates together with the instruments of transfer by the petitioner however, the company failed to comply with the said order compelling the applicant to file the present application under 634a of the act. to direct the company to comply with the order dated 23.12.2003.2. shri. krishna srinivasan, learned counsel for the petitioner while reiterating the averments made in the application submitted that the applicant had forwarded the original share transfer forms duly revalidaled along with the share certificates to the respondent no. 2 being the registrar and share transfer agent of the company on 10.01.2004 lo efieet the transfer in its favour. inspite of repeated demands as borne out by the correspondence on record, the respondents failed to act in terms of the order of this bench. shri krishna srinivasan, leamed counsel, relying upon the decision made in m.muthuvel v. telematic systems limited 2002 4 corn lj 480 (clb) urged that the company be directed to comply with the order of the bench.3. shri t.s. vijayaraghavan, leamed counsel representing the respondents no. 1 & 3 submitted that the company has filed an appeal before the high court of karnataka against the order dated 23.12,2003 and that the matter is pending before the high court of karnataka.4. i have considered the matter in entirety. it is on record that the company failed to effect the transfer of impugned shares in favour of the applicant in compliance with the order made on 23.12.2003 by the bench. the company has challenged the said order before the high court of karnataka, but no stay of operation of order dated 23.12.2003 has been granted by the high court. the company failed to act as per the order in question, inspite of the opportunity afforded to it, causing immense prejudice to the applicant. by virtue of section 634 a, an order made by company law board may be enforced by that board in the same manner as if it were a decree made by a court in a suit pending therein. this board is in a position to execute the order made by it.accordingly, i direct that sri. a.m. sridharan, bench officer, company law board, southern region bench to endorse the transfer entries on the reverse of the share certificates bearing no. 121796 - 121805 and 121806 - 121807 in respect of 12,00,000 equity shares of the company, being subject matter of the present application, in favour of the applicant. this will be conclusive evidence of the registration of the tranfer having taken place. in respect of 12,00,000 shares directed to be registered in favour of m/s. centurion bank limited, the bench officer will give a certificate under the authority of this order that m/s. centurion bank limited is the registered shareholder of the shares specifically indicating therein the distinctive share certificate numbers. this certificate of bench officer shall be conclusive evidence of m/s. centurion bank limited having become the registered shareholder of the impugned shares. a copy of this order shall be sent to the registrar of companies for taking on record in the company's file and this order shall form part of the annual report of the company as and when the same is filed. this order is, however, subject to any order that may be passed by the high court of karnataka in the appeal preferred against the order dated 23.12.2003 of the company law board.with these directions the application stands disposed of.

Judgment:
1. M/s. Centurion Bank Limited (applicant herein) had filed a petition under Section 111A of the Companies Act, 1956 (the Act) in CP. No.11/111A/SRB/2003 against M/s. Bellary Steels & Alloys Limited ("the Company") & 2 others seeking directions for transfer of 12,00,000 equity shares of the Company, pledged in favour of the applicant, by the third respondent, pursuant to the default committed by the latter in repayment of the loan amount availed from the applications/petitioner. This Bench, while disposing the Company petition, by an order dated 23.12.2003 ordered that the company shall transfer the impugned shares in favour of the petitioner within 30 days of lodging of the share certificates together with the instruments of transfer by the petitioner However, the Company failed to comply with the said order compelling the applicant to file the present application under 634A of the Act. to direct the Company to comply with the order dated 23.12.2003.

2. Shri. Krishna Srinivasan, learned Counsel for the petitioner while reiterating the averments made in the application submitted that the applicant had forwarded the original share transfer forms duly revalidaled along with the share certificates to the Respondent No. 2 being the Registrar and Share Transfer Agent of the Company on 10.01.2004 lo efieet the transfer in its favour. Inspite of repeated demands as borne out by the correspondence on record, the respondents failed to act in terms of the order of this Bench. Shri Krishna Srinivasan, leamed Counsel, relying upon the decision made in M.Muthuvel v. Telematic Systems Limited 2002 4 Corn LJ 480 (CLB) urged that the Company be directed to comply with the order of the Bench.

3. Shri T.S. Vijayaraghavan, leamed Counsel representing the respondents No. 1 & 3 submitted that the Company has filed an appeal before the High Court of Karnataka against the order dated 23.12,2003 and that the matter is pending before the High Court of Karnataka.

4. I have considered the matter in entirety. It is on record that the Company failed to effect the transfer of impugned shares in favour of the applicant in compliance with the order made on 23.12.2003 by the Bench. The Company has challenged the said order before the High Court of Karnataka, but no stay of operation of order dated 23.12.2003 has been granted by the High Court. The Company failed to act as per the order in question, inspite of the opportunity afforded to it, causing immense prejudice to the applicant. By virtue of Section 634 A, an order made by Company Law Board may be enforced by that Board in the same manner as if it were a decree made by a Court in a suit pending therein. This Board is in a position to execute the order made by it.

Accordingly, I direct that Sri. A.M. Sridharan, Bench Officer, Company Law Board, Southern Region Bench to endorse the transfer entries on the reverse of the share certificates bearing No. 121796 - 121805 and 121806 - 121807 in respect of 12,00,000 equity shares of the Company, being subject matter of the present application, in favour of the applicant. This will be conclusive evidence of the registration of the tranfer having taken place. In respect of 12,00,000 shares directed to be registered in favour of M/s. Centurion Bank Limited, the Bench Officer will give a certificate under the authority of this order that M/s. Centurion Bank Limited is the registered shareholder of the shares specifically indicating therein the distinctive share certificate numbers. This certificate of Bench Officer shall be conclusive evidence of M/s. Centurion Bank Limited having become the registered shareholder of the impugned shares. A copy of this order shall be sent to the Registrar of Companies for taking on record in the Company's file and this order shall form part of the annual report of the company as and when the same is filed. This order is, however, subject to any order that may be passed by the High Court of Karnataka in the appeal preferred against the order dated 23.12.2003 of the Company Law Board.

With these directions the application stands disposed of.