R. Venkataswamy Naidu Vs. the Director, Enforcement Directorate, New Delhi and Others - Court Judgment

Excerpt:
foreign exchange regulation - offence--s, foreign company and subsidiary of another foreign company sv -- s holding shares in indian company -- sv transferring its shareholding in s in favour of lhp, another foreign company -- transaction between sv and lhp does not involve transfer of shares in indian company -- does not constitute violation of section 26(4) of fera -- writ petition seeking declaration from high court that transfer of interest of sv in s favour of lhp violated section 26(4) and hence void and direction to authorities to investigate into transaction -- not maintainable -- regulation act (46 of 1973), section 26(4). - - it is also stated in the affidavit that normally when permission is applied, reserve bank of india, the second respondent herein insists upon transfer of shares to the existing share-holders for the first instance and that this has been done with mala fide object since the petitioner herein complained against snia viscosa, the fifth respondent herein with regard to the supply with defective plant. in my view, on the basis of the allegations and counter-allegations made in the affidavits, no declaration as prayed for can be given by a writ court in a matter like this. as is well known, the latin word mandamus means to command and only under the above circumstance, we could command the first three respondents to investigate.order1. the petitioner seeks a writ of declaration from this court to declare that the transfer of interest held by the holding company, m/s. snia viscose, the fifth respondent company herein of its subsidiary company sapina the 6th respondent herein in favour of m/s. look heath properties thirty limited, the 7th respondent herein, as viola-tive of section 26(4) of the foreign exchange regulation act, 1973 and that the same is void in the absence of prior approval from the reserve bank of india.2. the short facts leading to the filing of the writ petition are: the petitioner is one of the promoters of the fourth respondent company, the south india viscose limited. the company was incorporated in the year 1957. the petitioner herein was on the board of directors till 31-7-1981 and was the managing director from the commencement of the company for nearly 24 years. he was also a shareholder of the company in the year 1981. the total 24.5% foreign shareholding was not held by the original allottee, the italian holding company snia viscose, the 5th respondent herein, but it was wholly owned subsidiary of this italian holding company by name sapina located in luxum-burg, the 6th respondent herein. according to the petitioner herein, the company was created in december 1964 to transfer the business interests of the italian holding company held outside italy in countries such as india, brazil and in other states of south america and africa. the petitioner's case is that the shares held by m/s. south india viscose ltd. coimbatore, the 4th respondent herein were transferred, as stated above, with the approval of the government of india and the reserve bank of india. in the year 1966, m/s. sapina, luxemburg, the 6th respondent herein, was owning shares in three indian companies. in the year 1982, one p.s. mistry acquired the shares of the collaborate from sapina, the 6th respondent herein. the method adopted by the said p. s. mistry in order to acquire shares was to take over the company sapina whose only assets were the indian companies shares by a company of his group in middle east. the company of the said p.s. mistry group took over sapina. according to the petitioner herein, there was a transfer of shares in the sense that m/s. snia viscose sold shares to a foreign company, violating section 26(4) of the foreign exchange regulation act, 1973. the petitioner filed a writ petition w. p. no. 5531 of 1984 before this court, without impleading respondents 5 to 7 herein. the petitioner in that writ petition prayed for the issue of a writ of mandamus to direct the director of enforcement, reserve bank of india and secretary, ministry of finance to investigate into the transactions held in the 4th respondent company herein by the 5th respondent herein in favour of the 7th respondent herein and to take steps under the foreign exchange regulation act. sathar sayeed, j. by order dated 27-11-1984 dismissed the writ petition w. p. no. 5531 of 1984 holding that there is no transfer from the fourth respondent company herein and that there is no violation of the foreign exchange regulation act. the learned judge further held that the mere taking of the shares by a non-resident company will not amount to violation of section 26(4) of the foreign exchange regulation act. the learned judge has also held that the petitioner has a right to approach thecompany court seeking redressal ot the grievances, if any, referring to sections 234, 237 of the companies act, 1956. on appeal against this order in writ appeal w. a. no. 140 of 1985, (r. venkatasamy naidu --appellant v. the director, enforcement directorate foreign exchange regulations act, central bureau of investigation, new delhi and 19 others -- respondents.) by judgment dated 8-8-1989, a division bench of this court, consisting of mohan, officiating chief justice and s. ramalingam, j. dismissed the appeal. at the appellate stage, the learned counsel appearing for the petitioner gave up his argument with regard to transfer of shares and confined the argument on the question of transfer of interest. it was argued before the division bench by the learned counsel for the petitioner, that respondents 1 to 3 in that case have not properly appreciated the question of transfer of interest and that there is a violation of section 26(4) of the foreign exchange regulation act. the division bench considered the arguments of respondents therein that this is a disputed question of fact, i.e. whether there is a transfer of interest at all and that the transfer of interest has been stoutly denied by all the respondents. the division bench has further taken note of the fact that not a single document relating to transfer had been produced to show that there was such a transfer. the fact that no application had been made by the transferor or the transferee was also taken note of by the division bench. after taking note of the facts, the division bench re-produced para 13 of the affidavit in that case filed by the petitioner. while considering the question as to whether there is any transfer of interest at all, the division bench referred to the counter-affidavit filed by director, enforcement directorate, new delhi and held that when the transfer had taken place and if the enforcement directorate remained dormant without taking any action, the question of issue of mandamus would arise at all. the division bench further held that there are other remedies for the petitioner to approach the company law board under section 247 of the companies act and in the result the division benchconfirmed the decision of the learned single judge.the petitioner preferred an appeal to the supreme court in s.l.p. no. 15847 of 1989 and at the time of admission, before the supreme court, it was contended that on facts, transfer of sapina a foreign company holding interest in indian company to another foreign company is a violation. in paragraph 13 of the affidavit filed in support of the writ petition, it is stated as follows : '....i respectifully submit that having raised a contention that the shares the 4th respondent company were transferred in violation of 26(4), i felt that i must have specifically raised in the writ petition that there was transfer of interest in indian company. hence i am filing this writ petition...'at this stage, the petitioner has come up before this court, with the prayer as stated supra.3. it is alleged in the affidavit filed in support of the petition that transfer of interest by snia viscosa of its subsidiary company which owns only shares i.e. interest in indian company, the south india viscose limited, the fourth respondent herein in indian to another foreign company m/s. lock heath properties thirty limited, amounts to transfer of interest in indian company and violates section 26(4) of the foreign exchange regulation act. since this point was not specifically raised in the earlier writ petition, and that it is wrongly stated that only shares were transferred, the petitioner alleges in the affidavit filed in support of the writ petition that he has come with the present writ petition raising the question of transfer of shares in indian company, viz., the transfer of subsidiary company, sapina by snia viscosa to another foreign company, viz. m/s. locks heath property thirty limited, the 7th respondent is directively violative of section 26(4) of foreign exchange regulation act, 1973. it is further stated in the affidavit that to circumvent the law, respondents have transferred the subsidiary company itself which owns indian company shares to another company itself not realising that the transfer of an interest in indian company by a foreign company to another foreign company isdirectly violative of section 26(4) of foreign exchange regulation act. it is also stated in the affidavit that normally when permission is applied, reserve bank of india, the second respondent herein insists upon transfer of shares to the existing share-holders for the first instance and that this has been done with mala fide object since the petitioner herein complained against snia viscosa, the fifth respondent herein with regard to the supply with defective plant.4. i have heard mr. n. c. raghavachari, the learned senior counsel appearing for the petitioner in extenso. the learned senior counsel, after referring to the order of the supreme court in s. l. p. no. 15847 of 1989 and the judgment of the division bench of this court in writ appeal no. 140 of 1985 dated 8-8-1989, contends that this point of transfer of interest was not specifically raised on earlier occasions and as such the petitioner has taken up this point now, in the present writ petition. on the basis of the allegations made in the affidavit, the learned senior counsel contends that this is a fit case where a writ of declaration is to issue. he further contends that there is a gross violation of section 26(4) of the foreign exchange regulation act, 1973. section 26(4) of the foreign exchange regulation act, 1973 (hereinafter referred to as the 'act 1973') is to the following effect : '..notwithstanding anything contained in any other law, no transfer of any interest in any business in india may by a person resident outside india to any person also resident outside india shall be valid unless such transfer is confirmed by the reserve bank on an application made to it in this behalf by the transferor or the transferee..'5. first of all, i am not able to accept the arguments of mr. n. c. raghavachari, the learned senior counsel appearing for the petitioner, that his is a matter which can be gone in a petition under article 226 of the constitution of india. the petitioner has got ample remedies under the companies act, 1956. section 234 of the companies act empowers the registrar of companies to call for information or explanation with respect to theallegations levelled before him by a person. section 237 of the companies act deals with the investigation of company's affairs in other cases. section 247 of the companies act reveals the investigation of ownership of company. i am of the view that the petitioner has got every right to approach the company board to seek the redressal of his grievances, if any. in my view, on the basis of the allegations and counter-allegations made in the affidavits, no declaration as prayed for can be given by a writ court in a matter like this.6. secondly, even on the earlier occasion in w. a. no. 140 of 1985, the learned counsel for the petitioner restricted his argument before the division bench of this court, with regard to the question of transfer of shares. in the said writ appeal, the division bench observed as follows : '...the only remaining question will be whether there has been a transfer of interest at all. we would rather quote from the affidavit of the writ petitioner-appellant. in paragraph 13 he has stated as follows :--'the transfer or take over of sapina by another foreign company outside india was in effect and in law a transfer of interest in business in india, hit at by section 26(4) of the foreign exchange regulation act. i submit that this transfer of all collaborator's share holding in the manner aforesaid therefore attracts prohibition under section 26(4) of the act.'on this aspect of the matter, the counter affidavit filed on behalf of the first respondent, the director, enforcement directorate, central board of investigation, new delhi, is to the following effect :--'regarding the second main allegation about the transfer of 24.5% shares held by m/s. sapina in m/s. south india viscose to a muscat based construction company, it is stated that according to the company, m/s. snia viscose have sold their interest in sapina of luxemburg to m/s. locks heath properties thirty ltd. a company incorporated in england and that the said company is owned by mr. c. d. motiwalla, a british subjectbased in dubai and that snia viscose have sold sapina and not the shares of m/s. south india viscose ltd. it is categorically stated by the company that no application has been made by any transferee or transferor for registration of such alleged transfer of shares. it is therefore understood that the shares of m/s. sapina in south india viscose ltd. have not been sold. in this connection, it is stated that the company is asserting in the matter of non-transfer of shares according to their books. the only competent authority who could state to the facts of the transfer, or otherwise legally is the registrar of companies, tamil nadu, madras with whom any such transfers effected have to be registered by means of filling a prescribed return under the provisions of the companies act, 1956...'the allegations remained unilateral, and only when the transfer has taken place and if the enforcement directorate remained dormant without taking any action, the question of issue of mandamus would arise at all. as is well known, the latin word mandamus means to command and only under the above circumstance, we could command the first three respondents to investigate. on mere surmises or on mere unilateral allegations, we cannot compel respondents 1 to 3 to take action. otherwise the writ court would be converted into a court of investigation for which there are other forums. as rightly pointed out by mr. govind swaminathan, learned counsel for the fifth respondent company that if the register of share holding does not reflect any such transfer, how could the high court in exercise of power under article 226 of the constitution of india ever investigate into the matter/ our emphatic answer to the question is that it could not, likewise, if there has been a stout denial by all concerned, the writ court cannot order an investigation into the matter.as we said above, there are other remedies. in fact, the appellant being conscious of that position, has approached the company law board under section 247 of the companies act along with two others, and the company law board has held as follows :--'the applicants have mentioned in thepetition that the shares held by snia in the south india viscose ltd. have been transferred to sapina and that the ownership of sapina has been transferred to locks heath properties thirty ltd. thus, admittedly the ownership of the purchaser of the share is already known and therefore there seems no justification to order investigation to find out the real owners who as stated above are already identified. the allegations regarding destabilisation of the management by shri p.s. mistry has also not been corroborated by any specific evidence as he was already on the board of directors before the aforesaid transfer of shares took place ......taking intoconsideration all the facts and circumstances of the case, this board is of the view that the allegations made in the application have not been substantiated nor are these sufficient in themselves to justify initiating any investigations under section 247 of the companies act in relation to the ownership of locks heath properties thirty ltd. and/or invoking the provisions of section 250 of the act in relation to the shares held by m/s. sapina, s. a. luxemburg in the company. therefore, no action under section 247 or 250 is warranted...'in view' of the categorical findings given by the division bench, on this question also, i do not think the petitioner can raise the question once again, only by impleading new parties. further section 108 of the companies act deals with the transfer of shares and debentures. the supreme court has categorically held in life insurance corporation of india v. escorts ltd. : 1986(8)ecc189 'a transfer effective as against the company and any person without notice of the transfer until the transfer is registered in the company's register.....' when such is the effect of section 108 of the companies act, i do not think the petitioner herein can ask for a writ of declaration before this court, especially in a petition under article 226 of the constitution of india. it is not clear from the affidavit that whether the aforesaid shares have been transferred in the name of the 7th respondent herein.7. further, i am of the view, that the alleged transfer of shareholding in sapina would not be a transfer of interest coming within the purview of section 26(4) of the foreign exchange regulation act. it is also to be noted that the transaction involving transfer of shares between two non-residents is not covered by the provisions of section 26(4) of the foreign exchange regulation act. i am of the view that the said section has no application to the facts of the present case assuming that there is a transfer of interest as alleged by the petitioner. even on the earlier occasion, it was found that the records produced therein show that sapina continued to hold 1,79,550 equity shares of the south india viscose ltd. the 4th respondent herein and that no transfer application or a petition had been lodged for the transfer of the shares held by sapina in the fourth respondent company to any other person. in these state of affairs, even assuming without admitting, that there is a take over of sapina by the 7th respondent herein, i am of the view that it will not tantamount to transfer of shares of a public company. further, section 26(4) of the foreign exchange regulation act is very clear that no transfer of any interest in any business in india may by a person resident oulside india to any person also resident outside india shall be valid unless such transfer is confirmed by the reserve bank on an application made to it in this behalf by the transferor or the transferee. in view of this provision, (i do not think that this court can issue a declaration straightway at this stage. the reserve bank of india has also filed a counter-affidavit earlier making points clear about the factual position.8. i am not inclined to enterain this writ petition on one another ground, that it, the point raised he (sic)in had already been decided by the divi on bench of this court, as mentioned (sic)oove, against the petitioner with regard to the transfer of interest. both the learned single judge and the division bench of this court, as mentioned above, have decided the issue before me, not only on merits but also on the ground of alternative remedy which is available to the petitioner herein. in view of that, this writ petition isliable to be dismissed, applying the principle of constructive res judicata, also.9. for the reasons stated above, i am not inclined to entertain this writ petition. the writ petition will, therefore, stand dismissed.10. petition dismissed.

Judgment:
ORDER

1. The petitioner seeks a writ of declaration from this Court to declare that the transfer of interest held by the holding company, M/s. Snia Viscose, the fifth respondent company herein of its subsidiary company Sapina the 6th respondent herein in favour of M/s. Look Heath Properties Thirty limited, the 7th respondent herein, as viola-tive of Section 26(4) of the Foreign Exchange Regulation Act, 1973 and that the same is void in the absence of prior approval from the Reserve Bank of India.

2. The short facts leading to the filing of the writ petition are: The petitioner is one of the promoters of the fourth respondent company, the South India Viscose Limited. The company was incorporated in the year 1957. The petitioner herein was on the Board of Directors till 31-7-1981 and was the Managing Director from the commencement of the company for nearly 24 years. He was also a shareholder of the company in the year 1981. The total 24.5% foreign shareholding was not held by the original allottee, the Italian holding company Snia Viscose, the 5th respondent herein, but it was wholly owned subsidiary of this Italian holding company by name Sapina located in Luxum-burg, the 6th respondent herein. According to the petitioner herein, the company was created in December 1964 to transfer the business interests of the Italian holding company held outside Italy in countries such as India, Brazil and in other States of South America and Africa. The petitioner's case is that the shares held by M/s. South India Viscose Ltd. Coimbatore, the 4th respondent herein were transferred, as stated above, with the approval of the Government of India and the Reserve Bank of India. In the year 1966, M/s. Sapina, Luxemburg, the 6th respondent herein, was owning shares in three Indian companies. In the year 1982, one P.S. Mistry acquired the shares of the collaborate from Sapina, the 6th respondent herein. The method adopted by the said P. S. Mistry in order to acquire shares was to take over the company Sapina whose only assets were the Indian companies shares by a company of his group in Middle East. The company of the said P.S. Mistry group took over Sapina. According to the petitioner herein, there was a transfer of shares in the sense that M/s. Snia Viscose sold shares to a foreign company, violating section 26(4) of the Foreign Exchange Regulation Act, 1973. The petitioner filed a writ petition W. P. No. 5531 of 1984 before this Court, without impleading respondents 5 to 7 herein. The petitioner in that writ petition prayed for the issue of a writ of mandamus to direct the Director of Enforcement, Reserve Bank of India and Secretary, Ministry of Finance to investigate into the transactions held in the 4th respondent company herein by the 5th respondent herein in favour of the 7th respondent herein and to take steps under the Foreign Exchange Regulation Act. Sathar Sayeed, J. by order dated 27-11-1984 dismissed the writ petition W. P. No. 5531 of 1984 holding that there is no transfer from the fourth respondent company herein and that there is no violation of the Foreign Exchange Regulation Act. The learned Judge further held that the mere taking of the shares by a non-resident company will not amount to violation of Section 26(4) of the Foreign Exchange Regulation Act. The learned Judge has also held that the petitioner has a right to approach thecompany Court seeking redressal ot the grievances, if any, referring to Sections 234, 237 of the Companies Act, 1956. On appeal against this order in Writ Appeal W. A. No. 140 of 1985, (R. Venkatasamy Naidu --Appellant v. The Director, Enforcement Directorate Foreign Exchange Regulations Act, Central Bureau of Investigation, New Delhi and 19 others -- Respondents.) by judgment dated 8-8-1989, a Division Bench of this Court, consisting of Mohan, Officiating Chief Justice and S. Ramalingam, J. dismissed the appeal. At the appellate stage, the learned counsel appearing for the petitioner gave up his argument with regard to transfer of shares and confined the argument on the question of transfer of interest. It was argued before the Division Bench by the learned counsel for the petitioner, that respondents 1 to 3 in that case have not properly appreciated the question of transfer of interest and that there is a violation of section 26(4) of the Foreign Exchange Regulation Act. The Division Bench considered the arguments of respondents therein that this is a disputed question of fact, i.e. whether there is a transfer of interest at all and that the transfer of interest has been stoutly denied by all the respondents. The Division Bench has further taken note of the fact that not a single document relating to transfer had been produced to show that there was such a transfer. The fact that no application had been made by the transferor or the transferee was also taken note of by the Division Bench. After taking note of the facts, the Division Bench re-produced para 13 of the affidavit in that case filed by the petitioner. While considering the question as to whether there is any transfer of interest at all, the Division Bench referred to the counter-affidavit filed by Director, Enforcement Directorate, New Delhi and held that when the transfer had taken place and if the Enforcement Directorate remained dormant without taking any action, the question of issue of mandamus would arise at all. The Division Bench further held that there are other remedies for the petitioner to approach the company Law Board under Section 247 of the Companies Act and in the result the Division Benchconfirmed the decision of the learned single Judge.The petitioner preferred an appeal to the Supreme Court in S.L.P. No. 15847 of 1989 and at the time of admission, before the Supreme Court, it was contended that on facts, transfer of Sapina a foreign company holding interest in Indian company to another foreign company is a violation. In paragraph 13 of the affidavit filed in support of the writ petition, it is stated as follows :

'....I respectifully submit that having raised a contention that the shares the 4th respondent company were transferred in violation of 26(4), I felt that I must have specifically raised in the writ petition that there was transfer of interest in Indian Company. Hence I am filing this writ petition...'

At this stage, the petitioner has come up before this court, with the prayer as stated supra.

3. It is alleged in the affidavit filed in support of the petition that transfer of interest by Snia Viscosa of its subsidiary company which owns only shares i.e. interest in Indian Company, the South India Viscose Limited, the fourth respondent herein in Indian to another foreign company M/s. Lock Heath Properties Thirty Limited, amounts to transfer of interest in Indian company and violates Section 26(4) of the Foreign Exchange Regulation Act. Since this point was not specifically raised in the earlier writ petition, and that it is wrongly stated that only shares were transferred, the petitioner alleges in the affidavit filed in support of the writ petition that he has come with the present writ petition raising the question of transfer of shares in Indian Company, viz., the transfer of subsidiary company, Sapina by Snia Viscosa to another foreign company, viz. M/s. Locks Heath Property Thirty Limited, the 7th respondent is directively violative of Section 26(4) of Foreign Exchange Regulation Act, 1973. It is further stated in the affidavit that to circumvent the law, respondents have transferred the subsidiary company itself which owns Indian company shares to another company itself not realising that the transfer of an interest in Indian company by a Foreign Company to another foreign company isdirectly violative of Section 26(4) of Foreign Exchange Regulation Act. It is also stated in the affidavit that normally when permission is applied, Reserve Bank of India, the second respondent herein insists upon transfer of shares to the existing share-holders for the first instance and that this has been done with mala fide object since the petitioner herein complained against Snia Viscosa, the fifth respondent herein with regard to the supply with defective plant.

4. I have heard Mr. N. C. Raghavachari, the learned senior counsel appearing for the petitioner in extenso. The learned senior counsel, after referring to the order of the Supreme Court in S. L. P. No. 15847 of 1989 and the judgment of the Division Bench of this Court in Writ Appeal No. 140 of 1985 dated 8-8-1989, contends that this point of transfer of interest was not specifically raised on earlier occasions and as such the petitioner has taken up this point now, in the present writ petition. On the basis of the allegations made in the affidavit, the learned senior counsel contends that this is a fit case where a writ of declaration is to issue. He further contends that there is a gross violation of Section 26(4) of the Foreign Exchange Regulation Act, 1973. Section 26(4) of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as the 'Act 1973') is to the following effect :

'..Notwithstanding anything contained in any other law, no transfer of any interest in any business in India may by a person resident outside India to any person also resident outside India shall be valid unless such transfer is confirmed by the Reserve Bank on an application made to it in this behalf by the transferor or the transferee..'

5. First of all, I am not able to accept the arguments of Mr. N. C. Raghavachari, the learned senior counsel appearing for the petitioner, that his is a matter which can be gone in a petition under Article 226 of the Constitution of India. The petitioner has got ample remedies under the Companies Act, 1956. Section 234 of the Companies Act empowers the Registrar of companies to call for information or explanation with respect to theallegations levelled before him by a person. Section 237 of the Companies Act deals with the investigation of company's affairs in other cases. Section 247 of the Companies Act reveals the investigation of ownership of company. I am of the view that the petitioner has got every right to approach the company Board to seek the redressal of his grievances, if any. In my view, on the basis of the allegations and counter-allegations made in the affidavits, no declaration as prayed for can be given by a writ court in a matter like this.

6. Secondly, even on the earlier occasion in W. A. No. 140 of 1985, the learned counsel for the petitioner restricted his argument before the Division Bench of this Court, with regard to the question of transfer of shares. In the said writ appeal, the Division Bench observed as follows :

'...The only remaining question will be whether there has been a transfer of interest at all. We would rather quote from the affidavit of the writ petitioner-appellant. In paragraph 13 he has stated as follows :--

'The transfer or take over of Sapina by another foreign company outside India was in effect and in law a transfer of interest in business in India, hit at by Section 26(4) of the Foreign Exchange Regulation Act. I submit that this transfer of all collaborator's share holding in the manner aforesaid therefore attracts prohibition under Section 26(4) of the Act.'

On this aspect of the matter, the counter affidavit filed on behalf of the first respondent, the Director, Enforcement Directorate, Central Board of Investigation, New Delhi, is to the following effect :--

'Regarding the second main allegation about the transfer of 24.5% shares held by M/s. Sapina in M/s. South India Viscose to a Muscat based construction company, it is stated that according to the company, M/s. Snia Viscose have sold their interest in Sapina of Luxemburg to M/s. Locks Heath Properties Thirty Ltd. a company incorporated in England and that the said company is owned by Mr. C. D. Motiwalla, a British subjectbased in Dubai and that Snia Viscose have sold Sapina and not the shares of M/s. South India Viscose Ltd. It is categorically stated by the company that no application has been made by any transferee or transferor for registration of such alleged transfer of shares. It is therefore understood that the shares of M/s. Sapina in South India Viscose Ltd. have not been sold. In this connection, it is stated that the company is asserting in the matter of non-transfer of shares according to their books. The only competent authority who could state to the facts of the transfer, or otherwise legally is the Registrar of Companies, Tamil Nadu, Madras with whom any such transfers effected have to be registered by means of filling a prescribed return under the provisions of the Companies Act, 1956...'

The allegations remained unilateral, and only when the transfer has taken place and if the Enforcement Directorate remained dormant without taking any action, the question of issue of Mandamus would arise at all. As is well known, the Latin word Mandamus means to command and only under the above circumstance, we could command the first three respondents to investigate. On mere surmises or on mere unilateral allegations, we cannot compel respondents 1 to 3 to take action. Otherwise the writ court would be converted into a court of investigation for which there are other forums. As rightly pointed out by Mr. Govind Swaminathan, learned counsel for the fifth respondent company that if the Register of share holding does not reflect any such transfer, how could the High Court in exercise of power under Article 226 of the Constitution of India ever investigate into the matter/ Our emphatic answer to the question is that it could not, Likewise, if there has been a stout denial by all concerned, the writ court cannot order an investigation into the matter.

As we said above, there are other remedies. In fact, the appellant being conscious of that position, has approached the Company Law Board under Section 247 of the Companies Act along with two others, and the Company Law Board has held as follows :--

'The applicants have mentioned in thepetition that the shares held by Snia in the South India Viscose Ltd. have been transferred to Sapina and that the ownership of Sapina has been transferred to Locks Heath Properties Thirty Ltd. Thus, admittedly the ownership of the purchaser of the share is already known and therefore there seems no justification to order investigation to find out the real owners who as stated above are already identified. The allegations regarding destabilisation of the management by Shri P.S. Mistry has also not been corroborated by any specific evidence as he was already on the Board of Directors before the aforesaid transfer of shares took place ......Taking intoconsideration all the facts and circumstances of the case, this Board is of the view that the allegations made in the application have not been substantiated nor are these sufficient in themselves to justify initiating any investigations under Section 247 of the Companies Act in relation to the ownership of Locks Heath Properties Thirty Ltd. and/or invoking the provisions of Section 250 of the Act in relation to the shares held by M/s. Sapina, S. A. Luxemburg in the company. Therefore, no action under section 247 or 250 is warranted...'

In view' of the categorical findings given by the Division Bench, on this question also, I do not think the petitioner can raise the question once again, only by impleading new parties. Further Section 108 of the Companies Act deals with the transfer of shares and debentures. The Supreme Court has categorically held in Life Insurance Corporation of India v. Escorts Ltd. : 1986(8)ECC189 'a transfer effective as against the company and any person without notice of the transfer until the transfer is registered in the Company's register.....' When such is the effect of Section 108 of the Companies Act, I do not think the petitioner herein can ask for a writ of declaration before this Court, especially in a petition under Article 226 of the Constitution of India. It is not clear from the affidavit that whether the aforesaid shares have been transferred in the name of the 7th respondent herein.

7. Further, I am of the view, that the alleged transfer of shareholding in Sapina would not be a transfer of interest coming within the purview of Section 26(4) of the Foreign Exchange Regulation Act. It is also to be noted that the transaction involving transfer of shares between two non-residents is not covered by the provisions of Section 26(4) of the Foreign Exchange Regulation Act. I am of the view that the said section has no application to the facts of the present case assuming that there is a transfer of interest as alleged by the petitioner. Even on the earlier occasion, it was found that the records produced therein show that Sapina continued to hold 1,79,550 equity shares of the South India Viscose Ltd. the 4th respondent herein and that no transfer application or a petition had been lodged for the transfer of the shares held by Sapina in the fourth respondent company to any other person. In these state of affairs, even assuming without admitting, that there is a take over of Sapina by the 7th respondent herein, I am of the view that it will not tantamount to transfer of shares of a public company. Further, section 26(4) of the Foreign Exchange Regulation Act is very clear that no transfer of any interest in any business in India may by a person resident oulside India to any person also resident outside India shall be valid unless such transfer is confirmed by the Reserve Bank on an application made to it in this behalf by the transferor or the transferee. In view of this provision, (I do not think that this Court can issue a declaration straightway at this stage. The Reserve Bank of India has also filed a counter-affidavit earlier making points clear about the factual position.

8. I am not inclined to enterain this writ petition on one another ground, that it, the point raised he (sic)in had already been decided by the Divi on Bench of this Court, as mentioned (sic)oove, against the petitioner with regard to the transfer of interest. Both the learned single Judge and the Division Bench of this Court, as mentioned above, have decided the issue before me, not only on merits but also on the ground of alternative remedy which is available to the petitioner herein. In view of that, this writ petition isliable to be dismissed, applying the principle of constructive res judicata, also.

9. For the reasons stated above, I am not inclined to entertain this writ petition. The writ petition will, therefore, stand dismissed.

10. Petition dismissed.