C.P. No. 987/2010. Case: Gujarat Industrial Investment Corporation Ltd. Vs Twenty First Century Management Services Ltd.. Company Law Board

Case Number:C.P. No. 987/2010
Party Name:Gujarat Industrial Investment Corporation Ltd. Vs Twenty First Century Management Services Ltd.
Counsel:For Appellant: Gurmeet Kour Revathi, Advocate and For Respondents: K. Ramasamy, Advocate
Judges:Kanthi Narahari, Member (J)
Issue:Code of Civil Procedure, 1908 (CPC) - Section 10; Companies Act, 1956 - Section 111A
Judgement Date:February 10, 2015
Court:Company Law Board
 
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Order:

Kanthi Narahari, Member (J), (Chennai Bench)

  1. The present petition is filed under section 111A of the Companies Act, 1956 praying this Bench to direct the respondent to register the shares in the name of the petitioner and return the share certificates with due endorsement of transfer. The counsel appeared for the petitioner narrated the brief facts of the case. It is submitted that the respondent had approached the petitioner to rediscount bills and make advances against the security of and/or otherwise deal with for or on the borrower's account, bills of exchange or promissory notes drawn on and/or accepted by the respondent whether or not accompanied by documents of title to goods or other documents of any description in relation to goods. The petitioner accepted the request of the respondent and agreed to rediscount the bills drawn on and accepted by the respondent as per the terms and conditions agreed between the petitioner and respondent in various documents executed thereafter. As requested, the petitioner had sanctioned the bill re-discounting facility vide its letter dated 08.07.1996. The facility was given subject to various terms and conditions on payments towards interest and principal on due dales and various other terms and conditions mentioned therein.

    1. The respondent herein shall enter into necessary agreements with the petitioner in respect of the bill rediscounting facility.

    2. The directors of the respondent shall pledge 12,40,000 equity shares held by the promoters and their associates with the petitioner.

    3. Bills discounted by the respondent of reputed suppliers for period not exceeding 90 days shall be considered for rediscounting and the respondent shall endorse the discounted bill in favour of the petitioner and shall produce certificate to the effect that the said bills are held by the respondent on behalf of the petitioner.

    4. Minimum rate of discounting charges shall be 24% p.a. or as may be decided by the petitioner from time to time. The rediscounting charges shall be recovered in advance.

    5. In case of default, the balance sanction shall stand cancelled and interest at 36% p.a. for the delayed period shall be payable by the respondent or as may be decided by the petitioner.

    6. Post-dated cheques payable to the petitioner shall be given by the respondent for each bill rediscounted. Cheques payable by the respondent shall be payable at Bombay.

    7. The sanction shall be valid for a period of one year from the date of sanction.

  2. It is stated that the petitioner and respondent entered into an agreement for bill rediscounting dated 09.09.1996 whereby the petitioner agreed to rediscount the bills drawn on and accepted by the respondent as per the terms and conditions specified in the said agreement. The respondent had pledged 18,05,000 equity shares of Rs. 10/- each of the respondent and 40,000 equity shares of Rs. 10/- each of IVR Constructions Ltd., a public limited company incorporated under the provisions of the Companies Act, 1956. The limit was Rs. 75 lakhs and discount rate was 24% p.a., (additional charges at 2% p.a. if not paid in time) or as may be decided from time to time by the petitioner. Validity period was 12 months w.e.f. 21.06.1990. All the payments in respect of the above agreement should be paid by the respondent to the petitioner free of exchange and any other deduction at Ahmedabad. In respect of the above, a promissory note for Rs. 75,00,000/- dated 09.09.1996 was executed by the respondent in favour of the petitioner to pay along with interest at 24% p.a. for the value received.

    The following Un-attested Agreements were executed in favour of the shares of the respondent company:

    1. On 09.09.1996 Mr. Sunder Iyer a shareholder of the respondent had executed an Un-attested Agreement in favour of the petitioner. By this agreement the said shareholder pledged 10,00,000 equity shares (share certificate No. 22305) and 2,00,000 equity shares (share certificate No. 8462) of the respondent company in favour of the petitioner. The said shareholder agreed that the shareholders, their relatives, friends, associates shall not withdraw, transfer, assign, pledge, hypothecate or otherwise charge or dispose of in any manner, their investment either by way of share capital or by way of Unsecured loans and deposit from the respondent during the currency of the said loan and also the share capital, both equity and preference, if any, held by each of the shareholders and also the share acquired further by way of loans purchase, gift, any transfer and right issues as well.

    2. Mr. Sunder Iyer executed an Un-attested Agreement dated 27.11.1996 by which he pledged 6,05,000 equity share of respondent company. (Share certificate No. 26759).

      In respect of the above shares of the respondent company two powers of attorney were executed:

    3. Power of attorney dated 09.09.1996 executed by Mr. Sunder Iyer on behalf of the respondent in favour of the petitioner in respect of 10,00,000 equity shares (share certificate No. 22305) and 2,00,000 (share certificate No. 8462) of the respondent company.

    4. Power of attorney dated 27.11.1996 executed by Mr. Sunder Iyer in respect of 6,05,000 equity shares (share certificate No. 26759).

  3. The petitioner submits that the respondent had been consistently defaulting in making payments in respect of the bills discounted. The respondents had time and again been reminded of its liability to pay the petitioner the outstanding amounts. Despite the best efforts of the petitioner is trying to recover the dues, the respondent defaulted in the payment of dues to the petitioner. In the meanwhile the petitioner by its letter dated 07.12.1999 sent the share certificates concerning the equity shares (morefully described in the Schedule) and transfer forms to the respondent to transfer the same in the name of the petitioner. The petitioner vide its letter dated 15.02.2000 reminded the respondent to transfer the shares in its name. Since the respondent did not respond to any of the letters issued by the petitioner, the petitioner lodged a complaint with the Investors Services Cell, Bombay Stock Exchange letter dated 25.05.2000. The petitioners vide its letter dated 08.09.2000 informed the Registrars of the respondent, Intime Spectrum Registry Pvt. Ltd. to look into the matter. The registrars by...

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