Company Law Board
Gujarat Industrial Investment ... vs Sterling Holiday Resorts (India) ... on 27 March, 2006
Equivalent citations: [2006]133COMPCAS705(CLB)
ORDER
K.K. Balu, Vice Chairman
1. This application is filed by M/s Gujarat Industrial Investment Corporation Limited ('the applicant") under Section 634A of the Companies Act. 1956 for enforcement of the order dated 23.08.2004 of the Bench, wherein M/s Sterling Holiday Resorts (India) Limited ("the Company"') has been directed to register the transfer of 22.93.000 shares in the name of the applicant within thirty days of receipt of the Order. However, the Company failed to comply with the order dated 23.08.2004. Hence, the applicant has come out with the present application for enforcement of the subject order.
2. According to the applicant, the Company had preferred an appeal against the order of the Bench in C.M.A. No. 3223/2004 before the High Court of Madras, apart from the appeal tiled by the pledgers in CMA No. 3118/2004. Both the appeals came to be dismissed by a common order dated 30.12.2004 of the High Court of Madras, upon which the pledgers as well as the Company filed civil appeal nos. 942/2005 and 943 2005 before the Supreme Court of India. These civil appeals stand dismissed by an order dated 02.02.2006 of the Supreme Court. Nevertheless, the Company has failed to act in terms of the order of the Bench. The Company has offered a meager sum of Rs. 746.60 lakhs towards settlement against total outstanding amount of Rs. 59.54 crores. This offer has been totally rejected by the applicant. The applicant is no more interested in any settlement as proposed by the Company. The Company has been taking adjournments to defeat the order of the Bench and, therefore, sought to enforce the order dated 23.08.2004 by directing the Company to register the transfer of 22,93.000 shares in the name of the applicant.
3. According to the Company, the principal amount borrowed is only Rs. 4.50 crores. but the claim of Rs. 59.54 crores now made by the applicant is not comprehensible. At the same time, the Company is ready and willing to arrive at any mutual settlement. The review petition filed by the Company before the Supreme Court is pending.
4. I have considered the arguments advanced in the present application. It is on record that the applicant had extended a corporate loan of Rs. 5 Crores in October, 1996 in favour of the Company, against pledge of the shares of the Company by the promoters made on 06.11.1996 and 28.01.1997. The applicant approached the Bench in September. 2003 seeking directions against the Company to register the transfer of 22.93.000 shares pledged by the promoters in its favour, on default committed by the Company in repayment of the loan amount. This Bench by an order dated 23.08.2004 directed the Company to register the transfer of 22.93,000 shares in the name of the applicant within the time specified therein. The appeals preferred by the promoters and the Company against the order dated 23.08.2004, before the High Court of Madras came to be dismissed on 30.12.2004, as devoid of merits. Thereafter, the civil appeals filed before the Supreme Court by the aggrieved parties were also dismissed. The decree of the Supreme Court dated 02.02.2006 reads as follows:
1. THAT the appeals above mentioned be and are hereby dismissed:
2. THAT there shall be no order as to costs of these appeals in this Court:
3. THAT the Order of this Court dated 14th March, 2005 passed in these appeals granting stay in Petitions for Special Leave to Appeal (Civil) Nos. 5172 and 5260 of 2005 be and is hereby vacated:
AND THIS COURT DOTH FURTHER ORDER that this ORDER be punctually observe and carried into execution by all concerned:
When the application came up for hearing on 02.03.2006 and after hearing the representation of Shri V.M. Shivakumar. learned Counsel for the applicant and Shri R. Rajesh, learned Counsel representing the Company, the following order has been passed:
'Heard. The Company has preferred review petition before the Supreme Court and seeks 4 weeks rime, which has been seriously opposed by the petitioner. The. Bench will pass appropriate orders on 24.3.06 at 2.30 p.m.. in the absence of any stay by the Supreme Court. Call on 24.3.06 at 2.30 p.m..
During the hearing held on 24.03.2006. Shri P.H. Arvind Pandian. learned Counsel submitted that the Managing Director of the Company has right now gone to Ahmedabad with a demand draft of Rs. 4.50 crores in order to hold discussions with the applicant's representative for exploring the feasibility of any amicable settlement and further expressed the readiness of the Company to lodge the demand draft of Rs. 4.50 crores on Monday the 27th of March. 2006. Shri Pandian. learned Counsel, pointed out that the review petition before the Supreme Court, is likely to be numbered within a period of ten days and. therefore, sought to postpone the hearing.
Shri K.P. Balmurali, learned Counsel opposed the prayer for adjournment on the premise that the Company is adopting delay tactics to defeat the order of the Bench, which would cause unfair prejudice to the applicant and therefore, not willing for any settlement. There is no impediment in enforcing the order dated 23.08.2004. Shri Balmurali. learned Counsel, made a reference to the order dated 02.03.2006 of the Bench and insisted for appropriate directions in this behalf. There is no doubt that the Company failed to act as per the order dated 23.08.2004 and that it has not succeeded before the High Court of Madras as well as the Supreme Court. The Company has not produced any order passed in the revision petition purportedly preferred before the Supreme Court. Section 634A dealing with enforcement of orders of the Company Law Board reads thus:
Any order made by the 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, and it shall be lawful for that Board to send, in the case of its inability to execute such order, to the Court within the local limits of whose jurisdiction, -
(a) in the case of an order against a company, the registered office of the company situated, or
(b) in the case of an order against any other person, the person concerned voluntarily resides, or carries on business or personally works for gain;
By virtue of Section 634A. the order dated 23.08.2004 may be enforced by the Bench in the same manner as if it were a decree made by a Court in a suit pending thereon. I have no doubt that this Bench is in a position to execute the order made on 23.08.2004 against the Company. For these reasons, I direct as under:
(A) The Company shall register the transfer of 22,93,000 shares in the name of the applicant within ten days of receipt of this order and file an affidavit of compliance within three days thereafter.
(B) If the Company fails to act strictly in terms of the directions stipulated hereinabove, Shri A.M. Sridharan, Bench Officer, Company Law Board. Southern Region Bench. Chennai shall -
i) endorse the transfer entries on the reverse of the share certificates in respect of 22.93.000 shares of the Company pledged in favour of the applicant; and
ii) make appropriate entries in the Share Transfer Register and the Register of Members of the Company, recording the transfer of 22,93,000 in the name of the applicant, towards which the Company shall make available the concerned registers to the Bench Officer at the registered office.
(C) A copy of this order shall be forwarded to the Registrar of Companies. Tamilnadu, Chennai who shall take it on record in the Company's record file.
This order is, however, subject to any order that may be passed by the Supreme Court in the review petition reportedly filed by the Company against the order dated 02.02.2006 of the Supreme Court. With these directions, the application stands disposed of.