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K.K. Balu, Vice-Chairman

1. M/s Gujarat Industrial Investment Corporation Limited ("the applicant") by an application (C. A. No. 15 of 2005) filed under Section 634A of the Companies Act, 1956 ("the Act") sought to enforce the Order dated 23.08.2004 made in C.P. No. 13 of 2003 under Section 111A directing M/s Sterling Holiday Resorts (India) Limited ("the Company") to register the transfer of 22,93,000 shares in favour of the applicant within thirty days, on failure of which this Bench directed the Company on 27.03.2006 to register the transfer of shares in a time bound manner and gave appropriate directions, in the event of the Company failing to act strictly in terms of the order dated 27.03.2006. The Company registered the transfer of 22,93,000 shares in the name of the applicant on 27.04.2006, however, subject to final decision in the pending civil suits in relation to the impugned shares as borne out by the endorsement set out in the share certificates in the following manner:

• The applicant is not in a position to exercise his legitimate right to enforce the securities in realisation of its dues or demat the shares. The defence put forth seeking shelter under the provisions of Sections 176 & 177 of the Indian Contract Act by the Company cannot be raised in execution proceedings and the executing court cannot go beyond the terms of the decree.
• The Supreme Court, while dealing with the powers of the CLB under Section 634A in Manish Mohan Sharma v. Ram Bahdur Thakur Limited (2006) Vol. 67 SCL 91 held that (a) the CLB is bound to execute its order. If CLB finds that the decree or any of its terms called for interpretation, it is within the CLB's jurisdiction to interpret that particular terms and to execute the decree on the basis of such interpretation; (b) the effort of the executing court must be to see that the parties are given the fruits of the decree; and (c) if the CLB refuses to execute its order, it would amount to error committed by it.

3. I have considered the arguments advanced for the parties. The short issue before me is whether the endorsement contained in the share certificates is liable to be cancelled, as claimed by the applicant. It is on record that the applicant approached the Company Law Board under Section 11A of the Act (C.P. No. 13 of 2003) seeking directions against the Company and others, pursuant to the failure on the part of Company to repay the outstanding loan amount due to the applicant, to register the transfer of 22,93,000 shares of the Company pledged by the promoters in favour of the applicant. This Bench after considering the matter in entirety on merits 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 30 days of receipt of the order. The appeals preferred against the order dated 23.08.2004, by the Company and the pledgors before the Division Bench of the High Court of Madras were dismissed on 30.12.2004. Similarly the civil appeals filed before the Supreme Court came to be dismissed as early as on 27.02.2006, with which the order made by the CLB on 23.08.2004 to the effect that the Company is hereby directed to register the transfer of 22,93,000 shares in the name of the petitioner within 30 days on receipt of this orderhas become final and is binding on the Company and the pledgors. When the Company failed to comply with the order of the Bench, the applicant came out with an application (CA No. 15 of 2005) for enforcement of the order dated 23.08.2004. By virtue of Section 634A the order made on 23.8.2004 may be enforced by the Bench in the same manner as if it were a decree by a Court in a suit pending thereon. This Bench was in a position to execute order and therefore directed the Company by an order dated 27.03.2006 in the following terms: