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S. Balasubramanian, Chairman

1. In this order, we are considering the application, C. A. 238 of 1998, filed by the petitioners under Section 634A of the Companies Act ("the Act") read with regulation 44 of the Company Law Board Regulations, 1991, in C. P. No. 47 of 1995 filed under Section 397/398 of the Act in the matter of M/s. R. H. W. India Limited which is now known as IFB Automotive and Seating System Ltd. (the company). When the petition was being heard, the parties desired to resolve the disputes amicably and accordingly an order was passed on April 17, 1996, incorporating the terms of settlement between the parties. As per the terms of the settlement, the company was to refund a sum of Rs. 55 lakhs to the first petitioner as against Rs. 52 lakhs invested by the first petitioner by way of share application money and that IFB Industries Limited, the second respondent was to purchase 5.2 lakhs equity shares held by the first petitioner in the company at the rate of Rs. 55 which was considered to be the fair value for the share. The said consent terms also provided that the second respondent would deposit a sum of Rs. 2.86 crores being the consideration for the shares with the petitioner's advocate by June 18, 1996, against delivery of the share certificates and transfer deeds. It was also provided that the petitioners would apply to the Reserve Bank of India for transfer of shares and repatriation of the consideration as the first petitioner is a foreign company. The consent terms further provided that certain articles of the articles of association of the company would be either deleted or amended so as to ensure that the first petitioner does not have any further say in the management of the company. It also provided that the petitioner-directors shall cease to be directors of the company with immediate effect and that the name of the company would be changed into IFB Automotive Seating and Systems Limited with effect from January 1, 1997. Liberty was granted to apply till the settlement was completely worked out.

2. Now, in this application filed on September 24, 1998, the petitioners have complained that the second respondent has failed to carry out its obligation under the terms of settlement by failing to deposit Rs. 2.86 crores being the consideration for the shares in spite of the permission received from RB1 for transfer of shares and as such in terms of Section 634A, the Company Law Board should order execution of the terms of settlement. In reply to the application, the second respondent has prayed for recalling the consent order dated April 17, 1996, in so far it relates to the payment of consideration for the shares, for the reasons elaborated in the reply.

4. Shri Sarkar, senior advocate, appearing for the respondents submitted that the application is misconceived and not maintainable. According to him, the question of treating the order of the Company Law Board dated April 17, 1996, as a decree in terms of Section 634A of the Act does not arise as this order is not a money decree. Referring to the arguments of Shri Sen, that this application has been made in terms of the liberty granted in our order dated April 17, 1996, he submitted that such liberty cannot extend to apply for execution of the order. Further, he referred to the civil suit, O. S. No. 18 of 1998, filed by the first respondent against the first petitioner in the City Civil Court, Bangalore, wherein the former has made a claim of about Rs. 3.28 crores against the latter on certain grounds. In that case, the second respondent has been named as garnishee and the said court has passed an ex parte order as follows : "The defendant is directed to give security for a sum of Rs. 2.86 crores on or before the next date. If he fails to furnish security of the said amount which is in the garnishee stands attached and in that event the defendant is prohibited from withdrawing the said amount from the garnishee and the garnishee is prohibited from making payment of the said amount to the defendant until further orders". Therefore, he submitted that the Company Law Board has no jurisdiction now to pass any order directing the second respondent to pay the consideration for the shares or appoint a special officer for recovering the amount from the company as sought for by the petitioners as such an order would be in conflict with the directions of the civil court.

8. First, we shall deal with the stand of Shri Sarkar that this application is not maintainable. This application has been made under Section 634A of the Act which reads as follows : "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 for 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 :