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1 - 9 of 9 (0.24 seconds)Mathrubhumi Printing And Publishing ... vs Vardhaman Publishers Ltd. And Ors. on 28 November, 1991
Therefore, the plea of the respondents that the share certificates and the blank share transfer form signed by the third respondent on behalf of the German Company were handed over to the American Company, much before the commencement of the insolvency proceedings, supported only by the communication dated 15.09.2003 of the German Company without being corroborated by any other documentary proof and without any legal authorization given by the German Company, in my view, could in no way establish the case of the respondents. It is evident from the share transfer form that the same was executed on 15.12.2003, after the commencement of the insolvency proceedings. Against this background, the decisions cited by Shri Datar, learned Senior Counsel, do not go to the aid of the respondents. The share transfer form executed by the third respondent without explicit authority of the German Company not being a proper instrument of transfer, does not satisfy the requirements of Section 108, which are mandatory, as held in Mannalal Khetan v. Kedar Nath Khetan and Mathrubhumi Printing And Publishing Co. Ltd. v. Vardhaman Publishers Ltd (supra). Furthermore, the Nuremberg Insolvency Court, on an application filed by the third respondent on behalf of the German Company, initiating insolvency proceedings, appointed the second petitioner on 27.10.2003 as the Provisional Insolvency Administrator of the German Company. Later, the German Company was declared as an insolvent company by an order dated 15.12.2003 of the Insolvency Court. It is on record that the Attorney of the second petitioner by a letter dated 07.11.2003 (Annexure A-13) intimated the Indian Company about the order dated 27.10.2003 of the Nuremberg Insolvency Court appointing the second petitioner as the Provisional Insolvency Administrator of the German Company and further specifically advised the Indian Company not to give effect to the SPA and the Addendum. This communication was followed by yet another communication dated 13.01.2004 (Annexure A-13), Wherein the Indian Company was advised not to transfer the impugned shares to any other party without written approval of the Insolvency Administrator. The Attorney of the second petitioner further by a communication dated 12.02.2004 (Annexure A-13) categorically questioned the validity of the transaction of shares in favour of the American Company and indicated that the second petitioner already contested the transaction according to Germany Insolvency Act. It is also on record that the Attorney of the second petitioner by a communication dated 16.02.2004 (Annexure A-13) specifically invited the attention of the Indian Company that the transfer of impugned shares in favour of the American Company is in violation of the provisions of Section 91 of the German Insolvency Act. It is worthwhile to observe that the communication dated 13.01.2004 was addressed to Shri Venkataraman and the remaining communications in favour of Shri Uttam Reddi, who constituted the Share Transfer Committee of the Indian Company, which approved the transfer in favour of the American Company. It is, therefore, beyond doubt that the Indian Company was appraised as early as on 07.11.2003 about the prohibition, under the German Insolvency Act, of sale of the impugned shares in favour of the American Company pursuant to the terms of the SPA and also the commencement of the insolvency proceedings against the German Company before the Nuremberg Insolvency Court. Further, even the manner in which the registration of transfer had been approved in favour of the American Company by the Share Transfer Committee of the Indian Company raises doubts about bonafides of the entire transaction. When the Insolvency Administrator had cautioned the Indian Company not to effect the registration of transfer, the Committee should have, before effecting the transfer ascertained full particulars, as a measure of abundant caution, which in the present case, it had failed to do giving rise to possible conclusion that the registration was sought to be made before the Insolvency Court seized of the matter. However, when the Indian Company approved the transfer of impugned shares in favour of the American Company on 14.01.2004, ignoring the various communications of the second petitioner, the latter approached the Nuremberg Court questioning the validity of the transfer approved by the Indian Company, which was contested by the American Company. The contentious issues raised by the American Company form part of the order dated 14.05.2004 of the Nuremberg Insolvency Court. The Insolvency Court came to the conclusion that the transfer of the impugned shares by the German Company in favour of the American Company is hit by the German Insolvency Act and further held that the second petitioner is entitled for the block of shares re-transferred from the American Company. It shall be borne in mind that neither the Indian Company nor the American Company ever raised the plea of handing over the share certificate or the share transfer form duly signed in blank by the German Company in favour of the American Company, either in reply to any of the aforesaid correspondence or in the course of the proceedings before the Nuremberg Insolvency Court. Having found that there is no adequate material to show that the German Company had transferred the impugned shares in favour of the American Company prior to the commencement of the insolvency proceedings and further that the Indian Company had acted in contravention of the provisions of Section 108(1), the petitioners are entitled to seek rectification of the register of members of the Indian Company. This issue is answered accordingly.
The Sale Of Goods Act, 1930
Section 108 in The Companies Act, 1956 [Entire Act]
Mannalal Khetan Etc. Etc vs Kedar Nath Khetan & Ors. Etc on 25 November, 1976
Therefore, the plea of the respondents that the share certificates and the blank share transfer form signed by the third respondent on behalf of the German Company were handed over to the American Company, much before the commencement of the insolvency proceedings, supported only by the communication dated 15.09.2003 of the German Company without being corroborated by any other documentary proof and without any legal authorization given by the German Company, in my view, could in no way establish the case of the respondents. It is evident from the share transfer form that the same was executed on 15.12.2003, after the commencement of the insolvency proceedings. Against this background, the decisions cited by Shri Datar, learned Senior Counsel, do not go to the aid of the respondents. The share transfer form executed by the third respondent without explicit authority of the German Company not being a proper instrument of transfer, does not satisfy the requirements of Section 108, which are mandatory, as held in Mannalal Khetan v. Kedar Nath Khetan and Mathrubhumi Printing And Publishing Co. Ltd. v. Vardhaman Publishers Ltd (supra). Furthermore, the Nuremberg Insolvency Court, on an application filed by the third respondent on behalf of the German Company, initiating insolvency proceedings, appointed the second petitioner on 27.10.2003 as the Provisional Insolvency Administrator of the German Company. Later, the German Company was declared as an insolvent company by an order dated 15.12.2003 of the Insolvency Court. It is on record that the Attorney of the second petitioner by a letter dated 07.11.2003 (Annexure A-13) intimated the Indian Company about the order dated 27.10.2003 of the Nuremberg Insolvency Court appointing the second petitioner as the Provisional Insolvency Administrator of the German Company and further specifically advised the Indian Company not to give effect to the SPA and the Addendum. This communication was followed by yet another communication dated 13.01.2004 (Annexure A-13), Wherein the Indian Company was advised not to transfer the impugned shares to any other party without written approval of the Insolvency Administrator. The Attorney of the second petitioner further by a communication dated 12.02.2004 (Annexure A-13) categorically questioned the validity of the transaction of shares in favour of the American Company and indicated that the second petitioner already contested the transaction according to Germany Insolvency Act. It is also on record that the Attorney of the second petitioner by a communication dated 16.02.2004 (Annexure A-13) specifically invited the attention of the Indian Company that the transfer of impugned shares in favour of the American Company is in violation of the provisions of Section 91 of the German Insolvency Act. It is worthwhile to observe that the communication dated 13.01.2004 was addressed to Shri Venkataraman and the remaining communications in favour of Shri Uttam Reddi, who constituted the Share Transfer Committee of the Indian Company, which approved the transfer in favour of the American Company. It is, therefore, beyond doubt that the Indian Company was appraised as early as on 07.11.2003 about the prohibition, under the German Insolvency Act, of sale of the impugned shares in favour of the American Company pursuant to the terms of the SPA and also the commencement of the insolvency proceedings against the German Company before the Nuremberg Insolvency Court. Further, even the manner in which the registration of transfer had been approved in favour of the American Company by the Share Transfer Committee of the Indian Company raises doubts about bonafides of the entire transaction. When the Insolvency Administrator had cautioned the Indian Company not to effect the registration of transfer, the Committee should have, before effecting the transfer ascertained full particulars, as a measure of abundant caution, which in the present case, it had failed to do giving rise to possible conclusion that the registration was sought to be made before the Insolvency Court seized of the matter. However, when the Indian Company approved the transfer of impugned shares in favour of the American Company on 14.01.2004, ignoring the various communications of the second petitioner, the latter approached the Nuremberg Court questioning the validity of the transfer approved by the Indian Company, which was contested by the American Company. The contentious issues raised by the American Company form part of the order dated 14.05.2004 of the Nuremberg Insolvency Court. The Insolvency Court came to the conclusion that the transfer of the impugned shares by the German Company in favour of the American Company is hit by the German Insolvency Act and further held that the second petitioner is entitled for the block of shares re-transferred from the American Company. It shall be borne in mind that neither the Indian Company nor the American Company ever raised the plea of handing over the share certificate or the share transfer form duly signed in blank by the German Company in favour of the American Company, either in reply to any of the aforesaid correspondence or in the course of the proceedings before the Nuremberg Insolvency Court. Having found that there is no adequate material to show that the German Company had transferred the impugned shares in favour of the American Company prior to the commencement of the insolvency proceedings and further that the Indian Company had acted in contravention of the provisions of Section 108(1), the petitioners are entitled to seek rectification of the register of members of the Indian Company. This issue is answered accordingly.
Messrs. Howrah Trading Co., Ltd vs The Commissioner Of Income-Tax, ... on 26 March, 1959
3. Shri Arvind P. Datar, learned Senior Counsel, appearing for the respondents contended that the impugned shares were sold by the German Company to the American Company for valuable consideration as borne out by the SPA dated 01.03.2003 and the Addendum dated 24.10.2003. On completion of the share purchase transaction in terms of these agreements and on payment of full consideration thereon, the share certificate and blank share transfer form duly signed in blank by the German Company were delivered to the American Company on 15.09.2003, much before commencement of the insolvency proceedings on 27.10.2003 before the Nuremberg Court. The third respondent had the full authorization and competence to sign and execute the share transfer form in blank on behalf of the German Company. The American Company had filled on 15.12.2003 the blank transfer form and executed the same as buyer of the impugned shares for registration of the transfer in the books of the Indian Company. Shri Datar, learned Senior Counsel pointed out that the blank transfers are recognized by the courts, in support of which referred to Howrah Trading Co. Ltd. v. Commissioner of Income-tax, Central, Calcutta - AIR 1959 SC 775 and In the matter of Bengal Silk Mills Co., Ltd. - A.I.R. (29) 1942 Calcutta 461. The Calcutta High Court in the latter case held that even in cases of transfers in blank, the transferee has the right, after the death of the original transferor, to fill in the necessary particulars including his own name as transferee and the date of the transfer. The instrument then is complete and the transferee is entitled to have his name registered as the holder of shares in the company's register. In the instant case, the shares being movable property, the ownership and title passed on to the American Company on the date of entering into the contract for sale and its delivery, in support of which Shri Datar, learned Senior Counsel, referred to the relevant provisions of the Sale of Goods Act, 1930. Thereafter the Indian Company had effected registration of the transfer of shares in favour of the American Company. At present, the American Company is the lawful owner of the impugned shares and the German Company is no longer has any interest over the impugned shares and in any case, the petitioners have already sold on 28.01.2004 the shares in favour of one M/s Amazeum Shop & Merchandising GmbH, in spite of being fully aware of the sale of shares by the German Company in favour of the American Company, the fact of which has been suppressed by the petitioners. Therefore, the petitioners do not have any locus standi to file the company petition for rectification of the register of members of the Indian Company. Moreover, M/s Amazeum Shop & Merchandising GmbH, the purchaser is not before the CLB, The petitioners have not indicated as to how the transfer of shares in favour of the American Company is in contravention of the particular provision of any law for time being in force. They are not specified persons in Sub-section (3) of Section 111A to make the present petition for rectification of the register of members of the Indian Company. The requirements of Section 111A(3) are not fulfilled enabling the petitioners to invoke the provisions of Section 111A. Section 111A can be pressed into service, inter-alia, in the event of breach of "any law for time being in force" in India and not in other countries of the world. The petitioners have filed a similar suit for the same cause of action in the District Court of Nuremberg. The petitioners are engaged in forum shopping, which must be declined by the CLB. The remedy open to the petitioners is to question the transfer of shares in favour of the American Company before the Nuremberg Court and not before the CLB.
Section 133 in The Companies Act, 1956 [Entire Act]
Section 274 in The Companies Act, 1956 [Entire Act]
Section 283 in The Companies Act, 1956 [Entire Act]
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