1999 (3) TMI 481 - HC - Companies Law

Summary

Issues Involved:
1. Transfer of 16,000 part 'C' debentures purchased from Uttamchandani.
2. Transfer of 20,000 part 'C' debentures standing in the name of Suryakant A. Patel and Jyotsnaben S. Patel.
3. Transfer of 92,000 part 'C' debentures standing in the name of Jains, Patkars, and Shahs.
4. Objections raised by the Enforcement Directorate.
5. Payment of interest on debentures.

Detailed Analysis:

1. Transfer of 16,000 Part 'C' Debentures Purchased from Uttamchandani:
The petitioners argued that the necessary Reserve Bank of India (RBI) permission had been obtained and submitted. However, the respondent company pointed out discrepancies in the dates of submission and differences in specimen signatures. Given these discrepancies and the conflicting evidence, the court found it impossible to grant the reliefs as prayed for by the petitioners. The petitioners were directed to pursue a separate suit to establish ownership and seek appropriate reliefs. The court allowed for suitable directions regarding the amount due and payable against these debentures.

2. Transfer of 20,000 Part 'C' Debentures Standing in the Name of Suryakant A. Patel and Jyotsnaben S. Patel:
The objections raised were regarding the absence of witness names on the transfer document and an objection from the transferor. Since no legal proceedings were initiated by the transferor and the signatures matched, the court found these objections invalid. The court directed the respondent company to rectify the register and record the petitioners' names, and to pay the redemption amount along with accrued interest.

3. Transfer of 92,000 Part 'C' Debentures Standing in the Name of Jains, Patkars, and Shahs:
The Jains and Patkars had no objections, leaving only the Shahs' debentures, which had signature discrepancies. The Enforcement Directorate had also raised objections under FERA. The court directed the rectification of the register for Jains and Patkars, with protections for the Enforcement Directorate's interests. For the Shahs' debentures, the petitioners were directed to file a suit, and the redemption amount was to be deposited in court.

4. Objections Raised by the Enforcement Directorate:
The Enforcement Directorate had seized original transfer documents, but the petitioners claimed these were returned. The court directed the Enforcement Directorate to hand over the original documents within 30 days or the petitioners to submit xerox copies with an affidavit. The court also required the petitioners to file an undertaking to refund monies received if the Enforcement Directorate passed any confiscation orders.

5. Payment of Interest on Debentures:
The respondent company had paid interest to registered holders, arguing it was their mandatory duty under the Companies Act and the Securities Contracts (Regulation) Act. The court noted that the petitioners' challenge was sub judice and that the respondent's actions were at their own risk. The court directed the respondent to pay the petitioners interest on debentures where registration refusal was found invalid. For debentures held by Uttamchandani, the petitioners were to claim interest in a separate suit. The court also provided directions for the Enforcement Directorate to deposit interest received on certain debentures.

Reliefs Granted:
(a) Rectification of the register for 20,000 debentures in the name of Suryakant A. Patel and Jyotsnaben S. Patel, and payment of redemption amount and interest.
(b) Rectification of the register for 72,000 debentures in the name of Jains and Patkars, with the Enforcement Directorate to deposit interest received.
(c) For 16,000 debentures (Uttamchandani) and 20,000 debentures (Shahs), the petitioners were directed to file a suit. Redemption amounts and unpaid interest to be deposited in court.
(d) Petitioners to claim interest from Uttamchandani in a separate suit.
(e) Respondent to pay interest to the petitioners for debentures held by Suryakant A. Patel and Jyotsnaben S. Patel.
(f) Respondent has the liberty to sue Suryakant A. Patel and Jyotsnaben S. Patel for wrongly paid interest.
(g) Petitioners to file an undertaking to refund amounts to the Enforcement Directorate if any adverse orders are passed.

Costs:
No order as to costs was made.