1994 (3) TMI 397 - Board - Companies Law

Summary

Issues:
Petition for rectification of register of bond-holders under Section 111 of the Companies Act, 1956; Transfer of bonds involving multiple parties; Jurisdiction of Company Law Board vs. Special Court under Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992.

Analysis:
1. The petitioner, A.N.Z. Grindlays Bank, filed a petition seeking rectification of the register of bond-holders under Section 111 of the Companies Act, 1956. The bonds in question were originally purchased from Smt. Promod Gupta and Shri Sanjay Gupta, who failed to deliver all post-dated interest warrants to the petitioner upon sale of the bonds. Subsequent transfers of the bonds involved respondent No. 4 and respondent No. 5, leading to a complex chain of transactions. The petitioner sought rectification due to non-registration of the bonds by NHPC, including prayers against respondents Nos. 2 and 3 regarding interest warrants.

2. Respondents Nos. 2 and 3 contended that the securities in question were tainted and fell under the jurisdiction of the custodian appointed under the Special Court Act. They argued that there was no cause of action against them as the bonds had been transferred. The Company Law Board acknowledged the mixed questions of law and facts in the case, including the separability of interest warrants from bond certificates and the Board's power under Section 111(6)(c) regarding interest warrants. The Board decided to hear the facts along with the law to determine the maintainability of the petition.

3. Subsequently, the jurisdiction of the Company Law Board was challenged in light of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, Amendment Ordinance, 1994. The parties debated whether the proceedings should be transferred to the Special Court due to the involvement of a notified person, respondent No. 4. The Board considered the implications of the Ordinance and concluded that its jurisdiction was barred, and the proceedings stood transferred to the Special Court as per the provisions of the Ordinance.

4. The Board noted that the main contention of respondents Nos. 2 and 3 regarding the maintainability of the petition had become irrelevant due to the Ordinance. The Board's original jurisdiction was found to be superseded by the provisions of the Ordinance, leading to the conclusion that the case could not proceed before the Company Law Board. The jurisdictional conflict between the Company Law Board and the Special Court was effectively resolved by the application of the Ordinance, transferring the matter to the Special Court.

Conclusion:
The judgment highlights the intricate legal issues surrounding the transfer of bonds, jurisdictional conflicts between the Company Law Board and the Special Court, and the impact of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, Amendment Ordinance, 1994 on the proceedings. The Board's decision to transfer the case to the Special Court demonstrates the adherence to legal provisions and the recognition of the limitations on its jurisdiction in matters falling under the purview of the Special Court Act.