9911796707
TMI Blog1991 (1) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... in was on the board of directors till July 31, 1981, and was the managing director from the commencement of the company for nearly 24 years. He was also a shareholder of the company in the year 1981. The total 24.5% foreign shareholding was not held by the original allottee, the Italian holding company, Snia Viscose, the fifth respondent herein, but it was the wholly owned subsidiary of this Italian holding company by name Sapina located in Luxemburg, the sixth respondent herein. According to the petitioner herein, the company was created in December, 1964, to transfer the business interests of the Italian holding company held outside Italy in countries such as India, Brazil and in other States of South America and Africa. The petitioner's case is that the shares held by South India Viscose Ltd., Coimbatore, the fourth respondent herein were transferred, as stated above, with the approval of the Government of India and the Reserve Bank of India. In the year 1966, Sapina, Luxemburg, the sixth respondent herein, was owning shares in three Indian companies. In the year 1982, one P. S. Mistry acquired the shares of the collaborate from Sapina, the sixth respondent herein. The method ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts therein that this is a disputed question of fact, i.e., whether there is a transfer of interest at all and that the transfer of interest has been stoutly denied by all the respondents. The Division Bench has further taken note of the fact that not a single document relating to transfer had been produced to show that there was such a transfer. The fact that no application had been made by the transferor or the transferee was also taken note of by the Division Bench. After taking note of the facts, the Division Bench reproduced para 13 of the affidavit in that case filed by the petitioner. While considering the question as to whether there is any transfer of interest at all, the Division Bench referred to the counter-affidavit filed by the Director, Enforcement Directorate, New Delhi, and held that when the transfer had taken place and if the Enforcement Directorate remained dormant without taking any action, the question of issue of mandamus would arise at all. The Division Bench further held that there are other remedies for the petitioner to approach the Company Law Board under section 247 of the Companies Act and in the result the Division Bench confirmed the decision of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the first instance and that this has been done with mala fide object the petitioner herein complained against Snia Viscose, the fifth respondent herein with regard to the supply with defective plant. I have heard Mr. N. C. Raghavachari, learned senior counsel appearing for the petitioner in extenso. Learned senior counsel, after referring to the order of the Supreme Court in S. L. P. No. 15847 of 1989 and the judgment of the Division Bench of this court in Writ Appeal No. 140 of 1985 dated August 8, 1989, contends that this point of transfer of interest was not specifically raised on earlier occasions and as such the petitioner has taken up this point now, in the present writ petition. On the basis of the allegations made in the affidavit, learned senior counsel contends that this is a fit case where a writ of declaration is to issue. He further contends that there is a gross violation of section 26(4) of the Foreign Exchange Regulation Act, 1973. Section 26(4) of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as "the Act, 1973"), is to the following effect: "...Notwithstanding anything contained in any other law, no transfer of any interest in any business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Muscat based construction company, it is stated that according to the company, Snia Viscose have sold their interest in Sapina of Luxemburg to Locks Heath Properties Thirty Ltd., a company incorporated in England and that the said company is owned by Mr. C. D. Motiwalla, a British subject based in Dubai and that Snia Viscose have sold Sapina and not the shares of South India Viscose Ltd. It is categorically stated by the company that no application has been made by any transferee or transferor for registration of such alleged transfer of shares. It is, therefore, understood that the shares of Sapina in South India Viscose Ltd., have not been sold. In this connection, it is stated that the company is asserting in the matter of non-transfer of shares according to their books. The only competent authority who could state to the facts of the transfer, or otherwise legally is the Registrar of Companies, Tamil Nadu, Madras, with whom any such transfers effected have to be registered by means of filing a prescribed return under the provisions of the Companies Act, 1956". The allegations remained unilateral, and only when the transfer has taken place and if the Enforcement Directorate r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 247 or 250 is warranted..". In view of the categorical findings given by the Division Bench on this question also, I do not think the petitioner can raise the question once again, only by impleading new parties. Further, section 108 of the Companies Act deals with the transfer of shares and debentures. The Supreme Court has categorically held in Life Insurance Corporation of India v. Escorts Ltd. [1986] 59 Comp Cas 548 at 618 "a transfer effective between transferor and the transferee is not effective as against the company and any person without notice of the transfer until the transfer is registered in the company's register..". When such is the effect of section 108 of the Companies Act, I do not think the petitioner herein can ask for a writ of declaration before this court, especially in a petition under article 226 of the Constitution of India. It is not clear from the affidavit whether the aforesaid shares have been transferred in the name of the seventh respondent herein. Further, I am of the view that the alleged transfer of shareholding in Sapina would not be a transfer of interest coming within the purview of section 26(4) of the Foreign Exchange Regulation Ac ..... 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