9911796707
TMI Blog1995 (11) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... pay a sum of Rs. 40,000 towards remuneration due from 1986 to 1990 with interest at the rate of 12 per cent and for costs. 2. The petitioner is the Central Bank Executor & Trustee Co. Ltd. having registered office at Bombay. The respondent sent offer to the petitioner in the year 1985 requesting them to act as trustees and agents for debenture holders in respect of one lakh debentures of value of Rs. 100 each which were going to be issued shortly. The petitioner sent his consent as per his letter dated 25-9-1984. It was informed by the petitioner that the respon-dent will give first charge on the fixed assets of the company and for the proposed debentures. It is also agreed to maintain 1.5 times security to cover the net fixed assets. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the concerned officers in this regard. Since, the trust deed has not been executed in favour of the petitioner, it would not be possible for the petitioner to continue as trustees as there was no trust deed in the eye of law, the petitioner cannot be treated as a trustee. It is submitted that the petitioner, that it acted honestly and reasonably and it is entitled to be absolved from all its liabilities which may arise out of their appointment as trustees and agents. Since the respondent failed to execute the trust deed, it is seeking declaration that it is not liable for any loss or cones-quences and further direction for payment of remuneration from 1986 onwards with interest. 3. A counter-affidavit was filed by the respondent-comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch as the petitioner is not a trustee in the eye of law. 5. On the basis of the pleadings as set out above, it is to be considered whether the petition is maintainable under section 633(2). 6. For a proper appreciation of the case, it is necessary to refer to section 633(2), which is extracted below : "(2) Where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for relief and the High Court on such application shall have the same power to relieve him as it would have had if it had been a Court before which a proceeding against that officer for negligence, default, breach of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the petitioner who has agreed to act as agents and trustees are the officers of the company. Even though, it is specifically contained in the offer of debentures that the petitioner-company has agreed to act as a agent and trustee, it could not be called as an officer of the company. The learned counsel for the petitioner contend that since the remuneration has been fixed, they are to be treated as the officer. On the other hand, the learned counsel for the respondent submits, firstly, the petitioner has no locus standi to file an application under section 633(2), as he is not an officer. The application is maintainable only by the officer of the company. Secondly, the trust-deed has not been executed in favour of the petitioner-comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petition is liable to be dismissed. 11. Accordingly, the petition is dismissed. However, it is a matter of great concern that the interest of the debenture holders has not been protected as required under law. That is the reason, the statute provides the appointment of debenture trustee and execution of trust deed in his favour. Even according to the company, no trust deed has been executed and thus, there is a violation of the provisions of the Act. Though the company is expressing difficulty that on account of certain unforeseen circumstances, pari passu charge could not be obtained from the other financial institutions and that the amounts were frozen by the Andhra Bank, it cannot be absolved of its statutory obligations. The very p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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