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TMI Blog2020 (3) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-company. It is undisputed fact that corporate insolvency resolution process (CIRP) was started against respondent No. 1-company in a petition filed under section 7 of the I and B Code by the Canara Bank bearing C. P. (IB) No. 41/07/HDB/17. The petition was admitted on July 5, 2017 - The petitioners have no locus standi to continue the proceedings. The petitioners have no subsisting interest in view of the fact that the resolution plan is approved for respondent No. 1-company. There is no need to go into the merits of the case rather it can be disposed of on the ground that the relief sought for by the petitioners becomes infructuous - Petition dismissed. - T. P. No. 149 /HDB/ 2016 and C. P. No. 4/111/CB/ 2014 - - - Dated:- 8-1-2020 - Ratakonda Murali (Judicial Member) And Narender Kumar Bhola (Technical Member) For the Petitioners : S. Chidambaram , Practising Company Secretary For the Respondent : P. Siri Harsha Reddy ORDER NARENDER KUMAR BHOLA (TECHNICAL MEMBER) .- 1. The petition was filed before the erstwhile hon'ble Company Law Board, Chennai being Company Petition No. 4 of 2014. Consequent on abolition of the Board and establishment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000 equity shares of ₹ 2 each of the petitioners in favour of ICICI Bank Ltd., respondent No. 2 herein, viz., 40,00,000 equity shares of ₹ 2 each of petitioner No. 1 ; 40,00,000 equity shares of ₹ 2 each of petitioner No. 2 and 1,00,00,000 equity shares of ₹ 2 each of petitioner No. 3. 2.7 During the course of its business respondent No. 1-company had availed loan facilities from respondent No. 2-ICICI Bank, which were renewed from time to time vide agreements dated December 15, 2011, June 18, 2012 and June 18, 2012 by which working capital loans of ₹ 100 crores, ₹ 350 crores and ₹ 140 crores were sanctioned. The petitioners stood guarantors to the aforesaid loan agreements and executed personal guarantee. 2.8 It is averred in paragraph 6.4 of the petition that the shares were to be held in a dematerialised form in an escrow dematerialised account with ICICI Bank. In compliance of the terms of agreement, with bona fide belief the petitioners have pledged shares of respondent No. 1 held by them in favour of ICICI Bank. However, such agreement to pledge shares dated July 28, 2012 (annexure P3) has never been executed. 2.9 It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated February 18, 2014. Any modification in the shareholding of respondent No. 1-company would amount to defeating the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). 2.14 It is further contended that winding up proceedings have already been initiated by various parties, as such transfer of shares is void under section 536(2) of the Companies Act. Hence transfer of shares effected by respondent No. 2 is null and void. 2.15 In paragraph 7 of the petition it is declared that the petitioners have not filed any other application. However, respondent No. 2, in paragraphs 4, 5 and 6 of its counter, contended that C. P. No. 5 of 2013 was filed by the petitioners before the erstwhile Company Law Board, Chennai and interim orders were obtained. It is discussed in latter paragraphs. 3. Amended petition dated March 3, 2017 before the National Company Law Tribunal, Hyderabad 3.1 C. A. No. 58 of 2017 and C. A. No. 69 of 2017 were filed along with the amended petition of C. P. No. 4/111/CB/2014, seeking to implead M/s. Karvy Computershare P. Ltd. . The Tribunal vide order dated June 30, 2017 has allowed both the applications by deleting respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is contended in paragraph 9 of the counter that under section 28(2) of the Companies Act, 2013, securities or other interest of any member in a public company shall be freely transferable. It is further contended that shares are freely transferable without any restriction in any contract. Section 59(4) of the Companies Act provides that where transfer of securities is in contravention of any provisions of the SEBI Act, the Securities Contracts (Regulation) Act, 1956 or any other law, the Tribunal may direct the company or a depository to set right the contravention. However, in the present case, there is no whisper about any contravention. Since the shares are in dematerialized form, the provisions of the Depositaries Act shall apply, as claimed by the deponent. 4.5 It is contended in paragraph 10 of the counter that what is prayed for in the petition is a direction or injunction rather than rectification of records of the depositary participants, namely, respondent No. 4 . Such a direction or injunction does not come within the scope of section 58 or 59 of the Companies Act, 2013. Hence the petition is not maintainable. 4.6 It is averred in paragraphs 13 and 14 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e over the current and movable assets of the company. The said charge was also registered with the Registrar of Companies : 25-7-2012 Respondent No. 1-company had executed addendum to the deed of hypothecation dated July 25, 2012. 15-9-2012 Respondent No. 1-company and respondent No. 2 had agreed for modification of charge with regard to the charge created over the franchise agreement dated February 21, 2011 and to the said effect respondent No. 2 had issued letter dated September 15, 2012 agreeing to release the charge created over the franchise agreement dated February 21, 2011. 4.8 It is averred in paragraph 17 of the counter that respondent No. 1-company had failed to fulfil its obligations leading to the events of default. Respondent No. 2 was constrained to issue notice of acceleration and recall dated October 27, 2012 calling upon respondent No. 1-company to pay an amount of ₹ 511,71,15,341.67 along with interest thereon. Respondent No. 1-company neither paid the due nor replied. Respondent No. 2, on November 14, 2012 approached the Debts Recovery Tribunal for recovery of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by the petitioners. 4.11 It is averred in paragraph 21 of the counter that since the petitioners failed to repay the dues pursuant to the pledge invocation notice dated October 30, 2012 (annexure R22), respondent No. 2 exercised its right as the pledgee, details of invocation of shares, in November 2012, are enumerated in this paragraph. Thus, respondent No. 2 denies that the shares were illegally transferred. 4.12 In paragraphs 22 and 23 of the counter it is averred that as the petitioners further failed to repay dues, respondent No. 2 has exercised its right and further resorted to invocation of shares on February 24, 2014. Respondent No. 2 has disclosed (copy at annexure R27) the acquisition to the stock exchanges. Thus, by pledge invocation, respondent No. 2 has acquired 1,80,00,000 shares of respondent No. 1-company in addition to 25,00,000 shares held by it. Respondent No. 2 denies that the shares were illegally transferred. Respondent No. 2 was within its rights to invoke the pledge agreement due to failure of the petitioners to repay the dues even after issuance of pledge invocation notice. 4.13 It is averred in paragraph 24 of the counter that in September 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014 reference of the company was pending before the BIFR under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). 6.2 It is averred in paragraph 3 of the reply that reference was registered as BIFR Case No. 66 of 2013 before the BIFR. The said reference has been rejected on September 19, 2013. However, the matter was carried before the hon'ble Delhi High Court and the hon'ble Delhi High Court vide its order dated February 3, 2014 (annexure B) has directed that reference of respondent No. 1-company be placed before the BIFR and the BIFR should proceed to adjudicate the reference in accordance with the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). 6.3 It is averred in paragraph 4 of the reply that the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) passed order dated December 11, 2015 rejecting the reference of respondent No. 1-company. It is submitted that respondent No. 2 had taken certain action during the pendency of reference. However, said action is contrary to section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). It is further submitted that transfer of sha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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