Vimla Yadav - (1.) IN this order I am considering Company Petition No. 82/2008 filed under section 111(2) of the Companies Act 1956 ('the Act') in the matter of Parekh Platinum Ltd. having its registered office at 16, B Samhita Industrial Estate, off. Andheri Kurla Road, Mumbai -400 072. The authorised share capital of the respondent -company is Rs. 60,00,00,000 divided into 6,00,00,000 (Six crore) equity shares of Rs. 10 each and paid -up share capital of the respondent -company is Rs. 43,63,62,930 divided Into 4,36,36,293 equity shares of Rs. 10 each. The respondent -company is carrying on the business of manufacturers, importers, exporters, melters, refiners of and dealers like platinum, palladium, rhodium, iridium, ruthenium, osmium, gold, silver and non -ferrous metals in their virgin and their alloy form with any other metal and chemicals and products made out of such metals and alloys for industrial and domestic purpose. The respondent -company is a listed public limited company. It is noted that the petitioner, namely, Gujarat State Financial Corporation ('GSFC') is a financial institution, it is a statutory corporation established for the State of Gujarat by the State of Gujarat under the State Financial Corporations Act, 1951. The petitioner's case is that it is legitimate to get the pledged shares transferred in its favour, the petitioner's efforts since 2004 in this regard have failed.
(2.) GSFC at the request of Parekh Platinum Ltd. sanctioned bill discounting limit of Rs. 240 lakh vide its letter dated 16th March, 1998. As per condition No. 12 of the sanction letter of GSFC, the respondent -company was required to pledge shares worth of Rs. 480 lakh of the respondent -company with GSFC (the petitioner) towards collateral security. Thirty -six shareholders of the respondent -company had pledged 4,00,045 equity shares having market value of Rs. 4,80,00,000 to GSFC on 29th March, 1998. They had delivered 4,00,045 equity shares to GSFC and executed unattested agreement for lodgment of share certificates on 24th March, 1998 in favour of GSFC, irrevocable general power of attorney dated 20th March, 1998 in favour of GSFC and specific power of attorney given by shareholders of the respondent -company authorising Natvarlal D. Shah to execute documents in respect, of pledge of equity shares in favour of GSFC to secure bill discounting limit of Rs. 240 lakh. The respondent -company has noted the lien of GSFC on the aforesaid equity shares on 21st March, 1993. Thus, the equity shares were pledged with the GSFC. The blank share transfer forms were also deposited by 36 shareholders with GSFC to enable GSFC to transfer equity shares pledged as and when required by GSFC. They have also signed the irrevocable power of attorney in favour of GSFC authorising to transfer the equity shares. Subsequently the respondent -company could not make the repayment of bill discounting limit of Rs. 240 lakh and committed a default in the said loan account. Therefore, GSFC decided, to get pledge security of 36 shareholders transferred in the name of GSFC in D -mat form. Initially GSFC completed share transfer forms and sent 45,000 equity shares of Rs. 10 each having face value of Rs. 10 each held by Jyoti Parekh jointly with Komal Parekh, having folio No. 21 along with share transfer forms duly completed to transfer the same in GSFCs name. The equity shares were lodged with Sharex Dynamic (India) (P.) Ltd., the share transfer agent of the respondent -company for completing the transfer formalities. On 15th April, 2004 shares were returned to GSFC by the share transfer agent of the respondent -company stating that the respondent -company has not approved the share transfer request and the company's letter dated 12th April, 2004 was enclosed. Transfer deeds and share certificates were returned to GSFC. It was stated in the letter that since the company was declared as "relief undertaking" by Government of Gujarat, all the remedies for enforcement of rights shall be suspended and all proceedings shall be suspended. Aggrieved by the action of the respondent GSFC took the opinion or Kunte & Modha, chartered accountant, Ahmedabad. The said firm was of the, opinion that GSFC can proceed against collateral provided by the promoters or third party as well as invoke guarantee provided by promoters and other entities, GSFC also took the opinion of Satyen N. Thakkar, senior advocate of Ahmedabad on 23rd May, 2004. He quoted the decision of Kailashnath Agarwal v. Pradeshiya Industrial & Investment Corporation of U.P., Ltd. : [2003] 53 CLA 110 (SC)/[2003] 4 SCC 305, wherein the hon'ble Supreme Court has held that the words 'suit' and 'proceedings' have not been used interchangeably in the Sick industrial Companies (Special Provisions) Act, 1985 ('SICA') and that the object for enacting SICA and for introducing the 1994 amendment was to facilitate the rehabilitation or the winding up of sick industrial companies and that it is not stated that the object of Act is to protect any other person or body. On a conjoint reading of the provisions, the hon'ble, Supreme Court had further held that since the section 22(1) only prohibits recovery against the industrial company, there is no protection afforded to the guarantors against recovery proceedings under the UP Act. It was opined that in view of the said decision of the Apex Court in the case of Kailashnath Agarwal (supra) as well as in the case of Patheja Bros. Forgings & Stamping v. ICICI Ltd. : [2000] 38 CLA 202 (SC), no suit for winding up of the company or for proceedings against the assets of the company, would lie or be proceeded with further. However so far as guarantors are concerned, though no suit would lie for recovery of the dues of the company from the guarantors, the proceedings of the GSFC against the, charged and mortgaged properties or in respect of the collateral securities under the contracts entered into are certainly permissible. After obtaining legal opinion GSFC again submitted 45,000 equity shares along with share transfer forms on 2nd August, 2004 explaining all facts, position of law and the same was received by share transfer agent in person on 12th August, 2004 to complete the transfer formalities. GSFC on 22nd September, 2004 got the reply that the company had applied for registration as a sick industry in case No. 240/2004 on 26th July, 2004. Pursuant to section 22(1) of SICA any proceedings for recovery of money or enforcement of security against individual company shall not lie without the consent of Board for Industrial and Financial Reconstruction ('BIFR') and, therefore, equity shares could not be transferred to GSFC and shares were returned to the petitioner.
(3.) IT was pointed out that on 24th November, 2004 legal notice was given. The company had not shown any willingness to transfer the shares pledged with the petitioner, GSFC wrote a letter 18th December, 2004 to Securities and Exchange Board of India ('SEBI'). On 7th February, 2006 GSFC again lodged 45,000 equity shares. The same were rejected and on 11th March, 2006 and all papers were returned to the petitioner on the same ground. On 24th November, 2006 39,55,045 shares were lodged to Sharex Dynamic (India) (P.) Ltd., the share transfer agent, along with share transfer forms. The respondent -company received all the shares on 24th November, 2006 and all the shares were received by the share transfer agent on 28th November, 2006. On 17th January, 2007 share transfer agent returned all share transfer deeds to GSFC stating that the company has made reference under section 15(1) of SICA and, therefore, pursuant to section 22 of the Act, GSFC is not entitled to enforce the security for recovery of money. GSFC received the papers back on 28th January, 2007. On 27th March, 2007 GSFC issued legal notice no reply was received.;