Decided on May 22,1995



- (1.) THIS is a petition filed on October 28, 1992, by the liquidator of BoB Fiscal Services Ltd. (hereinafter called "BoB Fiscal") under Section 111 of the Companies Act, 1956, praying for an order directing the respondent-company to register the transfer of 7,42,400 equity shares in the name of the petitioner and for other consequential reliefs. The respondents in this case are : (1) Dunlop India Ltd. (hereinafter called "Dunlop") having its registered office at Calcutta and (2) Bank of Baroda, a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, having its head office at Baroda.
(2.) The main facts of this case are : BoB Fiscal (a wholly owned subsidiary company of Bank of Baroda) was incorporated in 1988. In the same year BoB Fiscal purchased from all-India financial institutions 7,42,400 equity shares of Dunlop. Immediately thereafter during September 22, 1988, to October 4, 1988, all the scrips in respect of these shares were lodged with Dunlop along with duly stamped transfer deeds. According to the petitioner, BoB Fiscal is an investment company within the meaning of Section 372 of the Companies Act, 1956. Pending the transfer of the impugned shares BoB Fiscal entered into contracts for sale of these shares with two brokers at Bombay. After the lodgment, BoB Fiscal enquired from Dunlop about the date by which the transfer deed will be registered. In reply, Dunlop called for a board resolution of the transferors, confirming as to whether the purchase was on its own behalf or on behalf of its clients and, if so, the necessary declaration and permission of the Reserve Bank of India in case the purchase was for any non-residents. These queries were answered by BoB Fiscal. Thereafter Dunlop called for a copy of the board resolution of BoB Fiscal under Section 292 of the Companies Act. On this BoB Fiscal protested and drew the attention of Dunlop to the relevant clauses in the memorandum and articles to the effect that BoB Fiscal was an investment company, Still the required board resolution was also sent. Dunlop thereafter raised the question of a board resolution under Section 372(5) of the Companies Act and also called for a copy of the approval of the Central Government. This is despite Dunlop having been told about the relevant clauses in the memorandum of association that the petitioner was an investment-company. According to the petitioner the acquisition was also within the limits laid down under Section 372 of the Companies Act, 1956. Still BoB Fiscal replied to this query and even thereafter further information regarding different activities of the petitioner-company were sought which BoB Fiscal refused to furnish being confidential information. According to BoB Fiscal the piecemeal correspondence on the part of Dunlop was to intentionally delay registration. By the entire process time was lost up to July, 1989. It is further stated that the shares purchased constituted even less than 5 per cent. of the subscribed capital of Dunlop and as such Section 372 was not applicable. Dunlop, it is further alleged wrongfully raised the ruse of Section 372 knowing fully well that it was not applicable. Though the respondent-company intimated its intention to approach the Department of Company Affairs for a clarification with regard to applicability of Section 372 it actually did not do so which shows its bad intention.
(3.) WHILE the above process was on, in September 1990, BoB Fiscal resolved to voluntarily wind itself up under Section 484(1)(b) of the Companies Act and the petitioner was appointed as the liquidator. In November, 1990, this fact was intimated to the respondent-company. The petitioner vide his letter dated November 15, 1990, called back the transfer documents in view of the resolution for voluntary winding up. On receipt of this letter the respondent-company questioned the authority of the petitioner to withdraw the applications for transfer, It continued to refuse the return of the documents and also did not supply a draft indemnity for return of the documents for which it was originally agreeable. According to the petitioner, by an arrangement with Bank of Baroda, all the assets, title and interest of the company were vested in the said bank. The bank also applied to the Reserve Bank of India for permission for take over of the assets and liabilities of BoB Fiscal and the same was granted in February 1991. The Reserve Bank of India also stipulated that the said bank may arrange to unload the shares and debentures taken over at a suitable time. The respondent-company was duly informed about the arrangement as well as the Reserve Bank of India approval referred to above, Despite this the respondent-company did not return the shares but called for confirmation from Bank of Baroda that BoB Fiscal is a 100 per cent. subsidiary and also for an indemnity. An offer without prejudice was made by Bank of Baroda through its solicitors for sale of the shares to the respondent-company. Despite giving all clarifications, the respondent-company delayed registration but was agreeable to consider returning the impugned shares together with the relevant transfer deed upon compliance with certain requirements. At no stage did the respondent-company refuse to register the shares but it continued to default in registration. As a consequence Bank of Baroda had to incur huge losses to the extent of refunding the purchase price to the brokers and also paying a sum of Rs. 2.45 crores on account of interest as the contract was rescinded. The respondent-company has also not paid the dividend for the years 1988-89 onwards. The loss of interest on account of non-payment of dividend has been assessed at Rs. 75 lakhs. The petitioner has prayed for an order directing Dunlop to register the transfer of the impugned shares as well as for payment of the arrears of dividend since 1989. The petitioner has also prayed for directions for an enquiry to be instituted as well as for costs.;

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