C.P. No. 14/111/SRB/98

Present: 1. Shri S. Balasubramanian, Vice-Chairman

2. Shri K.K.Balu, Member.

IN THE MATTER OF COMPANIES ACT, 1956 (1 OF 1956)

SECTION 111

AND

IN THE MATTER OF THE M/S KREBS BIOCHEMICALS LIMITED

PETITIONER:

M/s Swapnil Securities Limited

RESPONDENT:

1. M/s Krebs Biochemicals Limited

2. Dr. R.T.Ravi

3. Shri K. Sahadeva Reddy

4. Shri Syed Khasim

PRESENT ON BEHALF OF PARTIES:

1. Shri P. Sudershan, Company Secretary of the Petitioner Company.

O R D E R

(DATE OF HEARING: 09.05.2001)

S. BALASUBRAMANIAN:

1. In this petition filed under Section 111(2) of the Companies Act, 1956 (“the Act”), the petitioner has complained that M/s Krebs Biochemicals Limited (“the Company”) has failed to enter the name of one Govind Kishore Rathi in respect of 100 shares sold through the petitioner.

2. The facts of the case are that the petitioner is a registered member of Hyderabad Stock Exchange. The second respondent had executed an irrevocable power of attorney in favour of the third respondent to deal with securities in the name of the second respondent which inter-alia included shares held by him in the Company. A copy of the power of attorney was registered with the Company. The third respondent approached the petitioner in June, 1999 with 20,000 shares of the Company held in the name of the second respondent along with transfer deeds duly signed by the third respondent for sale of the shares. The petitioner had sold 2,000 shares and returned the balance 18,000 shares to the third respondent. One of the purchasers of 100 shares, Shri Govind Kishore Rathi sent the 100 shares to the Company for registration of transfer. The Company had declined to register these shares on the ground that the third respondent had filed a Police complaint that the petitioner had failed to remit the consideration for the shares given for sale. According to the petitioner, since there is no court order restraining the registration of transfer, the Company has erred in not registering the shares and as such has sought for direction to register the transfer of shares in the name of Shri G.K.Rathi.

3. According to the Company, the petition filed under Section 111(2) is not maintainable. Since the Company is a public limited company governed by the provisions of Section 111A and further since the transferor has not made any complaint, as a broker the petitioner has no locus standi to file this petition. It is also submitted that by selling these shares, the third respondent had not acted in terms of the schedule to the agreement and as such he had no power to sell the shares. It is also stated in the reply that these shares were pledged with the third respondent for certain financial accommodation and as such the third respondent had no right to sell the shares pledged. It is also submitted that the first and second respondents have filed a comprehensive suit seeking declaration that the second respondent is not owner of the 20,400 shares and that any transaction that had taken place between the petitioner and the third respondent should be declared as null and void.

4. When the petition was taken up for hearing today, none appeared on behalf of the respondents in spite of notice of the hearing. Respondent No.4 had sent a telegram seeking for adjournment of the hearing. Since we have heard the learned Authorised Representative for the petitioner and since the first and second respondent have filed their replies, we are disposing of the petition ex-parte.

5. In regard to the maintainability of the petition under Section 111(2) of the Act, since the petition is against a public limited company, we have treated this petition under Section 111A of the Act, the provisions of which are applicable to a public limited company. In regard to the other objection of the respondents that the petitioner has no locus-standi as it is neither a transferee nor transferor, we find substance in this submission in as much as this petition has been filed seeking direction to the Company to transfer the shares in the name of the transferee. As per the proviso to sub-section (2) of Section 111A, the right to file a petition for refusal to register transfer is vested in the transferee of a share. Since the petitioner is not the transferee of the impugned shares, this petition is not maintainable. Even otherwise, we find from the reply of the Company that a substantive suit has been filed by the first and second respondents challenging the authority of the third respondent to sell the shares and if the plea of the respondents is accepted, then there would be no valid sale of the 100 shares impugned in the petition.

6. In view of the foregoing, we dismiss the petition.

(K.K. BALU) (S.BALASUBRAMANIAN)

Dated this the 11^th day of May, 2001