S. Balasubramanian, Chairman —The main ground on which this petition has been filed is that even though the petitioner, which has acquired the debt of the company, the non-repayment of which would entitle the petitioner to acquire 51 per cent, shares in the company is being denied the shares even though the company has not repaid the debt. The relief sought is that the register of membership should be rectified recording that the petitioner holds 51 per cent, shares. There are certain other allegations and consequential further reliefs have been sought.

2. The facts of the case are : M/s. Jaipur Metals and Electricals Ltd. ("the company") which was incorporated in August, 1943, is presently under the management of the officials of the Government of Rajasthan. The company had availed of loans from the IDBI at different periods by executing various loan agreements. One of the terms of these agreements is that in case of default in repayment of the loan as per the terms of the agreements, IDBI would have the right to convert up to 20 per cent, of the defaulted amount into shares. And that on receipt of notices of conversion, the company shall allot and issue the requisite number of shares. The agreement also provided that IDBI would be entitled to appoint directors on the board of the company.

3. The petitioner being an asset reconstruction and securitisation company, in terms of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, by an agreement dated October 11, 2007, purchased from the IDBI all the debts of the company. Since the company had defaulted in repayment of the loan, the petitioner exercised its right of conversion and also nominated two of its nominees on the board of the company. The company did not accept either of these requests and hence this petition.

4. Shri Sarkar, senior advocate, appearing for the petitioner submitted : It is not in dispute that the company had borrowed money from the IDBI by entering into two loan agreements. In terms of the loan agreements dated March 23,1995 and March 21,1996, the lender is entitled to convert, at his option, 20 per cent, of the defaulted amount into fully paid equity shares. To exercise this right, the lender has to issue a notice of intention to convert and on receipt of the notice, the company has to allot and issue requisite number of fully paid-up shares. Further, in terms of the agreement, the lender is also entitled to appoint its nominee as directors. The petitioner is a asset reconstruction company registered under the SARFAESI Act. This Act authorises an asset reconstruction company to acquire debts of a lender with all rights and obligations of such a lender. The petitioner acquired the debts of the company from the IDBI by a deed of assignment dated October 11, 2007 and as such the petitioner has stepped into the shoes of the IDBI. Since the company had defaulted in repayment of the loan, by a letter dated July 25, 2008, the petitioner exercised the option to convert 20 per cent, of the defaulted amount, i.e., Rs. 300 lakhs into 3 lakhs equity shares on the same date. It also nominated 2 of its nominees as directors on the board. However, neither the shares have been allotted nor its nominees have been appointed as directors. On exercising the option to convert, the petitioner has become entitled to hold around 51 per cent, shares in the company and thus has become the majority shareholder. However, the company is not issuing share scrips and has not entered the name of the petitioner in the register of members of the company. Now the Government is proposing to sell 60 per cent, comprising of shares held by it and also of the shares held by the employees' society to an outsider for which it has already invited bids on September 8, 2008, with the last date of submission of the proposal as September 16, 2008. If the proposal of sale goes through, it would be highly detrimental to the interest of the peti