The tribunal affirmed the right to rectify the register of members under Section 59 of the Companies Act, 2013, enabling the petitioner to enforce a share pledge without formal transfer procedures, as the respondents failed to comply with requisite contractual obligations.

O R D E R

Per RADHAKRISHNA SREEPADA, Member(Technical)

1. This Company Petition is filed on 30.03.2023 by Axis Trustee Services Limited (hereinafter referred as “Petitioner”) under Section 59 of the Companies Act, 2013 against Aubergine Properties Private limited and another (hereinafter referred as “Respondents”) inter-alia seeking the following reliefs:

a. Direct the Respondent No.1 Company to record the name of the Petitioner as a member of the Respondent No.1 Company in respect of the pledged shares i.e., 4,88,100 equity shares and rectify the statutory register of members.

b. Direct the Respondent No.1 Company to deposit all the amounts in respect of the pledged shares including dividends and other distributions.

c. Pass such other order or orders as the Hon’ble Tribunal may deem fit and proper.

2. Facts of the case as submitted by the Petitioner Facts of the Case mentioned by the Petitioner in this application are as under:

a) The Petitioner is a Debenture Trustee registered with the Securities Exchange Board of India under the Securities and Exchange Board of India (Debenture Trustees) Regulations.

b) The Respondent No. 1 Company is in the business of construction and development of real estate and the Respondent No. 2 is the Managing Director of the Respondent No. 1 Company and also holds 4,8,100 equity shares (97.62%) in the Respondent No.1 company. The Respondent No. 1 Company took on a project for the development and construction of a commercial building named "Whitefield Tower" on land admeasuring Ac 4-16 gts. in Sy. Nos. 173/1 and 173/2 situated at Kannamangala Village, Bidarahalli Hobli, Bangalore East Taluk, Bangalore.

c) The Respondent No. 1 Company unable to complete construction of Whitefield Tower and in need of additional funds for the project, proposed to issue up to 420 secured, unlisted, unrated, redeemable and transferable non-convertible debentures of a nominal value of Rs.10,00,000/- on a private placement basis aggregating up to Rs.42,00,00,000/- in tranches in favour of its Debenture Holders and that the Petitioner was appointed as a Debenture Trustee for the benefit of the Debenture Holders.

d) As per the Debenture Trust Deed, the debt was to be secured by, inter alia, a first ranking exclusive charge over pledged shares held by the Respondent No. 2 in the Respondent No. 1 Company in favour of the Petitioner. In pursuance of the same, the Respondent No. 2 executed the Share Pledge Agreement dated 02.12.2020 in favour of the Petitioner, pledging his entire shareholding in the Respondent No.2 company. As evidence of creation of the pledge, the Respondent No. 2 deposited documents including duly stamped share certificates of the pledged shares, duly executed share transfer instruments (Form SH-4) and a duly executed power of attorney by the Respondent No. 2 appointing the Petitioner its Attorney.

e) The Respondent No. 1 company has till date allotted 230 non-

convertible debentures on 07.12.2020, 30 non-convertible debentures on 19.02.2021, 30 non-convertible debentures on 06.04.2021, 30 non-convertible debentures on 14.07.2021, 22 non-convertible debentures on 07.10.2021, 21 non-convertible debentures on 15.12.2021 and 23 nonconvertible debentures on 28.02.2022. A total of 386 debentures aggregating up to Rs. 38,60,00,000/- were allotted to Kroyana Special Situations Fund ("Debenture Holder"). The final redemption date was 06.12.2022 which is 24 months from the deemed date of allotment of the first tranche of debentures.

f) As per the Share Pledge Agreement, the Petitioner is entitled to invoke the share pledge upon occurrence of any default under the Debenture Trust Deed. The Respondent No. 1 def