1984 (12) TMI 258 - HC - Companies Law

Court - Jurisdiction of, Shares certificate, Share warrants and entries in register of members

Summary

Issues Involved:
1. Validity of ad interim mandatory injunction
2. Suppression of material facts by the plaintiff
3. Compliance with the provisions of the Companies Act
4. Jurisdiction and procedural errors by the trial court
5. Prima facie case for mandatory injunction

Issue-wise Detailed Analysis:

1. Validity of Ad Interim Mandatory Injunction:
The revision petition challenges an ad interim mandatory injunction that divested the petitioners of ownership of 12,387 shares. The trial court's order was passed mechanically without proper application of mind. The learned judge granted the injunction without considering the necessary legal provisions and implications, rendering the order unsustainable.

2. Suppression of Material Facts by the Plaintiff:
The plaintiff failed to disclose critical facts to the trial court, including the existence of an order by a learned single judge of the High Court, which held that the three defendants continued to be directors of the company. This suppression of facts was deemed significant enough to deprive the plaintiff of the right to an injunction.

3. Compliance with the Provisions of the Companies Act:
The trial court did not consider the provisions of the Companies Act, specifically sections 82, 84, and 108, which regulate the transfer of shares and the issuance of duplicate shares. The mandatory injunction ordered the issuance of duplicate shares and their immediate transfer to the plaintiff, bypassing the statutory requirements. The court failed to recognize that the right to transfer shares is contingent on compliance with these statutory provisions.

4. Jurisdiction and Procedural Errors by the Trial Court:
The trial court issued an ad interim mandatory injunction against Messrs Century Flour Mills Limited, which was not a party to the suit. This procedural error demonstrated a lack of proper judicial consideration. Additionally, the petition for the injunction was incorrectly filed under Order 39, rule 7 of the Civil Procedure Code, which was not applicable to the relief sought.

5. Prima Facie Case for Mandatory Injunction:
The plaintiff's claim to the ownership of the shares was based on an alleged compromise, which was itself disputed and subject to an application under Order 23, rule 3 of the Civil Procedure Code before the company court. The plaintiff had not established a prima facie case for a mandatory injunction, as the facts and legal rights were still in dispute and required thorough examination during the trial.

Conclusion:
The High Court set aside the trial court's order of mandatory injunction, emphasizing that injunctions should not be granted as a matter of course and must be based on well-established legal principles. The case was transferred to the Principal Judge, City Civil Court, Madras, pending a decision on the transfer application by the company court. The revision petition was allowed with costs, and the trial court was advised to exercise extreme caution and care in future injunction matters.