1989 (9) TMI 320 - HC - Companies Law

Issues Involved:

1. Jurisdiction of the Ludhiana Court.
2. Interpretation and application of Section 113 of the Companies Act, 1956.
3. Validity of the ex parte decree and injunction orders.
4. Entitlement of the petitioner to the shares, debentures, and dividends.
5. Initiation of action against the company for non-compliance.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Ludhiana Court:

The petitioner contended that the civil court at Ludhiana had no jurisdiction to entertain the suits filed by the company. The company invoked the jurisdiction of the Ludhiana court on the grounds that one of the defendants resided and worked for gain at Ludhiana, where the head office and factory of the company were also situated. The court held that the civil court at Ludhiana is fully competent to decide the question of its jurisdiction to entertain the suits filed by the company. The petitioner should approach that court by an appropriate application to raise all these contentions.

2. Interpretation and Application of Section 113 of the Companies Act, 1956:

The petitioner filed the petition under section 113(3) of the Companies Act, 1956, seeking delivery of share certificates and debentures. The court discussed the meaning, object, and scope of section 113, noting that it imposes a statutory obligation on the company to complete and have ready for delivery the certificates of shares and debentures within three months of allotment. The court disagreed with the judgment in Asiatic Oxygen Ltd., In re [1972] 42 Comp Cas 602, which held that section 113 did not impose an obligation to deliver the shares. The court interpreted the words "complete and have ready for delivery" to include actual delivery, supporting a broader interpretation of section 113.

3. Validity of the Ex Parte Decree and Injunction Orders:

The petitioner argued that the ex parte decree dated April 30, 1987, and the order dated January 15, 1988, were not binding as they were passed by a court with no jurisdiction. However, the court held that so long as the decree and order passed by the Ludhiana court are not discharged or vacated, they remain binding on the petitioner. The court cited the principles from Krishna Singh v. Mathura Ahir [1981] 4 SCC 421 and Amrit Bhikaji Kale v. Kashinath Janardhpn [1983] 3 SCC 437, emphasizing that the petitioner must approach the Ludhiana court to challenge the jurisdiction and validity of the orders.

4. Entitlement of the Petitioner to the Shares, Debentures, and Dividends:

The petitioner subscribed to the shares and debentures and paid the requisite amount. The shares and debentures were allotted on June 23, 1986. The court noted that the petitioner and her family members sent multiple reminders to the company and the authorities demanding delivery. The company admitted to receiving the amount and the allotment of shares but cited the injunction order as an impediment. The court held that the petitioner is entitled to have the certificates and debentures delivered to her, subject to the completion of legal formalities.

5. Initiation of Action Against the Company for Non-Compliance:

The petitioner sought action against the company for its failure to pay dividends and deliver shares and debentures. The court declined this relief, accepting the company's defense that the approval from the Reserve Bank of India was obtained in May 1987, and the company could not deliver the shares or pay dividends due to the ex parte decree and subsequent stay order.

Conclusion:

The court partly allowed the petition, directing that the share certificates, debentures, and dividends deposited in court be delivered to the petitioner, subject to her completing the legal formalities. No order as to costs was made.

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