1993 (10) TMI 233 - HC - Companies Law

Summary

Issues Involved:
1. Nature of jurisdiction under section 155 of the Companies Act, 1956.
2. Whether the jurisdiction of the civil court to entertain disputes relating to title to shares is barred.

Summary:

1. Nature of Jurisdiction under Section 155 of the Companies Act, 1956:
The primary issue addressed is the nature of jurisdiction the company court exercises u/s 155 of the Companies Act, 1956, in petitions seeking rectification of the register of members. The court examined whether this jurisdiction is of a summary nature and if the company court can decline to entertain petitions involving complicated and disputed questions of facts requiring extensive evidence. The judgment highlights that the remedy provided by section 155 is summary and is intended for non-controversial matters or those requiring quick decisions to prevent irreparable injury. The court can decline to entertain petitions involving serious disputes necessitating regular investigation and relegate the parties to a civil suit. The discretionary nature of the power under section 155 allows the company court to decide whether to entertain a petition based on the complexity of the issues involved.

2. Jurisdiction of Civil Court to Entertain Disputes Relating to Title to Shares:
The court also addressed whether the jurisdiction of the civil court to entertain disputes relating to the title to shares is barred. It was concluded that the jurisdiction of the civil court is not barred and remains wide, unrestricted, and unlimited. The ouster of the jurisdiction of the civil court is not to be readily inferred and must be explicitly expressed or clearly implied. The court emphasized that section 155 does not abrogate the provision of filing a suit as available under section 9 of the Code of Civil Procedure. Therefore, the remedy of a suit for adjudication of disputes relating to the title to shares is not barred, and parties can choose to file a regular suit for such disputes.

Conclusion:
1. The jurisdiction exercised by the company court under section 155 of the Act is discretionary and summary in nature.
2. In exercise of discretionary and summary jurisdiction, the company court can decline to entertain petitions involving disputed and complicated questions requiring examination of extensive oral and documentary evidence.
3. The remedy of suit for adjudication of disputes relating to title to shares is not barred.

The reference is answered accordingly.