1995 (7) TMI 318 - HC - Companies Law

Summary

Issues Involved:
1. Rectification of the register of shares under Section 155 of the Companies Act, 1956.
2. Jurisdiction of the court to entertain the petition under Section 155.
3. Validity of the decree passed by the Division Bench and its enforcement.
4. Appointment of a receiver to manage the company's affairs and implement court directions.

Analysis:

1. Rectification of the Register of Shares under Section 155 of the Companies Act, 1956:
The petitioner sought to rectify the register of shares of the first respondent-company to include his name as a joint holder of shares registered in the names of respondents Nos. 2 and 3. The company court dismissed the petition, stating that the petitioner did not apply for registration as transferee in the manner specified by the statute. The court emphasized that proceedings under Section 155 cannot overlook statutory prescriptions regarding the mode of transfer. Additionally, the agreement set up by the petitioner was disputed and pending in a separate civil suit, making it undesirable to pronounce on the question of title at this stage.

2. Jurisdiction of the Court to Entertain the Petition under Section 155:
Respondents Nos. 1 and 2 contended that the judgment in M.F.A. No. 547 of 1981 could not be implemented as the court lacked jurisdiction. They argued that a decree passed by a court without jurisdiction is a nullity and can be challenged whenever and wherever it is sought to be enforced, citing Kiran Singh v. Chaman Paswan, AIR 1954 SC 340. The court, however, held that the Division Bench had considered all aspects and the Supreme Court had dismissed the special leave petition, making the judgment final. The exclusion of civil court jurisdiction cannot be assumed unless explicitly stated by statute. The court concluded that the Division Bench had jurisdiction to entertain the petition, and the respondents could not re-agitate the issue.

3. Validity of the Decree Passed by the Division Bench and Its Enforcement:
The court emphasized that the executing court can only go behind a decree if there was a lack of inherent jurisdiction, not merely erroneous exercise of jurisdiction. The respondents' challenge based on jurisdiction was not sustained as the Division Bench's judgment had become final after the Supreme Court dismissed the special leave petition. The court cited several precedents, including Sunder Dass v. Ram Parkash, AIR 1977 SC 1201, affirming that a decree's validity can only be challenged if the court lacked inherent jurisdiction. The court reiterated that even a wrong decision on jurisdiction does not render a decree a nullity.

4. Appointment of a Receiver to Manage the Company's Affairs and Implement Court Directions:
A company application was filed for the appointment of a receiver to take over the company's assets and manage its affairs to implement the court's directions. The court noted that the decree had been executed in part by appointing a receiver, indicating partial compliance with the judgment. The respondents' participation in the proceedings and the appointment of a receiver further weakened their contention regarding the nullity of the judgment.

Conclusion:
The court overruled the objections raised by respondents Nos. 1 and 2, affirming the validity and enforceability of the Division Bench's judgment. The court held that the decree could not be challenged on jurisdictional grounds at the execution stage, as the issue had been conclusively decided and confirmed by the Supreme Court. The appointment of a receiver was upheld, and the respondents were directed to comply with the court's orders.