1999 (2) TMI 483 - HC - Companies Law

Summary

Issues Involved:
1. Whether the Company Law Board (CLB) erred in holding that the disputes raised in the petition involved complicated questions beyond its jurisdiction u/s 111 of the Companies Act, 1956.
2. Whether the CLB failed to provide reasons for its order, necessitating a remand for a reasoned decision.

Summary:

Issue 1: Jurisdiction of CLB u/s 111 of the Companies Act, 1956
The appellants contended that the CLB erred in holding that the disputes raised in the petition involved complicated questions that could not be decided by the CLB in exercise of its jurisdiction u/s 111 of the Companies Act, 1956. The appellants sought rectification of the Register of Members of the respondent-company concerning 14,520 shares. The respondent-company argued that they received only 4,700 shares and denied the lawful ownership of the remaining 6,050 shares by the appellants, citing that the shares were not lodged for transfer and were subject to subsequent transfers.

The CLB concluded that the matter involved complicated questions of fact, which could not be decided in a petition u/s 111 and should be decided by a civil court. The High Court referenced the judgment of the Apex Court in *Ammonia Supplies Corpn. (P.) Ltd. v. Modern Plastic Containers (P.) Ltd.*, which held that the company court has exclusive jurisdiction for rectification matters but not for issues involving disputed civil rights or title. The High Court agreed that the disputes regarding the ownership and potential forgery of shares were beyond the jurisdiction of the CLB and should be decided by a civil court.

Issue 2: Lack of Reasons in CLB's Order
The appellants argued that the CLB did not provide reasons for its order, necessitating a remand for a reasoned decision. The High Court acknowledged that while the CLB's reasoning was flawed, its ultimate conclusion was correct. The High Court noted that it could exercise the same powers as the trial court and found it unnecessary to remand the matter to the CLB, as the issues raised could not be decided by the CLB.

Conclusion:
The High Court dismissed the appeal, affirming that the disputes involved complicated questions of fact beyond the jurisdiction of the CLB u/s 111 of the Companies Act, 1956, and should be decided by a civil court. The High Court also found that remanding the matter to the CLB for a reasoned decision was unnecessary. The appeal was dismissed with no order as to costs.