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Issues:
Jurisdiction of civil court to entertain the suit; Interpretation of legal provisions under the Companies Act, 1956; Availability of alternative remedy under the Act. Jurisdiction of Civil Court: The plaintiffs filed a suit for declaration regarding the purchase of shares affected by the Harshad Mehta scam. The trial court decreed the suit in favor of the plaintiffs. However, the appellate court reversed this decision, holding that the civil court had no jurisdiction to entertain the suit. The lower appellate court found that the cases cited by the appellants were distinguishable, and that the Companies Act, 1956, provided an alternative remedy for such disputes. It was noted that under the Act, provisions exist for the transfer and registration of shares, with avenues for appeal in case of refusal by the company. Consequently, the lower appellate court's decision to dismiss the appeal was deemed appropriate due to the availability of an efficacious alternative remedy under the Act. Interpretation of Legal Provisions under the Companies Act, 1956: The judgment delved into the legal provisions of the Companies Act, 1956, specifically sections 108, 110, and 111. Section 108 pertains to the transfer and registration of shares and debentures, allowing either the transferor or transferee to apply for registration. Section 110 enables such applications, while section 111 outlines the company's right to refuse registration, with provisions for appeal to the Company Law Board and subsequently to the High Court. The court emphasized that the existence of these statutory provisions indicated that the appellant had an alternative legal recourse available under the Act, rendering the civil court's jurisdiction in the matter untenable. Availability of Alternative Remedy under the Act: The judgment concluded that the findings of fact by the lower courts were not arbitrary and were based on material evidence, precluding any interference by the higher court. It was asserted that the case did not involve any substantial questions of law warranting admission for final hearing. The appeal was summarily rejected, with the court highlighting that the appellant's attempt to challenge the decision was barred by limitation. Ultimately, the court held that no interference was possible, given the presence of an alternative legal remedy under the Companies Act, 1956.
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