1991 (2) TMI 416 - HC - Companies Law

Summary

Issues Involved:
The suit filed for declaration and injunction regarding shares of a company, seeking rectification of shares u/s 155 of the Companies Act.

Judgment Details:

(1) Rectification of Shares:
The plaintiffs sought remedies under section 155 of the Companies Act for rectification of shares, specifically requesting the delivery of duly registered share certificates and cancellation of transfer deeds.

(2) Companies Act, 1956 - Section 155:
Section 155 of the Companies Act allows for rectification of the register of members, enabling the Court to decide questions related to the title of any person regarding entry in or omission from the register.

(3) Rule 6 of Companies(Court) Rules, 1959:
Rule 6 states that the practice and procedure of the Court, along with the provisions of the Code of Civil Procedure, apply to proceedings under the Companies Act, allowing the Company Judge to exercise powers as per the Code.

(4) Jurisdiction of Civil Court:
The principle established by the Privy Council in Nazir Ahmad's case, reiterated by the Supreme Court, indicates that when a statute requires a specific action, it must be done accordingly. The cognizance of suits involving shares is impliedly barred by section 9 of the Code of Civil Procedure.

(5) Special Statute - Companies Act:
The Companies Act provides special remedies for matters related to shares, and the powers of the Company Judge align with those of a civil court, making it inappropriate for civil courts to entertain issues concerning share title determination.

(6) Conflict of Judgments:
A conflict between the Gujarat High Court and a Division Bench of the Delhi High Court was noted regarding the interpretation of section 155 and the jurisdiction to decide questions of title to shares.

(7) Rejection of Plaint:
Based on Order VII Rule 11(d) of the Code of Civil Procedure, the plaint was rejected as it related to the determination of the right of title to shares in a limited company, implying the bar under section 9 of the Code.

This judgment emphasizes the exclusive jurisdiction of the Company Judge under section 155 of the Companies Act for matters concerning share rectification and title determination, barring the cognizance of civil courts in such disputes.