1983 (3) TMI 309 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the petition under Section 155 of the Companies Act.
2. Alleged contravention of Section 299 of the Companies Act by the Directors.
3. Validity of the Board of Directors' meetings and resolutions.
4. Legality of the share transfers without share certificates.
5. Jurisdiction of the Civil Court versus the High Court.

Detailed Analysis:

1. Maintainability of the petition under Section 155 of the Companies Act:
The primary issue is whether the petition under Section 155 of the Companies Act is maintainable given the complexity of the case. Section 155 provides a summary remedy for rectification of the register of members. The court cited precedents, including *S. Bhagat Singh v. The Piar Bus Service Ltd., Amritsar* and *Smt. Soma Vatt Devi Chand v. Krishna Sugar Mills Ltd.*, which establish that Section 155 is intended for non-controversial matters requiring quick decisions. The court held that due to the various disputes and complexities involved, the matter should be relegated to a Civil Court. The Supreme Court's decision in *Public Passenger Service Ltd. Chidambaram v. M.A. Khadar* was also referenced, reinforcing that complex matters should be decided in a suit rather than under Section 155.

2. Alleged contravention of Section 299 of the Companies Act by the Directors:
The petitioners alleged that certain directors (Gurdeep Singh, Daljit Singh, Smt. Harmohinder Kaur, Smt. Inderjeet Kaur, and Miss Jasmeen Chug) violated Section 299 by not disclosing their interest in the theatre hire agreements, leading to automatic vacation of their offices. This allegation adds to the complexity, requiring detailed investigation, which is beyond the scope of summary proceedings under Section 155.

3. Validity of the Board of Directors' meetings and resolutions:
The petitioners contested the validity of the Board meetings held on 3rd July 1976 and 2nd November 1976, which appointed new directors and approved share transfers. The validity of these meetings is crucial as it impacts the legality of subsequent resolutions and actions. The court noted that determining the legality of these meetings involves intricate factual disputes, which are better suited for a Civil Court.

4. Legality of the share transfers without share certificates:
The petitioners argued that the share transfers were invalid as they were conducted without the original share certificates. The respondents countered that the certificates were lost, and the transfers were made based on representations and allotment letters. This issue involves factual determinations about the representations made and the circumstances of the transfers, further complicating the case.

5. Jurisdiction of the Civil Court versus the High Court:
The respondents initially objected to the jurisdiction of the Civil Court, suggesting that the proper remedy was under Section 155 of the Companies Act. However, they later conceded this point. Given that similar suits are already pending in Civil Court, the High Court decided that the Civil Court is the appropriate forum for resolving these disputes. The court emphasized that the decision in the pending suits would be binding on the parties.

Conclusion:
The High Court dismissed the petitions, upholding the preliminary objection that the matters involved complex questions of law and fact, which are unsuitable for summary proceedings under Section 155 of the Companies Act. The petitioners were advised to seek resolution through the Civil Court. No order as to costs was made.