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Issues involved: Jurisdiction of Civil Court u/s 111 of Companies Act, 1956 for disputes regarding redeemable preference shares.
Summary: The case involved a challenge to the trial Court's rejection of the plaint under Order 7 Rule 11 CPC on the ground that disputes regarding redeemable preference shares under the Companies Act, 1956 should be decided by the Company Law Board u/s 111 of the Act. The plaintiffs sought declaration and mandatory injunction regarding the redemption of preference shares issued in 1957, which the defendants claimed were subject to a compromise pending before the Company Law Board. The trial Court dismissed the suit based on the belief that the jurisdiction of the Civil Court was barred due to the Company Law Board's jurisdiction u/s 111 of the Act. However, the High Court held that the jurisdiction of the Civil Court and the Company Law Board is concurrent, as established in previous judgments. It was emphasized that highly disputed questions of fact should be decided by the Civil Court, not the Company Law Board. Therefore, the impugned judgment dismissing the suit was set aside, and the appeal was accepted. In conclusion, the High Court ruled that the Civil Court has jurisdiction to try and determine disputes related to redeemable preference shares under the Companies Act, 1956. The case was directed to appear before the District & Sessions Judge for marking the suit to a competent Court for further proceedings, ensuring notice to the defendants before proceeding.
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