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TMI Blog1977 (9) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... en it might be called up. The defendant applied for 25 shares and deposited Rs. 625 with the application. He was allotted only 12 shares. A sum of Rs. 300 was accordingly appropriated towards the amount payable on allotment in respect of the shares allotted to him. The board of directors of the transferor-bank by a resolution dated June 13, 1960, decided to call from each shareholder I.G. Rs. 12.86 equivalent to O.S. Rs. 15 per share out of the uncalled portion of O.S. Rs. 50. Accordingly a notice dated August 16, 1960, was issued to the defendant calling upon him to deposit a sum of Rs. 154'32 nP. payable by him in respect of his 12 shares on or before September 15, 1960, and informing him that in default of payment on the due date, interest would be charged at the rate of 5 per cent, per annum. The transferor-bank was amalgamated with the plaintiff-bank with effect from September 4, 1961, as per the scheme of amalgamation sanctioned by the Govt. of India, Ministry of Finance, Dept. of Economic Affairs, under notification No. F. 4(86)-BC/-l published in Part II, section 3( ii ) of the Gaz. of India, Extry., dated August 28, 1961. As per para, ( i ) of the said scheme of amalga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Companies Act, 1956, and the Banking Regulation Act, 1949, the High Court alone had jurisdiction to try the suit and that the amalgamation was not in accordance with the provisions of the Banking Regulation Act. On a consideration of the entire material placed by the parties, the trial court held on the main issues of jurisdiction and amalgamation against the defendant. However, the learned Munsif Magistrate held that the plaintiff failed to prove that the defendant applied for the allotment of shares, that there was no proof of the service of notice of forfeiture on the defendant and that the suit was also barred by limitation. Consequently, he dismissed the suit. On appeal, the learned Chief Judge, City Civil Court, affirmed the findings of the trial court on the issues relating to the jurisdiction and validity of amalgamation. However, on the question whether the defendant applied for or was allotted the shares by the transferor-bank the appellate court reversed the finding of the trial court and held that there was no specific denial by the defendant of having made the application for allotment of shares and that the oral evidence of P.W. 1 and the documentary evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Companies Act, 1956, are section 10(2)( b ) and section 616( b ). Section 10 deals with the jurisdiction of courts and reads : "(1) The court having jurisdiction under this Act shall be ( a )the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate to that High Court in pursuance of sub-section (2); and ( b )where jurisdiction has been so conferred, the District Court in regard to matters falling within the scope of the jurisdiction concerned, in respect of companies having their registered offices in the district. (2) the Central Government may, by notification in the Official Gazette and subject to such restrictions, limitations and conditions as it thinks fit, empower any District Court to exercise all or any of the jurisdiction conferred by this Act upon the court, not being the jurisdiction conferred ( a )in respect of companies generally, by sections 237, 391, 394, 395 and 397 to 407, both inclusive; ( b )in respect of companies with a paid-up share capital of not less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r instalment remaining unpaid. Regulation 30 states that the notice given under regulation 29 shall state that, in the event of non-payment on or before the day so mentioned, the shares in respect of which the call was made will be liable to be forfeited. Regulation 31 provides for forfeiture for non-compliance with the notice, by a resolution of the board to that effect. Under regulation 33, a person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares, but shall, notwithstanding the forfeiture, remain liable to pay to the company all moneys which, at the date of forfeiture, were presently payable by him to the company in respect of the share. In view of this regulation 33, there can be no doubt that the liability of the defendant is one arising under the provisions of the Companies Act and, therefore, one falling under section 10. Then the question is whether the jurisdiction of a civil court is excluded over matters arising under the Act in respect of which no notification has been issued under sub-section (2) conferring jurisdiction on the civil court. It is now well settled that ouster of the jurisdiction of a civil court ought not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by some shareholders of a company. The requisition wanted a change in the incumbent of the post of secretary and treasurer of the company. But the requisition was disregarded by the directors of the company. So the requisitionists, thereupon, held their own meeting to remove the board of directors and for appointing a fresh board and replacing the secretary and treasurer "K" by one "R" a shareholder. Then "R" filed an application in the High Court praying for a direction to "K" to hand over to him the records, account books and pass books, keys, etc . But the High Court held that the position of "R" was simply that of a person who had been wrongfully deprived of his office, or of some property or that he had been kept out of property wrongfully and he had a remedy by way of suit in the ordinary course. A Division Bench of the Kerala High Court in Star Tile Works Ltd. v. N. Govindan, AIR 1959 Ker. 254, held that a shareholder of a company was entitled to sue against the company such as the right to vote or right to stand as director of the company. In Rathnavelusami Chettiar v. Manichavelu Chettiar [1951] 21 Comp. Cas. 93; AIR 1951 Mad. 542, Raghava Rao J. held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Companies Act. In connection with the exclusion of jurisdiction of other courts, the line of inquiry is not whether there is any provision besides section 10 in the Companies Act giving the company court exclusive jurisdiction in company matters. But it is whether after having specified the courts having jurisdiction under the Companies Act, the said Act contains an ' otherwise ' provision excluding the jurisdiction of the company court in matters falling under the Companies Act". That case also arose out of a suit filed by one of the shareholders wherein he questioned the validity of the notice of the annual general meeting fixed for January 22, 1965, in regard to items 4 and 5 of the agenda of the meeting. It was alleged that the explanatory notice contained several suppressions of material facts and there was a fraudulent attempt on the part of the directors and managing agents of the company to deceive the shareholders of the defendant-company and have the said resolutions passed without informing the shareholders of the 1st defendant-company as to their rights in respect thereof as also to give particulars of facts which were relevant for the purpose of the said resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction to entertain the suit. The next submission of the learned counsel related to the factum of validity of the amalgamation of the transferor-bank with the plaintiff-bank. Both the courts below have found that the scheme of amalgamation was notified under Ex. A-9 by the Govt. of India, which is the true copy of the said scheme of amalgamation under section 45(7A) of the Banking Regulation Act. The said notification recites that the scheme of the said amalgamation of the transferor bank with the plaintiff-bank has been sanctioned by the Central Govt. under section 45(7A) of the Banking Regulation Act. Subsection (7A) provides that the sanction accorded by the Central Govt. under sub-section (7) shall be conclusive evidence that all the requirements of the section relating to amalgamation have been complied with and a copy of the sanctioned scheme certified in writing by an officer of the Central Govt. to be a true copy thereof, shall in all legal proceedings be admitted as evidence to the same extent as the original scheme. Exhibit A-9 is the true copy of the notification published in the Gaz. of India and has been certified as the true copy by the Under-Secretary to the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le I of Table A of the Companies Act is to give the shareholder an opportunity for payment of the call money. So, before there can be any forfeiture, a proper service of notice is a condition precedent to be fulfilled. Therefore, any irregularity either in the contents of the notice as required under regulation 30 or in the service of notice shall be fatal to the validity of the forfeiture. The Supreme Court in Public Passenger Service Ltd. v. M. A. Khadar [1966] 36 Comp. Cas. 1; AIR 1966 SC 489 held that a defective notice of forfeiture of shares renders the subsequent forfeiture invalid. In this case there is absolutely no proof of service of notice of forfeiture. In Karachi Oil Products Ltd. v. Kumar Shrec Narenderasinghji [1948] 18 Comp. Cas. 215; AIR 1950 Bom. 149 Bhagwati J. (as he then was) held that the forfeiture is treated very strictly by the courts and the directors seeking to enforce it must exactly pursue the course of procedure marked out by the articles. A slight irregularity is as fatal as the greatest. Therefore, it must be held that in this case there has been no valid forfeiture. When once it is found that there was no valid notice of forfeiture and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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