9911796707
TMI Blog1986 (7) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... re company. Another agreement was entered into between them evidenced by exhibit A-2 on January 22, 1975, for purchase of all the shares of that company. Meanwhile, all the three of them were spending amounts for the improvement of the estate, after they got possession of the estate on October 1, 1974. The petitioner made available necessary funds for purchase of the shares. However, contrary to the agreement, respondents Nos. 2 and 3 purchased the shares of the company in their own names. According to the petitioner, the registration of the shares in their names is brought about by fraud and mistake, since the petitioner is entitled to one-third right in the shares. This petition is, therefore, filed to rectify the mistake by including the petitioner's name also as a joint shareholder in the share register of the company. Respondents Nos. 2 and 3 admit exhibits A-1 and A-2 agreements. However, according to them, the proposal to purchase shares between them and the petitioner was abandoned. According to them, they did not obtain possession of the estate on October 1, 1974, and did not make any joint effort to improve the estate. So also the petitioner did not provide funds for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 3 negotiated and came to an agreement. There is also no mention of the number of shares involved or consideration paid. (3)In order that the names of the shareholders are to be removed, and other names entered in their place, the particulars referred to in clauses (a) to (d ) of section 150 (1) of the Act must be available. The petitioner has not furnished those details. (4)Section 155(2) confers only a discretion on the company court and it may not be desirable, even if permissible, to pronounce on the question of title at this stage since the scope of the agreement is in dispute in O. S. No. 245 of 1976. The questions to be decided are : (1)whether the petition is maintainable under section 155 of the Companies Act, and (2)if so, whether the prayer for rectification of the share register is to be allowed. Section 155 of the Companies Act reads as follows : "155. Power of court to rectify register of members.--(1) If-- (a)the name of any person-- (i)is without sufficient cause, entered in the register of members of a company, or (ii)after having been entered in the register, is, without sufficient cause', omitted therefrom, or (b)default is made, or unnecessary delay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion with the application for rectification". Under sub-section (1) of section 2, jurisdiction to decide questions under the Companies Act is the exclusive jurisdiction of the court as defined in that sub-section, namely, in an application under section 155, the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate. It may also be noticed that section 156 of the Act refers only to the filing with the Registrar of notice of an order of the court, evidently meaning the court having jurisdiction under the Act and not of any civil court whose judgments or orders are not required to be notified to the Registrar at ail. From a reading of this provision prima facie it would appear that it is not possible to file a separate suit in the ordinary civil court for obtaining the relief of rectification of the register of members of a company. In case of resort to a civil court, the provisions in section 156 may even be defeated. Learned counsel appearing for the parties placed before us several decisions for and against the abovesaid proposition. Out of this, Ramakrishna Rao v. Krishna Rao [1947] 1 MLJ 75 and Mahendra Kumar J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les framed, an application for rectification had to be made by originating summons. But in India the company court is approached under section 155 with a 'petition', which is more or less analogous to a suit. Some of the earlier Bombay decisions were rendered under rules framed by the High Court. These decisions cannot apply to petitions under section 155 where the court is empowered to decide 'any question which it is necessary or expedient to decide in connection with the application for rectification'. The jurisdiction conferred by section 155(3) is wide and comprehensive, and I am in respectful agreement with the view taken in Gulabrai's case [1978] 48 Comp. Cas. 438 (Guj.) that it is not summary". Reference was also made to the judgment of this court in P. V. Chandran v. Malabar and Pioneer Hosiery P. Ltd. [1984] KLT 84 (Sh N); [1985] 57 Comp. Cas. 570, in support of the contention that non-compliance with the provisions of section 108 of the Companies Act is fatal to a petition under section 155. However, it may be observed that that was a case of refusal to register transfer of shares of a private limited company, in the articles of association of which, there were specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r [1966] 36 Comp. Cas. 1 ; AIR 1966 SC 489, the Supreme Court only indicated that the court exercising jurisdiction under section 155 may refuse relief under that section if the questions involved can be more conveniently decided in a suit. However, in that case, the Supreme Court did not interfere with the granting of relief under section 155 by the High Court. The question of compliance with the provisions of section 108 of the Companies Act will arise only if it is found that the petitioner has title to the shares in question. In this case, the allegation is that as per exhibits A-1 and A-2, the petitioner is entitled to one-third right in the name of respondents Nos. 2 and 3. That issue was tried before the company court. Parties were afforded sufficient opportunity to adduce their evidence. The records did not disclose that the company court at any time refused any of the parties opportunity to adduce evidence. In fact, there was a fullfledged trial on all the issues in this petition. Therefore, under the circumstances of this case, we do not think that it is necessary to direct the parties to a fresh suit to decide the dispute between the parties. That will only result in mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of 1981, 492 of 1981 and 508 of 1981 are applications for adjourning the petition. The company court allowed those applications and adjourned the petition to suit the convenience of the parties. Application No. 360 of 1981 was filed on behalf of the company to hear and decide the question of maintainability of the company petition as a preliminary issue. The company court posted that application along with the company petition itself. We are stating this only to show that the matters involved were enquired into in full. It ' cannot be said that any of the parties proceeded with the trial of the proceedings as if the preliminary issue of maintainability of the petition is being tried. Only by the final order, the company court held that the petition was not maintainable. Under the circumstances, we do not think that the prayer for remand of this old company petition is to be allowed at this stage. The evidence in this case consists of the oral evidence of the petitioner, P.W.-1, the oral evidence of P.W.-2 and exhibits A-1 to A-14. None of the respondents is examined in these proceedings. No documentary evidence is adduced on behalf of the respondents. As P.W.-1, the petitioner h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xhibit A-4 were the papers for share transfer. On his return from Trivandrum, however, the second respondent told P.W.-1 that it would take another two weeks to get the papers. Subsequently, respondents Nos. 2 and 3 cut and removed some trees from the estate. So P.W.-1 had to file OS No. 245 of 1976 in the Calicut Sub-Court for a temporary injunction against the cutting of trees. The written statement in that suit is exhibit A-5 and the additional written statement is exhibit A-6. The petition for injunction is exhibit A-7 and the affidavit in support thereof is exhibit A-8. The objection to the injunction petition is exhibit A-9 and the certified copy of the judgment in that suit is exhibit A-10. Exhibit A-10 was against P.W. 1 and he filed A.S. No. 15 of 1981 challenging that judgment. Exhibit A-11 is the copy of the appeal memo of that appeal. P. W. 1 had paid Rs. 35,000 to the second respondent for purchase of shares as agreed to. P. W. 1 and respondents Nos. 2 and 3 had gone together to Chengannur and paid Rs. 1,00,000 to George Varghese, son of Dr. Varghese. They went from Calicut to Chengannur in a taxi. As far as P. W. 1 is aware, 100 shares have been purchased by the secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are no records to show that he continued to stay in the estate after its sale. Petitioner and respondents Nos. 2 and 3 had told him about the manner in which they were getting the shares transferred. He is in good terms with all the three of them. Exhibit A-1 is the agreement dated November 10, 1973, in which the petitioner and respondents Nos. 2 and 3 are parties. In the first portion of exhibit A-1, there is a reference to the sale of another rubber estate. Detailed conditions about the arrangements between the parties are mentioned in the agreement. In clause 10 of exhibit A-1, it is mentioned that if the parties find that the arrangement among them is properly working, they will enter into further agreements regarding other business. Exhibit A-2 is a photostate copy of the statement of accounts as on October 31, 1974, which is referred to in P. W. 1's evidence. There is an entry "Thandiyode account" which shows an expense of Rs. 80,341.88 under that account. According to P. W. 1, this relates to the expenditure incurred towards the first respondent-company. Exhibit A-3 is the agreement dated January 22, 1975. In exhibit A-3, it is stated that the petitioner and respondents No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntions. They have not disclosed the facts exclusively known to them. They have no explanation as to what happened to the Rs. 1,00,000 referred to in exhibit A-3 and also under what circumstances exhibit A-2 accounts and exhibit A-4 letter were written. Under the circumstances, we have to draw the presumption to the effect that if the documents and accounts were produced, that would be unfavourable to the respondents (see Kundan Lal Rallaram v. Custodian, Evacuee Property, AIR 1961 SC 1316). On a consideration of the evidence in this case, we hold that the acquisition of shares by respondents Nos. 2 and 3 in Thandiyode estate was for the common benefit of respondents Nos. 2 and 3 and the petitioner and that the petitioner is entitled to one-third right in the shares acquired in the names of respondents Nos. 2 and 3. In the result, it is ordered as follows : (1)The appellant's title/right to one-third right in the shares acquired in the names of respondents Nos. 2 and 3 in the first respondent company is hereby declared. (2)It is further declared that the appellant is entitled to get his name included in the share register of the first respondent-company along with the names of re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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