9911796707
TMI Blog1989 (9) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... For better appreciation of the contentions as made by learned counsel for the parties, it will be useful, to refer, in brief, to the facts of the case. The petitioner is a non-resident Indian, permanently residing and working for gain at London. The petitioner subscribed to the shares and debentures of respondent No. 1 (hereinafter called "the company") and was allotted 29,000 shares, on February 15, 1983, and 13,974 shares on July 27, 1984. All these shares were equity shares of Rs 10 each. Sometime in January and February, 1986, the company announced/offered issue of 18,14,400 equity shares and 13.5% redeemable non-convertible debentures on rights issue basis, closing on March 20, 1986. In response to the offer, the petitioner sent in the necessary application for allotment of 25,782 equity shares, at a premium of Rs. 15 per share, and for 8,594 debentures of Rs. 100 each. The amount was paid from the Canara Bank, London Branch, by a demand draft, drawn on the Canara Bank, Foreign Department, Bhagwan Dass Road, New Delhi, and the rupee equivalent of the amount paid was Rs. 15,03,950. The aforesaid amount was duly deposited with the company's bankers to the issue, viz. , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of India, wrote, "we have to state that the securities of Shri P.D. Jain and others are under dispute and a stay order in this respect has been granted by the Hon'ble Sub-Judge, 1st Class, Ludhiana" On April 28, 1987, the Joint Director addressed a letter to the company, thereby requesting it to furnish a copy of the proceedings relating to the stay order having been granted by the learned Sub-Judge, at Ludhiana. Some time in late 1987, through the Office of the Controller of Capital Issues, Government of India, the petitioner received a document purporting to be the ex parte decree dated April 30, 1987, passed in a suit filed by the company. From the decree, it appears that the company had filed a suit in the Court of the Sub-Judge, Ludhiana, on March 9,1987. In the suit, the petitioner and five other members of her family were never served directly, but the order restrained them from disposing of their remaining shares in any manner, or from repatriating the same in any manner whatsoever. According to the petitioner, the company has abused the process of law, inasmuch as the court at Ludhiana has no jurisdiction to entertain the suit. Getting an ex parte decree, in a matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and of the petitioner, enclosing the order of injunction passed by the civil court at Ludhiana, in Civil Suit No. 11 of 1987. In spite of that, the petitioner took no steps till date, to have the decree set aside, nor has any appeal been filed. Thereafter, the company filed another suit, being Suit No. 17 of 1988, which is still pending before the Sub-Judge, 1st Class, Ludhiana. In the suit, the court at Ludhiana has passed an order dated January 15, 1988. In the suit, notice has already been issued to the petitioner and the petitioner has not taken any steps to defend the suit. The aforesaid orders are, therefore, binding upon the petitioner and the petitioner is restrained, as per the orders, from dealing with the shares, debentures, dividend and interest payable thereon. The respondent has not abused the process of law or (it cannot be said) that the court at Ludhiana has no jurisdiction to entertain the suit. For similar reliefs, other members of the family, namely, Shri P.D. Jain, Shri Ashok Jain, Mrs. Sangya Jain, Miss Nandita Jain and Miss Rita Jain, have filed petitions, being C.P. Nos. 228 of 1987, 38 to 41 of 1988, against the respondents. The company, in its repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Shanker Ghosh contended that the relief which the court can grant under section 113 of the Act is to make good the default, namely, the default which is referred to in sub-section (1) as also in sub-section (2) of section 113. This default is not in making the shares, ready for delivery. He has placed reliance upon the judgment in Asiatic Oxygen Ltd., In re, [1972] 42 Comp Cas 602 (Cal) ; AIR 1972 Cal. 50. Dr. Shanker Ghosh further contended that section 113 entails penal consequences. Accordingly, the section has to be construed strictly. As the section does not contain any provision for delivery of the shares, a suit has to be filed for obtaining such a relief. Section 113 of the Act, prior to its amendment, reads as under : "113. Limitation of time for issue of certificates, (1) Every company shall, within three months after the allotment of any of its shares, debentures or debenture stock, and within two months after the application for the registration of the transfer of any such shares, debentures or debenture stock, complete and have ready for delivery the certificates, of all shares, the debentures, and the certificates of all debenture stock allotted or transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ault. Sub-section (3) of the said section empowers the court to make an order upon the company or any officer of the company only to make good the default in complying with the provisions of sub-section (1) to the said section. Failure to comply with the requirements of sub-section (1) to the said section thus shall be visited with penal consequences. In that view of the matter, in my opinion, the said sub-section has to be construed strictly. . . . . The said sub-section nowhere provides for delivery of the certificates of shares or debentures or debenture stock but only enjoins upon the company to have the same ready for delivery. The said words in the sub-section, in my opinion, should not be construed in such a way as to give an extended meaning to the words to have them ready for delivery'. Sub-section (1) does not impose an obligation upon the company to deliver the said shares, etc. Thus, in my opinion, sub-section (3) to the said section does not authorise a person to have an order for delivery of the said shares. In that view of the matter, in my opinion, this application is misconceived and must fail." I am in respectful disagreement with the judgment in Asiatic Oxyg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the petitioner and other members of her family, as the same have been passed by the learned Sub-Judge, 1st Class, Ludhiana, having no jurisdiction, and as such the same are nullity. According to him, the petitioner and other members of her family, who are defendants in the suits filed by the company at Ludhiana, are non-resident Indians, permanently residing in London. He, thus, has urged that the company abused the process of law, in filing the suits in the civil court at Ludhiana, when the civil court at Ludhiana has no jurisdiction to entertain the suits. Mr. Bhat has further urged that the company has failed to place any document on the record to show that Shri Ganga Ram Sharma was acting as an attorney of any of the petitioners who have filed the present petitions under section 113 of the Act. The name of Shri Ganga Ram has been introduced with a view to invoke the jurisdiction of the learned court at Ludhiana Mr. Bhat has also submitted that Miss Nandita Jain had already filed a petition, being C.P. No. 228 of 1987, under section 113 of the Act, thereby claiming reliefs similar to the reliefs claimed in the other petitions. Prior to the filing of Suit No. 17 of 1988, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be completely ignored, as if no such order was ever passed or existed. In Amrit Bhikaji Kale [1983] 4 SCC 437 ; AIR 1983 SC 643, their Lordships of the Supreme Court held (at page 647 of AIR 1983 SC). "If Janardhan became the owner on April 1, 1957, all subsequent proceedings in which the Tribunal held that the date of purchase was postponed because the recorded owner Ashoklal was a minor were without jurisdiction. The Tribunal had absolutely no jurisdiction to proceed on the footing that the date of sale was postponed. It is neither an incorrect order nor an erroneous order as was sought to be made out but the Tribunal lacked the jurisdiction to proceed under section 32F because when the proceedings under section 32F were commenced, Janardhan had long since become the deemed purchaser. Therefore, all subsequent proceedings were ab initio void and without jurisdiction and the High Court was right in holding that orders passed therein were nullity. The attempt to overcome this position by urging that the order was erroneous was rightly repelled by the High Court holding that the orders were null and void, proceeding on an erroneous assumption of a jurisdic-tional fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to decide the question with regard to its jurisdiction to entertain the suits filed by the company against the petitioner and other members of her family. So long as the decree and the order passed by the learned Sub-Judge, 1st Class, Ludhiana, in the facts and circumstances of the present case, are not discharged or vacated, the same are binding upon the petitioner. The other facet of the argument of Mr. Bhat is that under section 41( b ) of the Specific Relief Act, 1963, the court has no jurisdiction to restrain a person from initiating any proceedings in a court of law. He has placed reliance upon the judgment in Cotton Corporation of India Ltd. v. United Industrial Bank Ltd. [1984] 55 Comp Cas 423 (SC). Dr. Shanker Ghosh, on the other hand, contended that section 41( b ) of the Specific Relief Act, does provide that an injunction cannot be granted to restrain any person from instituting or prosecuting any judicial proceeding in a court. But, in the present case, the proceedings have already been initiated and the petitioner is being heard. The contention of the respondent is not that the matter cannot be heard or that there is any injunction restraining the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of exchange or hundis involved in the dispute for the purpose of any suit or other proceedings including winding up proceedings under the Companies Act. In the appeal filed by the bank, a Division Bench of the Bombay High Court issued an interim injunction restraining the Corporation from presenting a winding up petition. While interpreting the provisions of section 41( b ) of the Specific Relief Act, their Lordships of the Supreme Court held (at page 431): "It is, therefore, necessary to unravel the underlying intendment of the provision contained in section 41( b ). It must at once be conceded that section 41 deals with perpetual injunction and it may as well be conceded that it has nothing to do with interim or temporary injunction which as provided by section 37 are dealt with by the Code of Civil Procedure. To begin with, it can be said without fear of contradiction that anyone having a right that is a legally protected interest who complains of its infringement and seeks relief through court must have an unhindered, uninterrupted access to law courts. The expression 'court' here is used in its widest amplitude comprehending every forum where relief can be obtained in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n : When defending against a claim of injunction the person vindicates the claim and right to enforce the same ; if successful he does not get relief but a door to the court which was bolted in his face is opened. Why should he be exposed to multiplicity of proceedings? In order to avoid such a situation the Legislature enacted section 41( b ) and statutorily provided that an injunction cannot be granted to restrain any person from instituting or prosecuting any proceeding in a court, not subordinate to that from which the injunction is sought. Ordinarily, a preventive relief by way of prohibitory injunction cannot be granted by a court with a view to restraining any person from instituting or prosecuting any proceeding and this is subject to one exception enacted in larger public interest, namely, a superior court can injunct a person from instituting or prosecuting an action in a subordinate court with a view to regulating the proceeding before the subordinate courts. At any rate the court is precluded by a statutory provision, from granting an injunction restraining a person from instituting or prosecuting a proceeding in a court of co-ordinate jurisdiction or superior jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and restrained. Though the petitioner can file proceedings in the court, the court should dismiss it, not on the ground that she cannot approach the court, but on the ground that she has no right, as there is an injunction order against her. If I accept this argument of Dr. Ghosh, then it will mean that though there is no stay against the petitioner from instituting judicial proceedings under section 113 of the Act, after the institution, the petition should be dismissed on the ground that there is a restraint order against the petitioner. I am not holding that the courts can ignore the decree or the order passed by the other courts. But how far such decree or the order affects the rights of a party depends upon the facts and circumstances of each case. In the present case, if the contention made by Dr. Ghosh is correct, then the filing of the petition by the petitioner is just a formality. In other words, the petitioner can file a petition, but only to get the same dismissed on the ground that there is a stay order against her. The filing of the petition thus will be a futile exercise. It can also mean that the petitioner, in fact, could not initiate judicial proceedings fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bentures delivered to her under sub-section (3) of section 113 of the Act. The petitioner had subscribed to the shares and debentures of the company and was allotted 29,000 shares on February 15, 1983, and 13,974 shares on July 27, 1984. All these shares were equity shares of Rs. 10 each. After the company announced/offered the issue of 18,14,400 equity shares and 13.5% redeemable non-convertible debentures on rights issue basis, the petitioner sent in the necessary application for allotment of 25,782 equity shares at a premium of Rs 15 per share, and for 8,594 debentures of Rs. 100 each. The amount of Rs 15,03,950 was admittedly paid from Canara Bank, London Branch, by a demand draft. This amount was duly deposited with the company's bankers to the issue, i.e. , Hongkong Bank, New Delhi. The shares and debentures were allotted to the petitioner on June 23, 1986. Under sub-section (1) of section 113 of the Act, within 3 months after the allotment of its shares or debentures, the company was under a statutory obligation to complete and have ready for delivery the certificates of all shares, debentures, etc. It' is also not in dispute that the petitioner and other members of her ..... X X X X Extracts X X X X X X X X Extracts X X X X
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