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TMI Blog1993 (10) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt has made the order of reference so that the conflict may be resolved by a larger Bench. It would be useful to reproduce the order of reference dated May 12, 1993, which reads as under : "The question has arisen in this case whether complicated and disputed questions of facts which require extensive evidence should be dealt with while adjudicating the title of equity shareholder to certain shares and the rectification of the register be ordered under section 155 or such a dispute should be resolved by filing a civil suit which unlike the petition under section 155 is not a summary proceeding. This court in two cases, one of Punjab Distilling Industries Ltd. v. Biermans Paper Coating Mills Ltd. [1973] 43 Comp Cas 189 (Delhi) and in the case of Anil Gupta v. Delhi Cloth and General Mills Co. Ltd. [1983] 54 Comp Cas 301 (Delhi) had taken a view to the effect that having regard to the language used in section 155 of the Companies Act, it wag clear that the proceedings under this section can from its very nature be only a summary proceeding and that in all the cases where serious questions are in dispute and the intensity, the depth and the sweep of allegations on either s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of reference, we may also reproduce section 155 of the Act as under : "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 takes place, in entering on the register the fact of any person having become, or ceased to be, a member ; the person aggrieved, or any member of the company, or the company, may apply to the court for rectification of the register. (2) The court may either reject the application or order rectification of the register ; and in the latter case, may direct the company to pay the damages, if any, sustained by any party aggrieved. In either case, the court in its discretion may make such order as to costs as it thinks fit. (3) On an application under this section, the court ( a )may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register whether the question arises between members or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the court for rectification of the share register. The provisions of the Act relating to transfer of shares received the attention of the Sachar Committee. The said Committee recommended that sections 111 and 155 should be assimilated into a single statutory provision. The recommendations have been accepted by the passing of the Amendment Act of 1988 and the powers of the court under section 155 have been conferred on the Company Law Board as also the power of the Central Government under section 111 of the Act. The existing section 155 has been omitted from the Act and the existing section 111 has been substituted by new section 111 which, inter alia , confers powers on the Company Law Board to direct rectification of the share register and requires the company to give reasons in case of refusal to register the transfer of shares and also provides for an appeal to the Company Law Board against any refusal of the company to register the transfer of the shares. Now, section 111 reads as under : "111. (1) If a company refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the transfer of, or the transmission by operation of law o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m orders, including any orders as to injunction or stay, as it may deem fit and just ; ( b )such orders as to costs as it thinks fit ; and ( c )incidental or consequential orders regarding payment of dividend or the allotment of bonus or rights shares. (7) On any application under this section, the Company Law Board ( a )may decide any question relating to the title of any person who is a party to the application to have his name entered in, or omitted from, the register ; ( b )generally, may decide any question which it is necessary or expedient to decide in connection with the application for rectification. (8) The provisions of sub-sections (4) to (7) shall apply in relation to the rectification of the register of debenture holders as they apply in relation to the rectification of the register of members. (9) If default is made in giving effect to the orders of the Company Law Board under this section, the company and every officer of the company who is in default shall be punishable with fine which may extend to one thousand rupees and with a further fine which may extend to one hundred rupees for every day after the first day after which the default continues. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering various earlier decisions came to the conclusion that although the power conferred by section 155 on courts is very wide, the law seems to be well settled that the remedy provided by the section is summary, it can be invoked in non-controversial matters, requiring quick decisions and is not meant to be used for deciding disputes requiring investigations. It was held that in case of dispute of complicated nature involving controversy under several heads and necessitating a regular investigation this section ought not to be allowed to be used and the party concerned should be directed to proceed by way of a regular suit and it would not be proper to decide those questions in summary proceedings under section 155. In that case the petitioner was directed to establish her claim in a regular suit. Similar views have been expressed by two Division Benches and one single Bench decision of this court, as noticed hereinbefore. The Supreme Court in Public Passenger Service Ltd. v. M.A. Khadar [1966] 36 Comp Cas 1 ; AIR 1966 SC 489, has observed that where by reason of its complexity or otherwise the matter can more conveniently be decided in a suit, the court may refuse leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 9 of the Code of Civil Procedure. We see neither express nor any implied bar. Dealing with the Division Bench judgment of this court in the case of Punjab Distilling Industries Ltd. [1973] 43 Comp Cas 189 (Delhi) cited in support of the contention that the suit was maintainable as it raises some complicated questions of title to the shares and as the suit raised complicated questions of title the same could not be dealt with under section 155 of the Act, the learned judge in Harnam Singh's case [1992] 74 Comp Cas 726 opines (at page 730) : "In my view, however, that judgment does not help the contention of Mr. Khanna for the reason that the same related to proceedings under section 155 of the Companies Act itself. That judgment was not delivered in a suit." With great respect we are unable to agree with the aforesaid reasoning. The fact that the Division Bench judgment was not delivered in a suit and was delivered in an appeal against an order made on a petition under section 155 of the Act will not make any difference. In our view, the relevant factor to be considered is the ratio of a judgment and not in which proceedings, i.e., suit or petition under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed in Public Trustee v. Rajeshwar Tyagi [1973] 43 Comp Cas 371 (Delhi) are primarily based upon the views of the Full Bench of this court in University of Delhi v. Hafiz Mohd. Said, AIR 1972 Delhi 102 [FB]. The judgment of the Full Bench of this court in University of Delhi v. Hafiz Mohd. Said, AIR 1972 Delhi 102 [FB], was overruled by the Supreme Court. In any event it is not good law in view of Shah Babulal Khimji v. Jayaben D. Kania, AIR 1981 SC 1786." The learned single judge did not say anything on the second point considered by the Division Bench. The fact that the Division Bench had relied upon a Full Bench of the court which had been overruled by the Supreme Court, in our opinion, was not of any relevance while dealing with the scope and ambit of power under section 155 of the Act and this we say with great respect to the learned single judge. In Harnam Singh's case [1992] 74 Comp Cas 726, an earlier judgment of a single judge of this court in the case of Delhi Cloth and General Mills Co. Ltd. [1983] 54 Comp Cas 301 (Delhi) was not followed for the same reasons which weighed with the learned single judge for not following the Division Bench judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or enables the court generally to decide any question which it is necessary or expedient to decide in connection with the application for rectification." The main question for consideration, however, is not about the wide powers of court under section 155 of the Act. The main question is whether the remedy provided by this section is summary or not and whether the remedy of suit is barred. We would assume that the power conferred by section 155 on the courts is very wide but at the same time it has to be kept in view that it is a discretionary power. The question, therefore, is whether this wide though discretionary power, is summary in nature or not and whether the remedy of suit would be barred. In the Gujarat judgment also it does not seem to have been held that the suit would be barred as seen from the following observations (at page 456 of 48 Comp Cas) : "Therefore, both on principle and on authority, it becomes crystal clear that a petition under section 155 cannot straightaway be disposed of by merely saying that as complex and complicated questions of title are raised, the matter ought to be decided by way of a suit and the party ought to be relegated to a suit. At be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to title as is apparent from a bare reading of sub-section (3) of section 155 of the Act. We do not agree with the contention that the jurisdiction of wide amplitude would be rendered fruitless and nugatory and the purpose behind introducing section 155 would be defeated, if it is held that the company court exercises summary jurisdiction under section 155 of the Act. Further, in our view, the procedure by which a party can come to court and file an application seeking rectification of the register, by a petition and not summons for judgment, is not relevant for determining the nature of the jurisdiction the company court exercises. A long line of decision has clinched the issue and in our view the matter is no more res integra and is covered by the decision of the Supreme Court in the case of Public Passenger Service Ltd. [1966] 36 Comp Cas 1 holding that the court may refuse relief under section 155 in exercise of its discretionary jurisdiction and relegate the parties to a suit where by reason of its complexity or otherwise the matter can be more conveniently decided in a suit. We may also notice two other judgments cited by learned counsel for the petitioner ; one of the Ke ..... X X X X Extracts X X X X X X X X Extracts X X X X
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