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TMI Blog1998 (9) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the scope of rectification or not in the light of what we have said above. Since the High Court has not examined this case in the aforesaid light, we feel it appropriate to direct the High Court to decide this question in the light of what we have said afresh - CIVIL APPEAL NO. 5152 OF 1995 - - - Dated:- 4-9-1998 - G.B. PATTANAIK AND A.P. MISRA, JJ. Satish Chandra and Sarat Chandra for the Appellant. A.T. Ansari and S .K. Kaul for the Respondent. JUDGMENT Misra, J. - The present appeal arises out of an order dated 16-5-1994 dismissing the appellant-company appeal by the High Court. The short question raised by the appellant is : 'Whether in the proceedings under section 155 of the Companies Act, the Court has exclusive jurisdiction in respect of all the matters raised therein or have only summary jurisdiction?' According to the appellant, there are conflicting decisions of the various High Courts in India which resulted into reference of appel-lant's case to the Full Bench by the Delhi High Court. The Full Bench decided that the jurisdiction is summary in nature, thus rejecting the case of the appellant that the power of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83 Shri V.K. Bhargava dies in a car accident, which according to the appellant is the reason of dispute between the appellant-company and the respondent-company, being raised by the brothers of the deceased Shri V.K. Bhargava. It is because of this the appellant filed a composite petition on 10-9-1984 under sections 397, 398 and 155 of the Companies Act, 1956 for rectification of the register of members and for oppression and mismanagement of the respondent-company which was admitted on 14-9-1984. However, it seems that the petition which was filed by the appellant under sections 397, 398 read with section 155, the Court by its order confined the relief under section 155, that is to say, rectification prayer made therein. In this appeal we are only concerned with this part viz., the jurisdiction of the Court under section 155 while dealing with any application for the rectification. Further case of the appellant-company is that Shri V.K. Bhargava informed the appellant that his group of share-holders in the respondent-company wanted to get rid of Mittal Group of shareholders as the joint functioning was not proceeding well. It is on account of this he desired that the appellant-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent-company as owner of the shares to the extent of ₹ 1,26,500. In fact, no such amount was ever paid to the respondent-company and at no point of time the appellant-company became entitled to be the shareholder of the respon-dent-company. The shares of the respondent-company could only be transferred with the permission of the Board of directors. There was no such permission. In fact, in order to become the member or to purchase the shares of the company a procedure is prescribed under the Act which has to be followed before the shares could be transferred. There is neither any such plea by the appellant-company nor there is any such proceeding undertaken for the transfer of shares in favour of the respondent- company as alleged. Actually, the aforesaid Mittal Group offered to transfer shares to Shri V.K. Bhargava which was duly transferred by the Board of directors. Hence no question arises of offering any share for sale to the appellant-company of the shares belonging to the Mittal Group. If there are any transaction of advancement of ₹ 1,26,500 to Shri V.K. Bhargava, the said transaction is between Shri M.L. Bhargava or by the appellant-company with Shri V.K. Bharg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or invoking the summary jurisdiction under section 155, on the facts and circumstances of this case and, if advised, the appellant-company could seek his remedy by filing regular civil suit after seeking permission of the court under section 446(2). The petition of the appellant-company was, therefore, dismissed. On appeal also the Division Bench dismissed the appeal. Hence this special leave petition. 6. Within the aforesaid matrix of facts the question raised is not something new but is what is being raised time and again in the various High Courts including this Court. The question is, whether the jurisdiction of the Court under section 155 is summary in nature or it is all encompassing to include all types of disputes to be adjudicated exclusively by that Court. The learned senior counsel for the appellant contends that the aforesaid Full Bench of the Delhi High Court holds it to be summary in nature based on the decision of this Court in the case of Public Passenger Service Ltd. v. M.A. Khadar [1966] 36 Comp. Cas. 1 about which he feebly submitted to be in per curiam. In the alternative contention is, both in the Full Bench decision of the Delhi High Court and decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exercise of discretion has to be within the permissible parameters. Strong reliance is placed on the proviso of sub-section (3) of section 38 of the Indian Companies Act, 1913 ('1913 Act') under which the Court exercising power of rectification may direct an issue to be tried by the civil court in which any question of law is raised. This section deals with rectification as section 155 of the Indian Companies Act, 1956 (as amended in the year 1960) ('1960 Act') to which the present case is concerned. Since the proviso to the said section 38 was deleted, it is urged this inevitably indicates that Court need not refer any issue now. 8. As we have said above the interpretation of section 155, viz., the rectification of the register of a company has come umpteen time before various courts and in view of divergence of view Full Bench of the Delhi High Court was constituted. 9. We may also notice that by Companies (Amendment) Act, 1988 section 155 of the Act has been omitted from the Act. With effect from 31-5-1991 and now under section 111 the power to rectify the register of members of a company has been vested in the CLB. However, we are not concerned wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10, if it would have been done different inference would have been drawn. The submission is, the expression 'the Court' used under section 155 by virtue of definition of the Court as defined under section 2( 11 ) only means Company court and not Civil court. Similarly section 10 defines jurisdic-tion of the Court under this Act to be the High Court having jurisdiction for the company concern except to the extent the jurisdiction has been conferred in District Court subordinate with the High Court and where jurisdiction has been conferred on District Court the Court would mean the District Court. Hence the only Court which would have exclusive jurisdiction under section 155 would be either High Court or the District Court, as the case may be, by virtue of section 2( 11 ) and section 10. For ready reference section 2( 11 ) and section 10 are quoted hereunder : Section 2(11) : 'the Court' means ( a )with respect to any matter relating to a company (other than any offence against this Act), the Court having jurisdiction under this Act with respect to that matter relating to that company, as provided in section 10; ( b )with respect to any offence against this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Court' in section 9A(1) of the Special Court Act, not the narrower meaning of a Court of civil judicature which is part of the ordinary hierarchy of courts, but the broader meaning of a curial body, a body acting judicially to deal with matters and claims arising out of transactions in securities entered into between the stated dates in which person notified is involved. An interpretation that suppresses the mischief and advances the remedy must plainly be given. (p. 71) The word 'Court' must be read in the context in which it is used in a statute. It is permissible, given the context, to read it as comprehending the Courts of civil judicature and courts or tribunals exercising curial, or judicial, powers. In the context in which the word 'court' is used in section 9A of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, it is intended to encompass all curial or judicial bodies which have jurisdiction to decide matters or claims, inter alia, arising out of transactions in securities entered into between the stated dates, in which a person notified is involved. (p. 70) 17. The Court held that the CLB would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made the winding-up order would be the court which was winding-up the company. It was well-settled that a winding-up order once made could be revoked or recalled but till it was revoked or recalled, it continued to subsist. That was the situation in this case. If the winding-up order was subsisting, the Court which made that order or the Court which kept it in abeyance would have jurisdiction to give necessary directions to the provisional liquidator to take recourse to section 446(2). (p. 634) 19. The question was, whether the Division Bench, which was monitoring the scheme after winding-up order would have jurisdiction to pass an order for a direction to the Official Liquidator when the winding-up order was kept in abeyance ? The High Court held that it has no jurisdiction. This Court rejected this and held, when winding-up order was not set aside, quashed, cancelled or revoked the Court which kept in abeyance the winding-up order would have jurisdiction to give necessary directions. In the present case, as aforesaid, the question is the scope and the width of the jurisdiction of 'Court' under section 155 and not whether a 'Court' keeping abeyance the windin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no Court which could be said to be the Court of winding-up of the company thus the claim petition on behalf of the company which is not being wound-up is not contemplated under section 446(2). This decision and decision in Canara Bank's case ( supra ) rejected the restricted meaning given by the High Court of the expression 'Court which is winding-up the company'. Hence to this extent there could be no doubt, a company under liquidation falling under section 446(2), the Company Judge alone would have exclusive jurisdiction to decide matter covered by it. 22. Now reverting to the submission to read definition of 'Court' as defined under section 2( 11 ) read with section 10 with the word 'Court' used under section 155, whether it would result into any different interpretation to lend support to the submission of the learned counsel for the appellant ? Submission is the word 'Court' under section 155 would only mean Company Judge and he alone would have exclusive jurisdiction while exercising powers under this section, hence any direction to seek leave of the Court under section 446(2) for filing suit cannot be sustained. 23. First th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is fraudulently or without sufficient cause entered in or omitted from their Register of members of a company; or ( b )default is made or unnecessary delay takes place in entering on the register the fact of any person having 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 refuse the application, or may order rectification of the register and payment by the company of any damages sustained by any party aggrieved, and may make such order as to costs as it in its discretion thinks fit. (3) On any application under this section the Court 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 alleged members, or between members or alleged members on the one hand and the company on the other hand; and generally may decide any question necessary or expedient to be decided for rectification of the register : Provided that the Court may direct an issue to be tried in which any question of law may be raised; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany so as to make it conformable with a lawful transfer In Venkataramaiya's Law Lexicon, 2nd Edn.; The act to be done under the powers of that section is the 'rectification of the register, a term which itself implies that the register, either in what is, or what is not upon it, is wrong; but the register cannot be wrong unless there has been a failure on the part of the company to comply with the directions in the Act as to the kind of register to be kept: for if the Act has been complied with, the register must be right and not wrong. 26. In other words, in order to qualify for rectification, every procedure as prescribed under the Act before recording the name in the register of the company has to be stated to have been complied with by the applicant at least that part as required by the Act and assertion of what not complied with under the Act and rule by the person or authority of the respondent-company before applicant to claim for the rectification of such register. The Court has to examine on the facts of each case, whether an application is for rectification or something else. So field or peripheral jurisdiction of the Court under it would be what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the company. Thus before the name of any transferee is registered these procedures has to be shown to have been followed, which is an obligation of any such applicant under the Act. This shows an application is to be made either by the transferor or transferee for registering the name of the transferee as members or shareholders of the company by placing before the company duly stamped and signed document both by the transferor and transferee. Similarly is the position under section 155 of Indian Companies Act, 1960 before power is exercised for rectification essential ingredients are to exist. Section 100 gives mandate to a Company not to register transfer of shares, unless proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee has been delivered to the company along with certificates relating to the shares. 29. All the above indicates the limitation and the peripheral jurisdiction with which Court has to act. In spite of its exclusiveness it cannot take within its lap outside this scope of rectification. This is indicated even by section 155 itself : Power of Court to rectify register of membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y we find even under section 446(1), its words itself indicate jurisdiction of civil court is not excluded. This sub-section states, '... no suit or legal proceedings shall be commenced ... or proceeded with... except by leave of the Court'. The words 'except by leave of the court' itself indicate on leave being given the civil court would have jurisdiction to adjudicate one's right. Of course discretion to exercise such power is with the 'Court'. Similarly under section 446(2) 'Court' is vested with powers to entertain or dispose of any suit or proceedings by or against the company. Once this discretion is exercised to have it decided by it, it by virtue of language therein excludes the jurisdiction of the civil court. So we conclude the principle of law as decided by the High Court that jurisdiction of Court under section 155 is summary in nature cannot be faulted. Reverting to the second limb of submission by the learned counsel for the appellant that court should not have directed for seeking permis- sion to file suit only because a party for dispute sake states that the dispute raised is complicated question of facts including fraud to be ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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