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TMI Blog2017 (7) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... jected. Thus, points 1 and 2 are answered against the petitioner. The contention of the learned counsel for the petitioner is that as per Section 10GB of the Companies Act, 1956, which was inserted by the Companies (Second Amendment) Act, 2002, the suit is barred by the provisions of the Companies Act, is devoid of merits. As already held supra, the second relief of permanent injunction relates to title of the share and this Section is not applicable to the facts of the present case. The learned Judge held that the suit relates to title of the share and therefore dismissed the application. The judgment relied on by the learned Senior Counsel for the petitioner do not advance the case of the petitioner. On the other hand, the judgments relied on by the learned Senior Counsel for the first respondent are squarely applicable to the facts of the present case. In view of the judgments relied on by the learned Senior Counsel for the first respondent as well as the judgment dated 10.03.2017 made in S.L.P.No.4388 of 2017 and for the reasons stated above, hold that this Civil Revision Petition is liable to be dismissed and it is hereby dismissed.Consequently, connected Miscellaneous Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st respondent received larger amounts of cash gifts and the same was kept by his parents to be invested for his welfare; (ii) The petitioner as a father and natural guardian of first respondent opened an account on behalf of the first respondent in UCO Bank, Mount road branch, Chennai, bearing Account No:SB 02710100014018. The petitioner used these funds to acquire shares and make investments in fixed deposits in first respondent name in the second respondent. The shares were purchased from various third parties including the second respondent in the name of first respondent represented by the petitioner. The first respondent had 20180 equity shares in the second respondent in his individual name and 1973 equity shares as second holder along with the petitioner. Bonus shares 1:1 were issued in the years 2008 and 2012; (iii) Misunderstanding arose between the petitioner and his wife, mother of the first respondent and both have filed petitions for divorce and the petitions are pending in III Additional Family Court, Chennai. First respondent and his sister are residing with their mother. The petitioner did not provide sufficient funds for the maintenance of first respondent an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Civil Court and the present suit is abuse of process of the Court; (g) The first respondent is indulging in forum shopping and the plaint is liable to be rejected; 7. First respondent filed counter affidavit and denied various averments made by the petitioner and prayed for treating the averments in the plaint and evidence in I.A.Nos.4383 to 4385 of 2016 as part and parcel of the counter affidavit. The first respondent contended as follows: (i) The application is devoid of merits and is filed only to drag on the proceedings. The petitioner has filed the application without raising any substantial and valid objections and has not stated under which sub-clause of Rule 11 of Order 7 C.P.C., the application has been filed. The objections raised by the petitioner are not the grounds mentioned in the Order VII Rule 11 of C.P.C.; (ii) While considering the application under Order VII Rule 11 of C.P.C., the averments in the plaint alone have to be taken into consideration. The contentions of the petitioner contrary to the averments in the plaint are not relevant. The power under this provison has to be exercised sparingly and cautiously. In the present case, the petitioner ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of law and fact cannot be decided at that stage; (ii) There is a serious dispute with regard to the title of the shares and the said issue can be decided only by the Civil Court and Sections 58 and 59 of the Companies Act are not applicable to the facts of the present case; (iii) The petitioner has not stated under which sub-section of Order VII Rule 11 of C.P.C., the application has been filed. The first respondent stated that as to how the cause of action for the suit arose, in para-18 of the plaint, the cause of action is a bundle of facts. The relief sought for is to substitute the name of the first respondent and issue fresh share certificates to him; (iv) The first respondent has pleaded fraud and without trial, the said plea cannot be proved by the first respondent; 10. Aggrieved by the said order of dismissal dated 10.01.2017 in I.A.No.7540 of 2017, the petitioner has come out with the present civil revision petition. 11. The learned senior counsel appearing for the petitioner referring to the facts of the case contended as follows: (i) The suit is not maintainable, as per the Section 38 of the Specific Relief Act. The learned Judge dismissed the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to Section 424 of the Act and jurisdiction of the Civil Court is ousted by Section 430 of the Act, 2013. (ix) The first respondent represented by his mother filed C.S.No.412 of 2008 before this Court for partition. At that time itself, the shares mentioned in the present suit were in the name of the petitioner. The relief claimed in the present suit was available to the first respondent at that time itself. The mother of the first respondent deliberately did not include the present relief in the earlier suit. Only due to estranged relationship, the mother of the first respondent has instigated the first respondent to file the present suit to harass the petitioner. In view of this fact, the present suit is barred by the provisions of Order II Rule 2 of C.P.C.; (x) Admittedly, the shares were transferred in the name of the petitioner in the year 2006 to the knowledge of the mother of the first respondent. Hence, the suit filed in the year 2016 is barred by limitation; (xi) Section 10GB was inserted by the Companies (Second Amendment) Act, 2002. It barred the jurisdiction of the Civil Court. The Companies (Second Amendment) Act, 2002 was challenged as unconstitutional. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s jurisdiction must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure. ( 2) Where there is an express bar of the jurisdiction of the Court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court. Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case, it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in civil courts ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to follow in spirit the procedure outlined in Order 7 Rules 10 and 10A of the Code of Civil Procedure. (iii) 2010 6 SCR 857, (Union of India v. R.Gandhi, the President, Madras Bar Association), wherein in para-57, it is held as follows: 57.We therefore dispose of these appeals, partly allowing them, as follows: (i) We uphold the decision of the High Court that the creation of National Company Law Tribunal and National Company Law Appellate Tribunal and vesting in them, the powers and jurisdiction exercised by the High Court in regard to company law matters, are not unconstitutional. (ii) We declare that Parts 1B and 1C of the Act as presently structured, are unconstitutional for the reasons stated in the preceding para. However, Parts IB and IC of the Act, may be made operational by making suitable amendments, as indicated above, in addition to what the Union Government has already agreed in pursuance of the impugned order of the High Court. (iv) ( 1998) 7 Supreme Court Cases 105 (Ammonia Supplies Corporation (P) Ltd. v. Modern Plastic Containers Pvt. Ltd. and others), wherein in para 26, it is held as follows: 26.The proviso gave discretion to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (v) ( 2012) 8 Supreme Court Cases 706 (Church of Christ Charitable Trust and Educational Charitable Society v. Ponniamman Educational Trust), wherein in paras 17 and 30, it is held as follows: 17.In the case on hand, the plaintiff-respondent to get a decree for specific performance has to prove that there is a subsisting agreement in his favour and the second defendant has the necessary authority under the power of attorney. Order VII Rule 14 mandates that the plaintiff has to produce the documents on which the cause of action is based, therefore, he has to produce the power of attorney when the plaint is presented by him and if he is not in possession of the same, he has to state as to in whose possession it is. In the case on hand, only the agreement between the plaintiff and the second defendant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The suit in C.S.No.412 of 2008 is for partition and allotment of first respondent's share in the properties of HUF which are in possession of the petitioner as kartha. The present suit relates to shares, which are owned by the first respondent absolutely in his individual capacity. The properties and cause of action for both the suits are entirely different. Section 38 of the Specific Relief Act referred to by the petitioner has no relevance to the issue in the suit and the petitioner has not stated as to how the said provision is applicable to the facts of the present case; (iii) The various provisions of the Companies Act, 1956 and 2013 referred to by the petitioner are not applicable to the facts of the present case, especially, Section 58 of the Act, 2013. Section 58 is applicable to a case, where the company refused to rectify register of members. In the present case, first respondent is seeking rectification of register of members by substituting his name in the place of the petitioner's name and issue share certificates showing first respondent as owner. The first respondent has alleged fraud played by the petitioner in collusion with the directors and officials o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent suit in view of the fact that the first respondent is seeking rectification of register of members alleging fraud and collusion on the part of the petitioner and second respondent. In view of these allegations, the relief sought for amounts to question of title, which can be decided only by the Civil Court as per the judgment of the Hon'ble Apex Court and Karnataka High Court referred to above and the suit cannot be transferred to the Tribunal by invoking Section 422 of the Companies Act, 2013. 14. In support of his contention, the learned Senior Counsel has relied on the following decisions: (i) 2012 5 L.W. 278 in (K.Saravanan and another V. M/s.Cosmopolis Properties Pvt. Ltd. and others) wherein in para 27, it is held as follows: 27. As stated supra, in the decision reported in (2010) 11 SCC 1, the Honourable Supreme Court dealt with the scope of section 10GB of the Companies Act, and declared that Parts I-B and I-C of the Act viz., section 10FD to 10GF as presently structured are unconstitutional and they can be made operational by making suitable amendments, in that judgment. Admittedly, the amendments or suggestions laid down in that judgment are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt should relegate the parties to a suit, 23 September, 2015 which was the more appropriate remedy for investigation and adjudication of such seriously disputed question of title. 15. In reply, learned Senior Counsel appearing for the petitioner submitted that the judgment reported in 2012 5 L.W. 278 in (K.Saravanan and another V. M/s.Cosmopolis Properties Pvt. Ltd. and others), rendered before the Companies Act, 2013 whereby the defects pointed out by the Hon'ble Apex Court had been rectified. In the judgment reported in (2016) 198 CompCas 481 (Kar) in (K.Ravinder Reddy v. Alliance Business School and others), the Division Bench of the Karnataka High Court held only the Tribunal or the Company Law Board has power to decide the issue on rectification of register of members and only when the title of shares is in serious dispute, the Civil Court can decide the same. In the present case, the first respondent has not sought the relief of declaration of title of the shares in question. The suit is only for rectification of register of members. If declaration of title of shares is sought for, the suit has to be valued in consonance with the value of shares and pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t respondent contended that after attaining majority, he did not ratify the transfer of shares in the name of the petitioner. In view of the above contention and failure on the part of the petitioner to state whether the shares were in the name of the first respondent and if so, when the shares were transferred in the name of the petitioner, the question of limitation cannot be decided in summary proceedings. The issue on limitation is a mixed question of fact and law. In the present case, the question of limitation can be decided only by appreciating evidence let in by the parties. 22. The first respondent while he was minor filed C.S.No.412 of 2008 in this Court through his mother for partition of properties of HUF, which are with the petitioner as kartha. In the present suit, the first respondent claiming that the shares do not belong to HUF, but it belongs to him as his individual capacity. A reading of the plaint in C.S.No.412 of 2008 pending before this Court and the present suit reveal that the cause of action as well as the reliefs sought for are entirely different. Hence, the present suit is not hit by the provisions of Order II Rule 2 of C.P.C. The petitioner has not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be decided by the Tribunal in a summary proceedings. First respondent has claimed injunction restraining the petitioner from claiming any title or interest in respect of the shares mentioned in the suit schedule. In view of the relief of permanent injunction sought for in the suit, the title of the shares in question has to be decided. The Tribunal has no power to decide the title of the shares in a summary proceedings. Once the Tribunal comes to the conclusion that the title of the shares is involved, the issues have to be decided only by the Civil Court. For this, the learned Senior Counsel appearing for the first respondent relied on the decision reported in (2016) 1 Supreme Court Cases 423 in (Jai Mahal Hotels Private Limited v. Devraj Singh and others) and (2016) 198 CompCas 481 (Kar) in (K.Ravinder Reddy v. Alliance Business School and others). 27. A reading of Section 58 of the Companies Act, 2013, shows that rectification of register of members has to be decided by the Tribunal and as per Section 430 of the Companies Act, 2013, the Civil Court has no jurisdiction. At the same time, in the judgment relied on by the learned Senior Counsel for the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares at any point of time and that there was no fraudulent transfer in collusion with the officials of the second respondent. In this circumstance, the issue on title of shares is the main issue to be decided in the suit filed by the first respondent. 29. In the judgment relied on by the learned Senior Counsel for the first respondent reported in (2016) 1 Supreme Court Cases 423 in (Jai Mahal Hotels Private Limited v. Devraj Singh and others), wherein the Hon'ble Apex Court referring to the judgment reported in Standard Chartered Bank v. Andhra Bank Financial Services Ltd., (2006) 6 SCC 94, held that a seriously disputed question of title could be left to be decided by the Civil Court. In para-31 of the judgment reported in (2016) 198 CompCas 481 (Kar) in (K.Ravinder Reddy v. Alliance Business School and others), the Division Bench of Karnataka High Court held that if the question arises with regard to title of the person in whose favour, the shares are to be transferred, the Tribunal/Company Law Board has no power to adjudicate the issue. 30. The learned Senior Counsel for the petitioner contended that the judgment rendered by the Division Bench of Kar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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