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TMI Blog2023 (12) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... plies, Section 155 of the Act of 1956 was in question which deal with the power of company court to rectify the register of members maintained by a company. The word rectification has been defined as something what ought to have been done but by error not done and what ought not to have been done was done requiring correction. In this case, the question was framed as to whether in the proceedings under Section 155 of the Act of 1956, the court has exclusive jurisdiction in respect of all the matters raised herein or has only summary jurisdiction? The Hon ble Supreme Court held that the company court under Section 155 has to adjudicate in the facts and circumstance whether the dispute raised really pertains to rectification or under the garb of rectification questions of fact involving contentious issues are raised and if dispute found to be relating to the peripheral field of rectification, then the company court under Section 155 will have exclusive jurisdiction but if finding is otherwise then the civil court s jurisdiction is not excluded. In the case of IFB Agro, the Hon ble Supreme Court was considering the question in regard to the scope of the rectificatory jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order dated 07.09.2023, passed by the National Company Law Tribunal, Hyderabad Bench I (in short the Tribunal ), by which CP/10/59/HDB/2018 filed under Section 59 of the Companies Act, 2013 (in short the Act ) r/w Rule 11 of the NCLT Rules, 2016 (in short Rules ) has been dismissed as not maintainable before the Tribunal (in short first appeal ) and CA (AT) (CH) No. 96 of 2023 filed by Mr. Gireesh Sanghi (HUF) against the order dated 07.09.2023 passed by the National Company Law Tribunal, Hyderabad Bench 1, by which CP/33/59/HDB/2018 filed under Section 59 of the Act r/w Rule 11 of the Rules has been dismissed as not maintainable before the Tribunal (in short second appeal ). 2. In the first appeal, the application under Section 59 of the Act was filed seeking the following relief:- a. Declare that 1,33,62,800 shares transferred on 18.12.2014 is in willful violation of Orders of Hon'ble Company Law Board, 23.10.2008 and 28.10.2009. b. Direct rectification of Register of Members of Respondent No. 1 Company to the extent of 1,33,62,800 shares transferred to Respondent No. 2 on 18.12.2014, previously held by R7 to R l7 and as detailed below and consequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014, previously held by R7 to Rl7 and as detailed below and consequent rectification of shareholding of R2 in RI Company by restoring name of R7 to R17 in members register of R1 Company: SI. No. Name of the Respondent Impugned Transfer of Shares 1. SZF Pvt Ltd (R7) 24,00,000 2. Balaji Zippers Pvt Ltd (R8) 6,00,000 3. Sanghi Poly Zips Pvt Ltd (R9) 6,00,000 4. Sanghi Synthetics Pvt Ltd Rl0) 6,00,000 5. Alpha Zippers Pvt Ltd (Rl1) 6,00,000 6. Fancy Zippers Pvt Ltd (Rl2) 6,00,000 7. SKK Zippers Pvt Ltd (R13) 6,00,000 8. Maruthi Fasteners Pvt Ltd Rl4) 6,00,000 9. Sanghi Threads Pvt Ltd (Rl5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to a competent civil court. As such the present petition is not maintainable, before this Tribunal. 12. Point answered accordingly. 6. Counsel for the Appellant has vehemently argued that there is no dispute regarding family settlement rather the dispute is regarding illegal transfer of share and non-payment of consideration in respect of the shares transferred which has caused huge loss to the shareholders. Secondly, it is submitted that the decisions in the case of Ammonia Supplies and IFB Agro (Supra) are not applicable after coming into force of the Act in which Section 430 of the Act has been provided specifically excluding the jurisdiction of the Civil Court. It is submitted that the Hon ble Supreme Court in the case of Shashi Prakash Khemka Vs. NEPC Micon Ors. (2019) 18 SCC 569 has categorically held that the jurisdiction of the Civil Court is completely barred in Section 430 of the Act and held that where a dispute to arise today, the civil suit remedy would be completely barred and the power would vest with the NCLT under Section 59 of the Act. He has also referred to a decision in the case of Adesh Kaur Vs. Eicher Motors Limited and Ors., (2018) 7 SCC 709 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to refer to Section 59 and Section 430 of the Act, which are reproduced as under:- 59. Rectification of register of members. (1) If the name of any person is, without sufficient cause, entered in the register of members of a company, or after having been entered in the register, is, without sufficient cause, omitted therefrom, or if a default is made, or unnecessary delay takes place in entering in 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 appeal in such form as may be prescribed, to the Tribunal, or to a competent court outside India, specified by the Central Government by notification, in respect of foreign members or debenture holders residing outside India, for rectification of the register. (2) The Tribunal may, after hearing the parties to the appeal under sub-section (1) by order, either dismiss the appeal or direct that the transfer or transmission shall be registered by the company within a period of ten days of the receipt of the order or direct rectification of the records of the depository or the register and in the latter case, direct the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification has been defined as something what ought to have been done but by error not done and what ought not to have been done was done requiring correction. In this case, the question was framed as to whether in the proceedings under Section 155 of the Act of 1956, the court has exclusive jurisdiction in respect of all the matters raised herein or has only summary jurisdiction? The Hon ble Supreme Court held that the company court under Section 155 has to adjudicate in the facts and circumstance whether the dispute raised really pertains to rectification or under the garb of rectification questions of fact involving contentious issues are raised and if dispute found to be relating to the peripheral field of rectification, then the company court under Section 155 will have exclusive jurisdiction but if finding is otherwise then the civil court s jurisdiction is not excluded. In the case of IFB Agro (Supra), the Hon ble Supreme Court was considering the question in regard to the scope of the rectificatory jurisdiction of the NCLT under Section 59 of the Act and was called upon to determine the appropriate forum for adjudication and determination of violations of the Securities an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent legal developments to the impugned order have a direct effect on the present case as the Companies Act, 2013 has been amended which provides for the power of rectification of the Register under Section 59 of the said Act. 5. Learned counsel has also drawn our attention to Section 430 of the Act, which reads as under:- 430. Civil court not to have jurisdiction.- No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate. The effect of the aforesaid provision is that in matters in respect of which power has been conferred on the NCLT, the jurisdiction of the civil court is completely barred. 6. It is not in dispute that were a dispute to arise today, the civil suit remedy would be completely barred and the power would be vested with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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