Case: M/S Ammonia Supplies Corpn (P) Ltd Vs. M/S Modern Plastic Containers

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. 25. Sub-section (1) (a) of Section 155 refers to a case where the name of any person without sufficient cause entered or omitted in the register of members of a company. The word `sufficient cause is to be tested in relation to the Act and the Rules. Without sufficient cause entered or omitted to be entered means done or omitted to do in contradiction of the Act and the Rules or what ought to have been done under the Act and the Rules but not done. Reading of this sub-clause spells out the limitation under which the court has to exercise its jurisdiction. It cannot be doubted in spite of exclusiveness to decide all matter pertaining to the rectification it has to act within the said four corners and adjudication of such matter cannot be doubted to be summary in nature. So, whenever a question is raised court has to adjudicate on the facts and circumstance of each case. If it truly is rectification all matter raised in that connection should be decided by the court under Sec. 155 and if it finds adjudication of any matter not falling under it, it may direct a party to get his right adjudicated by civil court. Unless jurisdiction is expressly or implicitly barred under a Statute, for violation or redress of any such right civil court would have jurisdiction. There is nothing under the Companies Act expressly barring the jurisdiction of the civil court, but the jurisdiction of the `court as defined under the Act exercising its powers under various sections where it has been invested with exclusive jurisdiction, the jurisdiction of the civil court is impliedly barred. We have already held above the jurisdiction of the `court under Sec. 155 to the extent it has exclusive, the jurisdiction of civil court is impliedly barred. For what is not covered as aforesaid the civil court would have jurisdiction. Similarly we find even under Sec. 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 ones right. Of course discretion to exercise such power is with the `court. Similarly under Sec. 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 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 learned counsel for the appellant that court should not have directed for seeking permission to file suit only because a party for dispute sake states that the dispute raised is complicated question of facts including fraud to be adjudicated. The court should have examined itself to see whether even prima facie what is said is complicated question or not. even dispute of fraud, if by bare perusal of the document or what is apparent on the face of it on comparison of any disputed signature with that of the admitted signature the Court is able to conclude no fraud, then it should proceed to decide the matter and not reject it only because fraud is stated. Further on the other hand learned counsel for the respondent totally the denies any share having been purchased by the appellant-company or any amount paid to it. No transfer of any such share was ever approved by the Board of Directors. It is urged the money even if advanced to Sri V.K. Bhargava by the appellant-company, if at all was a private transaction between the two to which respondent-company has no concern. So we find there is total denial by the respondent.27. We have gone through the judgment of the High Court. It has rightly held the law pertaining to the jurisdiction of `court under Sec. 155 and even referred to some of the documents of the appellant but concluded since they are disputed and said to be forged hence directed for seeking peace if advised for suit. We feel it would have been appropriate if the court would have seen for itself whether these documents are disputed and any document is alleged to be forged whether it said to be so only to exclude the jurisdiction of the court or it is genuinely so. Similarly we feel appropriate while deciding this the court should take into consideration the submissions for the respondents, whether it would come within the scope of rectification or not in the light of what we have said above.28. 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, without prejudice to any party of any observation made by us above. In case High Court comes to the conclusion that any issue raised does not come within Sec. 155 then we feel it appropriate on the facts and circumstances of this case, as it is pending since 1984, that High Court exercises its discretion under Sec. 446(2) to get it adjudicated by the court (Company Judge) itself instead of sending back to the civil court to which we order. 29.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]19. First the scope of Section 155 and Section 446 to be understood to be entirely in different fields. Section 155 deals with power of the Court to rectify register of members maintained by a Company. Section 441 deals with commencement of winding-up by the Court. Section 442 deals with the power of the Court to stay or restrain proceedings against the company, at any stage after the petition for winding up is filed about before a winding up order is made. A creditor or a company may apply to the Court having jurisdiction to wind up the company to restrain all further proceedings in any suits or proceedings against the Company. Section 443 deals with powers of Court to hear such petition, Section 444 entrusts the Court after the winding up order to communicate the same to the Official Liquidator. Section 445 directs that a copy of the winding up order to be filed with the Registrar. Then comes Section 446. Sub-section (1) is after winding up order has been passed or the official liquidator has been appointed, it puts an embargo on any suit to be instituted or if pending against the company on that date to be proceeded with except with the leave of the Court. Use of the words, `..... no suit.... shall be commenced `...proceeded with.... except by leave of the court...." spells out that the jurisdiction of the civil court is not ousted to adjudicate matter between the parties but embargo is to be controlled at the discretion of the Company Judge, depending on the facts of each case. Then comes Section 446 (2) under which the Court is invested with the jurisdiction to entertain or dispose of any suit or proceeding by or against the company. So Section 446 deals with cases of the company under winding up while Section 155 deals with both classes of companies, one under winding up and other not under winding-up.20. Now were proceed to examine the power of the Court to rectify the register of members of a company under Section 155. The question raised for the appellant is that the Court under this Act cannot direct an applicant to seek his remedy by way of suit but the Court under the Act having exclusive jurisdiction should decide itself.In other words, in order to qualify for rectification, every procedure as prescribed under the Companies 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 comes under rectification not projected claims under the garb of rectification. So far exercising of power for rectification within its field there could be no doubt the Court as referred under Section 155 read with Section 2(11) and Section 10, it is the Company Court alone which has exclusive jurisdiction. Similarly, under Section 446 the `Court refers to the Company Judge which has exclusive jurisdiction to decide matters what is covered under it by itself. But this does not mean by interpreting such `court having exclusive jurisdiction to include within it what is not covered under it, merely because it is cloaked under the nomenclature rectification does not mean court cannot see the substance after removing the cloak.22. Question for scrutiny before us is the peripheral field within which court could exercise its jurisdiction for rectification. As aforesaid the very word "rectification" connotes something what ought to have been done but by error not done and what ought not to have been done was done requiring correction. Rectification in other words, is the failure on the part of the company to comply with the directions under the Act. To show this error the burden is on the applicant, and to this extent any matter or dispute between persons raised in such Court it may generally decide any matter which is necessary or expedient to decide in connection with the rectification.23. Both under the 1913 Act and 1960 Act a procedure is prescribed for admitting a person as member by purchase or transfer of shares of that company. With reference to 1913 Act under Section 29, a certificate of shares or stock shall be prima facie evidence of the title of the number of the shares or stock therein. Section 30 defines "member" to be one who agrees to become a member of a company and whose name is entered in its register. Section 31 is to keep register of its members. Section 34 deals with transfer of shares and application for the registration of the transfer of shares is to be made either by the transferor or the transferee. Where such application is made by the transferor for registration of his share a registered notice is to be sent to the transferee. Section 34 (3) restricts to register a transfer share until the instrument of transfer duly stamped and executed by the transferor and transferee has been delivered to the company. Thus before the name of any transferee is registered these procedures have 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 transforer as members or share holders 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 108 gives mandate to company not to register transfer of shares, unless proper instrument of transfer duly stamped and executed by or on behalf of the transeror and by or on behalf of the transferee has been delivered to the company along with certificates relating to the shares.Sub-section (1) (a) of Section 155 refers to a case where the name of any person without sufficient cause entered or omitted in the register of members of a company. The word `sufficient cause is to be tested in relation to the Act and the Rules. Without sufficient cause entered or omitted to be entered means done or omitted to do in contradiction of the Act and the Rules or what ought to have been done under the Act and the Rules but not done. Reading of this sub-clause spells out the limitation under which the court has to exercise its jurisdiction. It cannot be doubted in spite of exclusiveness to decide all matter pertaining to the rectification it has to act within the said four corners and adjudication of such matter cannot be doubted to be summary in nature. So, whenever a question is raised court has to adjudicate on the facts and circumstance of each case. If it truly is rectification all matter raised in that connection should be decided by the court under Sec. 155 and if it finds adjudication of any matter not falling under it, it may direct a party to get his right adjudicated by civil court. Unless jurisdiction is expressly or implicitly barred under a Statute, for violation or redress of any such right civil court would have jurisdiction. There is nothing under the Companies Act expressly barring the jurisdiction of the civil court, but the jurisdiction of the `court as defined under the Act exercising its powers under various sections where it has been invested with exclusive jurisdiction, the jurisdiction of the civil court is impliedly barred. We have already held above the jurisdiction of the `court under Sec. 155 to the extent it has exclusive, the jurisdiction of civil court is impliedly barred. For what is not covered as aforesaid the civil court would have jurisdiction. Similarly we find even under Sec. 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 ones right. Of course discretion to exercise such power is with the `court. Similarly under Sec. 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 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 learned counsel for the appellant that court should not have directed for seeking permission to file suit only because a party for dispute sake states that the dispute raised is complicated question of facts including fraud to be adjudicated. The court should have examined itself to see whether even prima facie what is said is complicated question or not. even dispute of fraud, if by bare perusal of the document or what is apparent on the face of it on comparison of any disputed signature with that of the admitted signature the Court is able to conclude no fraud, then it should proceed to decide the matter and not reject it only because fraud is stated. Further on the other hand learned counsel for the respondent totally the denies any share having been purchased by the appellant-company or any amount paid to it. No transfer of any such share was ever approved by the Board of Directors. It is urged the money even if advanced to Sri V.K. Bhargava by the appellant-company, if at all was a private transaction between the two to which respondent-company has no concern. So we find there is total denial by the respondent.27. We have gone through the judgment of the High Court. It has rightly held the law pertaining to the jurisdiction of `court under Sec. 155 and even referred to some of the documents of the appellant but concluded since they are disputed and said to be forged hence directed for seeking peace if advised for suit. We feel it would have been appropriate if the court would have seen for itself whether these documents are disputed and any document is alleged to be forged whether it said to be so only to exclude the jurisdiction of the court or it is genuinely so. Similarly we feel appropriate while deciding this the court should take into consideration the submissions for the respondents, whether it would come within the scope of rectification or not in the light of what we have said above.28. 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, without prejudice to any party of any observation made by us above. In case High Court comes to the conclusion that any issue raised does not come within Sec. 155 then we feel it appropriate on the facts and circumstances of this case, as it is pending since 1984, that High Court exercises its discretion under Sec. 446(2) to get it adjudicated by the court (Company Judge) itself instead of sending back to the civil court to which we order.