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        Companies Law

        1999 (3) TMI 486 - HC - Companies Law

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        Rectification of share register disputes fall within the Companies Act forum, barring civil court jurisdiction over allied reliefs. Where the substance of a claim is rectification of the register of members, cancellation of allegedly wrongful share transfers, and related reliefs, ...
                        Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
                          Provisions expressly mentioned in the judgment/order text.

                            Rectification of share register disputes fall within the Companies Act forum, barring civil court jurisdiction over allied reliefs.

                            Where the substance of a claim is rectification of the register of members, cancellation of allegedly wrongful share transfers, and related reliefs, section 111 of the Companies Act, 1956 provides the special statutory forum. The Company Law Board is empowered to decide title questions connected with rectification and to grant incidental or consequential reliefs. In such matters, the civil court's jurisdiction under section 9 CPC is impliedly excluded, so a civil suit for declaration and allied reliefs is not maintainable and the plaint is liable to rejection under Order 7 Rule 11 CPC.




                            Issues: Whether a civil suit seeking declaration of title to shares, cancellation of transfers and issue of duplicate shares is barred by the special machinery under section 111 of the Companies Act, 1956 and therefore liable to rejection under Order 7 Rule 11 of the Code of Civil Procedure, 1908.

                            Analysis: The reliefs claimed in substance concerned correction of entries in the register of members and the cancellation of transfers said to have been effected without sufficient cause. Section 111 of the Companies Act, 1956 empowers the Company Law Board to deal with applications for rectification of the register, to decide questions relating to title connected with such rectification, and to grant incidental or consequential reliefs, including injunctions and bonus shares. Where the dispute falls within this special statutory field, the civil court's jurisdiction under section 9 of the Code of Civil Procedure, 1908 is impliedly excluded. The plaint itself showed that the controversy related to shares already transferred or sought to be transferred, bringing the matter within the rectification jurisdiction.

                            Conclusion: The suit was not maintainable before the civil court and the plaint was liable to be rejected.

                            Final Conclusion: The statutory remedy before the Company Law Board was held to be the proper forum for the dispute, and the civil court could not entertain the claim.

                            Ratio Decidendi: Where the substance of the claim is rectification of the register of members and allied reliefs that fall within section 111 of the Companies Act, 1956, the civil court's jurisdiction is impliedly barred.


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