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of <h1>Court dismisses petition for rectification of company register, directs regular suit for complex disputes</h1> <h3>Smt. Soma Vati Devi Chand Versus Krishna Sugar Mills Ltd. and Ors.</h3> The court dismissed the petition seeking rectification of the register of members of the Company under Section 155 of the Companies Act. It directed the ... - Issues Involved:1. Rectification of the register of members of the Company.2. Allegations of fraud and dishonesty in the forfeiture and sale of shares.3. Compliance with procedural requirements under Order 6, Rule 4 of the Civil Procedure Code.4. Timeliness of the petition and whether it is barred by limitation.5. Complexity of the issues and appropriateness of summary proceedings under Section 155 of the Companies Act.Detailed Analysis:1. Rectification of the Register of Members of the Company:The petitioner sought rectification of the register of members of the Company under Section 155 of the Companies Act, 1956, by restoring her name and for payment of dividends. The petitioner claimed ownership of specific shares, both fully paid and partly paid, which were allegedly forfeited and sold without her knowledge.2. Allegations of Fraud and Dishonesty in the Forfeiture and Sale of Shares:The petitioner alleged that the forfeiture and sale of her shares were dishonest, fraudulent, and mala fide, carried out without notice to her. It was contended that the actions were part of a scheme of fraud designed by the late Seth Shiv Prasad, the then-Managing Director of the Company, in collusion with respondent No. 9. The petitioner claimed she was kept in the dark about the affairs of the Company and the forfeiture was done surreptitiously.3. Compliance with Procedural Requirements under Order 6, Rule 4 of the Civil Procedure Code:The respondents raised preliminary objections, stating that the particulars of fraud were not sufficiently detailed, violating Order 6, Rule 4 of the Civil Procedure Code. This led to an order on 24th January 1964, directing the petitioner to furnish the necessary particulars of fraud and allowing inspection of documents at the Company's registered office.4. Timeliness of the Petition and Whether it is Barred by Limitation:The respondents argued that the petition was barred by time, as the petitioner's name was removed from the register in 1947 and 1948, and the petition was filed after a significant delay. The petitioner admitted in her statement that she had asked her sons to inquire about the shares 10 to 12 years ago and to file a suit 8 to 9 years ago, raising the question of when she actually became aware of the forfeiture and sale.5. Complexity of the Issues and Appropriateness of Summary Proceedings under Section 155 of the Companies Act:The court noted that Section 155 provides a summary remedy for non-controversial matters requiring quick decisions. However, it is not intended for disputes necessitating detailed investigation. Given the allegations of fraud, the complexity of the facts, and the need for a thorough investigation, the court concluded that the matter could not be adjudicated summarily under Section 155. The court referenced several precedents, including Halsbury's Laws of England, and previous judgments which emphasized that complex disputes should be resolved through regular suits rather than summary proceedings.Conclusion:The court dismissed the petition, directing the petitioner to establish her claim through a regular suit due to the complexity of the issues involved and the need for a detailed investigation. The parties were left to bear their own costs.
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