2010 (12) TMI 1359 - HC - Companies Law

Appeal Dismissed: Delhi Courts Lack Jurisdiction Over Company Dispute; Exclusive Authority Lies with Company Law Board.

The Addl. District Judge's decision was upheld, affirming that the Delhi courts lacked territorial jurisdiction, as the company's registered office was in ... - Issues Involved:1. Territorial jurisdiction of the Delhi courts to entertain the suit.2. Jurisdiction of the Company Law Board under Section 155 of the Companies Act.3. The nature of relief sought by the appellants regarding share ownership and transfer deeds.4. The applicability of civil court jurisdiction in cases involving rectification of the register of members.Detailed Analysis:1. Territorial Jurisdiction of the Delhi Courts:The primary issue was whether the Delhi courts had the territorial jurisdiction to entertain the suit filed by the appellants. The respondents argued that the registered office of the company was in Mumbai, and therefore, the courts in Delhi had no jurisdiction. The appellants contended that a part of the cause of action arose in Delhi as the share certificates were sent from and delivered back to Delhi. However, the court held that the location of the registered office, which was in Mumbai, determined the jurisdiction, as per Section 10 of the Companies Act. Consequently, the court concluded that the Delhi courts lacked territorial jurisdiction.2. Jurisdiction of the Company Law Board under Section 155 of the Companies Act:The court examined whether the dispute fell within the jurisdiction of the Company Law Board under Section 155 of the Companies Act, which deals with the rectification of the register of members. The appellants sought the cancellation of transfer deeds and rectification of the register to reflect their ownership of shares. The court determined that the relief sought by the appellants essentially involved rectification of the register, a matter within the exclusive jurisdiction of the Company Law Board. The court cited the Supreme Court's judgment in Canara Bank Vs. Nuclear Power Corporation of India Ltd., which emphasized the exclusive jurisdiction of the Company Law Board in such matters.3. Nature of Relief Sought by the Appellants:The appellants sought a declaration of ownership of shares, cancellation of transfer deeds, and a permanent injunction against the transfer of shares. The court noted that the reliefs sought were primarily related to the rectification of the register of members, which is governed by Section 155 of the Companies Act. The court emphasized that disputes involving the title to shares and rectification of the register fall under the jurisdiction of the Company Law Board, not the civil courts.4. Applicability of Civil Court Jurisdiction:The court addressed whether civil courts could adjudicate disputes involving rectification of the register of members. It referred to the Supreme Court's judgment in Ammonia Supplies Corporation (P) Ltd. Vs. Modern Plastic Containers Pvt. Ltd., which recognized the discretionary and summary nature of the Company Court's jurisdiction under Section 155. The court concluded that while the Company Law Board could direct parties to approach civil courts for adjudication of seriously disputed civil rights, such jurisdiction was not inherently vested in civil courts unless directed by the Company Law Board.Conclusion:The court upheld the decision of the Addl. District Judge, concluding that the Delhi courts lacked territorial jurisdiction and that the matter fell within the exclusive jurisdiction of the Company Law Board under Section 155 of the Companies Act. The appeal was dismissed, with the court affirming that the appropriate forum for resolving the dispute was the Company Law Board. The decision underscored the importance of adhering to the specialized jurisdictional provisions of the Companies Act in matters involving rectification of the register of members.