Rectification of share register: disputed valuation needs a suit, but pure illegality in allotment can justify summary admission.

Rectification of the register under section 155 of the Companies Act, 1956 is unsuitable where the challenge to share allotment depends on disputed valuation, expert evidence, or alleged failure of consideration; such matters require fuller factual inquiry and are better left to a regular suit, so refusal on that ground was upheld. By contrast, where the objection raises a pure question of law on whether the allotment to a foreign collaborator exceeded the consent granted under the capital-issues regime, the petition should be admitted and adjudicated, and the tribunal should not decline it merely because related issues are pending elsewhere.

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Issues: (i) Whether rectification of the register of members could be refused in summary proceedings under section 155 of the Companies Act, 1956, where the challenge to the allotment of shares depended on disputed valuation of machinery and alleged failure of consideration. (ii) Whether the allotment of shares to the foreign collaborator contravened the Central Government's consent and the Capital Issues Control Act, 1947 so as to justify rectification of the register.

Issue (i): Whether rectification of the register of members could be refused in summary proceedings under section 155 of the Companies Act, 1956, where the challenge to the allotment of shares depended on disputed valuation of machinery and alleged failure of consideration.

Analysis: The remedy under section 155 is summary and is meant for cases capable of quick determination. Where the alleged error in allotment turns on disputed questions of valuation, technical expert opinion, and factual investigation, the matter is better suited to a regular suit rather than a petition for rectification. On the material before the Tribunal, the value of the machinery could not be conclusively assessed in summary proceedings, and partial failure of consideration would also raise further complicated issues.

Conclusion: The refusal to entertain rectification on this ground was upheld and is against the appellant.

Issue (ii): Whether the allotment of shares to the foreign collaborator contravened the Central Government's consent and the Capital Issues Control Act, 1947 so as to justify rectification of the register.

Analysis: The correspondence with the Controller of Capital Issues showed that the consent permitted an offer of shares up to 49% of the 30,000 equity shares proposed to be issued, and the later modification contemplated allotment to the foreign collaborator against supply of plant and machinery. The challenged allotment of 10,051 shares exceeded the permitted limit when measured against the subscribed capital, and the objection raised a pure question of law fit for adjudication. The Tribunal erred in declining admission merely because similar questions were pending elsewhere.

Conclusion: The petition ought to have been admitted and the appellant succeeds on this issue.

Final Conclusion: The dismissal of the first rectification petition was sustained, but the second petition was directed to proceed for adjudication, leaving the company judge to deal with the connected matters in accordance with law.

Ratio Decidendi: A petition for rectification of the register will not be entertained in summary jurisdiction where it requires investigation of disputed facts or expert valuation, but a pure question of legal invalidity in the allotment may justify admission and adjudication.

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