1976 (4) TMI 154 - HC - Companies Law

High Court dismisses Companies Act petition for civil disputes, directs remedy in civil court

Smt. Puran Devi Versus S. Gurnam Singh

The High Court held that the petition under section 155 of the Companies Act, 1956, was not maintainable for resolving complex civil disputes. It directed ... Powers of Court to rectify register of members Issues:1. Maintainability of the petition under section 155 of the Companies Act, 1956.2. Whether the petitioner should seek remedy in a civil court instead of the company court.3. Validity of the allotment of shares to minors.4. Legality of the transfer of shares made in a board meeting.5. Relief entitled to the petitioner.Analysis:Issue 1 & 2 - Maintainability of the Petition:The court considered the contention that the petition under section 155 of the Companies Act, 1956, was not maintainable for complex issues involving the civil rights of the parties. It was argued that the proceedings under section 155 are meant for rectification of minor errors and not for disputes involving complex facts. The court held that the dispute regarding the transfer and allotment of shares, including allegations of invalidity and lack of notice, were of a civil nature best resolved in a civil court. Citing precedents, the court emphasized that matters involving forgery, fabrication of documents, or challenges to shareholding titles are beyond the scope of section 155. Consequently, the court concluded that the petition was not maintainable under section 155 and directed the petitioner to seek remedy in a civil court.Issue 3 - Validity of Allotment to Minors:The petitioner alleged that the allotment of shares to minors was illegal as per the company's articles of association. Witnesses were examined to prove the ages of the minors at the time of allotment. However, due to the court's decision on the maintainability of the petition, a detailed analysis of this issue was not provided, and the petition was dismissed.Issue 4 - Legality of Share Transfer:The petitioner challenged the transfer of shares made in a board meeting, alleging that proper notice was not given as required by the articles of association. Witness testimonies and confrontations with documents were presented to support this claim. However, the court's decision on the maintainability of the petition rendered further analysis on this issue unnecessary, leading to the dismissal of the petition.Issue 5 - Relief Entitlement:Given the court's findings on the first two issues, it was deemed unnecessary to provide a detailed analysis or ruling on the relief entitled to the petitioner. The petition was ultimately dismissed with no order as to costs, based on the court's decision regarding the maintainability of the petition under section 155.In conclusion, the High Court ruled that the petition under section 155 of the Companies Act, 1956, was not maintainable for resolving the complex civil disputes raised by the parties. The court directed the petitioner to seek remedy in a civil court for matters involving the validity of share allotments, transfers, and related issues. The dismissal of the petition was based on the court's jurisdictional limitations under section 155, emphasizing the need for civil court intervention in cases of disputed civil rights and complex factual issues.