TaxTMI 
TaxTMI 
2005 (11) TMI 261
X X X X Extracts X X X X
X X X X Extracts X X X X
....operations on 2-5-1993. The said company was formally known as Modi Luft Ltd. Sometime in or about 20-6-1994 a collaboration agreement was executed between erstwhile company known as Modi Luft with Lufthansa under which it was agreed that the operation and management of the airlines will be taken over by Lufthansa. However it seems that in 1996 the said arrangement between Modi Luft and Lufthansa came to an end and there were litigations filed between the defendant No. 7-company which was then known as Modi Luft and Lufthansa. Ultimately an out of court settlement was arrived at between the defendant No. 7 and Lufthansa on 13-8-1997. On 26-12-1997 the promoters of the defendant No. 7 received an approval from Foreign Investment Promotion Board to raise U.S. $ 50 million for the issue and sale of cumulative redeemable convertible preference shares (shortly known as C.R.C.P.S.). In June 1998 a fresh business plan was prepared by the defendant No. 7 to relaunch the airlines. On 29-6-1998 the defendant No. 7 received a no objection certificate from the Indian Ministry of Civil Aviation to import aircrafts. There were also proceedings between the defendant No. 7 and various creditors in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o. 1 company from Ajmal Khan. Thus by transfer of the interest in the first defendant company the ownership rights in C.R.C.P.S. of 17.5 million U.S. Dollar which was issued pursuant to the special resolution dated 27-8-1999 in favour of the defendant No. 1 stood transferred alongwith beneficial interest therein in favour of the Kansagra Brothers from Ajmal Khan. On 17-10-2000 the defendant No. 1 remitted the amount of 17.5 U.S. Dollar and on the same day the defendant No. 7 issued 8,10,77,500 14 per cent C.R.C.P.S. to defendant No. 1. This allotment was pursuant to the said resolution dated 27-8-1999 passed under section 81(1)(a) of the Companies Act. On 28-2-2001 the said 8,10,77,500 C.R.C.P.S. were converted into equity shares of defendant No. 7. Thus in effect the defendant No. 1 acquired 50 per cent stake in the 7th defendant company. 3. Thereafter in 2005 out of the shareholding of 8,10,77,500 shares the defendant No. 1 sold 25,68,111 shares to the 2nd defendant 63,95,643 shares to the 3rd defendant, 44,45,586 shares to 4th defendant, 43,35,000 shares to the 5th defendant and 29,01,563 shares to 6th defendant. Thus the holdings of the defendant No. 1 in defendant No. 7 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t, 1956. It is further a case of the plaintiff that once the controlling interest was transferred in favour of the Kansagra Brothers then fresh resolution was required to be passed under section 81(1)(a) authorising the allotment of C.R.C.P.S. in favour of the defendant No. 1. It is further the case of the plaintiff that once the controlling interest in the defendant No. 1 is transferred in favour of the Kansagra Brothers the exemption available under the regulation 3(1)(c) is not available and thus the resolution passed under section 81(1)(a) is in effect contrary to regulations 10 and 12 of the said Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) being the Takeover code. Thus in effect the plaintiffs are challenging in the present suit the preferential allotment of 8,10,77,500 C.R.C.P.S. by 7th defendant to 1st defendant by passing a special resolution in October 2000. By prayer (a) of the suit a declaration is sought that the said resolution passed in October 2000 be declared invalid and in violation of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. By prayer (b) of the suit it is claimed that there should be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....shares of Rs. 10 each. (iv) Defendant No. 4 qua its shareholding of 44,45,586 equity shares of Rs. 10 each. (v) Defendant No. 5 qua its shareholding of 43,25,000 equity shares of Rs. 10 each. (vi) Defendant No. 6 qua its shareholding of 29,01,563 equity shares of Rs. 10 each. (vii) Defendant No. 8 qua its shareholding of 50,00,000 convertible warrants of Rs. 10 each. (viii) Defendant No. 9 qua its shareholding of 50,00,000 equity shares of Rs. 10 each and holding of 50,00,000 convertible warrants of Rs. 10 each. (ix) Defendant No. 10 qua its shareholding of 50,00,000 equity shares of Rs. 10 each and holding of 50,00,000 convertible warrants of Rs. 10 each. (x) Defendant Nos. 11 and 12 qua its holding of 1.53 million unsecured fully convertible debentures of Rs. 100 each, convertible into 3.7 million shares of Rs. 10 each. 5. Prayer (j) onwards are the interim prayers in the present suit. Thus in effect in the present suit what is sought is a cancellation of various allotment of shares in the 7th defendant company and subsequent transfer thereof and also further allotment of the share as in violation of the SEBI Act a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n adjudicating officer appointed under this Act or a securities Appellate Tribunal constituted under this Act is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act. Section 21 Savings Nothing in this Act shall exempt any person from any suit or other proceedings which might, apart from this Act, be brought against him. Section Application of other laws are not Application of other laws are not Application of other laws are not Barred. The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force. SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997 3. Applicability of the regulation. Applicability of the regulation. Applicability of the regulation. (1) Nothing contained in regulations 10, 11 and 12 of these regulations shall apply to: (a) allotment in pursuance of an application made to a public issue : Provided that if such an allo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e regulations. 12. Acquisition of control over a company. Acquisition of control over a company. Acquisition of control over a company. Irrespective of whether or not there has been any acquisition of shares or voting rights in a company, no acquirer shall acquire control over the target company, unless such person makes a public announcement to acquire shares and acquire such shares in accordance with the regulations : Provided that nothing contained herein shall apply to any change in control which takes place in pursuance to a [special] resolution passed by the shareholders in a general meeting : [Provided further that for passing of the special resolution facility of voting through postal ballot as specified under the Companies (Passing of the Resolutions by Postal Ballot) Rules, 2001 shall also be provided.] [Explanation - For the purpose of this regulations, acquisition shall included direct or indirect acquisition of control of target company by virtue of acquisition of companies, whether listed or unlisted and whether in India or abroad.] 44. Directions by the Board. Without prejudice to its right to initiate ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as specified in any of sections 15A, 15B, 15C, 15D, 15E, 15F, 15G and 15H, the adjudicating officer shall, in the first instance, issue a notice to such person requiring him to show cause within such period as may be specified in the notice (being not less than fourteen days from the date of service thereof) why an inquiry should not be held against him. (2) Every notice under sub-rule (1) to any such person shall indicate the nature of offence alleged to have been committed by him. (3) If, after considering the cause, if any, shown by such person, the adjudicating officer is of the opinion that an inquiry should be held, he shall issue a notice fixing a date for the appearance of that person either personally or through his lawyer or other authorised representative. (4) On the date fixed, the adjudicating officer shall explain to the person proceeded against or his lawyer or authorised representative, the offence, alleged to have been committed by such person indicating the provisions of the Act, rules or regulations in respect of which contravention is alleged to have taken place. (5) The adjudicating officer shall then give an opportunity to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Exchange Board of India (Foreign Institutional Investors) Regulations, 1995. (k) the Securities and Exchange Board of India (Custodian of Securities) Regulations, 1996. (l) the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996. (m) the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996. (n) the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. (o) the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. (p) the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998. (q) the Securities and Exchange Board of India (Cerdit Rating Agencies) Regulations, 1999. (r) the Securities and Exchange Board of India (Collective Investment Scheme) Regulations, 1999. (s) the Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 1992. 5. Appointment of enquiry officer (1) Where it appears to the chairman or a member designated in this behalf that an intermediary has contravened any of the provisions of a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by/or under the Act. The learned counsel for the defendant No. 4 has contended that in the light of the aforesaid bar contained under section 15Y this court ought not to exercise any jurisdiction to entertain and try the suit. He has contended that the suit is solely based on a contention that while allotment of the shares and/or transfer thereunder there has been violation of the provisions of what is known as Takeover Code (Securities and Exchange Board of India Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter for the sake of brevity referred to as Takeover Regulations). It has been contended that for breach of any such Takeover Regulation under sections 15H and 15-I the Adjudicating Officer has been appointed to take cognizance thereof. Apart therefrom under regulation 44 of the Takeover Regulations the power is conferred on the board to pass necessary directions including direction to cancel the shares when acquisition of shares is pursuant to an allotment in breach of the said Takeover Regulations and in cases of a transfer according to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in respect of any actions which the board is empowered to do under the Act, rules, regulations and various other provisions under which the board is empowered to take action. He has also drawn my attention to section 12 sub-clause (f) under which once the provisions are made that no person shall directly or indirectly acquire control of any company or security more than the percentage of equity share capital of a company whose securities are listed or proposed to be listed on a recognised stock exchange in contravention of the regulation made under the Act. Learned counsel for defendant No. 7 thereafter drew my attention to the provisions of sections 15H and 15-I of the said Act which provides inter alia for breach of Takeover Regulation and consequent inquiry and penalty. He has thereafter drawn my attention that after the order is passed under section 15-I the remedy of a person is by way of appeal to the Securities Appellate Tribunal under section 15-I and appeal therefrom lies to the Supreme Court under section 15Z of the said Act. Learned counsel has thus contended that the scheme by itself provides for a complete code and therefore, this court ought not to entertain any suit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. He has drawn my attention to the judgment of the Apex Court in the case of Union of India v. Delhi High Court Bar Association AIR 2002 SC 1479 and contended that the Parliament is competent to enact the legislation so as to provide for an expert Tribunal and bar the jurisdiction of the civil court. It has been contended that in the light of the developing economy it is necessary that more and more Tribunals are constituted so as to effectively provide speedy justice to the various parties. He has drawn my attention to the judgment of the Supreme Court in the case of Vatticherukuru Village Panchayat v. Nori Venkatarama Deekshithulu 1991 Suppl. (2) SC 228 and particularly paras 17 and 18 of the judgment : "17. All communal lands, porambakes, tanks, etc., in inam villages shall vest in the Government under section 2A; of Inams Act free from all encumbrances. Section 3 determines the inam lands whether held by the individual or the institution, provides procedure for determination and section 3(4) gives right of appeal. Section 4 converts those lands into ryotwari lands and accords entitlement to grant of ryotwari patta. Section 5 gives power to restitute the lands to the t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng in force or any instrument having effect by virtue of any such law.' 18. The constitution intends to herald an egalitarian social order by implementing the goals of socio-economic justice set down in the preamble of the Constitution. In that regard the constitution created positive duties on the State in Part IV towards individuals. The Parliament and the state Legislatures made diverse laws to restructure the social order; created rights in favour of the citizens; conferred power and jurisdiction on the hierarchy of Tribunals or the authorities constituted thereunder and gave finality to their orders or decisions and divested the jurisdiction of the established civil courts expressly or by necessary implication. The Inam Act is a step in that direction as part of Estate Abolition Act. Therefore, departure in the allocation of the judicial functions would not be viewed with disfavour for creating the new forums and entrusting the duties under the statutes to implement socio-economic and fiscal laws. We have to consider, when questioned, why the Legislature made this departure. The reason is obvious. The tradition bound civil courts gripped with rules of pleading and strict ru....
X X X X Extracts X X X X
X X X X Extracts X X X X
....relevant but cannot be decisive. He has contended that if there is an express bar in a statute then in that event the principles of ascertaining that whether there is a implied bar of the civil court jurisdiction or not is infact an irrelevant consideration. He has contended that on both the footing that there is a express bar contained under sections 15Y and 20A of the SEBI Act and also on the basis that the scheme is a complete code by itself and the remedy including the remedy sought by the present suit can be effectively obtained by the plaintiff before the SEBI are the grounds on which this court must hold that this court has no jurisdiction to entertain and try the present suit. 15. Mr. Aspi Chinoy, learned counsel for defendant No. 1 has supported the argument of Mr. Tulzapurkar and Mr. Singhvi and has taken me throughout the following averments of the plaint, which are as under : "It is submitted that no such resolution having been passed by the members/shareholders of defendant No. 7, the acquisition of shareholding by defendant No. 1, which was at the time of the acquisition admittedly under the control of the Kansagra Brothers was and is, illegal void ab init....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "As defendant Nos. 8 to 10 failed and/or neglected to make the said announcement, the allotment of 2,00,000 convertible warrants and 1,00,000 equity shares to defendant Nos. 8 to 10 is clearly illegal, in violation of the Takeover Code, null and void ab initio and non est". He has contended that looking at the aforesaid averments made by the plaintiffs and the prayers sought it is clear that the only point raised is that the allotment and/or transfer of the shares is infact contrary to and in breach of the Takeover Regulations. In the present suit no individual right of the plaintiff has been agitated and the relief sought in the prayers are based only on the contention that there is a breach of the Takeover Regulations. Learned counsel has therefore, contended by supporting the arguments of defendant Nos. 4 and 8 that this court has no jurisdiction to entertain and try the present suit. 16. Mr. Seervai learned counsel for the plaintiff has on the other hand contended that this court has jurisdiction to entertain and try the present suit. He has contended that the nature of cause of action and the nature of the suit as framed by the plaintiff in the present suit is identic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he defendant No. 4. He has drawn by attention to page 53 of the judgment of the learned Single Judge where the provisions of sections 15Y and 20A of the SEBI Act are noticed. He has thereafter drawn by attention to page 55 where the provisions of the Takeover Regulations are also noticed. He has thereafter drawn by attention to page 79 of the judgment wherein the court has formulated the issues which require determination of this court. He has contended that this court has already held that the issue as to the determination of the frontiers of the jurisdiction of the SEBI in interpretation of various concepts which are used under the SEBI Act and regulations framed thereunder is an issue which requires to be determined by the Civil Court and not by the SEBI. He has contended that in the present case also he has raised the issue as to the interpretation of the regulation 3(1)(c) of the Takeover Regulations and to determine the said interpretation of the regulation, it is only the civil court who has jurisdiction and not the SEBI Board. It has been contended that in the judgment of the learned Single Judge in the case of M. Sreenivasulu Reddy (supra) this court has already held that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at of the authorities concerned was a somewhat overlapping and concurrent jurisdiction. The judgments of the Supreme Court from Dhulabhai v. State of Madhya Pradesh AIR 1969 SC 78, onwards were referred to by both the learned counsel. In that context, Mr. Nariman also drew my attention to a letter on behalf of the defendants written but their advocates to the SEBI requesting it to defer the determination inasmuch as the High Court was seized of the matter. That letter dated January 22, 1999 is placed at page 487 in Volume III-A of the compilation. Mr. Nariman therefore submitted that in case the defendants were raising the issue of jurisdiction, then in his view the issue will have to be granted and on which he may have to consider whether evidence should be recorded, alternatively, the defendants must agree that they were not pressing the issue in the manner in which it was worded in para 1(g) of the above referred affidavit in reply of defendant No. 11. In view of the objections raised by Mr. Nariman and after due deliberations and instructions, the defendant filed a joint affidavit of defendant No. 1 and defendant No. 11 affirmed on March 16, 1999, stating therein that for th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....its both dated December 21, 1998, are not pressed." (p. 68) 20. Similarly the same issue was agitated but once again given up before the Division Bench and my attention has been drawn to pages 958 and 959 of the judgment which reads as under: "At this stage, it is necessary to notice the objection taken by defendant Nos. 1 and 11 in Notice of Motion No. 3120 of 1997 to the effect that this court did not have jurisdiction to try, entertain and dispose of the suit. It was submitted on behalf of defendant Nos. 1 to 11 that so far as the question of registration or non-registration of shares is concerned, the plaintiffs could approach the Company Law Board under section 111A of the Companies Act, which was the competent forum to go into such matters. Similarly, the allegations regarding violation of the SEBI regulations could have been gone into by SEBI which was the competent authority to go into those allegations particularly when the proceedings was arising out of the notices issued by it. When this question of jurisdiction was raised, Mr. Nariman, learned counsels appearing on behalf of the plaintiffs, sought clarification from defendant Nos. 1 to 11 as to their stand o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o press the issue in the manner in which it is worded in para 1(g) of the affidavit in reply of defendant No. 11, which is as follows: 'This honourable court does not have jurisdiction to try, entertain and dispose of the suit.' In view of the objection of Mr. Nariman, the defendants filed a joint affidavit of defendant Nos. 1 and 11, affirmed on March 16, 1999, stating for the reasons contained therein, the submission was not being pressed. Referring to clause (g) of para 1 of the affidavit dated December 21, 1998, in reply to Notice of Motion No. 3120 of 1997 and para 1A of the reply dated December 21, 1998, in Notice of Motion No. 3932 of 1998 it was clarified that if the company had filed the present suit, the defendants could and would have contended that the jurisdiction of this court is ousted in view of section 111A(2) and (3) of the Companies Act, since the plaintiffs as shareholders had filed the suit alleging violation of civil rights, such a suit can be filed before a civil court which has territorial and pecuniary jurisdiction. The defendants, therefore, urged that an interlocutory stage this honourable court should not exercise its discretion to grant i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at was urged before the court that even if the issue of jurisdiction was given up by virtue of the express provisions of sections 15Y and 20A still they are entitled to urge that court ought not to exercise its jurisdiction because if there is an appropriate expert body established by a special body like SEBI then even if there is a jurisdiction then also it is not prudent for the Court to exercise the same and the court must leave the matter to be determined by the Board. It has been contended that what was argued by the Division Bench was whether it is proper to exercise the jurisdiction and not the lack of jurisdiction whereas in the present case what is sought to be urged before this court is total lack of jurisdiction by express bar contained under sections 15Y and 20A. It has been further contended by the learned counsel for the defendant that infact the provisions of the said section are noticed by the learned Single Judge and the Division Bench but both the learned Single Judge and the Division Bench refrained itself from considering the said provisions because the said issue was expressly given by the defendant in that case and thus the said judgments cannot be authority f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his court has jurisdiction. On the other hand the learned counsel for defendant No. 7 has contended that the said judgment is not an authority on the proposition relied upon and canvassed before this court and therefore, this court cannot rely upon the said authority blindly and thus hold that this court has jurisdiction. Learned counsel Mr. Tulzapurkar appearing for defendant No. 4 has further contended that the view expressed by the Single Judge and the Division Bench is only a prima facie view and this court while determining the preliminary issue under section 9A is determining the issue finally and therefore, the prima facie view cannot bind this court while deciding the issue at the final hearing stage. It has been thus contended by the learned counsel Mr. Tulzapurkar that the view expressed by the Single Judge and the Division Bench in both the aforesaid judgment were at the interim stage and the view of the interim stage does not bind the learned Single Judge at the final hearing of the suit. Mr. Dvitre appearing for defendant No. 7 has supported the argument of the learned counsel for defendant No. 4 and in fact relied upon the judgment of the Division Bench of Himachal Pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll the material then before it. In deciding that issue, it will properly have no regard to the finding rendered on the point while disposed of the application for interim injection. No matter how superior the court rendering that finding - and we could include this court - the trial court is bound in the proper discharge of its duties to ignore the finding when it proceeds to dispose of the suit and to apply its mind independently to the decision of the issue, the trial court will bear in mind that the opinion expressed on the merits of the suit when deciding an application for interim injunction does not operate as res judicata. Even in a case where the suit calls for the decision of a pure question of law alone, the trial court would be entitled to, and indeed is bound to, express its independent opinion on the issue of law and dispose of the suit accordingly. Conceivably, the Supreme Court may meanwhile have expressed a contrary opinion on the point of law, or the statutory law itself may have altered retrospectively. Considerations such as these and many others can come into existence after the application for interim injunction has been disposed of." (p. 63) 23. He....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on found therein nor what logically follows from the various observations made in it. On this topic this is what Earl of Halsbury, L.C said in Quinn v. Leathem (1901) AC 495 : 'Now before discussing the case of Allen v. Flood (1898) ACI and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical code, whereas every lawyer must acknowledge that the law is not always logical at all.' It is not a profitable task to extract a sentence here and there from a judgment and to build upon it." 25. This golden ru....
X X X X Extracts X X X X
X X X X Extracts X X X X
....issue of jurisdiction of this court vice versa sections 15Y and 20A of the SEBI Act and held that it does not contain a bar to entertain the nature of the suit which has been raised in the present case. I have considered the aforesaid argument. Learned counsel has in support of the argument has taken me through paras after paras of both the judgment of the learned Single Judge and the Division Bench and I have given an anxious consideration to the argument advanced by the learned counsel. However I am unable to accept the said contention. It is because even after reading paras after paras of the judgment I am unable to find any reasoning, any consideration and/or any contention which has been dealt with and/or findings given pertaining to the express bar contained under sections 15Y and 20A in either of the said judgments. In my opinion the judgment has proceeded on a concession that this court has jurisdiction and the provisions of sections 15Y and 20A are not pressed. However both the judgments of the learned Single Judge and the Division Bench have undoubtedly considered the jurisdiction aspect from two different angles. First from the angle that whether this court's jurisdictio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aw as to the jurisdiction of this court and its exclusion thereof has been the subject-matter of diverse judgments of the Apex Court commencing from the judgment of the 7 Judges bench in the case of Kamala Mills Ltd. v. State of Bombay AIR 1965 SC 1942 the Apex Court has held as under : "The normal rule prescribed by section 9 of the Code of Civil Procedure is that the courts shall (subject to the provisions contained in the Code) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizances is either expressly or impliedly barred. A claim by the dealers for the refund of sales tax which is alleged to have been paid by them through mistake is a claim of a civil nature. It should normally be triable by the ordinary courts of competent jurisdiction as provided by section 9. But the jurisdiction of the civil courts to try suits of a civil nature can be excluded either expressly or impliedly. This is laid down in this section itself. The question about the exclusion of the jurisdiction of civil courts either expressly or by necessary implication must be considered, in every case, in the light of the words used in the statutory provision on whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the Tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not. (3) Challenge to the provisions of the particular Act as ultra vires cannot be brought before Tribunals constituted under that Act. Even the High Court cannot go into that question on a revision or reference from the decision of the Tribunals. (4) When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit. (5) Where the pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mes necessary and the result of the inquiry may be decisive. In the latter case, it is necessary that the statute creates a special right or liability and provides procedure for the determination of the right or liability and further lays does that all questions about the said right or liability shall be determined by the Tribunal so constituted and whether remedies is normally associated with the action in civil courts or prescribed by the statutes or not. Therefore, each case requires examination whether the statute provides right and remedies and whether the scheme of the Act is that the procedure provided will be conclusive and thereby excludes the jurisdiction of the civil court in respect thereof. . . ." (p. 3085) 31. Keeping in mind the aforesaid principles of section 9 of the CPC as has been held by the Apex Court in the 7 Judges bench and consistently followed thereafter it is for me to determine whether the provisions of sections 15Y and 20A expressly bars the jurisdiction of this court. It has been already held in each of the aforesaid judgments that where there is an express bar the question whether the Act also provides the right as well as remedy and/or the scheme ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions 15Y and 20A cannot be extended to the nature of the suit and must be restricted to those matters where the proceedings are initiated for the purpose of imposition of penalty. Learned counsel for the plaintiff has also drawn my attention to the provisions of section 15Y particularly the words 'in respect of any matter which the adjudicating officer appointed under this Act is empowered by or under this Act to determine. . . . . .' Learned counsel has also drawn my attention to the provisions of section 15-I which inter alia provides for power on an Adjudicating Officer to adjudicate the matter. He has drawn my attention to the said section and has contended that the only power which is conferred on the Adjudicating Officer is to levy fine as contemplated under section 15HA which may extend up to Rs. 25 crores or around three times the amount of profit whichever was higher. It was thus contended that the Adjudication Officer has no power to order rectification of the share register and thus the provisions of section 15Y would not apply to the nature of the case as presented before this court by the plaintiff. Learned counsel for the plaintiff has also drawn my attention to the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... board to see that the Takeover Regulations are not violated but it does not confer any simultaneous right on the plaintiff to apply for rectification of the shares. He has contended that the right to apply for rectification of the shares is a common law right and therefore, can be only invoked and exercised by filing the civil suit. He has in support of the aforesaid argument drawn my attention to the judgment of M. Sreenivasulu Reddy (supra) and also cited a judgment in the case of Wolverhampton New Waterworks Co. v. Hawkesford Re Allen 6 C.B. (N.S.) 335 and particularly the following para at page 495 "There are three classes of cases in which a liability may be established founded upon a statute. One is, where there was a liability existing at common law, and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law: there, unless the statute contains words which expressly or by necessary implication exclude the common law remedy, and the party suing has his election to pursue either that or the statutory remedy. The second class of cases is, where the statute gives the right to sue me....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de by the appellate Tribunal on appeal under this section, and subject to the orders of the administrator and the appellate Tribunal on appeal, the order of demolition made by the Commissioner shall be final and conclusive.' 7. Section 344 vests power in the Commissioner to stop the construction of the building where the erection of such building or execution of any work has been commenced or is being carried on either without sanction or contrary to sanction so granted or in contravention of any condition subject to which sanction has been accorded. Under section 345A the Commissioner at any time, before or after making an order of demolition under section 343 or of the stoppage of the erection of any building or execution of any work under section 343, can make an order directing the sealing of such erection or work or of the premises in which such erection or work is being carried out has been completed. A further appeal has been provided under section 347D to the administrator against the order of the appellate Tribunal. Section 347 says: '347E. Bar of jurisdiction of courts.-(1) After the commencement of section 7 of the Delhi Municipal Corporation (Amendment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....persons aggrieved. Provisions were also made for appeals and revision to higher authorities. 12. Then a question arose as to where a particular Act had created a right or liability and had also provided a forum for enforcement of such right or for protection from enforcement of a liability without any authority in law, whether a citizen could approach a court. It may pointed out that many statutes have created certain rights or liabilities and have also provided the remedial measures in respect thereof. But such statutes have not touched the common law rights of the citizen. But there are some states, which in public interest affect even the common law rights or liabilities of the citizen, which were in the nature of existing rights. The distinction between the two types of rights or liabilities is subtle in nature but at the same time very vital." (p. 167) as well as the another judgment of the Apex Court in the case State of Tamil Nadu v. State of Karnataka 1991 (Suppl.) (1) SCC 240 and has cited the following para's of the said judgment : "9. Dr. Y.S. Chitale, appearing on behalf of the respondent, State of Karnataka raised an objection that this court had no j....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tain any interim application till it finally decides the dispute referred to it. There is thus no force in the above argument raised by Dr. Y.S. Chitale." (p. 243) 34. It has been contended by the learned counsel for the plaintiff that the provisions of sections 15Y and 20A of the SEBI do not apply and the jurisdiction of the civil court can never be barred when it comes to the determination of the question as to the length and breadth of the jurisdiction of the Tribunal and/or determination of the finer question of law and/or interpretation of the statute because it is only the civil court who is the ultimate authority and has power to determine the scope and sphere of jurisdiction and also determine the legal interpretation of the various questions of law which may arise for the purpose of consideration. It has been contended that in view of the fact that in the present suit the plaintiffs have raised the issue as to the correctness of interpretations of the provisions of regulation 3(1)(c) of the Takeovers Regulations, therefore this court must hold that this court has jurisdiction to entertain the present suit and determine correct interpretation of the said regulation 3(1)(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re on the instrument. As applied to documents of title, the term refers to the act of the bailee voiding a negotiable document upon its surrender by the holder in taking possession of the goods. Rectification.-Implies the correctness of an error or removal of defects or imperfections. It implies prior existence of error, mistake or defect, which after rectification is made right, and corrected by removal of the flaws. Rectification means making or setting right or correcting what is wrong and not declaring that what is done has been rightly done." 36. Learned counsel for the defendants have contended that the right as well as the remedy are both provided by the SEBI Act itself. It has been contended that the nature of the right conferred under the Takeover Regulations is in the interest of the investor as a class and not in favour of the individual shareholder. It has been contended that thus the remedy provided for by the statute is also of a generic nature which inter alia include in appropriate cases even for rectification of the said register. Thus there is a complete right and complete remedy under the said Act. It has been brought to my attention that while the le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....resent case are identical to the provisions which are sought to be invoked before the court in the case of M. Sreenivasulu Reddy (supra) and thus the said provisions are also considered and already been interpreted and therefore, the argument that this court has jurisdiction for the purpose of interpretation of regulation 3(1)(c) does not survive and sought to be rejected. Learned counsel Mr. Dwarkadas has further contended that the nature of right conferred under the SEBI Act and the nature of remedy provided must be viewed in the light of the nature of right and the scheme of the Act. He has relied upon the judgment of Rajkot Municipal Corpn. v. Munjulben Jayantilal Nakum [1997] 9 SCC 552 and particularly the following para : "20. If the statute creates right and remedy, damages are recoverable by establishing the breach of statute as the sold remedy available under the statute. But where a statute merely creates a duty without expressly providing any remedy for breach of it, appropriate remedy, prima facie, is punishment for misdemeanour in respect of the injury to the public and the action for damages in respect of any special damage suffered by an individual. Where sp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id flat, is in substance no other than a prayer for the recovery of possession of the said flat. Realizing full well that the proper relief to pray for would be a decree or order for possession but at the same time being desirous of bringing the suit in this court and simultaneously not wishing the suit to suffer from a technical defect, the draftsman of the plaint has in the said prayer sought to protect the plaintiff by using the phraseology 'that the defendant be ordered and decreed by a mandatory order or injunction. . . .' Thus, really what is prayed for is a decree for possession. 'It is now well- settled that when we have to determine the nature of the suit what we are to look at is the real substance of the suit and not legal ingenuity in drafting the plaint. The plaint read as a whole and the real substance of the suit leaves no doubt that this is a suit between persons who hold the character of a licensor and licensee, which relationship having come to an end according to the plaintiff, the plaintiff has become entitled both in law and under the agreement of licence to recover possession of the property from the defendant, his licensee." (p. 129) 39. He has also brough....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the learned counsel for the plaintiff that irrespective of the fact that there is an express bar conferred under section 15Y read with regulation 20A this court must entertain the present suit and grant necessary relief cannot be accepted. The contention of the learned counsel for the plaintiff that there was a pre-existing common law right under section 9 of the CPC and that pre-existing common law right is not taken away by the provisions of sections 15Y and 20A also cannot be accepted. It is because the common law right of rectification which is sought to be enforced and exercised by the plaintiff in the present case arises out of the right conferred on the basis of Takeover Regulations and once the provisions of the Takeover Regulations are invoked then the entire jurisdiction by virtue of the provisions of sections 15Y and 20A is exclusively conferred on the SEBI authorities. Learned counsel's argument that under section 15Y the only jurisdiction conferred on an adjudicating officer is to penalise the party and not for rectification also cannot be accepted because the provisions of section 15Y are to be read together with section 20A of the SEBI Act which inter alia confers ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ereunder. 42. It is not possible to accept the contention of the learned counsel for the plaintiff that the provisions of sections 15Y and 20A should be so read down so as to exclude the cases of rectification of the share register by shareholder. If the provisions of the Act are such so as to cover all eventualities which arises under the statute then in that event it is not possible that a special exception be carved out only in the matter of one type of case as it is urged by the learned counsel for the plaintiffs. 43. I am of the opinion that on plain and simple reading of section 15Y read with section 20A of the Act all the cases arising out of the breach and Take- over Regulations must fall within the exclusive domain of SEBI and cannot be complained in the court of Law by virtue of express bar contained under section 15Y and section 20A of the SEBI Act. I am also of the further opinion that there is no doubt that there is a common law right in a share- holder to apply for rectification of the share register even though it is not his own share in respect of which he is seeking rectification but still the said right if it flows from the provisions of Takeover Regulations....