TaxTMI 
TaxTMI 
2017 (7) TMI 467
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....to the plaintiff; (ii) for permanent injunction restraining the second defendant from claiming any right, title or interest in respect of suit schedule shares; (iii) to direct the defendants to account for the dividends, benefits and payments received and appropriated by the second defendant in respect of suit schedule shares and to pay interest of 12% per annum on the amount so ascertained from the date of such benefit accruing to the second defendant till date of payment; 3. The petitioner filed I.A.No.7540 of 2017 under Order VII Rule 11 of C.P.C. for rejection of plaint. The first respondent filed counter affidavit denying the averments made in the affidavit. The learned Judge by order dated 10.01.2017 dismissed the application. 4. Against the order dated 10.01.2017 made in I.A.No.7540 of 2017, the present civil revision petition is filed by the petitioner. 5. The facts of the case is as follows: (i) First respondent is the son of petitioner and Mrs.Sharmila Ramji. The petitioner is the great grand son of T.V.Sundaram Iyengar (TVS). From his childhood, the first respondent used to get gifts from time to time on account of birth days, festival....
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....ejection of plaint on the following grounds: (a) The suit is not maintainable in Civil Court, as special remedy is available under the provisions of the Companies Act. The relief sought for cannot be entertained by the Civil Court, as the suit is expressly and impliedly barred. The suit is not maintainable either in law or on facts; (b) The suit is barred under Section 38 of the Specific Relief Act; (c) First respondent filed C.S.No.412 of 2008 before this Court in the very same issue and deliberately did not include the present relief and thereby, relinquished the present claim. The present claim is barred by Order II Rule 2 of C.P.C. The application filed by the petitioner to reject the plaint in C.S.No.412 of 2008 is pending in this Court; (d) The suit is barred by Section 58 of the Companies Act, 2013; (e) From the averments in the plaint, it is seen that in the letter to the mother of the first respondent in the year 2006, the share details were mentioned and the suit filed in the year 2016 is barred by limitation; (f) The relationship between the petitioner and his wife/ mother of the first respondent is not cordial and it....
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....he present case; (vi) Section 58 of the Companies Act, 2013 deals with refusal by a company to register the transfer or transmission of shares upon intimation. The said section does not apply to the facts and the reliefs sought for in the present case. Both the parties do not state that the shares were transferred freely. The issue on limitation is a mixed question of fact and law and it can be decided only after the completion of trial by appreciating the evidence let in by the parties. The question of fraud played by the petitioner can be decided only by appreciating the evidence let in by the parties and the Civil Court is the appropriate forum to decide the issue. The proceedings in the forum established in the provisions of the Companies Act is summary in nature and the forum has no jurisdiction or power to decide the issue of fraud in a summary proceedings. 8. Before the learned Judge, both the petitioner and the first respondent did not let in any oral evidence. The petitioner marked four documents as Exs.P1 to P4. The first respondent marked seven documents as Exs.R1 to R7. 9. The learned Judge considering the averments in the plaint, affidavit filed in suppo....
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.... The remedy and proper forum for rectification is National Company Law Tribunal. The learned Judge without considering this fact has dismissed the application; (v) Sections 58 and 59 of the Companies Act, 2013, which are equivalent to Sections 110 and 111A of the Companies Act, 1956, came into force on 12.09.2013 and these sections deal with rectification of register of members, a refusal of registration and appeal; (vi) As per the Section 430 of the Companies Act, 2013, the jurisdiction of the Court is ousted in respect of the matters, which National Company Law Tribunal is empowered to determine. The learned Judge failed to see that the present suit is barred under law as the jurisdiction of the Civil Court is ousted; (vii) The learned Judge failed to see that Section 58 and 59 of the Companies Act, 2013 has to be read with Section 424 and 430 of the Companies Act, 2013. The findings of the learned Judge that the suit is maintainable is bad in law and contrary to the provisions of the Companies Act, 2013. The learned Judge erred in considering the provisions of the old Companies Act, 1956 and the proceeding before the Company Law Board and failed to con....
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.... the Companies Act, 2013, the Tribunal and the Appellate Tribunal have the powers of the Civil Court and the Tribunal can go into the questions of fraud by letting in evidence and examining the witness; (xii) Section 430 of the Companies Act, 2013 bars jurisdiction of the Civil Court. As per Section 434(1)(c), which came into force on 15.12.2016, the suits pending in the High Courts and the District Courts, which are to be decided by the Tribunal, have to be transferred to the Tribunal. When suits pending before the High Courts and the District Courts ought to be transferred to the Tribunal, the present suit, which is pending before the Assistant City Civil Court, this sub judge has to be transferred to the Tribunal, even though it is not barred when it was filed in the City Civil Court. (xiii) As per the judgment reported in (1993) 3 SCC 123 (Inacio Martins (deceased through legal heirs) v. Narayan Hari Naik and others), when the Tribunal is constituted with power to decide the matters mentioned therein, only the said Tribunal is empowered to entertain the said matter. Appeal remedy is provided to the Appellate Tribunal and order of the Appellate Tribunal can be ....
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....nder the provisions of the Act may be taken note of. The impact of the fifth amendment may give rise to a situation where the remedy lies entirely under the Act and may have to be taken in the manner prescribed by or under the Act. For example, where a person who is a deemed tenant under section 4 of the Act if evicted from the land on or after July 1, 1962 his remedy under section 8(2) is to approach the authority under the Act for recovery of possession of the land of which he has been dispossessed. In such a situation the remedy may not be the one available in the case of a tenant other than a deemed tenant whose case is not governed by section 8(2) of the Act. But in the case of a deemed tenant who has been evicted from the land on or after 1st July, 1962 since a remedy has been provided under the Act, the Jurisdiction of the Civil Courts stands wholly barred by virtue of Section 58 (2) of the Act. In such a situation the Civil Court would not be competent to pass any order for restoration of possession to the deemed tenant. His remedy would, therefore, to be entirely under the Act. This is just by way of an illustration. If such a situation arises what procedure should the cou....
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....e rectification, its discretion to send a party to seek his relief before the civil court first for the adjudication of such facts, it cannot be said such right of the court to have been taken away merely on account of the deletion of the aforesaid proviso. Otherwise under the garb of rectification one may lay claim of many such contentious issues for adjudication not falling under it. Thus in other words, the court under it has discretion to find whether the dispute raised is really for rectification or is of such a nature that unless decided first it would not come within the purview of rectification. The word "rectification" itself connotes some error which has crept in requiring correction. Error would only mean everything as required under the law has been done yet by some mistake the name is either omitted or wrongly recorded in the Register of the company. In T.P.Mukherjee's Law Lexicon, Fifth Revised Edition: "The expression rectification of the Register used in Section 155 is significant and purposeful. 'Rectification' implies the correctness of an error or removal of defects or imperfections. It implies prior existence of error, mistake or defect... t....
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....ry in nature, we hold that the learned single Judge of the High Court has correctly concluded that in the absence of any cause of action shown as against the 1st defendant, the suit cannot be proceeded either for specific performance or for the recovery of money advanced which according to the plaintiff was given to the 2nd defendant in the suit and rightly rejected the plaint as against the 1st defendant. Unfortunately, the Division bench failed to consider all those relevant aspects and erroneously reversed the decision of the learned single Judge. We are unable to agree with the reasoning of the Division Bench of the High Court." 13. Per contra, the learned senior counsel appearing for the first respondent contended as follows: (i) The suit is not barred by limitation. The shares mentioned in the suit absolutely belongs to the first respondent. The petitioner in collusion with the directors or officials of the second respondent got the shares transferred in his name, while the first respondent was a minor and first respondent did not rectify the same, when he attained majority. The first respondent came to know the fraud played by the petitioner, when he was collecti....
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....pany Law Board as the proceeding is summary in nature. The proceedings before the Tribunal constituted under the Companies Act, 2013 is also summary in nature and the seriously disputed questions cannot be decided by the Tribunal. Even if the proceedings is initiated in the Tribunal, the seriously disputed questions have to be relegated to the Civil Court; (v) The Division Bench of the Karnataka High Court in the judgment reported in (2016) 198 CompCas 481 (Kar) in (K.Ravinder Reddy v. Alliance Business School and others), held that if question of title in whose favour the shares ought to be transferred, adjudication power under Section 58 is not available to the Tribunal or Company Law Board. The contention of the petitioner that Section 10GB would prevail till Section 430 of the Companies Act, 2013 was notified, is devoid of merits. Section 10GB forming part of 1C, even though inserted on 01.04.2003 by the Companies (Second Amendment) Act, 2002 never notified. The Apex Court in the judgment reported in (2010) 11 SCC 1 held that part 1C and 1B to be unconstitutional. The same view was taken by this Court in the judgment reported in 2012 - 5 - L.W. 278 in (K.Saravanan and ....
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....ii) (2016) 1 Supreme Court Cases 423 in (Jai Mahal Hotels Private Limited v. Devraj Singh and others), wherein in paras 17 and 18, it is held as follows: "17. Thus, there is a thin line in appreciating the scope of jurisdiction of the Company Court/Company Law Board. The jurisdiction is exclusive if the matter truly relates to rectification but if the issue is alien to rectification, such matter may not be within the exclusive jurisdiction of the Company Court/ Company Law Board. 18. In Standard Chartered Bank (supra), scope of Section 111(7) was considered. It was observed that jurisdiction being summary in nature, a seriously disputed question of title could be left to be decided by the civil court. It was observed : 29 The nature of proceedings under Section 111 are slightly different from a title suit, although, sub-section (7) of Section 111 gives to the Tribunal the jurisdiction to decide any question relating to the title of any person who is a party to the application, to have his name entered in or omitted from the register and also the general jurisdiction to decide any question which it is necessary or expedient to decide in connection with suc....
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.... of members of second respondent substituting his name in the place of petitioner's name and issue share certificates in his name. The first respondent has stated that these shares were purchased, while he was a minor from and out of gifts received by him from his maternal family members on the occasion of his birth days, festivals and Upanayanam etc. The petitioner as his father and natural guardian invested these amounts and purchased the shares from and out of the amounts received by the first respondent as gifts. When misunderstanding arose between the petitioner and his wife/mother of the first respondent and when both of them filed separate petitions for divorce. The petitioner fraudulently in collusion with the officials and directors of second respondent getting shares transferred in his name. 19. According to the first respondent, he came to know the fraud played by the petitioner only when he was ascertaining his assets while planning to go abroad for higher education. The petitioner has not filed written statement or counter in the interim application. Even in the affidavit filed in support of the application to reject the plaint, the petitioner has not stated as ....
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....t injunction restraining the second respondent claiming any right, title or interest in the said shares. 24. The petitioner filed I.A.No.7540 of 2017 under Order VII Rule 11 of C.P.C. to reject the plaint. The main contention of the petitioner is that the suit is for rectification of register of members of the second respondent. The Civil Court has no jurisdiction to entertain and decide the suit claiming such relief. According to the petitioner, as per Section 111 and 111A of the Companies Act, 1956 and as per Section 10GB inserted by the Companies (Second Amendment) Act, 2002, the claim of the first respondent has to be filed only before the Company Law Board. As per Section 58 of the Companies Act, 2013, first respondent has to make the claim with regard to rectification of register of members only before the National Company Law Tribunal. The National Company Law Tribunal is validly constituted as per Sections 407 to 414 of the Companies Act, 2013. 25. Section 430 bars jurisdiction of the Civil Court and as per Section 434(1)(c), proceedings pending before the High Courts and District Courts have to be transferred to the National Company Law Tribunal. To substantiate this....
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.... Law Tribunal constituted under the Companies Act, 2013 is also summary in nature. 28. From the provisions of the Companies Act, 2013 and 1956, it is clear that the Tribunal or Board as the case may be can decide only the rectification of register of members with regard to shares and connected incidental issues. In the present suit, a reading of the averments in the plaint as well as the relief sought for by the first respondent shows that to decide the issue raised by the first respondent, the title to the shares in question has to be considered. The first respondent has not only prayed for rectification of register of members by substituting his name in the place of the petitioner and issue share certificates to him, but also prayed for permanent injunction restraining the petitioner from claiming any title over the shares in question. Whether the first respondent is entitled to relief of permanent injunction and also payment of dividends and bonus in respect of the shares can be decided only when the title to the shares are decided. Only if the first respondent proves by acceptable evidence that he is the owner of the shares in question and that the petitioner fraudulently in....