TaxTMI 
TaxTMI 
2017 (7) TMI 467
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.... 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, festivals and other occasions from his maternal grand parents, his maternal great gr....
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....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 is estranged relationship. To harass the petitioner only, the first respondent has filed the suit at the instigation of his mother. The reli....
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.... 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 support of the application, counter affidavit, documents marked, judgments relied on by the parties, arguments of the learned counsel for the petitioner and first respondent, dismissed the appli....
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.... 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 consider the provisions of the Companies Act, 2013; (viii) The allegation of fraud made by the first respondent can be decided by the National Company Law Tribunal and the Tribunal has power to decide the said issue. The findings of the learned Judge that only the Civil ....
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....tion 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 challenged in the Hon'ble Apex Court. 12. In support of his contention, he relied on the following decisions: (i) AIR 1969 SC 78(1) (Dhulabhai v. State of M.P. and other), wherein in para-32, the marked portions are extracted hereunder: "(1) Where the statute gives a finality to the orders of the spec....
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....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 court follow in a pending suit which was instituted in a competent court having jurisdiction at the date of its institution. It would seem unfair to non-suit the plaintiff altogether for no fault of his own. We think, in such a situation where the entire dispute falls outside the Civil Court's jurisdiction on account of the change in law the proper course would....
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....n 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... the Register kept by the company has to be shown to be wrong or defective." According to Stroud's Judicial Dictionary: "Rectify - Altering the Register of a company so as to make it conformable with a lawful transfer." In Venkataramaiya's Law Lexicon, 2nd Edn.: "The act to be done under the powers of that section is the 'rectification' of the Register, a term which itself im....
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....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 collecting the details of his assets to proceed abroad for his higher education. Immediately, first respondent filed the suit. The limitation is a mixed question of fact and law, which can be decided only by appreciation of evidence let in during trial. This question cannot be decided in a summary proceedings; (ii) The suit is not barred by the provisions of the Order II Rule 2 of C.P.C. The suit in C.S.No.412 of 2008 is for partition and allotment of fi....
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....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 another V. M/s.Cosmopolis Properties Pvt. Ltd. and others); (vi) The suit was filed on 07.03.2016, when there was no bar for instituting proceedings in the Civil Court. Section 430 of the Companies Act, 2013 came into force only on 01.06.2016 and is not applicable to the suit already instituted. Even if Section 430 is applicable to the pending suits also, the same is not applicable to the present suit in view of the fact that the first respondent is seeking rectification o....
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....tered 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 such an application. It has been held in Ammonia Supplies Corpn. (P) Ltd. v. Modern Plastic Containers (P) Ltd. that the jurisdiction exercised by the Company Court under Section 155 of the Companies Act, 1956 (corresponding to Section 111 of the present Act, before its amendment by Act 31 of 1988) was somewhat summary in nature and that if a seriously disputed question of title arose, the Company Court should relegate the parties to a suit, 23 September, 2015 which was the more appropriate remedy for investigation and adjudic....
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....ween 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 to whether the shares were standing in the name of the first respondent and if so, when the shares were transferred in his name. 20. The petitioner has contended that the first respondent knew about the shares in his name in the year 2006 itself and the suit filed in the year 2016 is barred by limitation. 21. It is pertinent to note that the first respondent was a minor in the year 2006 and first respondent contended that after attaining majority, he did not ratify the transfer of shares in the name of the petitioner. In view of the above contention an....
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....dment) 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 claim, the learned senior counsel for the petitioner relied on the judgment reported in (1993) 3 SCC 123 (Inacio Martins (deceased through legal heirs) v. Narayan Hari Naik and others). 26. On the other hand, learned senior counsel for the first respondent contended that the proceedings before the National Company Law Tribunal is summary in nature. A serious question of fraud and collusion cannot be decided by the Tribunal in a summary proceedings. First respondent has claimed injunction restraining the petitioner from claiming any title or interest in respect of ....
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.... 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 collusion with the officials of the second respondent got transferred the shares in his name due to estranged relationship between the petitioner and his wife, mother of the first respondent, the first respondent cannot succeed in the claim of the rectification of register of members of the second respondent. The petitioner has not stated that first respondent is not the owner of shares at any point of time and that there was no fraudulent transfer in collusion with the officials of the second respondent. In this circumstance, the issue on title of shares is the main is....