TaxTMI 
TaxTMI 
2021 (11) TMI 957
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....egal representatives of the deceased unmarried daughter Santosh Bala, inter-alia, with the averments that each plaintiff had applied for and were allotted 100 Secured 'Zero' interest Fully Convertible Debentures ('FCD') of Jindal Iron & Steel Company Limited. The plaintiffs were required to pay the value of debentures in three installments of Rs. 2,000/- each. The debentures were to be converted in 100 shares of face value of Rs. 10/- with Rs. 50/- as premium. The first installment was paid alongwith the application and the second installment was also paid on receiving notice in this regard. Both the installments were received by the defendant. Suddenly, on 14.06.2004, a letter was received, whereby the plaintiffs were informed that the Company has forfeited plaintiffs' right to receive the equity shares and the principal amount paid by the plaintiffs thereof. The plaintiffs contested the action of the defendant, however, no action was taken by the defendant - Company. It was claimed that the amount of second call was sent by cheque, however, the cheque was returned and therefore, the amount was sent by the draft and as such, the defendant was not entitled to forfeit the right to....
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....led by the defendant - Company. Learned Senior Counsel appearing for the appellants submitted that he was pressing proposed substantial questions No.(III), (IV) & (V), which pertain to the right of the present appellants to receive a fresh notice as the original defendant Jindal Iron & Steel Limited had merged with Jindal Vijay Nagar Steel Limited. Whereafter, the name of the Company was changed to JSW Steel Limited during pendency of the suits; the civil court had no jurisdiction in the matter and that the trial court wrongly rejected the applications filed by the appellants -plaintiffs under Order IX, Rule 7 CPC. It was emphasized with reference to provisions of Section 111A of the Act that the jurisdiction in relation to the subject matter at the relevant time lay with the Company Law Board and as such, the jurisdiction of civil court to deal with the matter was impliedly barred and therefore, the first appellate court was not justified in accepting the appeals filed by the plaintiffs. Further submissions were made that the suits were originally filed against Jindal Iron & Steel Limited, who had issued FCDs, however, the said Company got merged with Jindal Vijay Nagar Steel L....
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....s the fact that the same also does not give rise to any substantial question of law. Reliance was placed on Bhagwan Dass Chopra v. United Bank of India & Ors. : AIR 1988 SC 215. I have considered the submissions made by learned counsel for the parties and have perused the material available on record, wherein the appellant has produced the plaint as well as the documents exhibited by the plaintiffs. The challenge laid in the suits pertain to the forfeiture of right to receive equity shares in respect of Secured 'Zero' Fully Convertible Debentures ('FCD'). The submissions made that the jurisdiction to deal with the subject matter of the suits lay with the Company Law Board under the provisions of Section 111A of the Act, apparently have no substance. Section 111A of the Act, insofar as, relevant reads as under :- "111A. Rectification of register on transfer.-(1) In this section unless the context otherwise requires, "company" means a company other than a company referred to in sub-section (14) of section 111 of this Act. (2) Subject to the provisions of this section, the shares or debentures and any interest therein of a company shall be freely transferable: Provided that ....
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....uit in this regard. Following the judgment in the case of Morgan Ventures Ltd. (supra) , the Company Law Board in Re: Larsen & Tourbo Ltd. : (2014) 182 CompCas 43 (CLB) came to the conclusion that the appeal under Section 111A of the Act against forfeiture of debentures lying in the name of the appellant cannot be decided by Company Law Board. As the jurisdiction under Section 111A of the Act has been consistently held to be limited to transfer and transmission of shares / debentures, challenge laid to forfeiture cannot obviously be entertained by the Company Law Board as determined by the Bombay High Court and the Company Law Board itself (supra) and as such, the plea raised pertaining to lack of jurisdiction of the civil courts apparently has no substance. So far as the judgments cited by learned counsel for the appellant herein are concerned, both the judgments in the case of Shashi Prakash Khemka (supra) and Eternit Everest Limited (supra) pertain to transfer of the shares and not allotment / forfeiture of the shares / debentures and as such, the same have no application to the facts of the present case. Besides the above fact, as provisions of Section 122 of the Act provid....