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PETITIONER: M/S AMMONIA SUPPLIES CORPORATION(P)LTD.

       Vs.

RESPONDENT: M/S MODERN PLASTIC CONTAINERS PVT.LTD.& ORS.

DATE OF JUDGMENT:       04/09/1998

BENCH: G.B.PATTANAIK, A.P. MISRA

ACT:

HEADNOTE:

JUDGMENT:  JUDGMENT MISRA, J. The present appeal arises out of an order dated  May 16,  1994  dismissing  the  appellant- Company appeal by the High Court. The short question raised by the  appellant  is: "Whether  in  the  proceedings  under  Section  155  of  the Companies Act,  the  Court  has  exclusive  jurisdiction  in respect  of  all  the  matters  raised  therein or have only summary jurisdiction?" According to the appellant, there are conflicting decisions of the various High  Courts  in  India which  resulted  into  reference  of Appellant’s case to the Full Bench by the Delhi High Court. The Full  Bench  decided that  the  jurisdiction is summary in nature, thus rejecting the case of the appellant that the power of the Court  under this  is  exclusive  in  respect  of  all the matters raised therein. In order to appreciate the point it is necessary  to refer to certain facts. M/s    Ammonia   Supplies   Corporation   (P)   Ltd. (hereinafter referred to as an  appellant-Company)  went  in liquidation  and  was  directed to be wound-up by the Punjab High Court Circuit Bench at Delhi.  By Order dated 24th Dec. 1962 the  said  High  Court  was  pleased  to  transfer  all proceedings to  the  Court  of District Judge, Delhi.  It is said Shri Murarilal Bhargava is the sole beneficiary of  the said Company.   He filed an application for absolute stay of the liquidation proceedings which was  granted  on  the  1st February, 1978  till  further  orders.  He was authorised to carry on the business of the Company.  The stay order was in respect of  all  the  affairs  except  with  regard  to  the assessment  and  of income tax payment thereof in respect of which it was directed that the same shall be  prosecuted  by the official liquidator. On the 3rd January, 1977 the appellant-Company  made investment  in  the  shares of M/s Modern Plastic Containers (P) Ltd.        (hereinafter    referred    to    as     the respondent-Company)  to  the extent of 50% shares that is to say 1,265  shares  of  Rs.    100  each  amounting  to   Rs. 1,26,500/-.  Shri  O.P.    Bhargava  S/o  Shri  M.L.Bhargava married the sister-in-law of one Shri V.K.Bhargaval, one  of

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the Managing   Directors  of  the  respondent-Company.    On account of this Shri M.L.  Bhargava became  closer  to  Shri V.K.  Bhargava.    It  is  for this reason appellant-Company invested    into    the    aforesaid    shares    of     the respondent-Company.    The   dispute   pertains  about  this investment.  According to respondent-Company  there  was  no such  investment made by the appellant-Company nor any share was transferred by the respondent-Company in favour  of  the appellant-Company.    On   the   other  hand,  the  bone  of contention of the appellant-Company is inspite of payment of the aforesaid amount for shares it was not invested in  such shares.   The  appellant-Company became 50% share holders of the   respondent-Company   about   which   there    is    an acknowledgment by  the  respondent-Company.  Strong reliance is placed on the  basis  of  various  documents  mainly  the Balance  Sheet  of  the  appellant-Company dated 31st March, 1977 showing investment in  the  respondent-Company.Accounts of  the  appellant-Company were audited which took notice of this investment which was subjected to income tax assessment orders dated 19th May, 1978 and 4th August, 1979.   On  18th January,  1983  Shri  V.K.Bhargava  dies  in a car accident, which according to the appellant is the  reason  of  dispute between  the  appellant-Company  and the respondent-Company, being  raised  by  the  brothers  of   the   deceased   Shri V.K.Bhargava.   It  is because of this the appellant filed a composite petition on 10th September,  1984  under  Sections 397,  398  and 155 of the Companies Act for rectification of the Register of Members and for oppression and mismanagement of  the  respondent-Company  which  was  admitted  on   14th September, 1984.   However, it seems that the petition which was filed by the appellant under  Sections  397,  398,  read with  155,  the Court by its order confined the relief under Section 155, that  is  to  say,  rectification  prayer  made therein.   In  this  appeal  we are only concerned with this part viz., the jurisdiction of the Court under  Section  155 while  dealing  with  any application for the rectification. Further  case  of  the  appellant-Company   is   that   Shri V.K.Bhargava  informed  the  appellant  that  his  group  of share-holders in the respondent-Company wanted to get rid of Mittal Group of share-holders as the joint  functioning  was not proceeding  well.    It is on account of this he desired that the appellant-Company of whom the sole  beneficiary  is Shri M.L.Bhargava  and  ultimately  Shri  O.P.  Bhargava-son should have 50% shares by purchasing the shares belonging to Mittal group.  On account of this the appellant-Company sent the aforesaid amount to Shri V.K.  Bhargava  for  purchasing the shares  in  the name of the appellant-Company.  Reliance is placed on the basis of various  letters,  some  of  which according   to   the   appellant   are   admission  for  the appellant-Company being entitled to the  shares  holding  of 50%.   According  to  the  facts  as recorded by the Company Judge in its order dated  4th  March,  1994  refers  to  the averment  in  the  petition  before  him,  that  1265 shares belonging to Mittal Group were to be transferred in the name of   the   appellant-Company   in   the   records   of   the respondent-Company but due to fraudulent intentions the same was not  done.    The  alternative  plea was taken that Shri V.K.Bhargava has no fund acquire the said  1,265  shares  in January  and  February  1977 and it should be hold that said Shri V.K.Bhargava held those shares benami in his  name  for the benefit  of  the appellant-Company.  In other words, the money was given by the Appellant-Company though  the  shares were purchased in the name of Shri V.K.Bhargava.  It is from the  money  which  was advanced by the appellant-Company the respondent-Company allotted 470 shares, that is to say,  265

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and 205  shares  to  the Respondent Nos.  2 & 3 respectively before the Company Judge to bring the distribution of shares ratio of 50% each.  A prayer was made that the Court  should declare  that 470 shares allotted to the said respondents is null  and  void   and   it   should   be   held   that   the appellant-Company  is  having  share-holding  of  those 1265 shares.  Accordingly, necessary rectification be made in the Register of the members of the respondent-Company. Contesting the case set up by the  appellant-Company before  the learned Company Judge the respondents vehemently disputed the claim. The contention is as the  claim,  if  at all   of   the  appellant-Company  of  having  advanced  the aforesaid amount of Rs. 1.26,500/- to late Shri V.K.Bhargava the recovery of which was  hopelessly  time  barred  as  the said transaction took place in year 1977 whereas the Company petition was only filed in the year 1984. Hence, the present petition  has  been filed as a device, as an alternative, to claim to be the member of the respondent-Company as owner of the shares to the extent of Rs. 1,26,500/-. In fact, no such amount was ever paid to the  respondent-Company  and  at  no point  of  time  the appellant-Company became entitled to be the share holder of the respondent-Company.  The  shares  of the  respondent-Company  could  only be transferred with the permission  of  Board  of  Directors.  There  was  no   such permission.  In  fact  in  order  to become the member or to purchase the shares of the Company a procedure is prescribed under the Companies Act which has to be followed before  the shares  could be transferred. There is neither any such plea by the appellant-Company nor there is  nay  such  proceeding undertaken  for  the  transfer  of  shares  in favour of the respondent-Company  as  alleged.  Actually,  the   aforesaid Mittal Group offered to transfer shares to Shri V.K.Bhargava which  was duly transferred by the Board of Directors. Hence no question arises of offering any share  for  sale  to  the appellant-Company  of  the  shares  belonging  to the Mittal Group. If there are any transaction of  advancement  of  Rs. 1,26,500/-  to  Shri  V.K.Bhargava,  the said transaction is between Shri M.L.Bhargava or by the  appellant-Company  with Shri  V.K.Bhargava which could only be a private transaction between them and the respondent-Company has  nothing  to  do with   the   same.   In   fact,  shares  purchased  by  Shri V.K.Bhargava from Mittal Group had always been shown in  the income  tax  return  of  Shri  V.K.Bhargava  as his personal assets. The  respondent-Company  further  pleaded  that  the appellant  had  forged  letter dated June 7, 1984 as much as the said letter was never issued by the  respondent-Company. Further,  there is no entry in the books of accounts for the aforesaid amount. In fact the various documents filed by the appellant-Company apart from the forged letter including  25 other letters are also denied by the respondent-Company. It is also necessary  to  record  certain  facts  as recorded in the proceedings before the Company Judge.  These facts  are recorded in the impugned order of the High Court. On 30th April, 1985 the Court directed the parties  to  file affidavits and  minute  books.    This  exercise started for considering the plaint  of  the  appellant-Company  for  the rectification as aforesaid.  Liberty was given to each party to cross-examine  the  witnesses.    The case was listed for cross-examination of the defendant on the 2nd  August,  1985 and 5th  August,  1985.  On the various dates the matter was listed but was adjourned.  On 22nd January, 1986 a direction was given that the Registrar of Companies should produce the enquiry report, if any, pertaining to the complaint filed by Shri M.L.Bhargava on 11th February, 1986.  On the 14th  July 1986  learned  counsel for the respondent-Company raised the

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objection that since the proceedings under  Section  155  of the  Companies  Act  was  summery  jurisdiction, the various points raised by the appellant-Company adjudication to which requires  detailed  evidence  to  be   led   including   the adjudication  of  the  various  letters including forged one cannot be gone into in these  proceeding  put  only  through civil suit.    Hence,  the  case  should be tried by a Civil court.  Thus raised the objection about the  maintainability of the  petition.  It is thereafter the learned Single Judge deferred recording  further  evidence.     After   extensive arguments  and  considering  various authorities the Company Judge following the Full Bench decision of  the  Delhi  High Court  in the very case of the appellant-Company reported in AIR 1994 Delhi.  51 (F.B.) held that it is not  a  fit  case for  exercising  discretion  of  the  Court for invoking the summary jurisdiction under Section 155 of the companies Act, on the facts and circumstances of this case and if  advised, the  appellant-Company  could  seek  his  remedy  by  filing regular civil suit after seeking  permission  of  the  court under Section 446 (2) of the Companies Act.  The petition of the appellant-Company  was, therefore, dismissed.  On appeal also the Division Bench dismissed the appeal.    Hence  this special leave petition. Within the aforesaid matrix of  facts  the  question raised is not something new but is what is being raised time and  again  in the various High Courts including this Court. The question is, whether the jurisdiction of the court under Section 155 of the Companies Act is summary in nature or  it is  all  encompassing to include all types of disputes to be adjudicated exclusively  by  the  court.    Learned   senior counsel  for  the appellant contends that the aforesaid Full Bench of the Delhi High Court holds  it  to  be  summary  in nature  based  on  the  decision  of this Court in the case, Public Passenger Service Ltd.  Vs.  M.A.Khadar  and  Another (1966 Companies Act  (Vol.  36) S.C.  Page 1) about which he feebly submitted to be in percuricum.   In  the  alternative contention  is  both in the full Bench decision of the Delhi High Court and decision of this Court  in  the  case  Public Passenger Service Ltd.  (Supra), notice was not drawn to the definition  of  ’Court’ as defined under Sec.2 (11) and Sec. 10 of the Companies Act.  If that would have been considered a different interpretation would have  followed.    If  that definition  is  read into Section 155 the ’Court’ would only be a company judge and not Civil Court.  Further, submission is even if it could be said the jurisdiction  of  the  Court under  Section 155 is summary in nature, an applicant cannot be driven to file civil suit only because  one  raises  such dispute  for  dispute  sake  to  harass an applicant with an object to delay the proceedings.  The Court has  to  examine its sustainability  at  least prima facie.  By merely saying complicated questions of fact and law are involved and there being challenge of any document to be forged, a party should not be driven to file civil suit.  Even if such  a  plea  is taken the court should scrutinise the objections to reach to a   prima   facie   finding  before  drawing  conclusion  of jurisdiction.  The  argument  is  various  documents  itself prima facie prove the appellant having become shareholder of the  respondent-Company  and  bare  perusal  of the document shows it not being forged and  if  that  be  so,  the  order directing  the  appellant to seek permission to file suit on the facts and circumstances of this case is not justified. In support that the court has exclusive jurisdiction reliance is  placed  in  Canara  Bank  Vs.    Nuclear  Power Corporation of India Ltd.  and Others.   (1985  (Vol.    58) Companies  Cases  Page  633)  read  with  Section 2 (II) and

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Section 10 of the Act.  Learned counsel  for  the  appellant contends,  these  decisions  in principle holds, the ’Court’ exercising power under  the  Companies  Act  have  exclusive jurisdiction  hence  the  ’Court’ referred to in Section 155 could  only  be   the   company   judge   having   exclusive jurisdiction.   Hence,  no matter under it could be sent for adjudication to the civil court.  The learned  counsel  also referred to  the  case in Indian Chemical Products Ltd.  Vs. State of Orissa and Another (1966 (Vol.  36) Companies cases Page 592)  to  contend  that  this  jurisdiction  is  to  be liberally exercised.    He  also  referred  to  the  case in Madhusudan Gordhandas and Co.  Vs.  Madhu Woollen Industries Pvt.  Ltd.  (1972 (Vol.  42) Company cases  Page  125)  that the  exercise of discretion has to be within the permissible parameters.  Strong reliance is placed  on  the  proviso  of Sub-Section(3) of Sec.  38 of the Indian Companies Act, 1913 (hereinafter  referred  to  as  ’1913  Act’) under which the Court exercising power of rectification may direct an  issue to  be tried by the civil court in which any question of law is raised.  This section deals with  rectification  as  Sec. 155  of  the Indian Companies Act of 1956 (as amended in the year 1960) (hereinafter referred to as ’1960 Act’) to  which the present  case  is  concerned.   Since the proviso to the said Sec.  38 was  deleted,  it  is  urged  this  inevitably indicates that Court need not refer any issue now. As  we  have  said  above the interpretation of Sec. 155, viz., the rectification of the register  of  a  company has  come  umpteen time before various courts and in view of divergence of view full Bench of the Delhi  High  Court  was constituted.         We  may  also  notice  that by Companies (Amendment) Act, 1988 S. 155 of the Act has been omitted from  the  Act. With  effect  from 31st May, 1991 and now under Sec. 111 the power to rectify the register of members of  a  company  has been  vested  in  the Company Law Board. However, we are not concerned with this amendment. The remedy provided by S.  155 of the Act is summary in  nature,  has  been the view of various High Courts (See: Soma Vati Devi Chand V.  Krishna Sugar Mills Ltd., AIR  1966 Punjab 44;  There Dhelakhat Tea Co.  Ltd., Air 1957 Calcutta 476; Punjab Distilling Industries Ltd.  V.   Biermans  Paper Coating Mills  Ltd.    1973  (43)  Company Cases 189 (Delhi) (DB); Public Trustee V.  Rajeshwar Tyagi, 1973 (43)  Company Cases 371:   (AIR 1972 Delhi 302) (DB); Anil Gupta V.  Delhi Cloth and General Mills Co.  Ltd.  1983 (54)  Company  Cases 301; Vishnu  Dayal  Jhunjhunwalla  V.   union of India, 1989 (66) Company Cases 684 (Allahabad) (DB); Rao  Saheb  Manilal Gangaram Sindore V.  Messrs Western India Theatres Ltd.  AIR 1963 Bombay 40. On the other hand a contrary view has been taken  by the   Gujarat  High  Court  in  Gulabrai  Kalidas  Naik  Vs. Laxmidas Lallubhai Patel, (1978 (48) Company Cases 432) when it  is  held  that  Section  155  does  not   indicate   the jurisdiction  conferred by the Section is one hedged in with a condition that it can only be exercised when relief can be granted in summary manner, also  by  Kerala  High  Court  in Mathew Michael Vs.  Teedoy Rubbers (Ubdual) Ltd., (1983 (54) Company   Cases   88)   and   Madras   High  Court  in  Mrs. E.V.Swaminathan Vs.  K.M.M.A.  Industries and roadways  Pvt. (1993  (76)  Company  Cases  1).  In  order  to resolve this conflict as aforesaid the Delhi High Court in  the  case  of petitioner company relying on Public Passengers Service Ltd. (Supra)  held  that  the  jurisdiction  of  the  Court under Section 155 is summary in nature. In Public  Passengers  Service  Ltd.  (supra),  this

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Court  held  by  reasons  of its complexity or otherwise the matter can more conveniently be decided in a suit, the Court may refuse relief under Section 155 and relegate the parties to a suit. Learned Counsel for  the  appellant  initially  made feeble  submission as aforesaid to hold that the decision in Public Passenger Service  Ltd.    (supra)  case  is  in  per curiam.   We have no hesitation to reject such a submission. This issue  was  directly  there  and  was  considered  with respect  to the interpretation of Section 155 and was a case not under 1913 Act but 1960  Act  hence  by  no  stretch  of imagination  it  could  be said that the said decision is in per curiam.  Next submission is neither this  case  nor  the Full Bench of Delhi High Court considered Section 2 (II) and Section 10 of this Act, if it would have been done different inference would  have  been  drawn.    The submission is the expression "the Court" used under Section 155 by  virtue  of definition  of the Court as defined under Section 2(II) only means Company court and not Civil court.  Similarly  Section 10  defines  jurisdiction  of the Court under this Act to be the High Court having jurisdiction for the  company  concern except  to the extent the jurisdiction has been conferred in District court subordinate with the  High  Court  and  where jurisdiction  has been conferred on District court the court would mean the District Court Hence  the  only  Court  which would have exclusive jurisdiction under Section 155 would be either High Court or the District court, as the case may be, by virtue  of  Section  2(II)  and  Section  10.   For ready reference Section 2(II) and Section 10 are quoted  hereunder :- ...            Section 2(II) :  "The Court means -            -------------            (a)With  respect to any matter relating to a            company (other  than  any  offence  against  this            Act),  the  Court  having jurisdiction under this            Act with respect to that matter relating to  that            company, as provided in section 10;            (b)With  respect to any offence against this            Act, the Court of a Magistrate of the First Class            or, as the case may be, a Presidency  Magistrate,            having jurisdiction to try such offence;"            S.10. "Jurisdiction of Courts. -            ----            (1)The  Court having jurisdiction under this            Act shall be-            (a)the High  Court  having  jurisdiction  in            relation  to  the  place  at which the registered            office  of  the  Company  concerned  is  situate,            except  to  the  extent to which jurisdiction has            been conferred on any District Court or  District            Courts subordinate to that High Court in            (b)pursuance of sub-section (2);            and            (c)where jurisdiction has been so conferred,            the  District  Court in regard to matters falling            within the scope of the  jurisdiction  conferred,            in  respect  of companies having their registered            offices in the district." He  also  relied  on the case of State of Orissa Vs. Indian Chemical Product Ltd.  (AIR  1957  Oeissa  Page  203) dealing  with  rectification  under  old  Section  38 of the Companies Act of 1930. Now we proceed to examine the  submissions  for  the appellant  in  the  light  of  various  aforesaid  decisions

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referred to by the  learned  counsel  keeping  in  mind  the interpretation of "Court" in the Act. In  the  case of Canara Bank (supra) the question of jurisdiction was tested inter set between  the  Court  under the   Special   Court   (Trial   of   Offences  Relating  to Transactions in Securities) Act, 1992 and  the  Court  under the Indian Companies Act:            "Having  regard to the enormity of the securities            scam and its ramifications, Parliament thought it            was necessary that  all  matters  in  respect  of            claims  arising out of transactions in securities            entered into between the stated dates in which  a            person  notified  was involved, should be brought            before and tried by the same forum.   That  forum            had  been  invested  with the jurisdiction to try            persons   accused   of   offences   relating   to            transactions  in  securities entered into between            the stated dates.  It was also required  to  give            directions to the custodian in regard to property            belonging   to   persons   notified  which  stood            attached under  the  provisions  of  the  Special            Court Act.    The  object of amending the Special            Court Act.  The object of  amending  the  Special            Court Act is to invest the Special Court with the            power   and  authority  to  decide  civil  claims            arising out of thrnsactions in securities entered            into between the stated dates in which  a  person            notified was  involved.   In these circumstances,            it is proper to attribute to the word "Court"  in            section  9A (1) of the Special Court Act, not the            narrower meaning of a court of  civil  judicature            which  is  part  of  the  ordinary  hierarchy  of            courts, but the broader meaning of a curial body,            a body acting judicially to deal with matters and            claims arising out of transactions in  securities            entered  into between the stated dates in which a            person notified is involved.   An  interpretation            that  suppresses  the  mischief  and advances the            remedy must plainly be given,".            "The word "court" must  be  read  in  the            context in  which it is used in a statute.  It is            permissible, given the context,  to  read  it  as            comprehending  the courts of civil judicature and            courts  or   tribunals   exercising   curial   or            judicial, powers.    In  the context in which the            word "court" is used in section 9A of the Special            Court (Trial of Offences Relating to Transactions            in Securities) Act, 1992  ,  it  is  intended  to            encompass  all  curial  or  judicial bodies which            have jurisdiction to decide  matters  or  claims,            inter   alia   arising  out  of  transactions  in            securities entered into between the stated dates,            in which a person notified is involved." The Court held that Company Law Board would not have jurisdiction to decide a petition under Section 111  of  the Companies  Act,  1956  (as  amended  in the year 1988) where persons notified under  the  Special  Court  Act,  1992  are involved.   In  other words, all matters pertain to security scam even in respect of matter covered by Section  111,  the Special Court  would  have  jurisdiction.   This case has no relevance for deciding the controversy in the present  case. This  decision  holds  "the  word ’court’must be read in the context in which it is used in a statute". Next  reliance was on the case in Sudarsan Chits (I) Ltd. (Supra). This was a case where on a petition by certain

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creditors, the appellant company was ordered to be  wound-up by   the  Company  Judge  and  an  official  liquidator  was appointed. Pending appeals against this order  the  Division Bench  approved a scheme of arrangement and kept in abeyance the winding up order. During implementation of  this  scheme an  application  was  filed  before the Division Bench for a direction  to  the  provisional  liquidator  to  file  claim petition  under  Section 446 (2) of the Companies Act, 1956. This was rejected on the ground that it had no  jurisdiction to  entertain  such  a  petition  as there was no Winding up proceedings either before the Company Judge or the  Division Bench. This Court held:            "That  the  winding  up  order made by the company            judge had not been quashed,  set  aside  cancelled            revoked or  recalled.    On  the  contrary,  after            directing that the winding up order shall be  held            in  abeyance, the Division Bench directed that the            official  liquidator  shall  continue  to  act  as            provisional liquidator  as provided by s.  450 and            that  itself  was  a  stage  in  the  winding   up            proceedings.   When  winding  up order was kept in            abeyance,  it  was  in  a   state   of   suspended            animation.   The  fact  that  the  Division  Bench            directed that, pending the implementation  of  the            scheme  as  sanctioned  by  the  High  Court,  the            winding up order will be kept in  abeyance  itself            without  anything  more  showed that the order was            neither cancelled nor recalled not revoked not set            aside.    It   continued   to   exist   but    was            inoperative....   Therefore,  the winding up order            was effectively subsisting but inoperative for the            time being....  If the winding up order was merely            held in abeyance, i.e., it was not  operative  for            the  time  being,  but it had not ceased to exist,            the winding up proceedings were  in  fact  pending            and  the  court  which  made  the winding up order            would be  the  court  which  was  winding  up  the            company.   It  was  well-settled that a winding up            order once made could be revoked or  recalled  but            till  it  was revoked or recalled, it continued to            subsist.  That was the situation in this case.  If            the winding up order was subsisting.    the  court            which  made  that order to the court which kept it            in  abeyance  would  have  jurisdiction  to   five            necessary directions to the provisional liquidator            to take recourse to Section 446 (2)." The question was whether the  Division  Bench,  which was  monitoring  the scheme after winding up order would have jurisdiction to pass an order for a direction to the official liquidator when the winding-up order was  kept  in  abeyance? The High  Court held that it has no jurisdiction.  This Court rejected this and held when  winding-up  order  was  not  set aside,  quashed, cancelled or revoked the court which kept in abeyance the winding-up order would have jurisdiction to give necessary directions.  In the present case, as aforesaid, the question is the scope and the width of  the  jurisdiction  of ’Court’  keeping  abeyance the winding-up order would have or not the jurisdiction to direct  the  applicant  to  seek  his remedy under Section 446 (2). Before  we  come back to Section 155, since appellant also submitted the Company Judge should  himself  decide  the relief  under  Section  446 (2) having exclusive jurisdiction instead of sending it to the civil court.   For  this  it  is necessary  to  refer  to the short background of Section 446. Earlier under section 171 of the Indian Companies  Act,  1913

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there was  no  similar provision as Section 446 (2).  It only provided no suits or proceedings pending  could  proceed  nor fresh suit  could  be filed without leave of the Court.  This provision was re-enacted with little modifications in section 446 (1).  After winding up order  a  company  may  have  many subsisting  claims and in order to recover it, he may have to file suits.  It is to  avoid  this  eventuality  for  a  long arduous  procedure before the civil Court the jurisdiction of the  Company  Judge  was  enlarged  even  to  entertain  such petition for  recovering  the  claims  of  the  Company.  The purpose of various amendments brought in the Companies Act is to centralise as far as possible all proceedings to the Court created under this act for adjudication  of  various  claims. It is in this background Section 446(2) was brought in, based on the recommendation of Company Law Committee Report through an amendment  of the Companies(Amendment) Act, 1969.  In this background the Sudarshan Chit (I)Ltd.  (supra) holds:           "Sub-section (2) of S. 446 confers jurisdiction on            the court which  is  winding  up  the  company  to            entertain  and  dispose  of proceedings set out in            cls. (a) to (d). The expression  "court  which  is            winding  up the company" will comprehend the court            before which a winding up petition is  pending  or            which  has  made  an  order  for winding up of the            company and further  winding  up  proceedings  are            continued  under  its  directions.  Undoubtedly, a            look at the language of s. 446 (1) and (2) and its            setting in Part VII, which deals with  winding  up            proceedings,   would   clearly   show   that   the            jurisdiction of the court to entertain and dispose            of proceedings set out in sub-cls. (a) to  (d)  of            sub-s.  (2)  can  be invoked in the court which is            winding up the company." The  appellate  Bench  in  this   case   held   since winding-up  proceeding in respect of the appellant-Company is no more pending and there is no Court which could be said  to be  the  Court  of  winding  up of the company thus the claim petition on behalf of the company which is not being wound-up is not contemplated under Section 44l (2).  This decision and decision in  Canara  Bank  (supra)  rejected  the  restricted meaning  given  by  the  High  Court of the expression "court which is winding up the company".  Hence to this extent there could be no doubt, a Company under liquidation falling  under Sec.   446  (2), the Company judge alone would have exclusive jurisdiction to decide matter covered by it. Now reverting to the submission to read definition of ’Court’ as defined under Section 2 (11) read with Section  10 with  the  word  ’Court’  used  under Section 155, whether it would  result  into  any  different  interpretation  to  lend support   to  the  submission  of  learned  counsel  for  the appellant? Submission of learned counsel for  the  appellant? Submission  is  the word ’court’ under section 155 would only mean  Company  Judge  and  he  alone  would  have   exclusive jurisdiction  while  exercising  powers  under  this section, hence any direction to seek leave of the court under  Section 446 (2) for filling suit cannot be sustained. First the scope of Section 155 and Section 446 to  be understood to  be  entirely in different fields.  Section 155 deals with power of the Court to rectify register of  members maintained by a Company.  Section 441 deals with commencement of winding-up by the Court.  Section 442 deals with the power of  the  Court  to  stay  or restrain proceedings against the company, at any stage after the petition for  winding  up  is filed but before a winding-up order is made.  A creditor or a company may apply to the Court having jurisdiction to wind-up

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the  company to restrain all further proceedings in any suits or proceedings against the Company.  Section 143  deals  with powers  of  Court to hear such petition, Section 444 entrusts the Court after the winding up order to communicate the  same to the  official Liquidator.  Section 445 directs that a copy of the winding up order to be filed with the Registrar.  Then comes Section 446.  Sub-section (1) is after winding up order has  been  passed  or  the  official  liquidator   has   been appointed, it puts an embargo on any suit to be instituted or if  pending  against the company on that date to be proceeded with except with the leave of the Court.  Use of  the  words, no suit...’  shall be commenced ’....  proceeded with.......’ except by leave of the  court......."  spells  out  that  the jurisdiction  of  the civil court is not ousted to adjudicate matter between the parties but embargo is to be controlled at the discretion of the Company Judge, depending on  the  facts of each  case.    Then  comes Section 446 (2) under which the Court is invested  with  the  jurisdiction  to  entertain  or dispose  of any suit or proceeding by or against the company. So Section 446 deals with cases of the company under  winding up while Section 155 deals with both classes of companies one under winding up and other not under winding-up. Now  we  proceed to examine the power of the Court to rectify the register of members of a  company  under  Section 155.  The question raised for the appellant is that the Court under  this Act cannot direct an applicant to seek his remedy by was of suit but the Court under the Act  having  exclusive jurisdiction should   decide  itself.    In  support,  strong reliance is placed on the deletion of proviso to  Section  38 of the  1913  Act.    Section  38  of  the  old Act is quoted hereunder:            "38. Power of Court to rectify register. - (1) If-            (a)  the name of any  person  is  fraudulently  or            without  sufficient  cause  entered  in or omitted            from their Register of members of a company; or in            the  manner  directed  by  the   code   of   Civil            Procedure, 1908 (V of            (b) default is made  or  unnecessary  delay  takes            place  in entering on the register the fact of any            person having ceased to be a member,            the  person  aggrieved,  or  any  member  of   the            company,  or  the  company, may apply to the Court            for rectification of the register.            (2)  The Court may either refuse the  application,            or  may  order  rectification  of the register and            payment by the company of any damages sustained by            any party aggrieved, and mayb make such  order  as            to  costs  as  it  in  its  discretion thinks fit.            1908), on the grounds mentioned in section 100  of            that Code." The proviso gave discretion to the Court to direct an issue of law to be tried,  if  raised.    By  this  deletion, submission is that the Company Court now itself has to decide any  question  relating  to the rectification of the register including the law and not to send one  to  the  civil  court. There  could  be  no  doubt  any  question  raised within the peripheral field of rectification,  it  is  the  Court  under Section  155  alone  which would have exclusive jurisdiction. However, the question raised does not rest here.  In case any claim is based on some seriously  disputed  civil  rights  or title,  denial  of  any  transaction or any other basic facts which may be the foundation to claim a right to be  a  member and if the Court feels such claim does not constitute to be a rectification  but  instead  seeking  adjudication  of  basic pillar some such facts falling outside the rectification, its

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discretion to send a party to seek his  relief  before  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 are really for rectification or is of such a nature, unless decided first it would not came within the purview of rectification.  The word rectification’ itself connotes some error which has crept  in requiring correction.    Error would only means everything as required under the law has been done yet by some mistake  the name  is either committed or wrongly recorded in the register of the Company.  In T.P.    Mukherjee’s  Law  Lexicon,  fifth revised edn;          Ã¯"The expression rectification of the register used            in   Sec.   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".            Strounds 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 implies that the register, either            in what is or what is not upon it,  is  wrong;  but            the  register cannot be wrong unless there has been            a failure on the part of the company to comply with            the directions  in  the  Act  as  to  the  kind  of            register  to  be  kept:  for  if  the  Act has been            complied with, the register must be right  and  not            wrong." In other words, in order to qualify for rectification, every procedure as prescribed under the Companies  Act  before recording  the  name  in the register of the company has to be stated to have been complied with by the  applicant  at  least that  part  as  required  by the Act and assertion of what not complied with  under  the  Act  and  rule  by  the  person  or authority  of the respondent company before applicant to claim for the rectification of such register.    The  Court  has  to examine  on  the facts of each case, whether an application is for rectification or something else.  So field  or  peripheral jurisdiction  of  the Court under it would be what comes under rectification  not  projected  claims  under   the   garb   of rectification.   So  far exercising of power for rectification within its field there could be no doubt the Court as referred under Section 155 read with Section 2(11) and Section  10,  it is  the  Company Court alone which has exclusive jurisdiction. Similarly, under Section 446 the ’Court’ refers to the Company judge which has exclusive jurisdiction to decide matters  what is covered  under  it  by  itself.   But this does not mean by interpreting such ’court’  having  exclusive  jurisdiction  to include within it what is not covered under it, merely because it  is  cloaked  under the nomenclature rectification does not mean court cannot see the substance after removing the cloak. Question for scrutiny  before  us  is  the  peripheral field  within  which court could exercise its jurisdiction for rectification. As  aforesaid  the  very  word  "rectification" connotes  something  what ought to have been done but by error

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not done and what  ought  not  to  have  been  done  was  done requiring  correction.  Rectification  in  other words, is the failure on  the  part  of  the  company  to  comply  with  the directions  under the Act. To show this error the burden is on the applicant, and  to  this  extent  any  matter  or  dispute between  persons  raised in such Court it may generally decide any matter which  is  necessary  or  expedient  to  decide  in connection with the rectification. Both under the 1913 Act and 1960 Act  a  procedure  is prescribed  for  admitting  a  person as member by purchase or transfer of shares of that company.  With  reference  to  1913 Act  under  Section 29, a certificate of shares or stock shall be prima facie evidence of the title  of  the  number  of  the shares or  stock  therein.   Section 30 defines "member" to be one who agrees to become a member of a company and whose  name is entered in its register.  Section 31 is to keep register of its members.    Section  34  deals with transfer of shares and application for the registration of the transfer of shares  is to be  made either by the transferor or the transferee.  Where such application is made by the transferor for registration of his share a registered notice is to be sent to the transferee. Section 34 (3) restricts to register a  transfer  share  until the  instrument  of  transfer duly stamped and executed by the transferor and transferee has been delivered to  the  company. Thus  before  the  name  of any transferee is registered these procedure has to be shown to have been followed, which  is  an obligation of any such applicant under the Act.  This shows an application  is  to  be  made  either  by  the  transferor  or transferee for registering  the  name  of  the  transferee  as members  or share holders of the company by placing before the company  duly  stamped  and  signed  document  both   by   the transferor and  transferee.    Similarly is the position under Section 155 of Indian Companies  Act,  1960  before  power  is exercised  for  rectification  essential  ingredients  are  to exist.  Section 100 gives mandate to a company not to register transfer of shares, unless proper instrument of transfer  duly stamped  and  executed  by  or on behalf of the transferee has been delivered to the company along with certificates relating to the shares. All  the  above  indicates  the  limitation  and   the peripheral  jurisdiction with which court has to act. In spite of its exclusiveness it cannot take  within  its  lap  outside this  scope  of  rectification. This is indicated even by Sec. 155 itself:  "Section 155 : Power of Court to rectify  register  of members 1)If - a)the name of any person - i)is  without  sufficient cause, entered in the register of members of a company, or ii)after having been entered in the register, is  without sufficient cause, omitted therefrom; or b)default  is made, or unnecessary delay takes place, in entering on the register the fact of any person having become, or ceased to be a member; the person aggrieved, or any member of the company, or the company, may apply to the Court for rectification  of  the register. Sub-section  (1)  (a)  of Section 155 refers to a case where the name of any person without sufficient cause  entered or omitted  in the register of members of a company.  The work ’sufficient cause’ is to be tested in relation to the Act  and the Rules.   Without sufficient cause entered or omitted to be entered means done or omitted to do in  contradiction  of  the Act  and  the  Rules or what ought to have been done under the

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Act and the Rules but not done.  Reading  of  this  sub-clause spells  out  the  limitation  under  which  the  court  has to exercise its jurisdiction.  It cannot be doubted in  spite  of exclusiveness   to   decide   all  matter  pertaining  to  the rectification it has to act within the said four  corners  and adjudication of such matter cannot be doubted to be summary in nature.   So,  whenever  a  question  is  raised  court has to adjudicate on the facts and circumstance of each case.  If  it truly  is  rectification  all matter raised in that connection should be decided by the court under Sec.  155 and if it finds adjudication of any matter not falling under it, it may direct a party to get his right adjudicated by civil court.    Unless jurisdiction   is  expressly  or  implicitly  barred  under  a statute, for violation or redress  of  any  such  right  civil court would  have  jurisdiction.    There is nothing under the Companies Act expressly barring the jurisdiction of the  civil court,  but  the  jurisdiction of the ’court’ as defined under the Act exercising its powers under various sections where  it has been   invested.      with   exclusive  jurisdiction,  the jurisdiction of the civil court is impliedly barred.  We  have already  held above the jurisdiction of the ’court’ under Sec. 155, to the extent it has exclusive, the jurisdiction of civil court is impliedly  barred.    For  what  is  not  covered  as aforesaid the  civil court would have jurisdiction.  Similarly we find even under Sec.   446(1)  its  words  itself  indicate jurisdiction of civil court is not excluded.  This sub section states, ’...........    no  suit or legal proceedings shall be commenced .........  or proceeded  with  .......    except  by leave of the court’.  The words ’except by leave of the court’ itself  indicate  on  leave  being given the civil court would have jurisdiction  to  adjudicate  one’s  right.    Of  course discretion  to  exercise  such  power  is  with  the  ’court’. Similarly under Sec.  446(2) ’court’ is vested with powers  to entertain  or dispose of any suit or proceedings by or against the company.  Once this discretion is  exercised  to  have  it decided  by  it, it by virtue of language therein excludes the jurisdiction of the civil court.  So we conclude the principle of law as decided by the High Court that jurisdiction of Court under Section 155 is summary  in  nature  cannot  be  faulted. Reverting  to the second limb of submission by learned counsel for the appellant that court  should  bot  have  directed  for seeking  permission  to  file  suit  only  because a party for dispute sake states that the  dispute  raised  is  complicated question of  facts  including  fraud  to  be adjudicated.  The Court should have examined itself to see  whether  even  prima facie what  is  said  is  complicated  question  or not.  Even dispute of fraud, if by bare perusal of the document  or  what is  apparent  on  the face of it on comparison of any disputed signature with that of the admitted  signature  the  Court  is able  to  conclude  no fraud, then it should proceed to decide the matter and not reject it only  because  fraud  is  stated. Further  on  the other hand learned counsel for the respondent totally  denies  any  share  having  been  purchased  by   the appellant-company or  any  amount  paid to it.  No transfer of any such share was ever approved by the Board of Director.  It is urged the money even if advanced to Sri V.K.Bhargava by the appellant-company if at all was a private transaction  between the two  to  which  respondent-company  has no concern.  So we find there is total denial by the respondent. We have gone through the judgment of the  High  Court. It  has rightly held the law pertaining to the jurisdiction of ’court’ under Sec.  155 and  even  referred  to  some  of  the documents  of  the  appellant  but  concluded  since  they are disputed and said to be  forged  hence  directed  for  seeding leave if  advised  for  suit.    We  feel  it  would have been

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appropriate if the court would have seen  for  itself  whether these documents are disputed and any document is alleged to be forged  whether  it  said  to  be so jurisdiction of the civil court.  So we conclude the principle of law as decided by  the High  Court  that  jurisdiction  of Court under Section 155 is summary in nature cannot be faulted.  reverting to the  second limb  of  submission by learned counsel for the appellant that court should not have directed for seeking permission to  file suit  only  because  a  party for dispute sake states that the dispute raised is  complicated  question  of  facts  including fraud to  be  adjudicated.    The  court  should have examined itself to see  whether  even  prime  facie  what  is  said  is complicated question  or  not.    Even dispute of fraud, if by bare perusal of the document or what is apparent on  the  face of it on comparison of any disputed signature with that of the admitted  signature  the  Court  is able to conclude no fraud, then it should proceed to decide the matter and not reject  it only because  fraud  is  stated.    Further  on the other hand learned counsel for the respondent totally  denies  any  share having  been  purchased by the appellant-company or any amount paid to it.  No transfer of any such share was  ever  approved by the  Board  of  Director.    It  is urged the money even if advanced to Sri V.K.Bhargava by the appellant-company,  if  at all  was  a  private  transaction  between  the  two  to which respondent-company has no concern.  So we find there is  total denial by the respondent. We  have  gone through the judgment of the High Court. It has rightly held the law pertaining to the jurisdiction  of ’court’  under  Sec.  155  and  even  referred  to some of the documents of  the  appellant  but  concluded  since  they  are disputed  and  said  to  be  forged hence directed for seeking leave if  advised  for  suit.  We  feel  it  would  have  been appropriate  if  the  court would have seen for itself whether these documents are disputed and any document is alleged to be forged  whether  it  said  to  be  so  only  to  exclude   the jurisdiction  of the court or it is genuinely so. Similarly we feel appropriate while deciding this  the  court  should  take into   consideration  the  submissions  for  the  respondents, whether it would come within the scope of rectification or not in the light of  what we have said above. Since the High Court has not examined this case in the aforesaid  light,  we  feel  it appropriate to direct the High Court to decide this question in the light  of  what  we  have said afresh, without prejudice to any party of any observation made by  us above.  In case High Court comes to the conclusion that any issue raised does not come within Sec.  155  then  we feel  it  appropriate  on  the facts and circumstances of this case, as it is pending since 1984, that High  Court  exercises its  discretion  under Sec.446(2) to get it adjudicated by the court (Company Judge) itself instead of sending  back  to  the civil to which we order. With the  aforesaid  findings  the  appeal  is  partly allowed. Costs on the parties.