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S. Gurucharan Singh Mahant Vs. Rattan Sports P. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtPunjab and Haryana High Court
Decided On
Case NumberC.P. No. 221 of 1980
Judge
Reported in[1986]59CompCas279(P& H)
ActsCompanies Act, 1956 - Sections 155
AppellantS. Gurucharan Singh Mahant
RespondentRattan Sports P. Ltd.
Appellant Advocate J.S. Narang, Adv.
Respondent Advocate H.L. Sarain, Senior Adv. and; M.L. Sarain, Adv.
DispositionPetition dismissed
Cases ReferredInsurance Co. Ltd. v. C.R.E. Wood and Co. Ltd.
Excerpt:
.....said order. - it had its offices in india as well as in indonesia. , as he then was, observed that the law seems to be well-settled that the remedy provided in section 155 of the companies act is summary. it is also relevant to point out that the dispute between mangal singh and the petitioner had been before the companies tribunal as well. the shares now stand in the names of some other persons who have not been made parties to the present proceedings for reasons best known to the petitioner......matter to arbitration and thus the award was not binding on him. it was also challenged by shri mangal singh (whose interests had been bracketed with the interests of the petitioner) and some others, up to the supreme court of indonesia at jakarta. the petitioner was impleaded as a pro forma respondent along with his wife in the appeal before the supreme court. the award was set aside by that court.3. the petitioner, after obtaining a copy of the judgment of the supreme court of indonesia, sent it to the registrar of companies at jullundur, for rectification of the register of shareholders as he came to know that the company had changed the register in view of the award given by the arbitrator. he received a reply from the registrar of companies that the matter had been taken up with.....
Judgment:

Rajendranath Mittal, J.

1. This is a petition under Section 155 of the Companies Act, 1956, for rectification of the register of shareholders of the respondent company.

2. It is averred that the petitioner was a promoter director of the company which was engaged in the business of manufacturing sports goods. It had its offices in India as well as in Indonesia. The petitioner had 95 shares of Rs. 100 each. The shares were shown in his name in the return filed with the Registrar of Companies on September 23, 1964. He continued to hold the office of director till June, 1969, when he was removed as a director. At that time, some dispute arose between the shareholders and the directors which was referred to the arbitrator at Surabaj (Indonesia), who gave his award against the petitioner and, inter alia, stated that the shop belonging to the company would be given to the petitioner and in lieu thereof, his shares would be cancelled. The petitioner had not signed any agreement for referring the matter to arbitration and thus the award was not binding on him. It was also challenged by Shri Mangal Singh (whose interests had been bracketed with the interests of the petitioner) and some others, up to the Supreme Court of Indonesia at Jakarta. The petitioner was impleaded as a pro forma respondent along with his wife in the appeal before the Supreme Court. The award was set aside by that court.

3. The petitioner, after obtaining a copy of the judgment of the Supreme Court of Indonesia, sent it to the Registrar of Companies at Jullundur, for rectification of the register of shareholders as he came to know that the company had changed the register in view of the award given by the arbitrator. He received a reply from the Registrar of Companies that the matter had been taken up with the company and he would be informed of the developments in due course. However, nothing was done by the Registrar.

4. The company later transferred the shares of the petitioner in the names of Karam Singh and Ujagar Singh without obtaining his signatures on the transfer form which is essential under the provisions of the Companies Act. It is averred that in the circumstances the shares could not be transferred to the said Karam Singh and Ujagar Singh by the company. The company has been allotting bonus shares to the shareholders to the extent of their individual shareholdings and the petitioner is also entitled to claim the bonus shares commensurate with his holding. It is consequently prayed that the register of shareholders of the company be rectified and the petitioner be shown as a shareholder of 95 shares and the bonus shares in the same ratio in which these were allotted to the other shareholders.

5. The petition has been contested by the respondent. It is, inter alia, pleaded that the petitioner's name did not appear in the register of members of the company with effect from the year commencing from 1968 up to date. Consequently, he has no right to move an application under Section 155 of the Act. The shares were transferred by him earlier than 1968, in the first instance by making a gift thereof to one Mangal Singh Taneja and later these were transferred by him and/or Mangal Singh Taneja in favour of other parties in whose names the shares are now registered. He has not taken interest in protecting his right for the last more than twelve years and, consequently, the petition is liable to be dismissed as barred by limitation.

6. Mangal Singh, it is further averred, moved an application before the Companies Tribunal, New Delhi, which was dismissed under Order 17, Rule 3, Code of Civil Procedure, vide order dated October 17, 1966. An application for restoration by him was also dismissed. All through the trial, the petitioner continued to attend the hearings before it. It is pleaded that the order ended the claim of Mangal Singh. Meanwhile, the matter was referred to T.D. Kundan of Indonesia as arbitrator. He also rejected the claim of Mangal Singh by three successive awards. The matter went up to the Supreme Court of Indonesia, which set aside the awards, but it is alleged that the order of the Supreme Court is not binding on the respondent.

7. The petitioner also filed a suit in the Court of Subordinate Judge, First Class, Jullundur, against Mangal Singh for a declaration that he was the registered owner of 95 shares, in which it was held that the civil court at Jullundur had no jurisdiction. Consequently, the plaint was returned to be presented to the court having jurisdiction to try the same. No appeal was filed against that order.

8. It is next averred that the matter involves complicated questions of law and fact and, therefore, a petition under Section 155 of the Act is not maintainable. On the pleadings of the parties, P.C. Jain J. framed the following preliminary issue :

' Whether the petition is liable to be dismissed as it involves disputed questions of fact which cannot be decided in summary proceedings under Section 155 of the Companies Act, 1956 ?'

9. Before dealing with the factual aspect, it will be appropriate to deal with the legal position. In S. Bhagat Singh v. Pier Bus Service Ltd., AIR 1959 Punj 352; [1960] 30 Comp Cas 300 (Punj), this very question was raised before this court. The learned judge, while dealing with the matter, observed as follows (p. 304):

' The object of enacting Section 38 of the Indian Companies Act of 1913, which is analogous to Section 155 of the Companies Act of 1956, was to provide a summary remedy in non-controversial matters or in matters where a quick decision was necessary in order to obviate an irreparable injury to a party. This provision was not intended for settling controversies under several heads necessitating a regular investigation. When serious disputes are involved--as in this case--the proper forum for their adjudication is a civil court.'

10. It was followed in Smt. Soma Vati Devi Chand v. Krishna Sugar Mills Ltd., AIR 1966 Punj 44, wherein H.R. Khanna J., as he then was, observed that the law seems to be well-settled that the remedy provided in Section 155 of the Companies Act is summary. It can be invoked in non-controversial matters requiring quick decision. Section 155 is not meant to be used for deciding disputes, requiring investigation. In the case of a dispute of complicated nature involving controversy under several heads and necessitating a regular investigation, the section ought not to be allowed to be used and the party concernced should be directed to proceed by way of a regular suit. Similar matter came up before me in Company Petition No. 12 of 1980 (Rakesh Kumar Malik v. Rohtak Ashoke Theatres Pvt. Ltd. decided on March 31, 1983, wherein I followed the above view.

11. This question was recently examined by a Division Bench of this court in R.S.A. No. 1221 of 1973 (Joginder Singh v. Basawa Singh) decided on June 3, 1983--[1985] 58 Comp Cas 843 (Punj). The learned Bench, after considering the various cases, including Public Passenger Service Ltd. v. M.A. Khadar [1966] 36 Comp Cas 1 (SC); AIR 1966 SC 489 and People's Insurance Co. Ltd. v. C.R.E. Wood and Co. Ltd. [1961] 31 Comp Cas 61 (Punj); AIR 1960 Punj 388, on which reliance has been placed by the counsel for the petitioner, arrived at the same conclusion. The following observations of the learned Bench may be read with advantage (at p. 850 of 58 Comp Cas):

' As a result of the aforesaid discussion, I find no escape from the conclusion that the scope of enquiry under Section 155 of the Act is of a summary nature and that the company court may refuse and decline to grant the discretionary relief where serious disputes and complicated questions are involved.'

12. From the above observations, it emerges that the proceedings under Section 155 are of a summary nature and the court is not bound to decide serious questions of title. The proper course in the cases where such questions are involved is to go to the civil court.

13. Now, adverting to the facts of the present case, it is evident from the foregoing paras that the questions involved are of complicated nature. According to the petitioner, the shares were shown in his name in the returns filed with the Registrar of Companies in 1964 and that he held the office of director till 1969. During that period, it appears that disputes arose between the parties. Some of the matters were referred to the arbitrator who gave an award against the petitioner. No doubt it is alleged that the award was set aside by the Supreme Court of Indonesia while deciding the controversy between the parties, but all these matters will require consideration. It is also evident that the shares were earlier transferred in the name of one Mangal Singh and the plaintiff instituted a suit against him in the year 1964 for a declaration that he was still the owner of those shares in the Court of Subordinate Judge, First Class, Jullundur. In that suit, an objection was taken that the civil court at Jullundur had no jurisdiction to try the suit as no part of the cause of action arose there. The learned Subordinate Judge decided the suit on August 9, 1965, holding that no part of the cause of action arose within the jurisdiction of the court. Consequently, he ordered that the plaint be returned to the petitioner for presentation to the proper court. It is true that on merits he returned a finding in favour of the petitioner but the petitioner cannot derive any benefit from those findings as the court had no jurisdiction to decide the case.

14. It may be highlighted that in spite of the fact that the findings on merits were returned in favour of the petitioner, he did not choose to institute the suit in the court of competent jurisdiction. It is also relevant to point out that the dispute between Mangal Singh and the petitioner had been before the Companies Tribunal as well. The shares now stand in the names of some other persons who have not been made parties to the present proceedings for reasons best known to the petitioner. The respondent has produced copies of the returns filed before the Registrar of Companies by it for various years starting with 1968, wherein the name of the petitioner is not mentioned as a shareholder. All these facts show that though the petitioner was deprived of these shares long back, yet he did not taken action under Section 155 of the Act till 1980. It is also not out of place to mention that voluminous evidence shall have to be recorded by the court in the case as all the above facts shall be proved by the parties concerned. Proceedings under Section 155, as already mentioned above, are of summary nature wherein the court is not expected to go into all such intricate and disputed questions of fact. Consequently, I decide the issue in favour of the respondent.

15. For the aforesaid reasons, I dismiss the petition. The petitioner may file a civil suit, if so advised. No order as to costs.


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