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Mylavarapu Ramakrishna Rao, Secretary and Treasurer of the Above Mills Vs. Mothey Krishna Rao - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtChennai
Decided On
Reported in(1947)1MLJ75
AppellantMylavarapu Ramakrishna Rao, Secretary and Treasurer of the Above Mills
RespondentMothey Krishna Rao
Cases ReferredLtd. v. Robert Menzies I.L.R.
Excerpt:
.....and consider the matters in respect of which he complained, as they are matters falling within the jurisdiction of the company court alone, i. it is distinctly provided by section 3 that the courts specified in that section have jurisdiction under the companies act. it is well understood in all systems of civilised jurisprudence that where there is a right there is a remedy. however apt these observations may be in respect of the right of a court to enforce a particular statutory obligation, in cases where the act imposing that obligation makes no reference to the method of enforcement, i cannot accept that they have any application in a case like the present, where, as i have already indicated, i am satisfied that the right, if any, of the applicant is one in respect of which he could,..........which the applicant relies on in support of his proposition that the court in the exercise of the company jurisdiction has inherent jurisdiction to give effect to, or enforce compliance with all the provisions of the act is british india corporation, ltd. v. robert menzies i.l.r. (1936) all. 988. the facts in that case were as follows :--mr. menzies was a shareholder in the british india corporation, ltd., and was its secretary and also managing director. whilst he was away on leave, his services were dispensed with and on his return he applied to the company for a copy of the register of its members. that copy was not supplied and mr. menzies filed an application to the company court, in that case the district court of cawnpore, praying that the company may be ordered to supply him a.....
Judgment:

Clark, J.

1. The applicant claims to be the Secretary and Treasurer of Sri Krishna Jute Mills, Ltd., Ellore. He is admittedly a shareholder in that Company, as also is the respondent. The respondent was admittedly the Secretary and Treasurer of the Company until the 16th April, 1945. He claims still to be the Secretary and Treasurer, but the applicant claims that he has a better right to those offices and that would appear to be the real substance of the dispute between these two gentlemen. It is common ground that the Secretary and Treasurer of this Company is also a director of the Company ex-offices.

2. The applicant's grievance arises in the following circumstances :--He claims that a requisition signed by no shareholders including himself for the holding of an extraordinary general meeting of the Company to consider certain proposals was disregarded by the Directors of the Company. That requisition is stated to have been deposited in the office of the Company on the 30th Jam arty, 1945, and, according to the applicant, it was the respondent as the Secretary and Treasurer of the Company, who was responsible for the decision to disregard that requisition. I understand that the proposals, which the requisitions desired to have considered, were, inter alia, concerned with a change in the incumbent of the post of Secretary and Treasurer. Also, I understand, that the proposals concerned a change in the personnel of the Board of Directors.

3. As the requisition for an extraordinary general meeting to consider these proposals was disregarded, it is said that ,the requisitions decided to hold the meeting on their own. The applicant claims that they gave sufficient notice to all the shareholders of the Company, and that the meeting duly took place on 16th April, 1945. That meeting, it is said, had to be arranged outside the Company's premises on account of the alleged refusal of the respondent to permit the meeting to be held there. It is said that the respondent also refused to hand over the minute books, etc., of the Company for use at that meeting.

4. According to the applicant, resolutions were passed at that meeting removing the Board of Directors and appointing a fresh Board and replacing the respondent as Secretary and Treasurer by the applicant. The applicant states that the copies of these resolutions were ' duly communicated ' to the Assistant Registrar of the Joint Stock Companies, West Godavary--Kistna under Section 82 of the Act. It is said that before accepting these resolutions that official either on his own initiative, or after consultation with the Registrar of Joint Stock Companies held an enquiry and thereupon recorded the resolutions. I mention this factor as considerable reliance has been placed on behalf of the applicant on the acceptance of those resolutions by that Official.

5. Matters seem to have been at an impasse and before the meeting of 16th April, 1945, took place the respondent filed a suit in the Court of the District Munsiff, Ellore, for a declaration that the proposed meeting would be invalid and for an injunction restraining the applicant and the other requisitionists from holding it. An attempt was made to secure an interim injunction to prevent the holding of the meeting, but that failed. After the meeting had been held with the results, which I have referred to, the next step was the filing by the applicant of a complaint under Section 282-A of the Act against the respondent in respect of the alleged wrongful withholding of the property of the Company, viz., the minute book, etc. An application in revision was filed in this Court to stay those proceedings pending the disposal of the civil case in the District Munsiff's Court and the hearing of that application has, I understand, been postponed until the present application is disposed of.

6. The applicant now prays for a direction to the respondent to hand over to him the records, account books, pass books, keys, etc., and for an injunction restraining the respondent from proceeding with his suit in the District Munsiff's Court, Ellore. The first objection by the respondent to this application is that this Court has no jurisdiction to hear it, and I have heard arguments on that contention as a preliminary point.

7. The petition is described on the face of it as being filed under Sections 3, 82, and 87 of the Act and Rule 9 of the Rules framed under the Act. I invited the Counsel for the applicant to state under which of these provisions he claimed there was a substantive right to file such a petition, but he frankly admitted that there is no specific provision in the Act, which enables such a petition to be filed. Section 3 is of course a jurisdiction section. Section 82 is the section dealing with the requirements of registration of copies of special and extraordinary resolutions and Section 87 imposes a responsibility on the officers of the Company to keep at the registered office of the Company a register of the Directors, Managers, and Managing Agents, etc. Rule 9, of course, is a procedural provision governing the form, which applications under the Act are to take in this Court. It is clear that none of these provisions can be relied on as justifying the hearing of the present application. Counsel for the applicant meets this difficulty by relying on what he describes as the inherent jurisdiction of the Court to give effect to, or to enforce compliance with the provisions of the Act. I am by no means clear as to what specific provision of the Act he relies on as imposing the liabilities which he now claims to enforce. Section 82 provides that a copy of every special and extraordinary resolution shall be filed with the Registrar and that he shall record the same Taking the pleas in the application at their face value--as I must regard them for the purpose of hearing this demurrer--it appears that the Registrar of the Joint Stock Companies has accepted and filed the copies of the resolutions. That being so, I cannot see that there is anything more required to be done on that account, certainly not at the instance of this applicant. It may be that the continuance in office f the respondent and his co-directors notwithstanding the decision of the Company at the requisitionists' meeting would amount to a contravention of Section 87, and if so the question is who would be entitled to move the Court to consider the regularity or otherwise of the position. Possibly the Company itself or a shareholder riper scenting all the other shareholders, or a majority of them could apply, but I am very doubtful whether one shareholder could properly complain in respect of such a matter.

8. For the purpose of disposing of this matter, however, I will assume that no objection can be taken to the application on the ground that it is the application of only one shareholder of the company. I will assume further that the applicant may be regarded as being entitled to do whatever the company itself could do in the way of making such an application. It will of course be appreciated that these are only assumptions and that I am not finding that he is so entitled. The only authority which the applicant relies on in support of his proposition that the Court in the exercise of the company jurisdiction has inherent jurisdiction to give effect to, or enforce compliance with all the provisions of the Act is British India Corporation, Ltd. v. Robert Menzies I.L.R. (1936) All. 988. The facts in that case were as follows :--Mr. Menzies was a shareholder in the British India Corporation, Ltd., and was its Secretary and also Managing Director. Whilst he was away on leave, his services were dispensed with and on his return he applied to the company for a copy of the register of its members. That copy was not supplied and Mr. Menzies filed an application to the Company Court, in that case the District Court of Cawnpore, praying that the Company may be ordered to supply him a copy of the names and addresses of the shareholders. The District Judge granted the petition and the matter came on revision before a bench of the Allahabad High Court. Sub-section (i) of Section 36 of the Act gives a right to a shareholder in a Company to inspect the register of the members. Sub-section (2) gives a right to him to require the Company to supply a copy of the register, or any part of it. Sub-section (3) provides a remedy in case the Company refuses to allow him to inspect the register, but the section is silent as to any remedy for a failure to give a copy of the register. It was held in British India Corporation, Ltd. v. Robert Menzies I.L.R. (1936) All. 988 that the Court has inherent jurisdiction to pass orders to compel due observance of the statutory obligations of a Company, and, accordingly that the Company Court could pass an order compelling the Company to furnish a copy of the register of its members. Now the applicant states that his case is on all fours with this. He states that there is an obligation on the respondent to hand over the books, etc., of the Company to him as he, the applicant, is now the Secretary and Treasurer of the Company. Further more, he urges that the District Munsiff Court has no jurisdiction to hear and consider the matters in respect of which he complained, as they are matters falling within the jurisdiction of the Company Court alone, i.e., of this Court. In respect of this second part of his argument he relies further on British India Corporation, Ltd. v. Robert Menzies I.L.R. (1936) All. 988 for in that case it was held that the District Court of Cawnpore had exclusive jurisdiction to determine the matter.

9. Now, before British India Corporation, Ltd. v. Robert Menzies I.L.R. (1936) All. 988 can be called in aid for In first part of his argument, it seems to me that he must establish that he has a right given to him under the Companies Act, the protection of which is not expressly provided for therein. Now, I find it difficult to follow the applicant in this part of his case. As I have already observed, he says that he has been validly appointed as Secretary and Treasurer and that the respondent has been removed from those offices and, accordingly, that he is entitled to have the property of the Company handed over to him. If his appointment is valid, this, of course, follows. But I am unable to appreciate how it is said that this follows by reason of some provision of the Act. In other words, I am unable to appreciate how the applicant can be regarded as having in that respect some special right given to him by the Act. It seems to me that his position is simply that of a person, who alleges that he has been wrongfully deprived of his office, or of some property, or that he has been kept out of property wrongfully. In none of these cases is he complaining of an infringement of a right given to him by the Companies Act and it seems clear that he has a remedy, viz., by suit. That being so, I can see no justification for the contention that a remedy must necessarily be given under the Companies Act. In British India Corporation, Ltd. v. Robert Menzies I.L.R. (1936) AH. 988 it was observed as follows:

It is distinctly provided by Section 3 that the Courts specified in that section have jurisdiction under the Companies Act. A reference to the Act shows that there are various statutory obligations cast upon companies by the Act and that with respect to most of those obligations penalties have been provided for by the Act. There is, however, in many cases no specific provision in the Act as regards the authority of the Court to enforce compliance with the provisions that define and regulate those obligations. Nevertheless it seems to us that the Courts referred to in Section 3 of the Act have inherent jurisdiction to compel due observance of the mandatory provisions of the Act. As has been pointed out by the learned District Judge, it is a fundamental principle of legal administration that where the law requires something to be done there must be in existence a Court that can directly order it to be done. It is well understood in all systems of civilised jurisprudence that where there is a right there is a remedy.

However apt these observations may be in respect of the right of a Court to enforce a particular statutory obligation, in cases where the Act imposing that obligation makes no reference to the method of enforcement, I cannot accept that they have any application in a case like the present, where, as I have already indicated, I am satisfied that the right, if any, of the applicant is one in respect of which he could, if he were so minded, seek relief in the ordinary Courts.

10. Further, I cannot accept the second part of the applicant's contention, viz., that this Court as the Company Court is the only Court having jurisdiction to enquire into these matters and with the greatest respect to the learned Judges who decided British India Corporation, Ltd. v. Robert Menzies I.L.R. (1936) AH. 988 I am unable to agree with their decision so far as it supports that contention. There is, in my view, no provision in the Indian Companies Act which gives the Company Court (i.e., the Court having jurisdiction under the Act) exclusive jurisdiction in all Company matters. The law reports both in India and in England are full of cases, which refute any such contention. I have been referred to a large number of those cases by Counsel for the respondent, but I think it will be sufficient if I observe that there are undoubtedly many such cases. It is, I think, unnecessary to give the references in detail. There is also a considerable body of authority for the proposition that many of the special remedies provided by the Act are equally enforceable in the other Courts by suits. This being so, it is in my view impossible to regard the Company Court as having exclusive jurisdiction in all matters pertaining to Companies. In the present case, as I have already observed, the applicant may have a good light of action against some person, the Company, the respondent, or whoever he may select, in respect of his deprivation of the office of Secretary and Treasurer. He may have a right of action for the return to him of the properties of the company. It would be improper for me to express any view as to the form of action, which may be open to him. He must take such action as he may be advised. All I say in this judgment is that I am satisfied that there is no remedy provided for his case under the special provisions of the law contained in the Indian Companies Act. My decision is merely that this Court, the Company Court has no jurisdiction to accept his application in its present form. Accordingly, the application is dismissed With costs and the interim order of 25th April, 1946, will be dissolved.


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