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2010 (4) TMI 609 - HC - Companies LawWhether the remedy of an appeal lies under section 111A of the Companies Act, 1956 in respect of allotment of shares made by a public company? Held that - Section 111A would not apply in the case of an allotment of shares. The Legislature which is aware of the existing position when makes a conscious departure of such a nature, in my opinion, there would be no room to infer that the right of appeal provided by sub-section (4) of section 111A is to be read in consonance with sub-sections (2) and (3) of section 111A by equating transfer of shares with the allotment of shares. It is thus clear there is no right of appeal provided by section 111A in relation to the public limited companies, which was contained in sub-section (4) of section 111 of the Companies Act. It is thus clear that the plaintiff would not be entitled to approach the Company Law Board for seeking the reliefs that are prayed for in the civil suit and, therefore, there is no question of jurisdiction of the civil court being barred by the availability of remedy to the plaintiff under section 111A of the Companies Act. Appeal dismissed.
Issues Involved:
1. Maintainability of the company petition under section 111A of the Companies Act, 1956. 2. Jurisdiction of the Company Law Board to entertain challenges regarding the allotment of shares by a public company. 3. Conflicting judgments on the interpretation of section 111A of the Companies Act. Detailed Analysis: 1. Maintainability of the Company Petition under Section 111A of the Companies Act, 1956: The primary issue addressed was whether an appeal lies under section 111A of the Companies Act, 1956 concerning the allotment of shares by a public company. The judgment concluded that such an appeal does not lie under section 111A. This conclusion was based on precedent, specifically the judgment in Gopal Krishan Banga v. Poona Industrial Hotel Ltd. [1999] 22 SCL 90 (Bom.), which held that section 111A does not cover the allotment of shares by a public company. The court emphasized that the legislative intent behind section 111A was to address the transfer of shares, not their allotment. 2. Jurisdiction of the Company Law Board: The Company Law Board had dismissed the appellant's petition challenging the allotment of shares on the ground that it was not maintainable under section 111A. The court upheld this decision, reiterating that section 111A pertains to the transfer of shares and not to their allotment. The judgment in Gopal Krishan Banga's case was cited, which clarified that the wider right of appeal provided by sub-section (4) of section 111 was not enacted in section 111A for public companies. Therefore, the Company Law Board correctly dismissed the petition for lack of jurisdiction. 3. Conflicting Judgments on the Interpretation of Section 111A: The appellant relied on a conflicting judgment in Finolex Industries Ltd. v. Anil Ramchand Chhabria [2008] 144 Comp. Cas. 7381 (Bom.), which suggested that the remedies under section 111A could be interpreted to include allotments. However, the court found that the judgment in Finolex Industries Ltd. was per incuriam (lacking consideration of earlier binding precedent) as it did not consider the earlier judgment in Gopal Krishan Banga's case. The court clarified that the judgment in Finolex Industries Ltd. dealt with the transmission of shares, not allotment, and thus did not directly apply to the current case. The court decided to follow the precedent set by Gopal Krishan Banga's case, thereby dismissing the appeals. Conclusion: The court dismissed the appeals, upholding the Company Law Board's decision that the petition challenging the allotment of shares was not maintainable under section 111A of the Companies Act, 1956. The judgment reaffirmed that section 111A does not provide a remedy for challenging the allotment of shares by a public company and emphasized adherence to the precedent set by Gopal Krishan Banga's case. The court also declined to refer the matter to a larger bench, asserting that the earlier judgment in Gopal Krishan Banga's case was binding and correctly interpreted the legislative intent.
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