1996 (8) TMI 400 - HC - Companies Law

Summary

Issues:
1. Validity of the forfeiture of shares held by petitioners in a company.
2. Maintainability of the petition before the company court.

Analysis:
1. Validity of Share Forfeiture:
The petition sought a declaration that the forfeiture of shares by the company was void. The petitioners had applied for and were allotted shares, some of which were transferred. The company claimed the shares were forfeited due to bounced cheques and non-compliance with agreement conditions. The petitioners argued factual discrepancies in the forfeiture notice, lack of specific demand, improper service, and invalidity of forfeiting transferred shares. The court examined the company's power to forfeit shares under Article 29 of the articles of association, which did not provide remedies beyond approaching the board for cancellation. Relevant sections of the Companies Act were discussed, but no specific provision was found to entertain the petition, leading to the conclusion that the situation did not fall under the jurisdiction of the court or Company Law Board.

2. Maintainability of the Petition:
The court deliberated on whether the petition was maintainable before the company court. Arguments were presented regarding jurisdiction under the Companies Act, Companies (Court) Rules, and previous legal precedents. It was noted that the Companies Act did not specify a provision to entertain such a petition. The court emphasized that unless a special mode prescribed under the Companies Act ousted the jurisdiction of the civil court, the petition could not bypass the general remedy. Reference was made to cases supporting the view that matters not falling under specific sections listed in the Companies (Court) Rules could be addressed by the civil court. The court concluded that the petition was not maintainable as the petitioners failed to indicate a specific section requiring filing before the company court, leading to the dismissal of the petition.

In summary, the judgment addressed the validity of share forfeiture and the maintainability of the petition before the company court. It highlighted the absence of a specific provision in the Companies Act to entertain the petition and emphasized the jurisdiction of the civil court in the absence of a prescribed special mode under the Act. The court dismissed the petition, citing the petitioners' inability to identify a relevant section necessitating filing before the company court.