TMI Blog1995 (12) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... ties and Exchange Board of India (SEBI) have issued instructions to all the companies that with a view to protect the interest of investors, the letter of offer for 'right issue' be sent to the shareholders by registered post. 3. The petitioners submitted that they did not get a notice of 15 clear days as contemplated under section 81, and consequently the petitioners have been deprived of their valuable rights in respect of right issue as well as warrants and debentures. The petitioners submit that at no time the said company as well as Registrar of Issue sent the letter of offer relating to the right issue either at the foreign addresses or at the Bombay address. 4. It is further submitted that Petitioner No. 1 had telephoned Shri Ashok Chaturvedi, Chairman and managing director on 14-10-1994 from London that the petitioners had not received the original offer forms from the company. The company sent duplicate forms at the Bombay address, i.e., Manish C/o 609, Jagannath Shanker Shet Road, Singapuri Building, 2nd floor, Bombay-400002. The envelope containing the dupli-cate forms was delivered to Manish Mehta C/o Sanjay Scientific Corpn., Ground Floor, Singapuri Building, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rotect the interest of investors, letters of offer for rights issue be also issued to shareholders by registered post in future. 7. Mr. Ram Panjwani, the learned counsel for the petitioners has placed reliance on Smt. Arati Dutta v. Eastern Tea Estate (P.) Ltd. AIR 1988 SC 325. In this case, the Supreme Court has held that in respect of the orders passed by the Single Judge of the High Court under sections 397 and 398, the provisions of section 483 of the Act would be attracted and an appeal would lie to the Division Bench. The appeal lies to the same High Court irrespective of the powers under the Letters of Patent, meaning thereby that the jurisdiction which the Court exercises on the company side is akin to the jurisdiction exercised by the Court on the original civil side. The orders passed on the original civil side are appealable. Similarly, orders passed by the company Judge in exercise of his jurisdiction are also appealable to the Division Bench of the same High Court. 8. The learned counsel for the petitioners has submitted that this Court under rule 9 of the Companies (Court) Rules has inherent powers. Rule 9 is reproduced as under: "9. Inherent powers of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Constitution which has any bearing on any treaty, agreement, covenant, engagement, etc. The expression 'relating to* means inter alia stand in some relation, to have bearing on concern, to pertain, to refer to bring into association with or connection with." 12. It is submitted that if the matter relates to a company, then, the jurisdiction has to be conferred to the High Court and under section 10, it has to be the High Court where the registered office of the company is situated. 13. The learned counsel for the petitioners has relied on a Division Bench judgment of the Madhya Pradesh High Court, reported as Nava Samaj Ltd. v. Civil Judge, Class /AIR 1966 MP 286, and has drawn attention of this Court, particularly on the following passage of para 8 of the judgment, the relevant part of that para reads as under: "The necessary implication of section 3 of the Act of 1913, as also of section 10 of the Act of 1956, is to exclude jurisdiction of other Courts in regard to matters covered by the Companies Act. In connection with the exclusion of jurisdiction of other Courts, the line of inquiry is not whether there is any provision besides section 10 in the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comprehensively construing the averments and allegations of the petition. Therefore the above-mentioned case has no relevance in the facts and circumstances of this case. 16. Mr. Panjwani has also cited the case of Maharaja Exports v. Apparels Exports Promotion Council [1986] 60 Comp. Cas. 353 (Delhi). In this case Chawla J. of Delhi High Court has held that the High Court has jurisdiction unless it expresses that the High Court has no jurisdiction. 17. In R. Prakasam v. Narayana Dharma Paripalana Yogam [1980] 50 Comp. Cas. 611 Kerala High Court had held that except in cases where the Companies Act, confers jurisdiction on the company Court or some other authority like the Central Government or the CLB, either expressly or by implication, all other disputes pertaining to a company are to be resolved through the forum of civil court when the disputes are kept on being resolved by them. Where wrong is done to an individual member, he can insist, by recourse to a civil suit, on "strict observance of the legal rules, statutory provisions and provisions in the memorandum and articles of association which cannot be waived by a bare majority of shareholders". Similar vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principles applicable to the jurisdiction of the Civil Court in relation to an industrial dispute may be stated thus: (1) If the dispute is not an industrial dispute, nor does it relate to enforcement of any other right under the Act the remedy lies only in the civil court. (2) If the dispute is an industrial dispute arising out of a right or liability under the general or common law and not under the Act, the jurisdiction of the Civil Court is alternative, leaving it to the election of the suitor concerned to choose his remedy for the relief which is competent to be granted in particular remedy. (3) If the industrial dispute relates to the enforcement of a right or an obligation created under the Act, then the only remedy available to the suitor is to get an adjudication under the Act. (4) If the right which is sought to be enforced is a right created under the Act such as Chapter VA then the remedy for its enforcement is either section 33C or the raising of an industrial dispute, as the case may be." (p. 446) 21. The learned counsel has also placed reliance on another celebrated judgment of the Supreme Court reported as N.P. Ponnuswami v. Returning Officer, Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9] 6 CBNS 336 at p. 358. 23. The learned counsel for the petitioner has also relied on British India Corpn. Ltd. v. Robert Menzies AIR 1936 All. 568. In this case, the Court had observed that it is well understood in all systems of civilised jurisprudence that where there is a right, there is a remedy. 24. Mr. Panjwani submitted that under section 81, time of 15 days mean that there should be interval of 15 days from the date of receipt and date of closing. In the present case, the company had never sent original offer under section 81(1)( b ) to the petitioner. The fraud has been alleged against the company. It has also been alleged that the company has acted mala fide and illegally. It is also alleged that action of the company is oppressive. 25. Mr. Haksar, the learned counsel for the respondent-company in reply had taken a threshold objection that this petition before this Court is not maintainable. He submitted that though this petition has been filed under section 81(1)( b )(10), whereas allegations and averments when properly comprehended clearly make out 8 cases under sections 397 and 398. Mr. Haksar had also drawn attention of the Court to the averments o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation:ln this sub-section, "equity share capital" and "equity shares" have the same meaning as in section 85. (1A) Notwithstanding anything contained in sub-section (1), the further shares aforesaid may be offered to any person whether or not those persons include the persons referred to in clause (a) of sub-section (1) in any manner whatsoever ( a )if a special resolution to that effect is passed by the company in general meeting, or (b) where no such special resolution is passed, if the votes cast (whether on a show of hands, or on a poll, as the case may be) in favour of the proposal contained in the resolution moved in that general meeting (including the casting vote, if any, of the chairman) by members who, being entitled, so to do, vote in person or where proxies are allowed, by proxy, exceed the votes, if any, cast against the proposal by members so entitled and voting and the Central Government is satisfied, on an application made by the Board of directors in this behalf, that the proposal is most beneficial to the Company. (2) Nothing in clause (c) of sub-section (1) shall be deemed ( a )to extend the time within which the offer should be accepted, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tters. The respondent-company submitted that in any event, the respondent-company is not liable in any manner. 32. In reply it was mentioned that the respondent was in no way liable or responsible if the courier delivered the duplicate form to Manish Mehta in place of Manish Shah. There is nothing remains of the said delivery of the duplicate form and as such respondent's liability was to properly address and pre page the envelope to the company in the application form in compliance and it was done with full and meticulous compliance of the law and accordingly the respondent is not liable or answerable for the non-receipt of the registered letter or for the alleged delay in delivery of the duplicate. It would have been received by Credit Lyonnais in Delhi on Monday, 17-10-1994 which could have been accepted. 33. It is also mentioned in the reply that the Credit Lyonnais, Bombay was right in refusing to accept the application inasmuch as only the New Delhi Branch of Credit Lyonnais was only entitled to receive the above application. The petitioners had to work according to instructions which were contained in the application form. It is submitted that request made by the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt conferred by the various provisions of the Companies Act in respect of specific matters relating to the companies situated within its jurisdiction. The High Court is a special court with special company jurisdiction and that jurisdiction has to be found from specific provisions of the Act and the High Court does not have any general plenary or residuary jurisdiction to deal with all matters and all questions arising under the Companies Act." (p. 834) 38. Mr. Haksar has also placed reliance on Satish Chandra v. Union of India AIR 1995 SC 138. In this case the Amendment Act 31 of 1988 by which the jurisdiction to CLB had been challenged. The court observed: "The winding up power has more serious consequences the same has been retained with the High Court while clothing the Board with a less drastic power visualised by section 397. The difference does provide a good ground of distinction. The argument of lack of intelligible and acceptable differentia in having two for the aforesaid two purposes is therefore not tenable. The provision cannot also be assailed on ground that the minority shareholders who would normally like to invoke power of section 397 would be require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners pertain to the realm of individual right of alleged wrong done to individual members and not to the realm of corporate rights, the petitioners should possibly insist on strict observance of relevant provisions in a civil suit. In any event the Company Court has no jurisdiction to grant relief in a matter like this. 43 . Mr. Haksar also cited R.R. Rajendra Menon (No. 2) v. Cochin Stock Exchange Ltd [1990] 69 Comp. Cas. 256 (Ker.). In this case the relevant portion is set out as under: "No provision in the Act has been brought to our notice as specifying expressly or impliedly that an application to compel a company to comply with the requirements in section 257 will lie in the company court. The Act specifies certain questions or disputes to be resolved by the Central Government, certain others by the Company Law Board and certain matters to be dealt with by the company court. Only such matters as are specified in the Act or in the rules to be dealt with by the Court could the company court deal with. The jurisdiction of the ordinary civil court can be regarded as impliedly barred in respect of those matters specified in the Act to be dealt with by the Court. It can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 48. Merely; filing a petition or mentioning section 81 and section 10 and rules 11( b ) and 17 cannot change or alter the real nature and character of dispute or controversy involved between the petitioners and the respondent. It is the bounden duty and function of the Court to properly comprehend the substance of the allegations and averments incorporated in the petition. 49. The Courts ought not to be governed merely by the outer forms of the petition. The Courts should be guided and governed primarily by the inherent substance of the averments and allegations incorporated in the petition. 50. When this well-established yardstick is made applicable to the instant case, the conclusion becomes irresistible that this petition is in fact a petition under sections 397 and 398. After the amendment in the Act, the jurisdiction to decide and determine matters pertaining to sections 397 and 398 has been transferred to the CLB. 51. In this view of the matter, the present petition is not maintainable before this Court and is accordingly dismissed. In the peculiar facts and circumstances of this case parties are directed to bear their own costs. - - TaxTMI - TMITax - Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
