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Nine Media & Information Services Ltd. Versus Hero Honda Motors Ltd. & Others

2016 (10) TMI 370 - BOMBAY HIGH COURT

Ownership of lost / transferred share - Reference to the appellant to obtain the order from the Competent Court - Held that:- In the instant case, the transferors, the original owners of the shares have not at all come forward to challenge the ownership of the appellant over these shares. They have also not approached the Registrar of respondent company to stake their ownership over the said shares. In such a situation, there does not appear to be any dispute of ownership of the appellant over t .....

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icate to the appellant, the Registrar is bound to make requisite inquiry under the provisions of Section 84(4) of the Companies Act and he is not precluded in any way from considering the title of the appellant over the said shares. - As stated above, the Registrar can even investigate the matter in accordance with rules and collect the evidence. Once, it is held that, the Registrar has to issue the duplicate share certificates after necessary inquiry, it follows that the inquiry will not be .....

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L NO. 406 OF 2016 WITH CIVIL APPLICATION NO. 3681 OF 2016 - Dated:- 29-9-2016 - DR. SHALINI PHANSALKAR-JOSHI, J. Mr. P. M. Modi, Sr. Advocate a/w. Mr. N. P. Lashkari i/b Das Associates for the Appellant. Mr. Ankit Lohia a/w Mr. Sanket Shah i/b Akshar Laws for Respondent No.1. DR. SHALINI PHANSALKAR-JOSHI, J. ORAL JUDGMENT 1. This appeal takes an exception to the Judgment and Order dated 12.01.2016 passed by City Civil Court, Mumbai in Suit No. 8497 of 1995. 2. The brief facts of the appeal can b .....

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rms duly signed by the transferor were dispatched by the brokers to the appellant at Mumbai on 23.01.1995 under the airway bill No.603032720, through courier service namely, M/s. Elbee Services Ltd. As per the case of the appellant, before the receipt of the delivery of the said shares with the duly signed transfer forms by the appellant, the same were lost in transit from the head office of Elbee Services Ltd., Mumbai. Accordingly M/s. Elbee Services Ltd. has also lodged complaint with the poli .....

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te, issued a further letter dated 23.03.1995 requesting them to refrain from transferring the said shares in favour of any third person, except the appellant. Respondent No.2 has taken the cognizance of the said letter and vide its reply dated 14.03.1995 called upon the appellant to obtain the necessary order to that effect from the competent Court. The appellant has, therefore, approached the Trial Court by filing the instant suit seeking the relief of declaration that the appellant is the abso .....

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the suit as they were the transferors of the shares in question. 4. In view of the enhancement of pecuniary jurisdiction of the City Civil Court, the suit came to be transferred to the Trial Court. Respondent Nos.1 and 2 resisted the suit by filing the their written statement, denying all the allegations and averments and raising a very specific defence that the Civil Court has no jurisdiction to entertain such suit as the subject matter of the suit can squarely fall within the inquiry and the j .....

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the said shares, challenging the territorial jurisdiction of the Trial Court and also on the ground of non joinder of necessary party, like the transferors of the shares being not joined in the suit. 6. The Trial Court framed necessary issues at Exhibit 4, on the basis of respective pleadings of the parties, including the issue relating to jurisdiction of Civil Court to try and decide the suit. In support of its case, on behalf of the appellant, one Nitin Sawant examined himself. The appellant .....

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the case of Shripal Jain (supra), the Trial Court was pleased to hold that Civil Court has no jurisdiction over the subject matter of the suit to entertain and try the same, in view of the provisions of Section 84 of the Companies Act. A specific finding was recorded to that effect to issue No.1. The Trial Court however proceeded further to decide issue Nos.3 and 4 which pertain to the relief of declaration as sought by the appellant, of being the absolute owner of the disputed shares and also .....

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n view thereof, the Trial Court dismissed the suit in its entirety. 8. This Judgment of the Trial Court is challenged in this appeal by learned counsel for the appellant by submitting that once the Trial Court has arrived at its own finding that it has no jurisdiction to entertain the suit, as the subject matter thereof, is covered under Section 84 of the Companies Act in view of the Judgment of the Apex Court in the case of Shripal Jain (supra), the Trial Court should not have proceeded further .....

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suit claim, being rendered or given by the Court which was not having jurisdiction over the subject matter, those findings cannot be, in any way, having any legal value or binding nature. 9. Learned counsel for the appellant has fairly submitted that the present case squarely fall in the ratio laid down by the Apex Court in the above said Judgment of Shripal Jain (supra). According to him, if the said ratio is to be applied and which was real contention of respondent Nos.1 and 2 also that Trial .....

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ies Act, the relief of interim injunction granted by this Court on 30.09.1997 shall continue to operate. According to learned counsel for the appellant in this way the appeal can be disposed of at this stage itself, instead of proceeding with the hearing of the same and ultimately coming to the conclusion that the Civil Court has no jurisdiction to decide the same. 10. Learned counsel for respondent No.1 has, however strongly resisted this submission. According to him, this prayer is made by the .....

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instant suit that the appellant is the absolute owner of the shares, Civil Court alone can grant such declaration and, therefore, the jurisdiction of the Trial Court was not barred in respect of this issue. It is submitted by learned counsel for respondent No.1, that whether the finding arrived at by the Trial Court on this issue of declaration relating to ownership of the shares is correct, valid and supported with the evidence and material, can be decided only after the appeal is admitted and .....

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Hence, in his opinion, it is necessary to admit the appeal and fix it for the final hearing after compliance of paper book. According to him, at the stage of admission of appeal itself, this Court is not armed with any provision of the law, to set aside the Judgment of the Trial Court. 11. In order to appreciate the rival submissions advanced by the learned counsel for the parties, in my considered opinion, it would be useful to first have reference to the averments made in the plaint and also .....

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of them chose to appear before the Trial Court or to contest the ownership and title of the appellant over those shares. 13. Thus, the case of the appellant is in respect of stolen shares for which he requests a direction to the Registrar of respondent No.1 to issue duplicate share certificate. It is stated in the plaint also that vide two letters dated 08.02.1995 and 20.02.1995, the appellant had informed about the loss of the shares to respondent Nos.1 and 2 but there was no response from the .....

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et the relief of necessary declaration and direction. 14. It is pertinent to note that, according to respondent Nos.1 and 2 also, the competent authority to issue the duplicate share certificate was the Registrar in view of Section 84 of the Companies Act. A specific plea to that effect was raised in para 3 of the written statement filed before the Trial Court in which it was stated that, "the plaintiff has filed the suit for ownership declaration of 2200 shares and seeking direction agains .....

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Therefore, the suit deserves to be dismissed with costs." 15. Respondent Nos.1 and 2 had thus challenged the maintainability of the suit on the count that the Civil Court has no jurisdiction to decide the subject matter involved in the suit in view of the provisions of Section 84 (4) of the Companies Act. 16. Section 84 of the Companies Act which is the crux of the matter and around which entire controversy revolves can be reproduced as follows: "84. Certificate of shares.- (1) A cert .....

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punishable with fine which may extend to ten thousand rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to [one lakh rupees], or with both. (4) Notwithstanding anything contained in the articles of association of a company, the manner of issue or renewal of a certificate or issue of a duplicate thereof, the form of a certificate (original or renewed) or of a duplicate thereof, .....

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f the Companies Act makes it clear that it is the jurisdiction of the Registrar of Companies to issue the share certificate, to renew the same or to issue a duplicate of the certificate if, original certificate is proved to have been lost or destroyed. Sub-section 4 of Section 84 of the Companies Act makes it clear that the Registrar in such situation, can also have the power to make necessary inquiry and for that purpose even to collect the evidence, vide investigation and the expenses for the .....

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84 (4) of the Companies Act, the Registrar of the Companies will have the jurisdiction to issue the duplicate share certificate, after making necessary inquiry, in which he can even investigate and collect the evidence. The Trial Court has also, accordingly, come to that conclusion, especially, placing reliance on the decision of Hon'ble Supreme Court in the case of Shripal Jain (supra). 19. The facts of the present case, as submitted by learned counsel for the appellant, squarely fall withi .....

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l Court rejected the application of the appellant. The appellant challenged the said decision in the High Court. The High Court dismissed the Civil Revision Application, filed by the appellant in limine. The appellant challenged the said order before the Hon'ble Supreme Court and the Hon'ble Supreme Court observed as follows: "3. We are of the view that the Registrar of the Company was in patent error in referring the appellant to the civil court in the facts and circumstances of th .....

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o know about the loss of the share certificates, initially approached respondent No.2-the Registrar by sending three letters. However, respondent No.2-the Registrar of the Company directed the appellant to bring the order from the competent Court. Hence, the appellant was compelled to approach the Trial Court. The Trial Court has, also rightly relying upon this decision of Shripal Jain (supra), which was cited before the Trial Court by learned counsel for respondent Nos.1 and 2, held that it has .....

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so, was in patent error in referring the appellant to obtain the order from the Competent Court, though he could have himself held the inquiry into the matter under Section 84(4) of the Companies Act read with the Companies (Issue of Share Certificates) Rules, 1960 and taken a decision himself. Therefore, as was done by the Apex Court in the above case, in this case also, it is necessary to remand the case back to the Registrar by giving liberty to the appellant to approach the Registrar. 23. Ne .....

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lf, instead of allowing the appeal to remain pending on admission. 24. The submission advanced by the learned counsel for respondent No.1 is that, the relief of declaration of ownership and title over the shares, can be granted by the Civil Court alone and Registrar of Company is not having any jurisdiction to do so. According to learned counsel for respondent No.1, in the instant case, the Trial Court has already recorded an adverse finding against the appellant on this issue and unless that fi .....

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were necessary to be issued as the Registrar has directed the appellant to approach the competent Court for that purpose. In order to get the necessary direction from the competent Court for Registrar to issue the duplicate certificates, it was necessary for the appellant to seek a relief of declaration that the appellant is the owner and having the title over those shares. The main relief, which the appellant was seeking, was the direction to the Registrar to issue the duplicate share certifica .....

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the learned counsel for the appellant, the Rules framed under the Companies Act also vests necessary powers and jurisdiction on the Registrar to not only make inquiry but also to collect the investigating evidence and if such evidence is collected and expenses for the same are incurred, then to recover those expenses also. That is the very reason why the Apex Court has, also in this above said authority of Shripal Jain (supra) relegated the appellant therein to the Registrar, when the duplicate .....

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para 3 of the written statement the respondents have challenged the maintainability of the suit, on this very count that Civil Court has no jurisdiction under Section 84 of the Companies Act. Even the perusal of the impugned Judgment and order passed by the Trial Court, especially, para 16 reveals that the Trial Court has also considered this aspect by observing as follows: "16. The plaintiff has filed the present suit for issuance of direction to defendants No.1 and 2 to issue duplicate s .....

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dants No.1 and 2 to issue duplicate share certificates to the plaintiff. 28. In para 18, the Trial Court was further pleased to conclude and hold that, it has no jurisdiction to entertain and try the present suit. 29. Not only that, in concluding para 28 also, the Trial Court held that, "even otherwise, as demonstrated in the forgoing paras, this court has no jurisdiction to direct to defendants No.1 and 2 to issue duplicate share certificates to the plaintiff. So, the suit must fail. 30. T .....

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lant and to enable the appellant to get that relief, the consequential/ancillary relief of declaration was sought about his title to shares. If the Trial Court has held that it has no jurisdiction to grant the main relief, then it follows that Trial Court had no jurisdiction even to grant other consequential/ ancillary relief of declaration. However, the Trial Court has entered into that issue and recorded findings. Needless to state that, the findings of the Trial Court on that issue being reco .....

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ed opinion, as rightly submitted by the learned counsel for the appellant, it would be a totally futile and infructuous exercise. The law is very clear, which is not and cannot be disputed in the light of the Apex Court Judgment that the Registrar is alone having jurisdiction to issue duplicate share certificate and, therefore, once the Civil Court has no jurisdiction to do so, even if I decide the appeal and ultimately hold in favour of the appellant that the appellant is having title and owner .....

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When the legal position is crystal clear and learned counsel for the appellant has, relying upon these provisions under Section 84 of the Companies Act and the law laid down in this authority of Shripal Jain (supra) has fairly conceded that the appellant may be given liberty to approach the Registrar instead of prosecuting this appeal, there is no point in proceeding with this appeal merely for academic purpose to decide the legality and validity of the findings recorded by the Trial Court on is .....

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cate certificate, in view thereof, this Court is adopting exceptional mode of deciding this appeal at the stage of admission itself, instead of allowing the same to languish for some more years. 32. As to the decision relied upon by respondent No.1 in the case of Inter Sales Vs. Reliance Industries Ltd. and Ors. Company Cases 680 Vol. 108, in that case though the matter relates to loss of equity shares and consequential reliefs, considering the fact that there was dispute with respect to the iss .....

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rar of respondent company to stake their ownership over the said shares. In such a situation, there does not appear to be any dispute of ownership of the appellant over those shares. Hence, even otherwise also the issue relating to declaration of ownership, as sought by the appellant is again of merely of an academic nature and academic interest, if no one is coming forward to dispute the same. 34. In such situation, one really fails to understand as to why respondent No.1 company is contesting .....

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vidence. Once, it is held that, the Registrar has to issue the duplicate share certificates after necessary inquiry, it follows that the inquiry will not be limited but it will cover even the aspect of ownership and title of the appellant over the said shares. 35. In the light of the discussion above, I find that this is a fit case where the appeal needs to be disposed of, by setting aside the impugned Judgment and order passed by the Trial Court and grant the liberty to the appellant to make an .....

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