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TMI Blog1997 (6) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... enting the parties in these petitions on different dates, since the issue is common we are considering the arguments of all counsel in this common order. 2. The Depositories Ordinance was promulgated on September 20, 1995, and was repromulgated twice on January 7, 1996, and on March 27, 1996. It later became the Depositories Act on August 10, 1996. Through this Ordinance/Act, certain provisions of the Companies Act were amended, one such provision being Section 111. Before the amendment, grievances relating to delay in as well as refusal to register/transfer of shares as also rectification of the register of members of any company-whether private or public (both listed and unlisted)--could be sought through a petition to the Company Law Board under Section 111. The Depositories Ordinance inserted a new Sub-section (14) in Section 111 of the Companies Act which reads : "In this section 'company' means a private company and includes a private company which had become a public company by virtue of Section 43A of this Act." 3. Simultaneously, a new Section 111A was also inserted in the Companies Act, Sub-section (1) of which reads : "In this section, unless t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njab v. Mohar Singh Pratap Singh, AIR 1955 SC 84, the Supreme Court held (headnote) : "Whenever there is a repeal of an enactment, the consequences laid down in Section 6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears. In the case of a simple repeal there is scarcely any room for expression of a contrary opinion. But when the repeal is followed by fresh legislation on the same subject the court would undoubtedly have to look to the provisions of the new Act, but only for the purpose of determining whether they indicate a different intention." 9. According to Shri Datar, the insertion of Sub-section (14) has not repealed Section 111, but it has only amplified to state that the provisions of that section are applicable to private limited companies and that there is nothing to indicate that the remedy through the Company Law Board has been barred for a cause of action that arose before the amendment. 10. Relying on the decision of the Supreme Court in Brihan Maharashtra Sugar Syndicate Ltd. v. Janardan Ramchandra Kulkami [1960] 30 Comp Cas 468, 472; AIR 1960 SC 794, 796, in which the court, while examining the juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt or tribunal which under the new law gets jurisdiction to try them ... It is also true that no litigant has any vested right in the matter of procedural law; but where the question is of change of forum, it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vested when the proceedings are initiated in the tribunal or the court of the first instance and unless the legislature has, by express words or by necessary implication, clearly so indicated, that vested right will continue in spite of the change of jurisdiction of the different tribunals or forums." 13. He laid great stress on the decision of the Supreme Court in P. V. Mohammad Barmay Sons v. Director of Enforcement [1993] 76 Comp Cas 27, 32; AIR 1993 SC 1188, 1191 in which the court observed : ". . . despite its repeal the penalty, liability, forfeiture or prosecution for acts done while the repealed Act was in force were kept alive, though no action thereunder was taken when the repealed Act was in force . . . rights, liabilities, penalties, forfeiture of punishment due to repeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when such forum has lost its jurisdiction in the matter of dispute. He differentiated between two circumstances--one the status of proceedings already initiated before a forum prior in time to the repeal and the proceeding started after the repeal. According to him in the former case the proceeding will go on in the forum in which it is pending and in the latter, the litigant has to move the new forum, if any, as per the new Act. In the present case, he stated that since the petitioners had not filed the petition before the Company Law Board before the coming into force of the Ordinance and as no forum has been named in the new Act, the petitioners have to only file a suit to set up their claim and cannot move the Company Law Board since it has no jurisdiction. He relied on the following cases : In Ram Karan Singh v. Ram Das Singh, AIR 1931 All 635 [FB], in which the court held (headnote) "a substantial right is not assumed to be taken away by a new Act, unless it expressly says so. But a right to sue in a particular court rather than another or a right to wait for a particular period of time before suing is not a substantive right. The selection of a forum and the period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring for the respondent bank, submitted that the petition is not maintainable under Section 111(4) inasmuch as the provisions of Section 111 have been made applicable only in respect of private limited companies and any reference to the Company Law Board in Section 111 is only with reference to shares in a private company. The Company Law Board has been conferred jurisdiction to entertain petitions relating to shares of public companies only under Section 111A which itself stipulates the grounds under which such petitions can be filed. Therefore, he argued to state that this petition filed under Section 111(4) should be dismissed for want of jurisdiction. 21. Shri K. G. Raghavan, counsel appearing for the petitioners, submitted that the views expressed by Shri Murali cannot be sustained and that, as far as rectification of register of members of a public company is concerned, the Company Law Board continues to have jurisdiction under Section 111. He submitted, in support of his proposition, that Section 111A deals only with matters relating to transfer of shares of a public company, and also rectification arising out of transfers. It does not deal with rectification of register of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of jurisdiction. This petition can also not be maintained under Section 111A(3), as this section does not talk of aggrieved person. He maintained that the petitioner's remedy lies in a civil suit and not in a petition before the Company Law Board. He submitted that entertainment of the petition by the Company Law Board would be without jurisdiction and any order passed on the merits would a nullity. He quoted, in support of this argument, the decision of the Madras High Court in R. Venkataswami Naidu v. South India Viscose Ltd., AIR 1985 Mad 257, 264 ; [1986] 60 Comp Cas 142, 153 "If the court had no jurisdiction "at all to entertain the suit, anything done by it, by assuming such jurisdiction, would be totally without competence on its part to do so." He further submitted that as held by the Madras High Court in India Pistons Ltd. v. A. C. Central Excise [1987] 27 ELT 651 (Mad), the petition should be returned to the petitioner for presentation to the proper forum and the Company Law Board itself cannot transfer the same to another forum on the ground of justice and fair play. He drew our attention to the headnote to Kiran Singh v. Chaman Paswan, AIR 1954 SC 340 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sitories Act. He attempted a distinct difference between amending a particular statute straightaway and amendment through schedules to a different enactment. In the latter case, he submitted that the amendments would cover only matters in the statute so enacted and not matters not covered in that enactment which would continue to be governed by the provisions existing before the amendment. He also raised a question as to what would happen to matters like theft of certificates, fraudulent removal of names from the register of members, transmission of shares, etc., for which there is no provision in Section 111A. He, therefore, submitted that the Company Law Board should take a pragmatic view and entertain the instant petition filed before it. 27. On the basis of the detailed submissions made by counsel appearing for the parties in these three petitions, we have framed the following issues for our consideration : 1. Does the Company Law Board have jurisdiction to entertain applications filed under Section 111 of the Companies Act seeking rectification of register of members on the grounds specified in Section 111(4) in respect of public limited companies? 2. Does it have jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies--whether private or public--could be considered by the Company Law Board. Thus remedy for the two separate sets of grievances has been provided in Section 111. 30. The first set relates to refusal to or delay in transfer of shares against which an "appeal" could be preferred to the Company Law Board. In this connection, it is relevant to note the opening words of Section 111 "If a company refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the transfer of . . .", to point out, that a company had the right to refuse registration of transfer. Under what circumstances such right could be exercised have been dealt with in a number of cases, with which we are not concerned, except to note that a company, whether private or public, had the right to refuse registration, only subject to the condition that it had provisions to that effect in the articles. However, in respect of a listed company, its right to refuse was governed by the provisions of Section 22A of the Securities Contracts (Regulation) Act (SCRA). This section specifically provided four grounds under which such right could be exercised and not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as introduced to Section 111, now provides that in this section, the term "company" would mean a private company. That would mean that the term "company" as used in Sub-section (4) would also mean only a private company and as such the provision relating to rectification of the members of a public company under this sub-section does not arise. This is the stand taken by the respondents in the first and second petitions. However, the petitioners in the second case, through their counsel, Shri Raghavan, contend that one cannot literally and textually apply the provision, but should also take into consideration the object, purpose and the background under which the same has been enacted. He submitted that Section 111A deals with matters connected with transfer of shares of public companies and it does not cover rectification arising out of matters not connected with transfers. In the absence of a provision to cover rectification on account of non-transfer matters in Section 111A, the right of a member of a public company to seek rectification under Sub-section (4) of Section 111, should be deemed to have been continued as it is a valuable right which could origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute may need interpretation as propounded by the apex court in Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. [1987] 61 Comp Cas 663 ; AIR 1987 SC 1023, but when the words in the statute are unambiguous, textual application would be in order. With the coming into force of Sub-section (14) to Section 111, it is crystal clear to us that this section is not applicable to public companies. Therefore, we are unable to agree with Shri Raghavan, that the right to move the Company Law Board for rectification in respect of public companies, under Section 111(4), continues even after the coming into force of the Ordinance. 38. Second issue.--This issue relates to appeal to the Company Law Board under Section 111(2) in respect of public companies. This sub-section provides for appeal to the Company Law Board in case a company refuses registration of transfer within two months of lodgment or delay in registering transfers. The same reasoning that we have given for rectification under 111(4) holds good in respect of an appeal under 111(2) also in respect of public companies. However, as we have already pointed out, the legislature has, now, through the amendment not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the repeal of that Act, As far as this proposition is concerned, counsel for the respondents, Shri Seshadri, has no different opinion. In the same way, in regard to the right of enforcement of a right or privilege accrued, as found in some of the judgments cited by Shri Datar, we do concur with him that such right survives the repeal. But the question is the forum through which such right is to be enforced. In the present case, the forum through which one could have enforced his right was the Company Law Board, when the cause of action arose. However, when the petitioners decided to enforce the right through the Company Law Board, the Company Law Board has been divested of its jurisdiction, by the amendment brought through the Ordinance on matters provided in Section 111. Under these circumstances, can the Company Law Board assume powers and jurisdiction to deal with the matter on the ground that it had jurisdiction when the cause of action arose ? We are afraid that the Company Law Board cannot assume such powers. Jurisdiction is always conferred by a statute and cannot be assumed. We have already extracted from the cases cited before us, judgments stating that any order passe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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