TMI Blog2022 (10) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... ained uncontroverted. Thus, it is clear that the consequence of the impugned order fell on the Petitioner at Mumbai where atleast the cause of the action in part has taken place - there is no substance in the contention raised by the Respondents that this Court has no jurisdiction to deal with this Writ Petition. Whether ROC has jurisdiction to deal with complaint dated 1st December 2015 filed by the Petitioner No.1? - What is the effect of pending Commercial Suit No.584 of 2017 on the said complaint dated 1st December 2015. 20? - HELD THAT:- The factual position on record clearly show that although Petitioner No.1 remained absent when the hearing of the said complaint was scheduled on 28th November 2018 as they have not been served with the notice of hearing but all along they requested for another date of hearing and without granting hearing, order was passed. It is further significant to note that this is not a case where after 28th November 2018 i.e. after scheduled date of hearing the ROC has immediately passed the impugned order. In fact, the impugned order has been passed after a period of four months after the said scheduled date of hearing. Thus, there was no impedime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entury Finance Limited (hereinafter referred to as TFCFL ) and Stemcor Sea Pvt. Ltd (an associate company of the Petitioner No. 1) and another with Mesco Projects Limited and Stemcor Sea Pvt. Ltd. By these agreements, Petitioner No. 1 purchased and acquired equity shares of MISL aggregating to 10% of the total issued share capital of MISL. Subsequently, supplemental agreement dated 28th March 2006 was executed modifying the clause regarding payment. ii. On 31st March 2006, physical share certificates were delivered to Petitioner No.1 by duly transferring the shares in the name of Petitioner No.1. Petitioner No.1 s name was included in the Register of Members maintained by MISL. iii. In 2011-2012 and 2012-2013, Petitioner No.1 was paid dividends. iv. In May 2013, Petitioner No.1 misplaced the said share certificates. v. Thereafter Petitioner No.1 carried on correspondence with Respondent No.3 and also filed police complaint. Petitioner No. 1 also carried on correspondence with Respondent No.3 s Registrar and Transfer Agent, M/s. Skyline Financial Services Private Limited. vi. Inspite of correspondence, Respondent No.3 failed to issue duplicate share certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed by learned Single Judge by order dated 19th March, 2019. xvi. On 25th April, 2019, Petitioner sent communication through Advocate to Respondent No.1 explaining that the suit and complaint filed with Respondent No.1 are not connected with each other. xvii. Thereafter, Petitioner No.1 sent reminder dated 25th April 2019. 3. In the above background, on 13th August 2019, the present writ petition has been filed inter alia impugning the decision dated 3rd April 2019 of the Respondent No.1. 4. We have heard Mr. Zubin Behramkamdin, learned counsel appearing for Petitioners, Mr. Y. R. Mishra, learned counsel appearing for Respondent No.1 and Mr. Chirag Modi, learned counsel appearing for Respondent No.4, 5a, 5b and 5c. 5. Mr. Behramkamdin on behalf of Petitioners raised following contentions : (i) ROC is the only appropriate forum to resolve the dispute relating to issuance of duplicate share certificate. He relied on judgment of Supreme Court in the case of Shripal Jain vs. Torrent Pharmaceuticals Ltd. Ors.1995 Supp. (4) SCC 590. The relevant portion of said judgment reads as under:- 2. The share certificates purchased by the appellant in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Companies Act. Therefore, Sections 420 and 424 of the Companies Act, 2013 indicate in broad terms, merely the procedure to be followed by the NCLT and NCLAT before passing orders. However, there are no separate provisions in the Companies Act, exclusively dealing with the jurisdiction and powers of NCLT. (Emphasis added) (iv) He also relied on judgment in the case of Rajiv Sanghvi Ors. vs. Pradip R. Kamdar Ors.IA No.571 of 2022 in Suit No.44 of 2021 which relied on Embassy Property Developments Pvt. Ltd. (supra) (v) He submitted that ROC in exercise of its supervisory jurisdiction under section 396 of the Act is entitled to deal with cases of non-issuance of duplicate share certificates. He also relied on the manual issued by the Ministry of Corporate Affairs. 6. Mr. Chirag Modi, learned counsel appearing for the Respondent Nos.4, 5(a), 5(b), 5(c) made following submissions. i. As the civil suit is pending inter alia praying that Respondent Nos. 4 and 5 be declared as owners of the said shares and have further sought declaration that agreements be declared as void on account of non-payment of consideration by the Petitioners, the Writ Petition be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mphasis added) (x) He also relied on paragraph 19 of Parenteral Drugs (India) Limited vs. Jagdish Mangal HUF Ors.2020 (2) MPLJ . Said paragraph 19 reads as under:- 19. In the present case, the parties are at variance with regard to the issue of duplicate share certificate. In the backdrop of the law laid down by Hon ble the Apex Court and followed by the Bombay High Court and the afore stated provisions of the Companies Act, in the facts and circumstances of the present case, it is manifest that the dispute between the parties is a company matter and not a civil dispute as held by the learned trial Court. After incorporation of new Companies Act, 2013 such matters has to be heard and decided by the Company Law Tribunal constituted under the new company law and is the only competent authority and has jurisdiction under the law to decide the conflict between the parties in respect of any company matter. It can hold enquiry into the matter under section 84 of the Act, 1956 or 46 of the Companies Act, 2013 read with the Companies (Issue of Share Certificates) Rules, 1960 or The Companies (Share Capital and Debentures) Rules, 2014 and take a decision in the matter. (E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stablishes following admitted position :- a) The said shares are listed with the Bombay Stock Exchange and are traded in Mumbai. The Petitioner would be able to trade with the said shares in Mumbai. The Duplicate Share Certificates once issued (in dematerialised form) would be issued in the Petitioner s demat account in Mumbai. b) The ROC s Impugned Letter/Order has affected Petitioners rights in Mumbai. Thus, the impugned order of ROC has affected Petitioners rights in Mumbai. 11. The Respondent No.4 and deceased Respondent No.5 filed Commercial Suit No. 584 of 2017 in this Court inter alia seeking following reliefs:- a) this Hon ble Court be pleased to order and declare that the Plaintiff No.1 is the owner of 2,00,400 shares out of the suit shares and Plaintiff No.2 is the owner of 1,35,87, 100 shares out of the suit shares and that the Defendant No.1 is not entitled to make any claims in respect of the suit shares including claim for duplicate shares, bonus shares or dividends or any other entitlements and benefits in respect of the suit shares; b) this Hon ble Court be pleased to order and declare that the Agreements dated 5th August 2005 (at Exhibits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant discussion is from paragraphs 17 to 22 which are reproduced hereinbelow:- 17 Jurisdiction connotes authority to decide. 18 The power conferred upon the High Court to issue directions, orders or writs can be exercised by the High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power. The Court exercising power under Article 226 of the Constitution can issue writs detailed under clause 1 to the person or authority situated beyond its territorial jurisdiction provided cause of action wholly or partly arises within the territorial jurisdiction of the court entertaining the Writ Petition. 19 The apex court, in the case of Kunjan Nair Sivaraman Nair Vs. Narayanan Nair (2004) 3 SCC 277 observed as under: 16. The expression cause of action has acquired a judicially settled meaning. In the restricted sense cause of action means the circumstances forming the infraction of the right or the immediate occasion for the action. In the wider senses, it means the necessary conditions for the maintenance of the suit, including not only the infraction of the right, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of this Court under Article 226 of the Constitution. The constitution does not place fetter on exercise of extraordinary jurisdiction. This Court would exercise its authority, power or jurisdiction within its territorial realm. This Court normally would not travel beyond its limits. 19. Reading Article 226(1) and (2) of the Constitution, a petition under Article 226 can be entertained before any of the High Court : i) Within whose territorial jurisdiction the person or authority against whom relief is sought resides or is situated. ii) The cause of action in respect of which relief is sought under Article 226 is wholly or in part arisen. 20. A distinction shall have to be drawn between cause of action and right of action. The petitioners may possess a right of action to institute the proceedings. To file a proceeding before a particular Court at least fraction of cause of action ought to have arisen within the precincts of that Court. 21 The issue of territorial jurisdiction in entertaining the Writ Petition revolves around Article 226(2) of the Constitution. It would be appropriate to refer to 226(2) of the Constitution. The same reads thus: 226. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight of above principles. 16. By the impugned order the Petitioners complaint inter alia regarding non-issuance of duplicate share certificate was rejected. The said demand was made on the basis of two separate agreements (i) agreement dated 5th August 2005 entered into by Petitioner No.1 with Respondent No.4 and Stemcor Sea Pvt. Ltd. and (ii) agreement dated 5th August 2005 entered into by Petitioner No.1 with Mesco Projects Limited and Stemcor Sea Pvt. Ltd. By these agreements, Petitioner No.1 purchased and acquired equity shares of MISL aggregating to 10% of the total issued share capital of MISL. Subsequently, supplemental agreement dated 28th March 2006 was executed modifying the clause regarding payment. Admittedly, the said agreements were executed at Mumbai. Thus, part of cause of action has taken place in Mumbai. 17. The Petitioners have specifically averred that the Petitioner No.1 would be able to trade with the shares in Mumbai and therefore, impugned order of ROC has affected Petitioners rights in Mumbai. The said averments have remained uncontroverted. Thus, it is clear that the consequence of the impugned order fell on the Petitioner at Mumbai where atlea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order was passed on 3rd April 2019. It is to be noted that the impugned order dated 3rd April 2019 was sent on the new registered address of the Petitioner No.1. 23. The factual position on record clearly show that although Petitioner No.1 remained absent when the hearing of the said complaint was scheduled on 28th November 2018 as they have not been served with the notice of hearing but all along they requested for another date of hearing and without granting hearing, order was passed. It is further significant to note that this is not a case where after 28th November 2018 i.e. after scheduled date of hearing the ROC has immediately passed the impugned order. In fact, the impugned order has been passed after a period of four months after the said scheduled date of hearing. Thus, there was no impediment for ROC to grant hearing to the Petitioner No.1. 24. It is further significant to note that the complaint of Petitioner No.1 is dated 1st December 2015. After submitting the said complaint, on number of occasions the Petitioner No.1 requested the ROC to fix the date of hearing and accordingly the hearing was fixed on 28th November, 2018 i.e. after a period of about three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NCLT. It is also the contention of Respondent No.4 that as far as the issue regarding non-payment of dividend is concerned, the jurisdiction is with SEBI. 28. Learned counsel appearing for the Respondent Nos. 4, 5(a) to 5(c) has relied on Parenteral Drugs (India) Ltd. (supra). Paragraph 19 of the said judgment appears to have been supporting the contention of the Petitioners that issue regarding issuance of duplicate share certificate is company matter and not a civil dispute. Thus, non-entertaining the complaint by ROC on the ground of pendency of suit appears to be contrary to the said judgment. However, we are not going into the said issue as we are remanding the matter to Respondent No.1-ROC. 29. Very substantial questions of law and fact have been raised by the parties including point regarding jurisdiction of the ROC to deal with the said complaint. It is not proper to decide the said issues at this stage for the first time. Undisputedly, the complaint was decided by ROC without giving hearing to the Petitioners. Therefore, the impugned order is liable to be quashed and set aside. 30. In view of above discussion, we pass the following order: ORDER (a) Impug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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