{"id":12680,"date":"2010-12-08T00:00:00","date_gmt":"2010-12-07T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/vishnu-manglani-anr-vs-reliance-industries-on-8-december-2010"},"modified":"2015-07-10T18:50:53","modified_gmt":"2015-07-10T13:20:53","slug":"vishnu-manglani-anr-vs-reliance-industries-on-8-december-2010","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/vishnu-manglani-anr-vs-reliance-industries-on-8-december-2010","title":{"rendered":"Vishnu Manglani & Anr vs Reliance Industries on 8 December, 2010"},"content":{"rendered":"
Delhi High Court<\/div>\n
Vishnu Manglani & Anr vs Reliance Industries on 8 December, 2010<\/div>\n
Author: Mool Chand Garg<\/div>\n
*      IN THE HIGH COURT OF DELHI AT NEW DELHI\n\n+      FAO 347-48\/2005\n                                         Reserved on : 25.11.2010\n                                        Date of Decision : 08.12.2010\n\n       VISHNU MANGLANI & ANR                             ..... Appellants\n                     Through            Mr. Pawan Mathur, Adv.\n\n                    versus\n\n       M\/S RELIANCE INDUSTRIES                                ... Respondent<\/pre>\n
                      Through           Mr. Somiran, Mr         Sidharth, Mr\n                                        R.S.Prabhu, Advs.\n\n       CORAM:\n       HON'BLE MR. JUSTICE MOOL CHAND GARG\n\n1.     Whether the Reporters of local papers may be allowed       Yes\n       to see the judgment?\n2.     To be referred to Reporter or not?                         Yes\n<\/pre>\n
3.     Whether the judgment should be reported in the Digest? Yes<\/p>\n
:      MOOL CHAND GARG,J<\/p>\n
1.     This appeal arises out of judgment\/order passed by the Addl.
\nDistrict Judge Delhi dated 02.09.2005 whereby in a suit\/plaint filed for
\ndeclaration\/cancellation of transfer deed, mandatory and permanent
\ninjunction filed by the appellant has been directed by the Addl. District
\nJudge to be returned for presentation before the Court of competent
\njurisdiction.   The impugned order has been passed on the basis of the
\nfindings returned on issue No.1 which was as follows “whether this Court
\nhas got no territorial jurisdiction to entertain the present suit for the
\nreasons stated in paragraph 2 & 3 of the written statement (preliminary
\nobjections)”.\n<\/p>\n
2.     The suit in question was filed by the appellant with the following
\nprayers:\n<\/p>\n
       “(a)  That a decree for declaration declaring the plaintiffs to be
\n       the owners of the shares, details of which are given hereunder
\n       be passed in favour of the plaintiffs and against the
\n       defendants:-<\/p><\/blockquote>\n
\n\n       Distinctive Record No.           Certificate No.    No. of\n       Nos                                                 Shares\n       ---         930251955            09195779           50<\/span>\n       ---         930252005            09195779           50<\/span>\nFAO 347\/2005                                                            Page 1 of 9<\/span>\n        133452933 -----                   06307612            50<\/span>\n       ---       907158829               08070715            50<\/span>\n\n\n       (b)    A decree for cancellation of the Transfer Deeds bearing\n<\/pre>\n
       No. 4994198, 4994199, 4994201 and 4994203 be passed in
\n       favour of the plaintiff and against the defendants and direction
\n       be issued to defendant No.3 to deliver the original share scripts
\n       detailed in para No.1 above to defendant No.2 who in turn be
\n       directed to transfer the said shares in favour of the plaintiffs
\n       and deliver the same to the plaintiffs;\n<\/p><\/blockquote>\n
       (c)   a decree for permanent injunction be passed in favour of
\n       the plaintiffs and against the defendants restraining the
\n       defendants No.1 and 2 to transfer the said shares in favour of
\n       any one else and against the defendant No.3, his servants and
\n       agents from transferring, alienating, encumbering or parting
\n       with possession of shares bearing Nos. the details of which are
\n       given below:<\/p><\/blockquote>\n
\n\n       Distinctive Record No.            Certificate No.     No. of\n       Nos                                                   Shares\n       ----        930251955             09195779            50<\/span>\n       ---         930252005             09195779            50<\/span>\n\n       Distinctive Record No.            Certificate No.     No. of\n       Nos                                                   Shares\n       133452933 ---                     06307612            50<\/span>\n       ---         907158829             08070715            50<\/span>\n\n       (d)    Cost of the suit be awarded;\n       (e)    such other orders be passed as this hon\u201fble Court deems\n       fit and proper.\"\n\n<\/pre>\n
3.     The facts in brief are that the appellants purchased 200 shares of
\nrespondent No 1 from respondent No 4 on 29.03.1993 vide intimation
\nletter No TX-29006 dated 20.03.1993 for a total consideration              of Rs
\n35,526\/- which were delivered by respondent No 4 vide bill dated
\n12.04.1993 along with transfer deeds. The appellants have stated to have
\nsent the said shares to respondent No 1 and 2 for carrying out ratification
\nin the register of members vide letter dated 27.04.1993 and having not
\nreceived any response from the respondents sent a fax message dated
\n25.09.1993 which was replied by the respondents through reply fax
\nmessage and also vide letter dated 20.12.1993 stating that the shares
\nstood transferred to respondent No 3 on transfer deeds lodged.\n<\/p><\/blockquote>\n
4.     It is thereafter appellants filed the suit in question before the District
\njudge on the ground that the respondent No 3 had no title, right or interest
\nin the said shares and also the transfer deed alleged to have been executed
\nFAO 347\/2005                                                            Page 2 of 9<\/span>
\n in favour of respondent no 3 is forged and fabricated document and hence
\nneeds to be cancelled by transferring those shares in the name of the
\nappellant.\n<\/p>\n
5.     The Respondents No 1 & 2 have contested the suit on the grounds
\nthat the registered office of the respondents is located in Mumbai, hence
\nthe courts in Delhi have no territorial jurisdiction to try the suit as no
\ncause of action arose here. Further respondents have also taken a stand
\nthat the issue relates to the rectification in the register of the shareholders
\nU\/s 155 of the Companies Act and hence either The Company Law Board
\ncan decide this issue or by the virtue of Section 10 of Companies Act , it is
\nthe Mumbai High Court or the District Courts at Mumbai U\/s 10(a) who
\nhave the jurisdiction to try the suit.\n<\/p>\n
6.     The Appellants on the other hand have submitted that the subject
\nmatter does not fall under the jurisdiction of the Companies Act inas much
\nas the jurisdiction exercised by the Company Court U\/s 155 of the Act is
\ndiscretionary and of summary nature, and if the title to the holding of the
\nshares is challenged, then the Company Court will not inquire into such a
\ndispute under Section 155 of the Act and for such an inquiry, a civil suit is
\nthe proper forum.\n<\/p>\n
7.     Further regarding the aspect that the Mumbai Courts                   have
\njurisdiction to entertain the issue as the registered office of the
\nrespondents     is   located   in   Mumbai,   appellants   contend   that     the
\nrespondents have their corporate office in Delhi and the share certificates
\nwere sent from Delhi and were delivered back to Delhi, as such a part of
\ncause of action arose in Delhi and hence this court has jurisdiction to try
\nthe suit.\n<\/p>\n
8.     On the pleadings of the parties the Addl. District Judge to whom the
\nsuit was marked for trial framed following issues:-\n<\/p>\n
       1.      Whether this court has got no territorial jurisdiction to
\n               entertain the present suit for the reasons stated in paras
\n               2 and 3 of the written statement (Preliminary
\n               Objections)?\n<\/p><\/blockquote>\n
       2.      Whether the defendants No 1 and 2 did not receive the
\n               share certificates and the transfer deeds from the
\n               plaintiff as alleged in paras 6 (i) to (iii) of the written
\n               statement (reply on merits)? If so, its effect<\/p>\n
FAO 347\/2005                                                           Page 3 of 9<\/span>\n<\/p><\/blockquote>\n
        3.      Whether defendant No 3 in connivance with other
\n               defendants forged and fabricated transfer deeds in
\n               respect of 200 shares belonging to the plaintiff as alleged
\n               in para 1 of the plaint?\n<\/p><\/blockquote>\n
       4.      To what relief, if any, are the plaintiffs entitled?\n<\/p><\/blockquote>\n
9.     The Addl. District Judge decided issue No.1 against the appellant
\nand returned the plaint for filing the same before the competent Court by
\nholding that the Court of District Judge Delhi had no jurisdiction to
\nentertain the suit. Primarily it is the finding of the Addl. District Judge
\nthat the dispute raised by the appellant is required to be adjudicated by
\nthe Company Law Board under Section 155 of the Companies Act and
\ntherefore the objection ought to have been filed before the Company Law
\nBoard. It has been observed by the Addl. District Judge that:-\n<\/p>\n
       In the present case the plaintiffs seek entering of their names in
\n       the register of shareholders which as per them should have
\n       been done but has not been done and instead the name of
\n       defendant No 3 has been entered in the register. In sum &
\n       substance the relief claimed by the plaintiffs is the rectification
\n       of register of shareholders which is covered U\/s 155 of
\n       Companies Act.\n<\/p><\/blockquote>\n
       Section 10 of Companies Act reads as follows:-
\n       Jurisdiction of courts- (1) The Court having jurisdiction under
\n       this Act shall be:-\n<\/p><\/blockquote>\n
       (a)    The High court having jurisdiction in relation to the place
\n       at which the registered office of the company concerned is
\n       situated, except to the extent to which the jurisdiction has been
\n       conferred on any district court or District courts subordinate to
\n       that High Court in pursuance of sub-section (2) and\n<\/p><\/blockquote>\n
       (b)    Where jurisdiction has been so conferred, the District
\n       Court in regard to matters falling within the scope of the
\n       jurisdiction conferred, in respect of companies having their
\n       registered offices in the district
\n       (2)<\/span>
\n       (3)<\/span><\/p>\n
       In the present case, it is the admitted case of the parties that
\n       the registered office of the defendant No 1 is situated in
\n       Mumbai.\n<\/p><\/blockquote>\n
       The Companies Act is admittedly a special enactment and the
\n       territorial jurisdiction has to be decided with reference to the
\n       special enactment. And that being so Section 20 CPC has no
\n       application.\n<\/p><\/blockquote>\n
10.    I have heard the parties. I have examined the written synopsis filed
\nby respondent. No written synopsis has been filed by the appellant It may<\/p>\n
FAO 347\/2005                                                           Page 4 of 9<\/span>
\n be observed here that Section 155 of the Companies Act has come into
\nbeing after the amendment of Section 111 of the Companies Act w.e.f.
\n31.05.1991. According to the aforesaid provision the Company Law Board
\nperforms the functions that were here-to-before performed by the Court of
\nCivil Judicature under Section 155.      As per the aforesaid provisions of
\nCompany Law Board “It is empowered to make orders directing rectification
\nof the Company\u201fs register as to damages, costs and incidental and
\nconsequential orders. It may decide any question relating to the title of any
\nperson who is a party before it to have his name entered upon the
\ncompany\u201fs register; and any question which it is necessary or expedient to
\ndecide, it may make interim orders. Failure to comply with any order visits
\nthe company with a fine.     In regard to all these matters it has exclusive
\njurisdiction (except under the provisions of the Special Court Act). Its orders
\nare appealable. The CLB, further, is a permanent body constituted under a
\nstatute.   The CLB performs functions which are administrative, as under
\nSections 224 and 269, and curial, as under Section 111. In exercising its
\nfunction under Section 111 the CLB must, and does, act judicially. It cannot
\nbe said to be anything other than a court, particularly for the purpose of
\nSection 9-A of the Special Court Act.”\n<\/p>\n
11.    The aforesaid observations were made by the Supreme Court in the
\njudgment delivered by it in the case of Canara Bank Vs. Nuclear Power
\nCorporation of India Ltd. & Ors.1995 Supp (3) SCC 81.          In view of the
\naforesaid, the issues raised by the appellant are required to be determined
\nby the Company Law Board.\n<\/p>\n
12.    Another aspect of the matter is as to whether Delhi Courts have the
\njurisdiction to try the disputes or not.     In this regard, in the case of
\nPandian Graphities (India) Ltd. Vs Louvumi Lakshmi and another (1996) 87
\nComp. cases 323 (AP), the Apex Court has held that the location of the
\nregistered office of the company has to be taken into consideration for
\ndeciding the question of territorial jurisdiction with reference to the special
\nstatue, and held that since the registered office of the company is situated
\nin Madras, the High Court of Madras has the          jurisdiction to entertain
\nmatters relating to Company Court i.e. Company Law Board after the
\namendment of Section 111 of the Act.\n<\/p>\n
FAO 347\/2005                                                          Page 5 of 9<\/span><\/p>\n
 13.    At this juncture, it may also be relevant to take note of Section 155
\nof the Company Act, which reads as under:\n<\/p>\n
       “155 : Power of Court to rectify register of members–
\n       (1) If–\n<\/p><\/blockquote>\n
       (a) the name of any person–\n<\/p><\/blockquote>\n
       (i) is without sufficient cause, entered in the register or
\n       members of a company, or\n<\/p><\/blockquote>\n
       (ii) after having been entered in the register, is, without
\n       sufficient cause, omitted therefrom, or\n<\/p><\/blockquote>\n
       (b) default is made, or unnecessary delay takes place, in
\n       entering on the register the fact of any person having
\n       become, or ceased to be, a member:\n<\/p><\/blockquote>\n
       the person aggrieved, or any member of the company, of the
\n       company, may apply to the Court for rectification of the
\n       register.\n<\/p><\/blockquote>\n
       (2) The Court may either reject the application or order
\n       rectification of the register; and in the latter case, may
\n       direct the company to pay the damages, if any, sustained
\n       by any party aggrieved.\n<\/p><\/blockquote>\n
       In either case, the Court in its discretion may make such
\n       order as to costs as it thinks fit.\n<\/p><\/blockquote>\n
       (3) On an application under this Section, the Court\n<\/p><\/blockquote>\n
       (a) may decide any question relating to the title of any
\n       person who is a party to the application to have his
\n       name entered in or omitted from the register whether
\n       the question arises between members or alleged
\n       members, or between members or alleged members on
\n       the one hand and the company on the other hand; and\n<\/p><\/blockquote>\n
       (b) generally, may decide any question which it is necessary
\n       or expedient to decide in connection with the application for
\n       rectification.\n<\/p><\/blockquote>\n
       (4) From any order passed by the Court on the application,
\n       or on any issue raised therein and tried separately an
\n       appeal shall lie on the grounds mentioned in section 100 of
\n       the Code of Civil Procedure, 1908 (5 of 1908)–\n<\/p><\/blockquote>\n
       (a) if the order be passed by a District Court, to the High
\n       Court;\n<\/p><\/blockquote>\n
       (b) if the order be passed by a single Judge of a High Court
\n       consisting of three or more Judges, to a Bench of that High
\n       Court.\n<\/p><\/blockquote>\n
       (5) The provisions of sub-sections (1) to (4) shall apply in
\n       relation to the rectification of the register of debentures
\n       holders as they apply in relation to the rectification of the
\n       register of members.”\n<\/p><\/blockquote>\n
FAO 347\/2005                                                        Page 6 of 9<\/span><\/p>\n
 13.    Interpreting the aforesaid provisions, the Apex court, in the case of
\nAmmonia Supplies Corporation (P) Ltd. Vs Modern Plastic Containers Pvt.
\nLtd. AIR 1998 SC 3153.\n<\/p>\n
       “The proviso gave discretion to the court to direct an issue of
\n       law to be tried, if raised. By this deletion, submission is that
\n       the Company Court now itself has to decide any question
\n       relating to the rectification of the Register including the law and
\n       not to send one to the civil court. There could be no doubt any
\n       question raised within the peripheral field of rectification, it is
\n       the court under Section 155 alone which would have exclusive
\n       jurisdiction. However, the question raised does not rest here. In
\n       case any claim is based on some seriously disputed civil
\n       rights or title, denial of any transaction or any other basic
\n       facts which may be the foundation to claim a right to be a
\n       member and if the court feels such claim does not
\n       constitute to be a rectification but instead seeking
\n       adjudication of basic pillar some such facts falling outside
\n       the rectification, its discretion to send a party to seek his
\n       relief before the civil court first for the adjudication of
\n       such facts, it cannot be said such right of the court to have
\n       been taken away merely on account of the deletion of the
\n       aforesaid proviso.\n<\/p><\/blockquote>\n
       Sub-section (1)(a) of Section 155 refers to a case where the
\n       name of any person is without sufficient cause entered or
\n       omitted in the Register of Members of a company. The word
\n       “sufficient cause” is to be tested in relation to the Act and the
\n       Rules. Without sufficient cause entered or omitted to be entered
\n       means done or omitted to do in contradiction of the Act and the
\n       Rules or what ought to have been done under the Act and the
\n       Rules but not done. Reading of this sub-clause spells out the
\n       limitation under which the court has to exercise its jurisdiction.
\n       It cannot be doubted that in spite of exclusiveness to decide all
\n       matters pertaining to the rectification it has to act within the
\n       said four corners and adjudication of such matters cannot be
\n       doubted to be summary in nature. So, whenever a question is
\n       raised the court has to adjudicate on the facts and
\n       circumstances of each case. If it truly is rectification, all
\n       matters raised in that connection should be decided by the
\n       court under Section 155 and if it finds adjudication of any
\n       matter not falling under it, it may direct a party to get his right
\n       adjudicated by a civil court.”\n<\/p><\/blockquote>\n
14.    The Addl. District Judge has taken note of the provisions contained
\nunder Section of the Companies Act as also the judgment delivered by the
\nApex Court in the Case of Pandian Graphities (India) Ltd. Vs Louvumi
\nLakshmi and another, Canara Bank Vs. Nuclear Power Corporation of India
\nLtd. & Ors (supra) and has held that as opined by the Hon\u201fble Supreme
\nCourt in Canara Bank\u201fs case the word \u201eCourt\u201f must be read in the context<\/p>\n
FAO 347\/2005                                                           Page 7 of 9<\/span>
\n in which it has been used in the Statute. And it has been observed that
\nthe \u201eCourt\u201f means CLB hereinafter which now exercises the powers that
\nwere exercisable by the Court u\/s 155. It is entitled to direct rectification
\nof register and the payment of damages by the company. It is entitled to
\ndecide any question relating to the title of any person who is a party to the
\napplication to have his name entered in or omitted from the register and to
\ndecide any question which it considers necessary or expedient in this
\nconnection.\n<\/p>\n
15.    The Court has also taken note of the judgments delivered by the
\nHon\u201fble Supreme Court in Ammonia Supplies Corporation (P) Ltd. Vs.
\nModern Plastic Containers Pvt. Ltd. AIR 1998 Supreme Court 3153 where
\nalso it has been held that the Court referred to under S.155 read with S.2
\n(11) and S.10 of the Companies Act, it is the company Court alone which
\nhas exclusive jurisdiction. And the jurisdiction of the Court u\/s 155 to the
\nextent it has exclusive, the jurisdiction of civil Court is impliedly barred.\n<\/p>\n
16.    It is in these circumstances, the Addl. District Judge decided issue
\nNo.1 against the appellant and held that the Court of Addl. District Judge
\nDelhi neither has the territorial jurisdiction nor the subject matter of
\njurisdiction to try and entertain the present suit and accordingly has
\ndirected the Registry to return the plaint to the appellant for presentation
\nbefore the Court of competent jurisdiction.\n<\/p>\n
17.    The learned counsel for the appellant has relied upon a judgment of
\na full Bench of the Apex Court given in the case of M\/s. Ammonia Supplies
\nCorporation Private Ltd. Vs. M\/s. Modern Plastic Containers (Pvt.) Ltd. & Ors.
\nAIR 1994 DELHI 51 where it has been held that:\n<\/p>\n
       The jurisdiction exercised by the Company Court under S.155
\n       of the Act is discretionary and summary in nature. In exercise
\n       of discretionary and summary jurisdiction the Company Court
\n       can decline to entertain petition involving disputed and
\n       complicated questions requiring examination of extensive oral
\n       and documentary evidence. The remedy of suit for adjudication
\n       of disputes relating to title to shares is not barred.\n<\/p><\/blockquote>\n
18.    On the other hand, respondents have also relied upon a Single
\nBench judgment of Rajasthan High Court in the case of Eternit Everest Ltd.
\nVs. Neelmani Bhartiya AIR 1999 RAJASTHAN 235 wherein it has been
\nobserved:\n<\/p>\n
FAO 347\/2005                                                            Page 8 of 9<\/span><\/p>\n
        “10. The relief claimed by the plaintiff that he should be
\n       declared to be the owner of the above 300 shares and duplicate
\n       shares be issued to him cancelling the transfer of these shares
\n       in favour of the transferees. All other reliefs are consequential.
\n       In the circumstances of the case when the plaintiff himself has
\n       stated that he had signed the transfer deeds and kept them
\n       along with the share certificates and ultimately it is found that
\n       some one has come to possess the transfer deeds and original
\n       shares and put them up before the Company for the shares
\n       being registered in their names, it is clearly a case of
\n       cancellation of such registration of shares in the name of the
\n       transferees obtained by misrepresentation or fraud or any other
\n       reason. There is no question of declaration because when the
\n       register is rectified, automatically, the shares would revert back
\n       to the plaintiff. Moreover, the transferees would be necessary
\n       parties to suit for any such declaration and they are not
\n       impleaded.”\n<\/p><\/blockquote>\n
19.    In the light of the law as discussed above and particularly
\nobservation made by the Apex Court in the case of Canara Bank Vs.
\nNuclear Power Corporation of India Ltd. & Ors. the jurisdiction is that of the
\nCompany Law Board to decide the lis which has been raised by the
\nappellant, of course it is the Board which can decide even to direct the
\nparties to approach the Civil Court in case they find that the claim was
\nbased upon some seriously disputed civil rights or title. However, before
\nsuch a power is exercised by the Company Law Board and directions are
\ngiven to the parties to approach the Civil Court it cannot be said that civil
\nCourt will have the jurisdiction which is sought to be pressed in service by
\nthe appellant. Consequently, the appeal filed by the appellant is dismissed
\nwith no orders as to costs.\n<\/p>\n
20.    TCR, if summoned, be sent back along with a copy of this order.\n<\/p>\n
                                                    MOOL CHAND GARG, J
\nDECEMBER 08, 2010
\n\u201esg\/anb\u201f<\/p>\n
FAO 347\/2005                                                          Page 9 of 9<\/span>\n <\/p>\n","protected":false},"excerpt":{"rendered":"
Delhi High Court Vishnu Manglani & Anr vs Reliance Industries on 8 December, 2010 Author: Mool Chand Garg * IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO 347-48\/2005 Reserved on : 25.11.2010 Date of Decision : 08.12.2010 VISHNU MANGLANI & ANR ….. Appellants Through Mr. Pawan Mathur, Adv. versus M\/S RELIANCE INDUSTRIES […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[14,8],"tags":[],"class_list":["post-12680","post","type-post","status-publish","format-standard","hentry","category-delhi-high-court","category-high-court"],"yoast_head":"\nVishnu Manglani & Anr vs Reliance Industries on 8 December, 2010 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/vishnu-manglani-anr-vs-reliance-industries-on-8-december-2010\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Vishnu Manglani & Anr vs Reliance Industries on 8 December, 2010 - 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