Andhra Pradesh High Court - Amravati
Chakka Adhipathi Rao vs Grandhi Seshamamba Died on 18 June, 2024
APHC010478122012
IN THE HIGH COURT OF ANDHRA
PRADESH
[3365]
AT AMARAVATI
(Special Original Jurisdiction)
TUESDAY ,THE EIGHTEENTH DAY OF JUNE
TWO THOUSAND AND TWENTY FOUR
PRESENT
THE HONOURABLE JUSTICE DR V R K KRUPA SAGAR
FIRST APPEAL NO: 1009/2012
Between:
Cheka Aadipathirao ...APPELLANT
AND
Grandhi Seshamambadied and Others ...RESPONDENT(S)
Counsel for the Appellant:
1. RAJA REDDY KONETI
Counsel for the Respondent(S):
1. S SATYANARAYANA MOORTHY
The Court made the following:
2
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
APHC010157102013
IN THE HIGH COURT OF ANDHRA
PRADESH
[3365]
AT AMARAVATI
(Special Original Jurisdiction)
TUESDAY ,THE EIGHTEENTH DAY OF JUNE
TWO THOUSAND AND TWENTY FOUR
PRESENT
THE HONOURABLE JUSTICE DR V R K KRUPA SAGAR
TRANSFER APPEAL NO: 515/2013
Between:
Chakka Adhipathi Rao ...APPELLANT
AND
Grandhi Seshamamba Died and Others ...RESPONDENT(S)
Counsel for the Appellant:
1.
Counsel for the Respondent(S):
1.
The Court made the following:
3
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
THE HON'BLE JUSTICE Dr. V.R.K.KRUPA SAGAR
APPEAL SUIT No. 1009 of 2012 and TRANSFER APPEAL
SUIT .No.515 of 2013
COMMON JUDGMENT:
1. Having lost his claims and contentions in two related suits,
the appellant herein preferred these two appeals under section 96
of the CPC. The dispute revolves around the ownership over
certain shares of the erstwhile Vysya Bank Limited (presently
Kotak Mahindra Bank).
2 Sri Grandhi Varaprasadarao and Smt. Grandhi Seshamamba
are husband and wife to each other. Sri Cheka Aadipathirao/
appellant is closely related to them. Sri Grandhi Varaprasadarao
purchased 1,250 shares of Vysya Bank. Several years thereafter,
there was a rights issue that was announced by the bank. Sri
Grandhi Varaprasadarao did not purchase the shares offered in
the rights issue and he renounced his rights in favour of his wife/
Smt. Grandhi Seshamamba. She claims that since her husband
renounced the rights issue in her favour, she paid the sale
consideration and purchased the plaint schedule mentioned 1250
shares. However, the claim of Sri Cheka Aadipathirao is that
these rights issue shares were jointly purchased by Grandhi
Seshamamba as the first applicant and himself as the second
applicant. It is this claim of him that has given rise to the litigation
in the courts.
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
3. Sri Cheka Aadipathirao filed O.S.No.556 of 1993 before
learned III Additional Munsif Magistrate, Guntur as against Smt.
Grandhi Seshamamba/ D1 and Messrs. Vysya Bank Limited/ D2.
He claimed that by forging his signatures Grandhi Seshamamba
was attempting to sell away the shares. He sent telegrams to the
bank and finding no response he even went to Bangalore and
met the officers of D2 Bank and finding no solution with a view to
prevent the alleged attempts of Grandhi Seshamamba in sale and
transfer of the shares, he filed the suit seeking perpetual
injunction restraining them from affecting transfer of the shares
mentioned in the plaint schedule. While so, Smt. Grandhi
Seshamamba filed O.S.No.44 of 1994 before learned IV
Additional Senior Civil Judge, Guntur stating that with her own
funds, she alone purchased the rights issue shares and Sri
Cheka Aadipathirao had nothing to do with them and she has
been even receiving dividends from her shares exclusively and
Sri Cheka Aadipathirao with hand - in - glove with the officers of
Vysya Bank surreptitiously got the name of Sri Cheka
Aadaipathirao interpolated the share certificates and as a
consequence of it the shares sold through D3 and D4 could not
materialize and therefore she prayed for declaration that the
shares mentioned in the plaint schedule exclusively belonged to
her and Sri Cheka Aadipathirao/ D1 therein does not have any
rights over them and she also prayed for consequential injunction
restraining D3 and D4 therein from selling or auctioning or in
anyway dealing with plaint schedule share certificates which were
in their custody. She also prayed for recovery of Rs.38,600/-
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
allegedly due from D3 towards the balance of sale proceeds of
400 shares. In that O.S.No.44 of 1994 also, Vysya Bank limited is
shown as D2.
4. Since the dispute in both the suits have common facts and
law, O.S.No.556 of 1993 filed by Sri Cheka Aadipathirao was
transferred to the court of IV Additional Senior Civil Judge, Guntur
where it was renumbered as O.S.No.726A of 2008. During the
pendency of the suits, Sri Grandhi Seshamamba died survived by
her husband Sri Grandhi Varaprasadarao. Accordingly, he was
brought on record in both the suits and he was arrayed as 2 nd
plaintiff in O.S.No.44 of 1994 while he was arrayed as D3 in
O.S.No.726A of 2008.
5. In O.S.No.726A of 2008 filed by Sri Cheka Aadhipathirao,
D1/Smt. G.Seshamamba filed her written statement putting forth
her case which is similar to the facts narrated by her in her
O.S.No.44 of 1994 and she sought dismissal of the suit. D2 in
that injunction suit is Vysya Bank Limited and it filed its written
statement narrating its version that the share certificates were
issued in the sole name of Smt.G.Seshamamba and it was a
mistake that took place during computerization and on realizing it,
it carried out the corrections and included the name of Sri Cheka
Aadipatirao and it denied the allegation of collusion and sought
dismissal of the suit. Sri G.Varaprasadarao who was brought on
record as legal representative of D1/ Smt. G.Seshamamba stood
by the written statement filed by his wife.
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
6. In O.S.No.44 of 1994 filed by Smt. G.Seshamamba, Sri
Cheka Aadipathirao is D1 and he filed his written statement
wherein he reiterated his stand taken in the other suit filed by him.
D2 therein is Vysya Bank Limited and it filed a separate written
statement reiterating the same version it mentioned in the other
suit. D3 filed a written statement stating that it is not a necessary
party and it only worked as an intermediator and acted as a
consultancy on commission facilitating transfer and sale and
purchase of shares. It claimed that Smt. G.Seshamamba is not
entitled for recovery of any money from it and in fact she herself
owed money for the services rendered by D3. D4 did not file any
written statement.
7. Learned IV Additional Senior Civil Judge consolidated both
the suits and conducted a common trial and passed a common
judgement on 13.02.2012. By that judgement, it dismissed
O.S.No.726A of 2008 filed by Sri Cheka Aadhipathirao. Aggrieved
of it, Sri Cheka Aadhipathirao filed initially an appeal before
learned Additional District Judge, Guntur which was thereafter
transferred to this court and it is Tras.A.S.No.515 of 2013.
Learned trial court allowed O.S.No.44 of 1994 of Smt.Grandhi
Seshamamba by granting declaratory relief as well as injunction
relief but it dismissed the money claim made by her as against
D3. Challenging that judgement, Sri Cheka Aadipathirao/ D1 in
the suit filed A.S.No.1009 of 2012. Thus, both the appeals are
before this court and both are preferred by Sri Cheka
Aadipathirao.
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
8. In A.S.No.1009 of 2012, R3 is shown as Vysya Bank
Limited. Subsequently by virtue of orders dated 26.09.2023 in
I.A.No.1 of 2023, Kotak Mahindra Bank represented by its
Managing Director, Mumbai is substituted since Vysya Bank
Limited was merged with Kotak Mahindra Bank.
9. Sri Raja Reddy Koneti, the learned counsel for appellant in
both the appeals and Sri Satyanarayana Moorthy, the learned
counsel appearing for R2/Sri Grandhi Varaprasadarao in
A.S.No.1009 of 2012 and who is also R3 in Tras.A.S.No.515 of
2013 submitted their arguments.
10. Before the trial court based on the pleadings the following
issues were settled in O.S.No.726A of 2008: -
1. Whether the plaintiff is entitled for perpetual injunction as
prayed for?
2. To what relief?
In O.S.No.44 of 1994, the following issues were settled by the
trial court: -
1. Whether the plaintiff is entitled for declaration that D1
does not have half share in the suit schedule and if so,
she is entitled for consequential injunction and for
recovery of Rs.38,600/- from D3 being the balance
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
amount of sale profits of 400 shares purchased from the
plaintiff?
2. Whether the suit is bad for mis-joinder and non-joinder
of parties?
3. To what relief?
11. For both the suits, common evidence was recorded in
O.S.No.44 of 1994. The original plaintiff/ Smt. G.Seshamamba
testified as PW.1 and her husband Sri G.Varprasadarao testified
as PW.2 and two other witnesses testified as PW.3 and 4. Among
whom PW.4 is the very brother of Sri Cheka Aadipathirao. Exs.A1
to A51 were marked. It has to be mentioned that Smt.
G.Seshamamba /PW.1 could not be tendered for cross-
examination on the grounds that she was severely sick. In those
circumstances, the learned trial court by an order dated
16.03.2009 eschewed her evidence. It is needless to mention that
sometime thereafter PW.1 died.
12. As against the said evidence, Sri Cheka Aadhipatirao
testified as DW.1 and got examined a witness Sri S.
Venkateswara Rao as DW.2. The corporate secretary of Vysya
Bank Limited testified as DW.3. Exs.B1 to B8 were marked.
13. By virtue of certain contentions raised by D2 and D3 in
O.S.No.44 of 1994, the issue concerning mis-joinder and non-
joinder of parties sprung up and the learned trial court after
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
assessing the material on record held that the suit was validly
constituted and there was no mis-joinder or non-joinder of parties.
That finding became final as nothing in that regard has come up
before this court.
14. On assessment of the entire evidence adduced on both
sides and after considering the rival contentions, learned trial
court stated that Smt. G.Seshamamba alone purchased 1250
shares mentioned in the plaint schedule and she alone paid
consideration and share certificates were issued in her favour and
that Sri Cheka Aadipathirao had no rights and claims over those
shares. The Vysya Bank Limited raised a contention through its
pleadings and evidence of DW.3 that though the share
certificates were issued in the name of Smt.G.Seshamamba, the
same was incorrect and shares were applied jointly by Smt.
G.Seshamamba and Sri Cheka Aadipathiaao and during the
process of computerisation an error took place and till that error
was detected the shares were transferred and on detection of
such error they refused for transfer of shares. On assessment of
evidence, learned trial court recorded that the said contention
was not proved. The contention of Sri Cheka Aadipathirao that he
had also paid his part of consideration for purchase of plaint
schedule shares and unlawfully Smt.G.Seshamamba was raising
a claim. On assessment of evidence, this contention was
disbelieved by the learned trial court. Accordingly, it decreed
O.S.No.44 of 1994 in favour of Sri G.Varaprasadarao who was
representing the estate of his wife late G.Seshamamba as
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
absolute owner of plaint schedule shares and granted
consequential perpetual injunction against D2, D3 and D4
restraining them from dealing with the plaint schedule shares
without prejudice to their rights to receive any amount if at all due
from the plaintiff and this relief was granted limiting it to the
shares that were available by the time of filing of the suit. It
dismissed O.S.No.44 of 1994 to the extent of the money claim for
Rs.36,000 on the grounds that there is no relevant evidence
available on record. It dismissed O.S.No.726A of 2008.
15. In A.S.No.1009 of 2012 (appeal as against judgment in
O.S.No.44 of 1994), the memorandum of grounds of appeal
allege that
• That the learned trial court did not consider the material on
record appropriately
• That the name of appellant/ Cheka Aadhipathirao was also
there in the share certificates and burden lies on R1 and R2
that they alone are entitled for the shares
• The bank being statutory body performed its public
functions without any manipulations and there could not be
any manipulations in its affairs
• Smt.G.Seshamamba did not give her evidence and
adverse inference ought to have been drawn
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
• That the learned trial court erred in rejecting the evidence
of DW.3 and there was no proper evidence to prove fraud
and collusion alleged in the plaint
• It was the duty of the bank to correct any mistakes and it
had no need to issue notice to anyone before correcting its
mistakes and the learned trial court erred in not considering
these
• Ex.B1 is the joint application made by him and the co-
sharer whereunder they sought allotment of shares and
that is the sole criteria to decide the dispute and the
findings of the learned trial court in this regard are
perverse. The observations of the learned trial court
attributing inaction on part of this appellant cannot be a
ground to negative his contentions
16. In Tras.A.S.No.515 of 2013 (appeal as against judgment in
O.S.No.726A of 2008) in the memorandum of grounds of appeal
it is urged that
• Learned trial court committed errors in considering oral as
well as documentary evidence
• It ought to have held that the appellant and R1 hold equal
rights over the plaint schedule shares
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
• The evidence of DW.3 should have been properly
considered as there was nothing contrary to that brought on
record by Smt.G.Seshamamba
• Trial court committed errors on facts and law and it ought
not to have dismissed the suit
17. Sri Raja Reddy Koneti, the learned counsel for appellant
argued that the evidence of DW.3 and Exs.B1 to B8 should have
been considered appropriately in terms of Sections 32, 34 and
114 of the Indian Evidence Act. The trial court ought to have
relied upon the evidence adduced by the bank and it failed in
doing so and therefore the impugned judgements shall be set
aside.
18. However, the main trust of the argument of Sri Raja Reddy
Koneti, the learned counsel for appellant in both the appeals is
that the trial court had no subject matter jurisdiction as well as
territorial jurisdiction. According to the learned counsel, the
National Company Law tribunal alone had jurisdiction to decide
the dispute involved in the suit. Learned Counsel refers to
sections 10 and 10E of the Companies Act, 1956 and submits
that if at all there is jurisdiction for the court the jurisdiction was
vested with the High Court or the District Court but in no case, it
was vested with a senior civil judge. Sri Raja Reddy Koneti, the
learned counsel further submits that in the case at hand, the
registered office of Vysya Bank Limited is at Bangalore of
Karnataka state and therefore either the High court or the
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
designated District court at Bangalore alone had territorial
jurisdiction but the courts at Guntur had no jurisdiction. Since the
trial court lacked jurisdiction in every respect, the appeals shall be
allowed and the impugned judgement shall be set aside. For
these contentions, learned counsel places reliance on Vishnu
Manglani V. M/s Reliance Industries1 of Hon'ble Delhi High
court. That was a case where Sri Vishnu Manglani allegedly
purchased 200 shares of Messrs. Reliance industries through R4
therein and thereafter he sent the shares to R1 and R2 for
carrying out ratifications in the relevant registers and since that
was not done and rights of R3 were alleged, Sri Vishnu Manglani
filed the suit for declaration seeking cancellation of certain
transfer deeds and for mandatory and permanent injunction for
the purpose of delivery of original share scripts to him and with
further directions to record the transfer of shares in his favour.
When the civil suit was filed before learned Additional District
Judge, Delhi the question about territorial jurisdiction had come
up and the learned Additional District Judge recorded that the
registered office of R1 company was located at Mumbai and
therefore courts of Mumbai alone had jurisdiction and courts at
Delhi had no jurisdiction. It also recorded that since the essential
dispute is with reference to rectification in the register of the
shareholders, section 155 of the Companies Act applies and only
the company law board alone could decide the issue by virtue of
section 10 of the Companies Act and in terms of section 10, the
High court at Mumbai or the District Court at Mumbai alone had
2010 SCC Online Del 4355
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
the subject matter jurisdiction. That was challenged before the
Hon'ble Delhi High Court by Sri Vishnu Manglani and the
challenge was negatived and thus the reasons and conclusions
arrived at by the Additional District Judge were approved. One of
the contentions raised was that a title dispute could be decided
only by civil courts. Disagreeing with that it was held that in terms
of section 155 it is the company court which had to decide as it
had a discretion either to decide the dispute or to relegate the
parties to go to civil court for adjudication. Therefore, parties by
themselves cannot circumvent that and on their own litigate the
matter before civil court. Hon'ble Delhi High court stated that in a
matter of the nature available before it, the registered office of the
company is a place where the matter had to be litigated.
19. As against those submissions, Sri S.Satyanarayana
Moorthy, the learned counsel for R1 and R2 vigorously contended
that the aspects concerning territorial jurisdiction and subject
matter jurisdiction have not been pleaded and argued in both the
suits before the trial court by any of the parties and no issues
were settled and no evidence was adduced and that no decision
was invited. Learned counsel further submits that the
memorandum of grounds of appeal in both the appeals have not
even whispered this jurisdiction aspects and for the first time
during arguments, the appellant raised these aspects finding no
strength to win the matter on the material available on record.
Learned counsel submits that the National Company Law tribunal
came into existence in the year 2003 and the litigation before the
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
trial court pertains to the year 1993 and 1994 and therefore the
arguments raised on behalf of appellant have no force. Learned
counsel contends that the jurisdiction of the civil courts was never
ousted and the matter is governed by section 9 of the CPC as the
question involved in the suit is not about rectification of entries in
the register but it is about ownership of shares about which the
company courts have nothing to say. Learned Counsel further
contended that even if it is assumed that the company courts
have jurisdiction the law has been that if complicated questions of
fact or law are involved, they could always be relegated to civil
courts for adjudication and for that one need not first move the
company law courts. Learned Counsel cited
1. K. Ravinder Reddy V. Alliance Business School2 of the
Hon'ble High Court of Karnataka
2. N.Ramji V. Ashwath Narayan Ramji: Sundaram Finance
Limited3 of the Hon'ble High Court of Madras.
In both these rulings, jurisdiction of civil court was upheld
essentially on the premise that the facts on record indicated
serious disputed questions of title and such dispute had to be
decided not by the company court under company law but only by
the civil court. Learned counsel further argued that the learned
2016 Lawsuit (Kar) 1516 (DB)
2017 Lawsuit (Mad) 813
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
trial court appropriately exercised its jurisdiction, and it did not
lack territorial jurisdiction since cause of action arose at Guntur.
That the dispute raised is a dispute that is amenable under
section 9 CPC and there is no exclusion of civil court's jurisdiction
and therefore the contentions on subject matter jurisdiction is
misplaced and seeks dismissal of the appeals.
20. Therefore, the following points fall for consideration: -
1. Whether trial court had no subject matter jurisdiction to
decide the lis?
2. Whether the trial court had no territorial jurisdiction to
decide the lis?
3. Whether the impugned judgement of the trial court in
declaring the ownership over shares is erroneous on facts
or law?
The evidence of Sri G.Varaprasadarao/ PW.2 that he owns
1250 shares of Vysya Bank and he has been holding them for
several years and that in the year 1985 the bank announced
rights of 1:1 for the shareholders is a matter that has been never
disputed at the trial as well as here.
21. The evidence of PW.2 is that he renounced his rights in
favour of his wife/ Smt.G.Seshamamba and he funded her and
accordingly she purchased the plaint schedule mentioned 1250
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
shares at the rate of Rs.10/- per share. According to him, she
made an application and signed it for herself and he also signed it
because he relinquished his rights. Exs.A11 to A17 are the share
certificates issued by Vysya Bank Limited. That they are the
copies of share certificates and what is printed therein is not
disputed. These share certificates indicate that those respective
shares are held by Smt.G.Seshamamba alone. Section 84(1) of
Companies Act, 1956 states that a certificate, under the common
seal of the company, specifying any shares held by any member,
shall be prima facie evidence of the title of the member of such
shares. Therefore, prima facie title of Smt.G.Seshamamba over
the plaint schedule properties is a matter of legal presumption
also. DW.3/ the company secretary for Vysya Bank Limited in his
cross-examination admitted that the plaint schedule share
certificates are computerized. He was questioned about the
method of knowing whether certain shares are held by a single
holder or joint holder. His answer was that to know whether there
is single shareholder or joint share holder there are three
registers that are available namely: -
1. Share allotment register
2. Register of members
3. Specimen signature register.
22. Ex.A45 is shown to him. He said that it is a true extract of
the original share allotment register and that was issued by his
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
Bank less than 3 months prior to himself giving evidence in the
court. He verified Ex.A45 and stated that the share allotment
register indicates that Smt.G.Seshamamba is the sole
shareholder. Thus he admits that there is no joint shareholder for
the plaint schedule shares. Thus, the evidence on record clearly
established Smt.G.Seshamamba as the sole shareholder for the
plaint scheduled shares. This is contended to be incorrect both by
the appellant as well as by the bank. The contention of the
appellant is based on Ex.B1. It is a copy of composite application
form. According to appellant/DW.1 it was signed by himself as
well as Smt.G.Seshamamba as they are joint shareholders. A
perusal of it indicates Sri G.varaprasadarao/ the husband of
G.Seshamamba relinquished his rights over the rights issue
shares and signed it. It contains the names of G.Seshamamba
and Cheka Aadhipathirao as joint applicants and it bears the
signatures of both of them. Appellant also relies on Ex.B4. It is a
certified true copy issued by Vysya Bank containing particulars of
shareholders and specimen signatures. It also bear the
signatures of both the shareholders. The contention of
Seshamamba and the evidence of her husband as PW.2 has
always been that the signatures of appellant were brought into
these documents by manipulation and collusion between the
appellant and the bank. It is in the context of the said contention
these documents are to be evaluated. Sri Cheka Aadipathirao/
appellant deposing as DW.1 stated that by the time of making this
application for rights issue in the year 1985 he was a student.
One has to see in Ex.B1, where it is mentioned that he is doing
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
business. The learned trial court recorded that the original of
Ex.B1 was not produced which remains a fact. DW.3 was asked
about original and he said that it was given to one Mr.P.Srinivas
Rao of his bank for production of the original in another case and
thereafter it was misplaced. Admittedly the said P.Srinivas Rao
was not examined. Thus, misplacement of original of Ex.B1 which
was to be proved through P.Srinivasa Rao did not materialise.
Thus, there is no evidence on record to see how the secondary
evidence could be brought on record. Coming to Ex.B4, the
learned trial court observed that while this page contains cut and
pasted signatures of all other shareholders, only for the disputed
shares it was not so and it directly contained signatures on the
document. DW.3 who was expected to give appropriate answer in
explaining this had failed to give any explanation. In such
circumstances, the learned trial court recorded that there was
manipulation and the contention of G.Seshamamba is correct.
Apart from this, from the evidence, the learned trial court recorded
that even from the very evidence of this appellant/ DW.1 since
1985 till 1993 dividends were always received by Seshamamba
and never by the appellant. The evidence of DW.1 was that till
about the year 1993 he was in physical possession of the original
share certificates and it was only about an year earlier to the filing
of the suit, Seshamamba obtained them from him for certain
verifications. If one accepts this evidence, it is crystal clear that
for about 8 years, this appellant was in physical possession of the
share certificates. DW.1 admitted that while the share certificates
were in his hands he had observed that they bear the name of
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
Seshamamba alone and his name was not printed. He admitted
that he never took any steps for their rectification. His evidence
does not indicate him questioning Seshamamba or the bank
officers in this regard. DW.1 admitted that he did not issue notice
to Seshamamba or the bank in this regard. He admitted that he
never raised a claim with Seshamamba seeking for his share of
dividends in all these years. This inaction on his part indicates
improbability of his. The contention of appellant is that his inaction
has no legal relevance. That is misplaced. Had he been one of
the true applicants for shares, he would have certainly taken
steps in that regard. The very fact that he did not take any steps
for rectification is indicative of the fact that the share certificates
were never available with him and he was not a joint applicant.
Coming to the contentions of Vysya Bank and evidence of DW.3
that they have been accepting share transfers made on behalf of
Seshamamba and after sometime, they had realised that there
was a computer mistake by which they recognized that the name
of the joint applicant as a joint share holder was missing from the
share certificate. If that be the case it was entitled to affect
rectifications. However, the bare minimum that is required was to
inform the parties affected by it. The written statement of the bank
and the evidence of the bank and the evidence of DW.3 makes it
crystal clear that after realising the alleged computer mistake they
did not inform either of the shareholders and they carried out
corrections on their own on the certificates that came up for
transfer. It is this evidence that impressed the learned trial court
to hold that it was a matter of manipulation by which Ex.B4 was
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
brought into existence. How it is incorrect is to be explained by
the appellant. The only contention raised in this regard is that in
terms of sections 34, 32 and 114 of Indian Evidence Act, 1872
the records maintained by the bank shall be presumed to be
correct as they were made in the due course of business. In the
opinion of this court, this contention is pale and cannot be
sustained. When the witness was asked to explain the facts, he
was not even able to say the date and the method by which they
were able to detect the alleged mistake. When Ex.A series share
certificates were issued in the year 1985 and according to DW.3
they were by then itself computerised and when admittedly they
have been paying dividends only to Seshamamba for all the 8
years and when they admittedly acted upon the transfer of certain
shares made exclusively by Seshamamba it is for them to say as
to when and how they realised the mistake. DW.3 was at loss of
words to speak anything on this important aspect when he was
seriously questioned in the cross- examination. Thus, the
evidence on record brought out clear manipulation of records.
The finding of the trial court remains unchallenged by the bank in
this appeal even though notices were served on it. When the
facts are clear there is no possibility of living on presumptions. It
is in these circumstances that this court must hold that on facts
and law, the trial court correctly reached to the conclusions.
23. Coming to the jurisdictional aspects, we are not concerned
with Companies Act, 2013. At the relevant time, what was in force
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
was Companies Act, 1956. Relevant provisions are to be
noticed:-
Section 2(11) of the Companies Act, 1956 defines "the
court" means: -
(a) with respect to any matter relating to a company (other
than any offence against this Act), the court having
jurisdiction under this Act with respect to that matter
relating to the company as provided in section 10.
section 10 of the Indian Companies Act, 1956 :-
JURISDICTION OF COURTS: -
(1) The Court having jurisdiction under this Act shall be -
(a) the High Court having jurisdiction in relation to the place
at which the registered office of the company concerned is
situate, except to the extent to which jurisdiction has been
conferred on any District Court or District Courts
subordinate to that High Court in pursuance of sub-section
(2); and
(b) where jurisdiction has been so conferred, the District
Court in regard to matters falling within the scope of the
jurisdiction conferred, in respect of companies having their
registered offices in the district.
(2) The Central Government may, by notification in the
Official Gazette and subject to such restrictions, limitations
and conditions as it thinks fit, empower any District Court to
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
exercise all or any of the jurisdiction conferred by this Act
upon the Court, not being the jurisdiction conferred -
(a) in respect of companies generally, by sections 237, 391,
394, 395 and 397 to 407, both inclusive:
(b) in respect of companies with a paid-up share capital of
not less than one lakh of rupees, by Part VII (sections
425to 560) and the other provisions of this Act relating to
the winding up of companies.
(3) For the purposes of jurisdiction to wind up companies,
the expression "registered office" means the place which
has longest been the registered office of the company
during the six months immediately preceding the
presentation of the petition for winding up.
. The above provision mentions about certain sections of the
Companies Act, 1956
• Section 237 - Investigation of companies affairs in other
cases.
• Section 391 - power to compromise or make arrangements
for creditors and members
• Section 394 - provisions for facilitating reconstruction and
amalgamation of companies
• Section 395 - power and duty to acquire shares of
shareholders descending from claim or contract approved
by majority
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
• Section 397 to 407 - they are in chapter 6 concerning
prevention of oppression and miss management, of powers
of tribunals with reference to oppression and miss
management
Section 10 also refers to part 7 and section 425 to 560 of
the Companies Act, 1956. Part 7 speaks about winding up of
companies. Thus, none of these provisions have any application
concerning a decision about ownership over certain shares that
were issued by Vysya Bank.
24. This court in Bhagawodas Garh V. Canara Bank limited,
Hyderabad4 explaining section 10 of the Companies Act held at
para 12 as below: -
"It is clear from the provisions of Section 10 that except to
the extent to which any jurisdiction is expressly conferred
on the District Court or District Courts subordinate to the
High Court by the Central Government by a notification in
pursuance of the powers conferred under sub-section (2)
(a) all residuary jurisdiction under sub-section 2 (a)
exclusive jurisdiction is conferred on the High Court in
respect of matters covered by Sections 237,391, 394, 395
and 397 to 407 both inclusive, of the Companies Act and as
regards the companies with a paid up-share capital of one
lakh of rupees and others in respect of all matters covered
by Part VII of the Act and other provisions relating to
winding up. Section 2 (11) defines 'the Court' to mean with
respect to any matter relating to a company the Court
having jurisdiction. Under the Act with respect to what
matter relating to any offence against that Act, the Court of
a Magistrate of the First Class, or as the case may be, a
1977 SCC Online AP 155/ (1978) 1 ANWAR 504
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
Presidency Magistrate, having jurisdiction to try such
offence"
It further held at para 14 has below: -
"We may now look at the last provision that requires to be
looked up viz., Section 9 C.P.C. Under section 9 C.P.C
jurisdiction is conferred on civil Courts to try all suits of a
civil nature excepting the suits of which their cognizance is
either expressly or impliedly barred."
It further held at para 18 as below: -
"Section 10 of the Companies Act also confers exclusive
jurisdiction on the High Court only in respect of matters
covered by Sections 237, 391, 394, 395 and 397 to 407,
both inclusive and in respect of matters covered by part VII
of the Companies Act with a paid up capital of one lakh of
rupees and over and in respect of other provisions relating
to winding up of companies. Except in respect of these
matters, the ordinary jurisdiction of the civil Courts to
decide the rights of parties is not excluded. This provision is
not inconsistent with Section 45-B of the Banking
Regulation Act, 1949."
That makes it very clear that for the nature of the dispute
raised between the appellant and Seshamamba, the Company
courts have nothing to do and only civil courts had jurisdiction. Be
it noted, unlike in the cited precedents at the bar, this is not a
case where any rectification in the register of the company is
sought for. Therefore, one has to necessarily conclude that this is
a matter exclusively governed by section 9 CPC and going by
that a civil court is holding subject matter jurisdiction and going by
the cause of action mentioned in the plaint which remained
undisputed all throughout the territorial jurisdiction of the civil
court has to be necessarily agreed upon. The contentions that
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
only the High Court or the designated District court situated at
Bangalore alone has jurisdiction is misplaced. Therefore, all the
points are answered against the appellant.
25. In the result both the appeals are dismissed with costs.
Consequently, common judgment dated 13.02.2012 of learned IV
Additional Senior Civil Judge, Guntur in O.S.No.44 of 1994 and
O.S.No.726A of 2008 is confirmed.
As a sequel, miscellaneous applications pending, if any,
shall stand closed.
_____________________________
Dr. V.R.K.KRUPA SAGAR, J
Date: 18.06.2024
Dvs
Dr. VRKS, J
A.S.No.1009 of 2012 &Tras.No.515 of 2013
THE HON'BLE JUSTICE Dr. V.R.K.KRUPA SAGAR
And
TRANSFER APPEAL SUIT No.515 of 2013
Date: 18.06.2024
Dvs
