Bombay High Court
Nine Media & Information Services ... vs Hero Honda Motors Ltd. And Ors on 29 September, 2016
Bench: Dr. Shalini Phansalkar-Joshi
(911) FA 406-16
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
Amk
FIRST APPEAL NO. 406 OF 2016
WITH
CIVIL APPLICATION NO. 3681 OF 2016
Nine Media & Information Services Ltd. ]
a company incorporated under the ]
provisions of the Companies Act, 1956 ]
and having its office at 104-A, Motlibai ]
Wadia Building, 1st Floor, 22 D S A ]
Brelvi Road, Fort, Mumbai-400 001. ] .. Appellant
Vs.
1. Hero Honda Motors Ltd.ig ]
a company incorporated under the ]
provisions of the Companies Act, 1956 ]
and having its office at 34, Community ]
Centre, Basant Lok, Vasant Nihar, ]
New Delhi - 110 057. ]
2. MCS Ltd. ]
a company incorporated under the ]
provisions of the Companies Act, 1956 ]
and having its office at 212/A, ]
Shahpur Jat, Behind Panchsheel Club, ]
New Delhi - 110 057. ]
3. Bank of India, A/c. BOI Mutual Fund, ]
24th Floor, Stock Exchange Tower, ]
Dalal Street, Bombay-400 023. ]
4. Jardine Fleming Intl. Mgmt. Inc. ]
A/c. Jardine Fleming India Fund Inc. ]
Citibank N.A., C/o. Sutanally's ]
Business Centre, Boradwall Mansion, ]
Dr. Anni Besant Road, Worli, ]
Mumbai - 400 018. ]
5. Vikran Dahayal Upadhya ]
6. Jatin Kantilal Upadhay ]
Both having address at C/o. Dahyala ]
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(911) FA 406-16
Bachanlal & Co. 72, New Bardan Lane, ]
Mandvi, Bombay - 400 003. ]
7. SBI Capital Markets Ltd. ]
The Indian Mutual Fund NVMP ]
Through 'Stock Holding Corporation ]
of India Ltd., having their office at ]
224, Mittal Court, B Wing, 2nd Floor, ]
Nariman Point, Mumbai - 400 021. ]
8. Morgan Stanely Assets Management ]
Inc. A/c. Morgan Stanley Emerging ]
Markets Funds Inc., The Hongkong ]
& Shanghai Banking Corporation Ltd., ]
52/60, M. G. Road, P. B. No. 128, ]
Bombay - 400 001. ]
9.
Pvt. Ltd.
Southern India Depository Services ]
]
A/c. Kothari Pioneer Prime Fund ]
Century Centre, Ground Floor, 39, ]
T. T. K. Road, Alwarpet, ]
Madras - 600018. ]
10. SBI Capital Markets ]
A/c. India Magnum Fund NV ]
SCHL 44/1, Kalicharan Mehta Estate, ]
LBS Marg, Near Vikhroli Station, ]
Vikhroli, Mumbai - 400 079. ]
11. Pankaj B. Desai ]
12. Nozer J. Shroff ]
Both having address at C/o. ]
D S Purbhoodas & Co. ]
1107, Stock Exchange Tower, ]
11th Floor, Dalal Street, Fort, ]
Mumbai - 400 023. ]
13. Roopakala K. Jain ]
14. Kushal Raj Jain ]
Both having address at ]
C/o. Sagar Handloom, Post ]
Bhilad, Dist.-Valsad-396 105. ]
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(911) FA 406-16
15. Chetan Shantilal Shah ]
16. Nirmala Shantilal Shah ]
both having address at 187, ]
Manhar Building, 3rd Floor, ]
Lohar Chawl, Mumbai - 400 002. ]
17. Anish Kharidia ]
18. Niranjan Kharidia ]
both having address at 17/A, ]
Bank of India Society, Ussmanpura, ]
Ahmedabad-380 013. ]
19. K. Saraswathy ]
20. K. Unnikrishnan
both having address at A28,
]
]
Rajatrekha 142-6, J. P. Road, ]
Andheri (W), Mumbai - 400 058. ]
21. Morgan Stanley Assets ]
Management Inc. ]
Sub. A/c. The India Special ]
Situation Fund Ltd., C/o. Stock ]
Holding Corporation of India Ltd. ]
Mittal Court, B Wing, 224, ]
Nariman Point, Mumbai-400 021. ]
22. Shyam Sunder H. Vyas ]
508, Arpita Apartment, TPS Road, ]
Off Factoring Lane, Borivali (W), ]
Mumbai - 400 092. ]
23. MCC Investment & Leasing Ltd. ]
RAvindra Sarani, Calcutta-700 073. ]
24. HB Portfolio & Leasing Ltd. ]
2nd Floor, Gopala Tower, ]
25 Rajendra Place, ]
New Delhi - 110 008. ]
25. Flaming Fund Management ]
(Luxembourg) S. A. ]
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(911) FA 406-16
A/c. Flagship India Investment ]
Co., (Mauritius) Deutsche Bank, ]
Ground Floor, Matre Pen Bldg., ]
Tulsi Pipe Road, Dadar (W), ]
Bombay-400 028. ]
26. M Anand ]
1L-192m 12th Main Road, ]
Annanagar, Madras-600 040. ]
27. IDBI AS Principle Trustee ]
A/c. IDBI Mutual Fund Ground ]
NIIT-93, Citibank N. A. ]
C/o. Sultanallias Business Centre, ]
Boradawalla Mansion, ]
Dr. Annie Besant Road, Worli, ]
Mumbai - 400 018. ig ].. Respondents
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.
CORAM : DR. SHALINI PHANSALKAR-JOSHI, J.
DATE : 29th SEPTEMBER, 2016.
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 be stated as follows:
The appellant herein has filed the instant suit for the relief of
declaration and injunction. The declaration sought was in respect of the
various shares of respondent-company which came to be lost in the
(911) FA 406-16
process of transit. It is submitted that the appellant has purchased 2200
shares of respondent No.1 from their brokers M/s. Raj Chawla & Co.,
having their office at New Delhi, under the purchase bill No.7797 dated
20.01.1995. The said shares along with blank transfer forms 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 police on 31.01.1995 and
intimated about the same to the appellant. The appellant by its letters
dated 08.02.1995 and 28.02.1995 informed about the loss of the said
shares to respondent No.1 company and respondent No.2 and requested
them to issue duplicate share certificate after completing the requisite
formalities. The appellant also requested them to stop the transfer of the
said shares. As there was absolutely no response from respondent No.1
or respondent No.2, the appellant, through its Advocate, 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,
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therefore, approached the Trial Court by filing the instant suit seeking the
relief of declaration that the appellant is the absolute owner of these
shares and for further direction to respondent Nos.1 and 2 to issue
duplicate share certificates in favour of the appellant in respect of these
shares. The consequential relief of injunction was also sought for.
3. Initially the suit was filed in this Court and this Court was
pleased to pass the order of interim injunction restraining respondent
Nos.1 and 2 from transferring the said shares in favour of any third person.
Respondent Nos.3 to 28 are also joined subsequently in 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 jurisdiction of the Registrar of Companies in view of Section 84 of the
of the Companies Act. The reliance was placed in the written statement
itself on the observations of the Apex Court in the case of Shripal Jain Vs.
Torrent Pharmaceuticals Ltd. & Ors., 1995 Supp (4) SCC 590.
(911) FA 406-16
5. In addition to this contention that the Trial Court has no
jurisdiction to try the suit, the various other contentions were also raised in
the suit, like denying the appellant's claim of being absolute owner of 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 led the evidence of Vijaysingh Padode. Through the evidence of
both these witnesses, the documents were got exhibited and marked.
Respondent Nos.1 and 2 did not lead any oral or documentary evidence.
Respondent Nos.3 to 28, except for respondent No.7 did not even appear
and the suit has proceeded ex parte against them. Respondent No.7 also
did not file any written statement or adduced evidence.
7. On the basis of the evidence produced on record and relying
upon the Judgment of the Apex Court, in 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
(911) FA 406-16
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 the direction to respondent No.1 to issue
duplicate share certificate. The Trial Court considered the evidence
adduced on record by the appellant herein and came to conclusion that
the appellant has failed to prove the documents like, the bill No.7797
dated 20.01.1995 and also the originals of those documents being not
produced and held that the contents thereof were not proved. Accordingly,
the Trial Court held that the appellant has failed to prove its case on these
relevant two issues also. In 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 of
deciding the other issues relating to the ownership and declaration as
sought by the appellant. The proper mode open for the Trial Court was
either to return the plaint or to reject the same on that very ground itself of
not having jurisdiction over the subject matter of the suit. However, the
(911) FA 406-16
Trial Court has proceeded to decide other issues also and ultimately
dismissed the suit. According to learned counsel for the appellant, the
findings of the Trial Court in respect of the merits of the 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 Court has no jurisdiction to entertain the suit, then
according to him, it is necessary, when the appeal is at the stage of
admission itself, to quash and set aside the impugned Judgment and order
of the Trial Court and give an opportunity and liberty to the appellant to
make appropriate application before the current RTA of respondent No.1
company, namely, Karvy Computershare Pvt. Ltd. It is submitted that till
the said RTA decides the application of the appellant under Section 84 of
the Companies 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
(911) FA 406-16
same.
10. Learned counsel for respondent No.1 has, however strongly
resisted this submission. According to him, this prayer is made by the
appellant herein, only after an adverse finding on all the issues are
recorded by the Trial Court against the appellant. Further, learned counsel
for respondent No.1 has submitted that, so far as the jurisdiction of the
Civil Court is concerned, it was ousted only in respect of the issuance of
duplicate share certificate, which can only be issued by the Company
Registrar under Section 84 of the Companies Act. However, as regards
the relief of declaration, which the appellant is claiming in the 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 heard finally. At this stage, according to
learned counsel for respondent No.1, this Court cannot pass any order, as
sought by the appellant, of disposing of the appeal, setting aside the
impugned Judgment and order of the Trial Court, with a liberty to the
appellant to approach the Registrar of the Company. According to learned
counsel for the respondent No.1, unless and until, legality of the finding
(911) FA 406-16
given by the Trial Court on this issue is tested by this Court, such course
cannot be adopted. 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
the written statement.
12. As stated above, the simple case of appellant, as pleaded
before the Trial Court and before this Court is that the appellant had
purchased about 2200 shares of respondent No.1-company, which came
to be lost during the transit from the brokers at Delhi to appellant's office at
Mumbai. In respect of loss of those shares, the complaint also came to be
lodged. Respondent Nos.3 to 28 are the transferors of those shares. The
notice of the suit was issued to them but none 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
(911) FA 406-16
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 them. Hence, one more letter dated 23.03.1995 was issued
restraining respondent No.1 from transferring the same in favour of any
third person. Thereafter, respondent No.2 has sent a reply to the appellant
on 14.03.1995 and directed the appellant to obtain an order to that effect
from the competent Court. ig Thus, only when respondent No.2- the
Registrar refused to issue the duplicate certificate without the order from
the competent Court, the appellant was constrained to approach the Trial
Court, to get 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 against these
defendants for issuing duplicate shares in their favour. It is submitted that
the suit is covered under Section 84 of the Companies Act and under this
section the Civil Court has no power to grant any relief as per the
Judgment of the Hon'ble Supreme Court of India in the case titled as
(911) FA 406-16
Shripal Jain (supra)." It was further stated that, "in view of this Judgment,
the suit is not maintainable and accordingly the appellant is not entitled for
any relief as prayed in the suit. 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 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 to such
shares.
(2) A certificate may be renewed or a duplicate of a
certificate may be issued if such certificate-
(a) is proved to have been lost or destroyed, or
(b) having been defected or mutilated or torn is surrendered
to the company.
(3) If a company with intent to defraud renews a certificate
or issues a duplicate thereof, the company shall be 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, the particulars to be
entered in the register of members or in the register of renewed or
duplicate certificates, the form of such registers, the fee on
(911) FA 406-16
payment of which, the terms and conditions, if any (including
terms and conditions as to evidence and indemnity and the
payment of out-of-pocket expenses incurred by a company in
investigating evidence) on which a certificate may be renewed or
a duplicate thereof may be issued, shall be such as may be
prescribed."
17. Thus, Section 84 (4) of 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 same will be borne out by the concerned party and only
after inquiry, the Registrar may renew the certificate or issue the duplicate
thereof. Thus, a specific jurisdiction is conferred on the Registrar of the
Companies in respect of the issuance of duplicate certificate, whenever
the original certificate is lost or destroyed.
18. In the instant case, the very case of the appellant is that the
shares purchased by the appellant came to be lost in transit. Therefore, it
follows that, under Section 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,
(911) FA 406-16
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 within the four corners of the law, as
laid down by the Apex Court in this decision. In the said decision also, the
share certificates purchased by the appellant in respect of M/s. Torrent
Pharmaceuticals Ltd. were stolen. The appellant therein approached the
Registrar of Companies, namely, respondent No.2 in the appeal, for issue
of duplicate certificates. The Registrar directed the appellant to have a
direction in this respect from the Civil Court, as had happened in the
instant case also. The Civil 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 the present case. He should have
himself held an enquiry 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 in the
matter."
20. Accordingly, the Apex Court set aside the impugned order of
the Civil Court and consequent order of the High Court and remanded the
case back to the Registrar to decide the matter, in accordance with law.
(911) FA 406-16
21. In the instant case also, the appellant has, after coming to
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 no jurisdiction to decide the subject matter of the suit, namely
issuance of duplicate share certificates. In this appeal, learned counsel for
the appellant is relying on the same decision to relegate the matter to
respondent No.2-the Registrar for issuance of such duplicate share
certificates.
22. In view thereof, and in the light of the order passed by the
Apex Court in the above said decision, it becomes necessary to hold that
the respondent No.2-Registrar of Companies in the present case also,
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
(911) FA 406-16
also, it is necessary to remand the case back to the Registrar by giving
liberty to the appellant to approach the Registrar.
23. Needless to state that the Registrar cannot issue the duplicate
share certificate even after being satisfied on due enquiry, as a result of
the adverse finding recorded by the Trial Court on issues relating to
ownership of appellant over those shares. As the Trial Court has recorded
that finding despite holding that it has no jurisdiction to issue duplicate
certificate, it becomes necessary to set aside the impugned Judgment and
order of the Trial Court and dispose of the appeal at this stage itself,
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 finding is set aside by this Court, after hearing the appeal
on merits, the appeal cannot be disposed of at the stage of admission, by
quashing the Judgment and order of the Trial Court.
(911) FA 406-16
25. In this respect, one has to consider why the Trial Court was
constrained to frame the issue relating to the declaration of ownership and
why the appellant had sought the said relief. The only cause for the
appellant to seek such relief was that the share certificates were lost and
duplicate share certificates 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 certificate and only to obtain that relief, the declaration of ownership
was sought. Hence, once it is held that the jurisdiction to issue the
duplicate share certificate lies with the Registrar in view of Section 84(2) of
the Companies Act, then it necessarily follows that the Registrar is also
vested with all the jurisdiction and powers to decide whether the person
approaching it for duplicate share certificate is having ownership or title to
those shares. For that purpose only, as rightly submitted by 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
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this above said authority of Shripal Jain (supra) relegated the appellant
therein to the Registrar, when the duplicate share certificates were sought
as the original share certificates were stolen. Therefore, there is
absolutely no substance in the contention of the learned counsel for
respondent No.1 that as the relief of declaration could have been given
only by the Civil Court, findings recorded by the Civil Court on these issues
are binding, unless they are set aside by this Court after admitting the
appeal and these findings cannot be set aside at the stage of admission.
26.
It is pertinent to note that in 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 share
certificates in respect of the suit shares. In Shripal Jain's case
(cited supra), the Hon'ble Supreme Court has held that the civil
court is not the proper forum to grant such relief and the plaintiff
must approach the Registrar of the Company for issuance of
duplicate share certificates under section 84 of the Companies
Act, 1956."
27. In para 17, the Trial Court further held that, in view of section
84 of the Companies Act, 1956, this court has no jurisdiction to direct
defendants No.1 and 2 to issue duplicate share certificates to the plaintiff.
(911) FA 406-16
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.
Thus, the Trial Court also came to the categorical finding that
it has no jurisdiction to grant the relief as sought by the appellant of
directing the Registrar to issue duplicate share certificates. In such
situation, the Trial Court should have restrained itself from entering into the
discussion on issue relating to the ownership and title of the appellant over
the shares. As, the relief of direction to the Registrar to issue duplicate
share certificates was the main relief, sought by the appellant 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 recorded by the Court having no jurisdiction to record
(911) FA 406-16
such findings, those findings cannot have any legal value. Hence, it is not
necessary, as such, to decide the legality of those findings on analysis of
evidence. Moreover, if the submission of learned counsel for respondent
No.1 is accepted that this Court should, instead of deciding the appeal at
this stage of admission, admit the same and thereafter decide on merits
the legality of findings recorded by the Trial Court, even then in my
considered 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 ownership over
the said shares, respondent Nos.1 and 2 are bound to challenge the said
decision on the count that if the Trial Court has no jurisdiction, this Court
was also not having the jurisdiction to record such finding in the appeal.
Therefore, it is going to be an entirely futile and infructuous exercise in
allowing the appeal to languish after admission, till its final hearing,
especially, when the cause of action for the suit has arisen in the year
1995 and already it is more than 20 years. 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
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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 issue Nos.3 and 4, pertaining to
declaration of title over the share certificates.
31. Therefore, though it is true that this court does not normally
dispose of the appeal at the stage of admission, unless both parties
consent thereto, considering peculiar facts of the case as even after the
ultimate decision is given one way or the other, that decision is likely to
become infructuous as the Civil Court has no jurisdiction to grant
substantial relief of giving direction to Registrar to issue duplicate
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 issue of duplicate shares, it was held that the
Civil Court should proceed with the disposing of injunction application
expeditiously according to law. Moreover, in the decision of Calcutta High
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Court, the above said decision of the Apex Court in Shripal Jain (supra)
was not cited or referred.
33. 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 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 the limited relief made by the
appellant, of giving liberty to the appellant to approach the Registrar.
Needless to state that before issuance of duplicate certificate 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
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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 application before the current RTA of respondent
No.1-Company, Karvy Computershare Pvt. Ltd. for issuance of duplicate
share certificates.
36. As a result, the appeal is allowed in following terms:
(i) The impugned Judgment and order dated 12.01.2016 passed
by the City Civil Court, Mumbai is quashed and set aside,
granting liberty to the appellant to make an appropriate
application before the current RTA of respondent No.-1
company, Karvy Computershare Pvt. Ltd., for issuance of
duplicate share certificates.
(ii) If, such an application is made by the appellant within a period
of three weeks from today, the RTA of respondent No.1 i.e.
Karvy Computershare Pvt. Ltd. shall decide the same within a
period of eight weeks thereafter, in accordance with law.
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(iii) In the meantime, the interim order dated 30.09.1997 shall
continue to operate and status quo shall be maintained in
respect of shares claimed by the appellant.
(iv) In the event, the order of the RTA is not in favour of the
appellant, then such order of interim status quo shall continue
for the further period of four weeks from the date of
communication of the order by the RTA to the appellant, so
that the appellant can take recourse to appropriate
proceeding, in accordance with law. Needless to clarify that
the time spent in Suit and in this appeal will be excluded from
computation of limitation, in view of Section 14 of the
Limitation Act.
(v) As the Appeal is disposed of, the Civil Application does not
survive and hence disposed of.
(vi) In the peculiar facts and circumstances, the parties to bear
their own costs, of the suit and this appeal.
[DR. SHALINI PHANSALKAR-JOSHI, J.]
