Delhi High Court

Shri Ram Saroop Nadkarni vs M/S Larson & Toubro Ltd.& Ors. on 21 December, 2010

Author: Indermeet Kaur

R-130A
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

%                        Date of Judgment: 21st December, 2010

+                        RSA No.77/2003

SHRI RAM SAROOP NADKARNI                         ...........Appellant
                  Through:           Ms. Amisha Upadhaya, Mr.
                                     Anish Kumar Maggo, Mr.
                                     Saurbah Mehra & Mr. Pawan
                                     Bhatia, Advocates.
                   Versus

M/S LARSON & TOUBRO LTD.& ORS.                   ..........Respondents
                  Through: None

CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR

     1. Whether the Reporters of local papers may be allowed to
        see the judgment?

     2. To be referred to the Reporter or not?               Yes

  3. Whether the judgment should be reported in the Digest?
                                                       Yes
INDERMEET KAUR, J. (Oral)

1. This appeal has impugned the judgment and decree dated

15.11.2002 which had endorsed the finding of the trial judge

dated 08.02.2002, whereby, the suit of the plaintiff stood

dismissed.

2. The plaintiff had filed his suit for declaration and mandatory

injunction against defendant no. 1, M/s Larson & Toubro Ltd. (L &

T Ltd.), the company whose shares had been purchased by the

plaintiff. Averment of the plaintiff was that he had purchased 200

equity shares of defendant no. 1 from defendant no. 2 and 100

equity shares of defendant no. 1 from defendant no. 3. The

distinctive numbers of the said shares have been mentioned in the

plaint. The dates of the bill of which these purchases were made

have also been detailed. Further contention of the plaintiff was

that on 19.06.1992, the said shares along with his other shares of

other companies were stolen from his car. FIR No. 377/1992

under Section 379 of the Indian Penal Code was registered.

However, the case could not be solved. On 24.06.1992, plaintiff

wrote a letter to the company informing him about the loss of the

shares; he requested for duplicate share certificates. This request

for issuance of duplicate share certificates was reiterated on

12.08.1992, 27.08.1992, 10.10.1992, 02.12.1992, 07.01.1993,

08.01.1993 thereafter again on 12.01.1993. On 15.01.1993, the

plaintiff received a communication from the defendant company

requiring certain details. On 14.03.1993, defendant requested the

plaintiff to send him the correct registered folio number of the

said shares which were accordingly sent. In spite of reminders,

the defendant no. 1, however, did not transfer the said shares in

the name of the plaintiff. Suit was accordingly filed.

3. The preliminary objection in the written statement was that

the suit is barred under Section 10 and 113 of the Companies Act,

1956; the Company Law Board is the only forum which could

decide this controversy. The trial judge relied upon the judgment

of the apex court reported in 1995, Supplementary (4) SCC 590

Shripal Jain Vs. Torrent Pharmaceuticals Ltd. to arrive at this

finding.

4. The judgment of the trial judge was confirmed in appeal.

The impugned judgment vide endorsing this finding had relied

upon the judgment of High Court of Bombay reported in AIR

1999Bombay-240 National Insurance Co. Ltd. Vs. Glaxo India Ltd.

5. This is a second appeal. It had been admitted and the

following substantial question of law was formulated on

24.09.2009. It reads as follows:-

"Whether the courts below adopted the right perspective while deciding that the Civil Court has no jurisdiction to entertain the suit."

6. Counsel for the appellant has vehemently urged that there is

a distinction in a rectification and a title to the shares; in the

instant case by way of declaration the plaintiff had sought a

declaration that he had granted title to the said shares which

were not yet transferred in his name. Reliance has been placed

upon AIR 1998 S.C. 3153 Amonia Supplied Corpn. Pvt. Ltd. Vs.

Modern Containers Pvt. Ltd. who support this submission. It is

pointed out that the instant case is a case which would not be

covered by a "rectification"; jurisdiction of the Civil Court would

not be barred.

7. The averments as deciphered from the plaint and prayer

clause have been perused. Plaintiff had purchased shares of

defendant no. 1 from defendants no. 2 & 3 which were stolen.

Thereafter, repeated correspondence has been sent by the

plaintiff to defendant no. 1 seeking issuance of duplicate shares in

the name of the plaintiff; this request had not been adhered to in

spite of the fact that the defendant company had sought details

from the plaintiff which included the correct registered folio

numbers of the shares which had been furnished by the plaintiff to

the defendant.

8. In the judgment of Amonia Supplies Corpn. (Supra), the

Supreme Court has expounded the definition of "rectification" as

contained in Section 155 of the Indian Companies Act. It

necessarily connotes same error in the Register of Members

which requires a correction. Para 27 of this judgment is relevant

and the same is herein extracted. It reads as follows:-

"In other words, in order to qualify for rectification, every procedure as prescribed under the Companies Act before recording the name in the register of the Company has to be stated to have been complied with by the applicant at least that part as required by the Act and assertion of what not complied with under the Act and rule by the person or authority of the respondent-Company before applicant to claim for the rectification of such register. The Court has to examine on the facts of each case, whether an application is for rectification or

something else. So field or peripheral jurisdiction of the Court under it would be what comes under rectification not projected claims under the garb of rectification. So far exercising of power for rectification within its field there could be no doubt the Court as referred under Section 155 read with Section 2(11) and Section 10, it is the Company Court alone which has exclusive jurisdiction. Similarly, under Section 446 the „Court‟ refers to the Company Judge which has exclusive jurisdiction to decide matters what is covered under it by itself. But this does not mean by interpreting such „court‟ having exclusive jurisdiction to include within it what is not covered under it, merely because it is cloaked under the nomenclature rectification does not mean court cannot see the substance after removing the cloak."

9. Rectification is thus the failure on the part of the Company

to comply with the directions under the Act. Under Section 155 of

the said Act before power is exercised for rectification certain

essential ingredients are to exist. Section 108 gives a mandate to

the company not to register transfer of shares unless the proper

instruments of transfer have been executed by or on behalf of the

transferor and by or on behalf of the transferee and have been

delivered to the Company along with the certificates relating to

the shares.

10. Section 155 of the said Act reads as under:-

"Section 155: Power of Court to rectify Register of Members-

           (1)     If-
           (a)     the name of any person-
           (i)     is without sufficient cause, entered in the Register
           of Members of a Company, or
           (ii)    after having been entered in the register, is,