SATISH CHANDRA SANWALKA Vs. TINPLATE DEALERS

JUDGEMENT

(1.) This case is on the Regular Board of this Court since 19.3.2012. No one appears for the respondents although it is 3.20 P. M. I have therefore heard the learned counsel for the appellants and perused the record. I am consequently proceeding to dispose of the appeal. The challenge by means of this Regular First Appeal (RFA) filed under Section 96 of the Code of Civil Procedure, 1908 (CPC) is to the impugned judgment of the trial Court dated 4.4.2005 rejecting the plaint under Order 7 Rule 11 CPC on the ground that disputes which were subject matter of the suit under the Companies Act, 1956 (hereinafter referred to as 'the Act') had to be decided by the Company Law Board by virtue of Section 111 of the Act.

(2.) The facts of the case are that the plaintiffs filed the subject suit for declaration and mandatory injunction on the pleading that the shareholding of defendant Nos. 3 and 6 to 9 of the defendant No. 1 was of Redeemable Preference Shares issued in the year 1957 for a term of 10 years redeemable in the year 1967; that the defendant No. 1-company issued a notice dated 12.10.1996 for holding of an Extraordinary General Meeting on 9.11.1996 for passing of a resolution subject to the consent of the Company Law Board for issuing of 7172 10% Tax Free Cumulative Redeemable Preference Shares of ' 100/- each redeemable on 31.10.2006 to the shareholders and on the issue of which 7172 preference shares, unredeemed redeemable cumulative preference shares issued in the year 1957 shall be deemed to have been redeemed. Another notice to the same effect dated 17.10.1996 was also said to have been received by the plaintiffs. It was contended by the plaintiffs that the redeemable preference shares of the year 1967 should have been redeemed in the year 1967 itself and after the due date of redemption, the shares would have ceased to exist. It was pleaded that the defendants were wrongly considering the redeemable cumulative preference shares issued in the year 1957 to exist. Declaration was sought that the right of the preference shareholders of the year 1957 would only be for recovery of debt and which also in any case had become time barred.

(3.) Defendant No. 1 filed its written statement wherein it was claimed that shares which were the subject matter of the suit were subject matter of the compromise pending before the Company Law Board and which compromise was arrived at on 30.10.1996 and that the plaintiffs were not the shareholders of the company and therefore had no locus standi to file the suit. It was denied that defendants were issued preference shares for 10 years period and which were due for redemption in the year 1967. The trial Court has dismissed the suit by making the following observations:-