HARSH MALHOTRA Vs. LAL CHAND MALHOTRA

JUDGEMENT

(1.) Rejection of plaint of the plaintiff/appellant brings him to this Court in appeal. Defendant/Respondent's application under order VII rule 11 CPC has been allowed vide impugned order dated 14th July 2006 and appellant's/plaintiff's plaint has been held to be barred by section 111 of the Companies Act, 1956 by the trial Court. In a suit for declaration, permanent and mandatory injunction, plaintiff/appellant had sought a declaration that fifty four shares of respondent no.2 transferred by the predecessor in interest of the plaintiff and the defendant no.1, vide share transfer deed dated 20th November, 1977 was a forged and fabricated transaction. Appellant had also sought injunction against respondent no.2 company to restrain it from further transferring the aforesaid shares.

(2.) The stand taken by the appellant/plaintiff before the trial Court was that the question of share transfer deed dated 20th November 1977 being forged and fabricated document cannot be decided without evidence and so the application under order VII rule 11 of CPC was resisted. Whereas, the stand of the respondent/defendant before the trial Court was that the tribunal constituted under section 111 of the Companies Act 1956 has the exclusive jurisdiction to decide the controversy regarding the title of shares and so the jurisdiction of the civil Court to entertain such matters is barred.

(3.) After having heard both the sides at length and upon perusal of the record of this case, we find that after the amendment of the Companies Act, 1956 w.e.f. 31st May, 1991, earlier Section 155 of the Companies Act stood substituted with Section 111 of the Companies Act, 1956 and the tenor of both these sections is the same. Trial Court in the impugned order had noticed the scope of Section 155 of the Companies Act, 1956 and has observed that the object of Section 155 of the Companies Act (now amended as Section 111 of the Companies Act) is to provide a remedy in non controversial matters or in the matters where a quick decision is necessary and can be rendered in order to obviate irreparable injury to a party and Section 155 of the Companies Act is ordinarily not intended for settling controversies necessitating a regular investigation and in such cases, the company Court can decline to entertain petition in exercise of its discretionary power and say that since serious disputes are involved, the proper forum for their adjudication is a civil Court.