NEPC MICON LIMITED Vs. SASHI PRAKASH KHEMKA

JUDGEMENT

(1.) (Civil Miscellaneous Appeals are against the orders of the Company Law Board, Chennai dated 27.5.1998 in C.P.No. 20/111/SRB/97 and 4/111/SRB/98.) The above Civil Miscellaneous Appeals arise out of the orders of the Company Law Board on the preliminary objection taken by the appellants herein as regards the maintainability of the petition filed by the respondents herein under Section 111 A(3) of the Companies Act. Important question of law arises in these appeals as to the availability of the jurisdiction of the Company Law Board under the amended Section 111A(3) of the Act with effect from 15.1.1997 on the question of rectification of register of shares transfer on the violation of the provisions of the Companies Act taking place prior to the amendment to Section 111A(3) in 1997.

(2.) THE Depositories Act, 1996, brought about comprehensive changes in the matter relating to transfer of securities by introducing amendments to various related statutes like Companies Act, Indian Stamp Act, IT Act, Securities Contract (Regulatory) Act. Prior to the enactment of the Depositories Act, 1996, two remedies were available to the aggrieved investors as regards the transfer of shares or debentures of a public or a private company to appeal to the Central Government under Section 111 of the Companies Act or to appeal before the High Court for rectification under Section 155 of the Companies Act. THE provision of Section 155 of the Companies Act relating to the power of the Court to rectify was omitted by the Company Amendment Act 1998 with effect from 31.5.1991. THE same was incorporated in Section 111 of the Companies Act that the avenue of relief through rectification was directed to the Company Law Board. Sub Section 14 was added to Section 111 of the Act consequent on the amendment introduced by the Depositories Act, 1996, as per which for the purpose of Section 111, a company shall mean a private company including a private company declared a public company under Section 43 A of the Act.

(3.) THE question that arises herein relates to the availability of the jurisdiction under Section 111A (3) of the Companies Act with reference to the time limit prescribed therein in respect of transfers that had taken place prior to the introduction of the provision . An aggrieved party has the right to elect the forum to exercise his common law right to move the civil court to vindicate the grievances or invoke the statutory right to move the Company Law Board for relief. THE Apex Court held in the decision 94 CC 310 that the jurisdiction under Section 155 of the Act was summary in nature. However, when the claim is based on the disputed rights or title and the materials placed are not sufficient enough to give a decision on the claim, the Court feels that such claim could not be constituting a ground for rectification to be decided in a summary manner, the Court could direct the parties to get their disputes adjudicated by a civil court. It may be seen that the position after the deletion of Section 155, and the insertion of Section 111 or 111 A is no different from what prevailed earlier. Applying the Article 137 of the Limitation Act where there is no time limit fixed elsewhere, the period of limitation to invoke common law right will be 3 years. Hence, it is a matter of election for the party aggrieved to invoke the forum and it is the discretion for the Company Law Board to exercise the jurisdiction depending on its view on the complexity of the issue before it.