NATIONAL INSURANCE COMPANY LIMITED Vs. GLAXO INDIA LIMITED

JUDGEMENT

(1.) THE appellants aggrieved by the order dated 24th July, 1988 passed by the Company Law Board, Western Region Bench, Mumbai, have preferred the present appeal. The main contention urged on behalf of the appellants is that the Company Law Board erred in holding that the disputes raised in the petition raise complicated questions which could not be decided by the Company Law Board in exercise of its jurisdiction under section 111 of the Companies Act. In addition, it is also submitted that no reasons have been given by the Board for the order passed and consequently the matter must be remanded to the Board for disposing of the matter by giving reasons for its order.

(2.) THE short facts which are necessary for disposal of the appeal may now be stated. It is the case of the appellants that the Stock Holding Corporation of India Limited (SHCIL.) had sent 10,750 equity shares of the respondent company for transfer in the name of the appellants on 15th March, 1991. The respondent company transferred only 4700 shares. The respondent company also had issued rights issue in the ratio of 1: 5 in the years 1993 and had also issued Bonus shares in the ratio of 1:1. The appellants felt that the shares issued as rights shares and bonus shares would not be allotted to the appellants and consequently the name of the appellants will not be entered in the Register of Members of respondent company in respect of 14,520 shares. It is their case that the Register should be rectified in respect of 14,520 shares by entering the name of the appellants. The respondent company filed their reply dated 6th July, 1995. The respondent company stated that they received a letter dated 15th March, 1991 from SHCIL giving the details of 10,750 shares. The respondent company, however, received only 4,700 shares. A letter dated 13th May, 1991 was addressed to SHCIL The respondent company also sent an acknowledgment dated 16th May, 1991 for the receipt of 4,700 shares. SHCIL made enquiries as late as in December, 1993 after the rights issue. The respondent company did not admit that the petitioner is a lawful owner of the said 6050 shares. It is thereafter set out that as the respondent company did not receive the missing shares it cannot under any circumstances be made responsible for the same. The 6050 missing shares were not lodged with the company for transfer and this was intimated to the appellants time and again. It is also pointed out that the appellants had filed a civil suit and in view of that the petition ought not to be entertained. At this stage it may be pointed out that the appellants have averred that though they had filed a suit on account of some observation made by the Company Law Board the suit was withdrawn. It may further to be noted that in respect of these very 6050 shares there are subsequent transfers effected by the respondent company.

(3.) THE Company Law Board after considering the matter arrived at a conclusion that the matter involve complicated questions of fact which could not be decided in a petition under section 111 of the Companies Act, 1956 and the controversy could be decided only by a Civil Court. With the above background the points urged cannot be decided. It may be relevant to mention at this stage that section 111 was substituted by the Companies (Amendment) Act, 1988 with effect from 31st May, 1991. Pursuant to this section 155 was omitted from the Companies Act. Section 111 thereafter was again amended by introduction of sub-section (4) which came into effect from 20th September, 1995. By virtue of the said amendment section 111 applies only to a private company which includes a private company which had become a public company by virtue of section 43-A of this Act. The appellants are a Public Limited Company. However, the petition was filed before the said amendment. There is no dispute at the Bar that the provisions of section 111 would be applicable in so far as the petition filed before the Company Law Board is concerned. Against an order passed under section 111 an Appeal lies under section 10-F. By virtue of the said section from an order of the Company Law Board an Appeal lies to the High Court within the time as set out.