GOPAL KRISHNA BALIGA Vs. POONA INDUSTRIAL HOTEL LIMITED

JUDGEMENT

(1.) BY this appeal the appellant challenges the order dated 14-10-1996 passed by the trial Court below Exh. 12 in S. C. Suit No. 1724 of 1996 holding that it has no jurisdiction to entertain the suit. The plaintiff had come to the Court challenging the Resolution passed by the Annual General Meeting of the company held on 11-9-1996, pursuant to Item No. 8 on the Agenda of that A. G. M. Item No. 8 of the Agenda was regarding the allotment of equity shares not exceeding 1,00,000 to the promoters of the company. The trial Court has held that in view of the provisions of section 111 of the Companies Act. The Civil Court has no jurisdiction to entertain the suit.

(2.) THE learned Counsel appearing for the appellant submits that the trial Court has committed a grave error in holding that the provisions of section 111 are applicable in the present case. He points out that the respondent company is a public limited company. He further points out that because of the provisions of sub-section (4) of section 111 of the Companies Act, application of section 111 is restricted only to the private limited companies and which became public limited companies by virtue of section 14 (a) of the Act. In the submission of the learned Counsel therefore, the trial Court was not right in holding that the jurisdiction of the Civil Court is ousted because the plaintiff has a remedy of approaching the Company Law Board under section 111 of the Act. The learned Counsel points out that the plaintiff would also not be entitled to approach the Company Law Board for the relief that he is seeking in the civil suit under section 111-A of the Companies Act. The learned Counsel submits that the right of appeal to the Company Law Board given under section 111-A applies to the public limited companies only in relation to the transfer of shares or debentures. In the submission of the learned Counsel in the civil suit, the plaintiff is not challenging any transfer of shares, but he is challenging the resolution of the company deciding to allot the shares to the promoters which does not amount to transfer.

(3.) THE learned Counsel appearing for the respondent on the other hand submits that section 111 as it originally stood applied both to the private limited companies as also the public limited companies till sub-section (14) was added by the Depositories Act, 1996 with effect from 20-9-1995. The learned Counsel submits that by that amendment section 111 was restricted to the private limited companies and similar provision in relation to the public limited companies was made by section 111-A. In the submission of the learned Counsel, therefore, remedies that were available under section 111 as it stood before the amendment in 1995 in relation to the public limited companies would be available under section 111-A of the Companies Act. The learned Counsel submits that the word transfer would also include allotment of shares and therefore the plaintiff has a right of an appeal before the Company Law Board under section 111-A of the Act.