K.N Seth, J.:— By means of a petition under article 226 of the Constitution (Civil Miscellaneous Writ Petition No. 9210 of 1978), the petitioners have prayed for a writ of certiorari quashing the order dated May 5, 1978, passed by the Regional Director, Company Affairs, Kanpur, in exercise of his power under section 108(1D) of the Companies Act, 1956, granting extension of time for registration of shares of K.M Sugar Mills Ltd. (hereinafter referred to as “the company”) in the names of respondents Nos. 4 and 5. A prayer has also been made for quashing the order of respondent No. 1 passed on the review application made by the petitioners. It has further been prayed that the respondent-company be directed to restore the names of the petitioners in the records of the respondent company as shareholders of 4,000 shares and to restrain respondents Nos. 4 and 5 from acting in any manner or exercising any right as owners and holders of the aforesaid 4,000 shares. The connected Special Appeal No. 30 of 1979 is directed against the order of the learned company judge dated August 13, 1979, dismissing the application of the petitioners under section 155 of the Companies Act for rectification of the register of members of K.M Sugar Mills Ltd.

2. The case set up by the petitioners was that K.M Sugar Mills Ltd. was incorporated on December 17, 1971, as a private limited company under the Companies Act, 1956. On September 13, 1974, it was converted into a public limited company with its registered office at 11, Moti Bhawan, Collectorganj, Kanpur. The authorised capital of the company is Rs. 25,00,000 consisting of eighteen thousand equity shares of Rs. 100 each and seven thousand 10 per cent cumulative redeemable preference shares of Rs. 100 each. The paid up capital of the company is Rs. 23,00,000 comprising eighteen thousands equity shares of Rs. 100 each and five thousand 10 per cent cumulative redeemable preference shares of Rs. 100 each. The petitioners held four thousand equity shares registered in their names. There were several other companies, partnerships, agricultural farms and charitable trusts as shareholders which were controlled by the petitioners and respondents Nos. 4 and 5 who were members of the same family. Serious disputes and differences arose between the petitioners and respondents Nos. 4 and 5 which were referred to one Sri M.L Bajoria, a common relation of the parties (for arbitration). Sri M.L Bajoria chalked out a scheme for settlement of the family disputes. However, differences again arose among the parties which were referred to Sri R.P Nevatia and Sri S.K Rajgharia. It has been alleged that in connection with the implementation of the family settlement, the petitioners delivered a number of blank transfer deeds to respondents Nos. 4 and 5. It has, however, been asserted that the petitioners never specifically executed any transfer deed for transfer of the petitioners’ shareholding in K.M Sugar Mills Ltd., in the names of respondents Nos. 4 and 5 and that the petitioners have reason to believe that the blank transfer deeds and the gift deeds executed by them in respect of other companies have been wrongfully utilised by the respondents for the purpose of transfer of the disputed shares in the respondent company. According to the petitioners, respondents Nos. 4 and 5 committed fraud and wrongfully and illegally sought to deprive the petitioners of their shares in the respondent company. It has further been averred that it was agreed between the petitioners and the said respondents that until a sum of Rs. 30,00,000 together with agreed damages was paid to the petitioners, the petitioners would continue to be members of the respondent company and their shareholding would not be transferred in favour of respondents Nos. 4 and 5. The petitioners, however, in June, 1978, learnt that respondents Nos. 4 and 5 had procured orders from the Regional Director, Company Law Board, Kanpur, extending the time for registration of 4,000 equity shares of the company in their names on the basis of certain transfer deeds alleged to have been executed by the petitioners in their favour between June, 1976, and October, 1976. Thereupon, the petitioners made an application to the Company Law Board on June 6, 1978, for reviewing the order of the Regional Director, dated May 5, 1978. The Company Law Board dismissed the review application by an order dated August 5, 1978. On the basis of the order of the Regional Director, the names of the petitioners in relation to the four thousand equity shares in dispute have been deleted and the shares have been fraudulently registered in the names of respondents Nos. 4 and 5. The legality of the order of the Regional Director has been challenged on the the ground that he passed the impugned orders without any notice to the petitioners and in violation of the principles of natural justice and without applying his mind to the allegations contained in the applications under section 108(1D) of the Companies Act. The order of the Company Law Board has been assailed on the ground that the Board has illegally refused to entertain the review application and gave no reasons for refusing to interfere in the matter.

3. Section 108(1D) provides:

“Notwithstanding anything in sub-section (1A) or sub-section (1B) or sub-section (1C) where in the opinion of the Central Government it is necessary so to do to avoid hardship in any case, that Government may on an application made to it in that behalf, extend the periods mentioned in those sub-sections by such further time as it may deem fit, whether such application is made before or after the expiry of the periods aforesaid; and the number of extensions granted hereunder and the period of each such extension shall be shown in the annual report laid before the Houses of Parliament under section 638.”

4. Respondents Nos. 4 and 5 made applications to the Regional Director, Department of Company Affairs, Company Law Board, Kanpur, under section 108(1A)(b)(ii) for extension of the period of validity in respect of the transfer deeds relating to 4,000 shares in K.M Sugar Mills Ltd. In the applications, it was claimed that the transfer deeds were executed on or about June 30, 1975, and October 15, 1976, by the writ petitioners who were the registered holders of the shares. It was alleged that on receipt of the share scrips and the transfer deeds, they were handed over to one Mr. M.C Chaudhary who was the mill manager and also a director for taking necessary steps for getting the shares registered in the names of the transferees. Sri Chaudhary, due to pressure of work, forgot about the matter. He fell seriously ill in December, 1976, and ultimately died on February 17, 1977. The documents were, in the first week of April, 1978, found in the residential house of Sri Chaudhary when his family started shifting from the house provided by the mill. It was further alleged that the transferors were not available for fresh signatures and it was apprehended that they might refuse to sign fresh transfer deeds owing to family disputes. Moreover, one of the transferors was living in the U.S.A The applicants prayed that since it was a case of genuine hardship, the period of validity of the instrument of transfers be extended. The Regional Director, Kanpur, by his order dated May 5, 1978, in exercise of powers conferred by sub-section (1D) of section 108 read with Notification No. GSR 2763, dated December 15, 1969*, issued by the Government of India, Ministry of Finance, Department of Company Affairs, extended the period by one month from the date of the order for acceptance by K.M Sugar Mills Ltd., of the instrument of transfers relating to 4,000 equity shares of the company as detailed in the order. It was specified in the order that the extension of time does not affect the rights and liabilities of the parties under the instrument of transfer in question.

5. Learned counsel for the petitioners contended that before passing the impugned order, the Regional Director did not afford any opportunity to the petitioners to contest the applications and thereby acted in violation of the principles of natural justice. It was further urged that the requirement of law regarding formation of opinion of the authority concerned that it was necessary so to do to avoid hardship clearly indicated that the authority concerned should afford an opportunity before passing an order to the parties concerned. In support of the plea that principles of natural justice were attracted to the proceedings before the Regional Director, a large number of Supreme Court decisions were placed before us wherein it has been laid down that principles of natural justice are applicable not only to quasi-judicial orders but also to administrative orders and that where an order is passed in breach of the principles of natural justice, the order is a nullity. It is now a firmly established rule of law that even in an administrative proceeding which involves civil consequences, the doctrine of natural justice is applicable. De Smith, in his book on Judicial Review of Administrative Action (Fourth Edition), dealing with the scope of the audi alteram partem rule, has set out one of the basic principles in the following words:

“Bodies whose designation, composition and normal procedures do not evoke an image of adjudication are also likely to be obliged to observe the rule if either (a) the language in which their functions are conferred or the general context in which they are exercisable is indicative of a duty to conduct a hearing or an inquiry before coming to their decision; or (b) they are empowered or required to decide matters analogous to lites inter partes; or (c) they are empowered or required to determine disputable questions of law and fact or to exercise a limited or ‘judicial’ discretion, and the effect of their decisions will, unless successfully challenged have a substantially adverse impact on the interests of an individual. Normally, an obligation to observe the rule arises only in the course of arriving at a decision having binding effect, although procedural obligations may also be imposed in other circumstances when fair-play so requires.”

6. We may now consider some of the decisions of the Supreme Court brought to our notice. State of Orissa v. Dr. Miss Binapani Dei, AIR 1967 SC 1269, the dispute related to the order of the State Government regarding the retirement age of Dr. Miss Binapani Dei. The order was passed without giving a reasonable opportunity of showing cause against the action proposed to be taken in regard to her. In A.K Kraipak v. Union of India, (1969) 2 SCC 262 : AIR 1970 SC 150, the dispute related to selection of officers serving in the Forest Department in the State of Jammu and Kashmir and the recommendations made by the Selection Board were challenged on the ground of its constitution. In Smt. Maneka Gandhi v. Union of India, (1978) 1 SCC 248 : AIR 1978 SC 597, the dispute related to the impounding of Maneka Gandhi's passport. It was held that the power conferred under section 10(3)(c) of the Passport Act, even if it be held to be administrative in character, would attract the rules of natural justice because it seriously interferes with the constitutional rights of the holder of the passport to go abroad and entails adverse civil consequences. The right to go abroad was held to be included in the expression “personal liberty” in article 21 of the Constitution. In Mohinder Singh Gill v. The Chief Election Commissioner, New Delhi, (1978) 1 SCC 405 : AIR 1978 SC 851, the dispute related to election to Parliament. Dealing with the nature of electoral right and whether it involved “civil consequences”, it was observed that “civil consequences” undoubtedly cover infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages as well. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts civil consequences. The expression “civil rights” as defined by Black (Law Dictionary 4th Edn.), is “such as belongs to every citizen of the State or country, or, in a wider sense, to all its inhabitants, and are not connected with the organisation or administration of government. They include the right to property, marriage protection by the laws, freedom of contract, trial by jury, etc. As otherwise defined, civil rights are rights appertaining to a person by virtue of his citizenship in a State or community, rights capable of being enforced or redressed in a civil action. Also a term applied to certain rights secured to citizens of the United States by civil action.” It was observed that “the interest of a candidate at an election to Parliament regulated by the Constitution and the laws come within this gravitational orbit. The most valuable right in a democratic polity is the ‘little man's’ little pencil marking, assenting or dissenting, called his vote. A democratic right, if denied, inflicts civil consequences.”

7. In the case of Mohd. Rashid Ahmad v. State of U.P, (1979) 1 SCC 596 : AIR 1979 SC 592, the dispute related to non-absorption of Mohd. Rashid Ahmad in the service of the Municipal Corporation, Kanpur. He was appointed as officiating Executive Engineer and continued to function in the same capacity on a purely temporary arrangement. The U.P Public Service Commission considered that he was not fit for appointment for the post of the Executive Engineer. His services were ultimately terminated by the State Government without affording him any opportunity. The order was quashed on the ground that if was violative of the principles of natural justice.

8. In the case of 5. L. Kapoor v. Jagmohan, (1980) 4 SCC 379 : AIR 1981 SC 136, the Lieutenant Governor of Delhi, in exercise of the powers conferred under section 238(1) of the Punjab Municipal Act, 1911, superseded the New Delhi Municipal Committee. The order was challenged on the ground that it had been passed without affording any opportunity to the members of the Committee. Dealing with the nature of right of the Committee, the Supreme Court observed (p. 142 para 9):

“A committee as soon as it is constituted, at once, assumes a certain office and status, is endowed with certain rights and burdened with certain responsibilities, all of a nature commanding respectful regard from the public. To be stripped of the office and status, to be deprived of the rights, to be removed from the responsibilities, in an unceremonious way as to suffer in public esteem, is certainly to visit the Committee with civil consequences. In our opinion, the status and office and the rights and responsibilities to which we have referred and the expectation of the committee to serve its full term of office would certainly create sufficient interest in the Municipal Committee and their loss, if superseded, would entail civil consequences so as to justify an insistence upon the observance of the principles of natural justice before an order of supersession is passed.”

9. The rule of audi alteram partem was again considered by the Supreme Court in Swadeshi Cotton Mills v. Union Of India, [1981] 51 Comp Cas 210 with regard to the taking over of an undertaking without investigation under the provisions of the Industries (Development and Regulation) Act. It was observed that this maxim has many facets. Two of them are: (a) notice of the case to be met; and (b) opportunity to explain. In the words of Lord Loreburn, the duty to afford a fair hearing is “a duty lying upon every one who decides something” in the exercise of legal power.

10. The basic question for consideration is whether these principles are attracted to the exercise of power under section 108(1D) of the Companies Act. That provision comes into play where, in the opinion of the authority concerned, it is necessary to extend the period prescribed for presentation of the instrument of transfer in order to avoid hardship in any case. If, in the opinion of the authority concerned, non-extension of time would entail hardship to a party, it has been conferred the power to extend the time for presentation of the instrument of transfer for registration in the name of the transferee. The language of section 108(1D) does not indicate that the concerned authority, while dealing with the matter of extension of time, is required to apply its mind to any other matter except the matter of hardship to the applicant in case the period is not extended. It is not competent for him to enter into the question relating to the genuineness or validity of the instrument of transfer. That matter has to be considered when the documents are lodged with the company for effecting registration in favour of the transferee shown in the instrument of transfer. No useful purpose could be served by giving the notice of the application for extension of time to the transferor since the authority concerned would not be in a position to decide the controversy, if any, raised by the transferor. In such a situation, the principles of natural justice would not come into play since the authority concerned is not required to do any adjudication over the rival claims that may be put before him.

11. It was urged that the statute requires that, before taking any action, the Central Government has to form an opinion that it is necessary to extend the period for presentation of the instrument of transfer to the company with a view to avoid hardship. In any case, it implies that the other party to the instrument of transfer, namely, the transferor, must be given an opportunity to contest it. We are not satisfied that any such requirement is implicit in the language used in the statute. The opinion has to be formed on the basis of material disclosed in the application for extension of time. It is not necessary to hear the transferor before forming an opinion as to whether it is necessary to extend the time in order to avoid any hardship. The hardship required to be seen is hardship to the transferee. This matter has been left to the discretion of the Company Law Board to which the power of the Central Government has been delegated. That discretionary power is to be exercised on the subjective opinion of the Board and not on any objective satisfaction. The Board is not competent to enter into any other matter except whether to extend the period or not. In such a situation, there appears to be no scope for the application of the principle of affording an opportunity to the other party to have its say in the matter. In the case in hand, the applications for extension of time, which were supported by affidavits, did contain material which could legitimately be taken into consideration in forming the opinion that it would cause hardship to the transferee if time was not extended. The opinion formed by the Board could not be characterised as arbitrary or capricious. As noted earlier, while granting the prayer for extension of time, the Board made it explicitly clear that the order of extension of time does not affect the rights and liabilities of parties under the instrument of transfer in question. Since no adjudication on the rights of parties was made by the order granting extension of time, no element of the principles of natural justice was attracted in the case.

12. The legality of the order of the Central Government dated August 6, 1978, has been challenged on the ground that it illegally refused to entertain the review petition. It was urged that the order of the Regional Director was subject to the control of the Company Law Board and consequently, the Company Law Board was competent to review the order. Neither any provision of the Act nor any notification has been brought to our notice which may indicate that the exercise of power by the Regional Director was subject to the control of the Company Law Board. Respondent No. 1 appears to be justified in taking the stand that under sub-section (1D) of section 108 of the Companies Act, the power exercised by the Regional Director is purely discretionary and no appeal or review is provided in-the Act. Apart from taking this stand, respondent No. 1 also took the view that since the shares have already been registered in the names of the transferees, it would not be possible to intervene in the matter. The view taken by respondent No. 1 appears to be fully justified. Since the shares had already been registered in the names of the transferees, no relief could be granted to the petitioners. Even if it was held that the Regional Director wrongly extended the time at that stage, under the Companies Act, the Central Government had no say in the matter. The order dated August 5, 1978, must also be held to be valid.

13. In support of the Special Appeal No. 30 of 1979, which arises out of proceedings under section 155 of the Companies Act, it was urged that the learned company judge committed an error in refusing to decide the matter on merits on the ground that the case involved complicated questions of title and highly disputed questions of fact. It was further urged that extension of period for presenting the instrument of transfer for registration was illegal and that the transfer deed and the gift deeds were not executed in respect of the disputed shares. It was also contended that the transfer was in violation of section 108A of the Companies Act.

14. We have already upheld the validity of the order of the Regional Director passed under section 108(1D) of the Act. The question whether the transfer deeds related to the shares in dispute can be gone into only if the dispute is decided on merits. As regards the plea that the transfer was in violation of section 108A of the Act, it may be noted that reference to this provision of the Act was made in paragraph 53 of the application under consideration. Reference to section 108A appears to have been made only with a view to emphasize that extension of time should not have been granted. Relevant particulars and details to establish that the transfer was in violation of the provisions of section 108A of the Act have not been put forward in the application. At the time of framing of the issues, the applicants did not press any specific issue on this aspect of the case. The order of the learned company judge does not indicate that this aspect of the case was pressed for consideration during the course of arguments. Even in the memorandum of appeal, no ground touching on the provisions of section 108A of the Act has been taken. The appellants are, therefore, not entitled to raise this question at the hearing of the appeal.

15. In the earlier part of the judgment, we have given a summary of the case set up by the appellants. Their basic plea undisputedly is that the instrument of transfer did not relate to the shares in dispute and respondents Nos. 4 and 5 committed fraud and wrongfully and illegally deprived the appellants of their shares in the respondent company. The circumstances in which the contesting respondents came in possession of the transfer deeds have been set out in detail. It cannot possibly be disputed that in order to substantiate the allegations made by the appellants, a lot of oral and documentary evidence will be required. The question is whether such a matter should be decided under section 155 of the Companies Act or the aggrieved party should have recourse to a competent civil court for adjudication of his rights.

16. The nature and scope of section 155 of the Act has been considered by various courts in India including our own court. In the matter of Dhelakhant Tea Co. Ltd.'s case, AIR 1957 Cal 476, P.S Mukharji J., took the view that where serious questions involving disputed questions of fact arise, the matter should not be tried in a summary procedure in an application for rectification of the share register under section 155 of the Act because they are more appropriate subjects for trial in a suit on evidence after a full discovery of documents and inspection.

17. In S. Bhagat Singh v. Piar Bus Service Ltd., [1960] 30 Comp Cas 300 (Punj) AIR 1959 Punj 352, Tek Chand J., after referring to a number of decisions of the Calcutta, Patna and Madras High Courts and the courts in England, observed (headnote at p. 304):

“The object of enacting section 38 of the Indian Companies Act, of 1913, which is analogous to section 155 of the Companies Act of 1956, was to provide a summary remedy in non-controversial matters or in matters where a quick decision was necessary in order to obviate an irreparable injury to a party. This provision was not intended for settling controversies under several heads necessitating a regular investigation. When serious disputes are involved as in this case, the proper forum for their adjudication is a civil court.”

18. In Jayashree Shantaram Vankudre v. Rajkamal Kalamandir Private Ltd., [1960] 30 Comp Cas 141 (Bom), it was laid down that where discovery and inspection are necessary and complicated questions such as forgery and fabricated documents arise, the summary procedure of trial by petition under section 155 should not be allowed.

19. In Rao Saheb Manilal Gangaram Sindore v. Western India Theatres Ltd., [1963] 33 Comp Cas 826 (Bom), Shah J. ruled that the provisions in section 155 of the Companies Act for a procedure by way of an application is only a provision for a summary procedure and that the court is not bound to give the relief under that section in that proceeding if it finds that complicated questions of fact and law are involved and it has got the power to direct the party concerned to a civil court and to file a proper action for the purpose of securing the relief which he seeks in the summary proceeding.

20. H.R Khanna J., in Smt. Somavati Devi Chand v. Krishna Sugar Mills Ltd., AIR 1966 Punj 44. following the decision in Delakhant Tea Co. Ltd.'s case, AIR 1959 Cal 476, the judgment of Tek Chand J. in the case of S. Bhagat Singh v. Piar Bus Service Ltd., [1960] 30 Comp Cas 300, and other cases, held that where complicated matters like fraud, etc., are involved, they can only be adjudicated after recording evidence and that it would not be proper to go into them in a summary proceeding under section 155 of the Act.

21. Satish Chandra J., as he then was, in Mahendra Kumar Jain v. Federal Chemical Works Ltd., [1969] 35 Comp Cas 651 (All) also declined to interfere under section 155 of the Act since, in that case, several disputed questions of fact arose which involved a detailed and thorough investigation on conflicting oral testimony as well as documentary evidence.

22. The Calcutta High Court, in the case of Daddy S. Mazda v. K.R Irani, [1977] 47 Comp Cas 39 (Cal), after setting out the disputes involved in the case, observed (page 53):

“In our view, the intensity, the depth and the sweep of the allegations are such that it is not possible for the court to come to any conclusion about the truth of the allegations except upon evidence which can be tested by cross-examination of witnesses. There can be no doubt that the allegations relate to serious disputed questions of fact and such disputes can be resolved only by oral testimony tested by cross-examination and by no other means. To hold that disputes such as those raised in the application can and ought to be resolved on averments made in the affidavits would defeat the purpose and object of the summary procedure prescribed by section 155 of the Act.”

23. Learned counsel for the appellants placed reliance on the decision of the Patna High Court in Basudev Kataruka v. Dhanbad Automobiles Private Ltd., [1977] 47 Comp Cas 68 (Pat). In that case, the question that arose for consideration was as to the allotment of certain unissued equity shares, the ground of challenge being to the restrictions under article 23 of the articles of association of the company. In these circumstances, the court held that the question was not so complex that it could not be decided in a summary proceeding under section 155 of the Act. The ratio in that case is of no assistance to the appellants. The decision of the Supreme Court in Indian Chemical Products Ltd. v. State of Orissa, [1966] 36 Comp Cas 592 (SC), is also of no assistance to the appellants. In that case, the Maharaja of Mayurbhanj held 7,500 shares of a company and the remaining 150 shares were held by others. As a consequence of the integration of the State with the Dominion of India, these 7,500 shares of the company vested in the Dominion. The Government of India delegated to the Government of Orissa the power to administer the territories of the merged State. There was, therefore, a transmission of the shares from the Maharaja to the State of Orissa by operation of law. The State of Orissa also obtained a deed of transfer signed by the Maharaja and lodged the same with the company for rectification of the share register. The company refused to make the necessary rectification and consequently an application was made under section 38 of the Indian Companies Act, 1913. The matter went up to the Supreme Court. On these facts, it was held that the right of refusal to register shares must be reasonably exercised in good faith and the discretion of the directors is liable to be controlled by the court. In this case, there was no dispute that a transfer deed was executed by the registered shareholders in the name of the transferee and there was also transmission of shares by operation of law. The ratio of this case is also of no assistance to the appellants.

24. Learned counsel lastly referred to the decision of the Gujarat High Court in Gulabrai Kalidas Naik v. Shri Lakshmidas Lallubhai Patel, [1978] 48 Comp Cas 438. Certain observations in that case do lend support to the contention raised by the appellants that even complex and complicated questions of title can be appropriately examined in a petition for rectification made under section 155 of the Act. The learned judge further observed that (p. 456):

“…a petition under section 155 cannot straightaway be disposed of by merely saying that as complex and complicated questions of title are raised, the matter ought to be decided by way of a suit and the party ought to be relegated to a suit. At best it can be said that the question is addressed to the discretion of the court and if the court exercises the discretion one way, namely, to undertake to hear the petition, its decision cannot be said to be one without jurisdiction.”

25. On the facts of the case, the learned judge found that the plea of forgery in the case was only an incidental question which the court may have to investigate but it did not raise any intricate or complex problem.

26. We may, in this connection, also refer to the observation of the Supreme Court in Public Passenger Service Ltd. v. M.A Khadar, [1966] 36 Comp Cas 1 (SC), to the effect that where, by reason of its complexity or otherwise the matter can more conveniently be decided in a suit, the court may refuse relief under section 155 in exercise of its discretionary jurisdiction and relegate the parties to a suit.

27. In our view, the consensus of judicial opinion appears to be that the jurisdiction under section 155 of the Companies Act is of a summary nature and in a case where complicated and complex questions of fact are involved, which can be properly decided on oral evidence tested by cross-examination and on documentary evidence, the proper course would be to relegate the aggrieved party to take recourse to a civil suit.

28. In any case, where a court of original jurisdiction declines to interfere in exercise of its jurisdiction under section 155 of the Act on the ground that the case involves seriously disputed questions of fact and adjudication of questions like fraud, forgery, etc., the appellate court would not be justified in interfering with the discretion exercised by the learned judge.

29. In the result, the writ petition as well as the special appeal fail and are dismissed with costs.