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Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
Judges
Acts
  • section 10 of the Companies Clauses Consolidation Act, 1845,
  • provisions of the Indian Companies Act
  • SPECIFIC RELIEF ACT
  • provision in clause (3) of section 36
  • clauses (1) and (2) of section 36
  • section 3, clause (1) of Act
  • Indian Companies Act
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
Judges
Acts
  • section 10 of the Companies Clauses Consolidation Act, 1845,
  • provisions of the Indian Companies Act
  • SPECIFIC RELIEF ACT
  • provision in clause (3) of section 36
  • clauses (1) and (2) of section 36
  • section 3, clause (1) of Act
  • Indian Companies Act
Smart Summary

Structured Summary of Opinion — Iqbal Ahmad and Harries, JJ.

Factual and Procedural Background

The opposite party, Robert Menzies, was a shareholder of the British India Corporation, Ltd., having joined as Secretary in 1920 and later also acting as Managing Director until April 1935. In November 1935 Mr. Menzies requested a copy of the company's register of members, paid Rs. 500 towards copying charges on 27 November 1935, but the Corporation failed to furnish the copy and delayed on various pretexts.

On 22 January 1936 Mr. Menzies filed a petition in the District Court of Cawnpore (the District Judge having jurisdiction under the proviso to section 3 of the Indian Companies Act) seeking an order that the Corporation supply him with a copy of the names and addresses of shareholders and "to deal with them according to law." The District Judge directed the Corporation to supply the copy within one week of his order (from 13 February 1936), but the order was not complied with.

The Corporation applied in revision to the High Court and obtained a stay of the District Judge's order pending the revision. The High Court heard argument on the revision application and on whether the District Judge had jurisdiction to order the company to deliver the register copy.

Legal Issues Presented

  1. Whether a court vested with jurisdiction under section 3 of the Indian Companies Act has jurisdiction to enforce compliance with the Act even though the Act does not expressly confer, in every instance, specific enforcement powers on the court.
  2. Whether a company Judge (the District Judge exercising jurisdiction under section 3) has power to order a company to deliver a copy of the register of members to a shareholder, given that section 36(3) expressly authorises the court to compel immediate inspection but does not expressly authorise ordering a copy.
  3. Whether the existence of remedies under the Specific Relief Act (such as mandatory injunctions being normally available only in a suit) prevents a company court from granting a mandatory injunction in a summary company proceeding to compel compliance with the Companies Act.

Arguments of the Parties

Applicants (the Corporation) — Principal Arguments

  • The only penalty expressly provided by section 36(3) for refusing inspection or a copy is a fine; the concluding portion of section 36(3) authorises the court to "compel an immediate inspection of the register" but is silent about ordering a copy to be given.
  • Because the statute expressly authorises inspection and prescribes fines, and does not expressly authorise the court to order a copy, the District Judge lacked jurisdiction to direct the company to furnish a copy.
  • Relying on the provisions of the Specific Relief Act, a mandatory injunction can be granted only on a regular suit (by decree) and not in a summary petition under the Companies Act; therefore the District Judge could not grant a mandatory injunction directing the company to supply the copy in the summary company proceeding.

Respondent (Mr. Menzies) — Position as Presented in the Opinion

  • Mr. Menzies asserted his statutory right as a member to obtain a copy of the register of members under section 36; he filed a petition in the District Court to enforce that right after the company repeatedly failed to supply the copy despite receiving payment for copying charges.
  • The court records show it was admitted on behalf of the applicant (the company) that Mr. Menzies had the right to demand and be furnished with the copy.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Davies v. Gas Light and Coke Company [1909] 1 Ch. 708 (Court of Appeal; decision affirming Warrington, J.) Held that a statutory right given to a shareholder to require a company to supply a copy of a shareholders' address book/register is a private statutory right of the shareholder; where a company refuses to supply a copy, appropriate remedies include injunction, mandamus, or a mandatory injunction directing supply. The court relied on this decision to support the proposition that Mr. Menzies (as a shareholder) had a proprietary statutory right to the copy and that a mandatory injunction or equivalent relief was an appropriate remedy to compel compliance; this precedent helped justify the District Judge's power to order the copy to be furnished.

Court's Reasoning and Analysis

The Court began by identifying the contested provision: section 36(1)–(3) of the Companies Act. Section 36(1) requires the register to be kept at the registered office and to be open to inspection by members (subject to limitations), section 36(2) permits a member to require a copy on payment of copying charges, and section 36(3) prescribes penalties for refusal and states that "the court may by order compel an immediate inspection of the register."

The applicants' central textual argument was that because section 36(3) mentions only fines and expressly authorises the court to order inspection (but is silent about ordering a copy), the court has no power to order a company to give a copy of the register. The Court rejected this argument.

Key steps in the Court's analysis:

  1. The Court relied on section 3 of the Act which vests jurisdiction under the Companies Act in specified courts (here, the District Judge of Cawnpore by local notification). The Court observed that the courts so specified must have the ability to enforce mandatory statutory obligations imposed by the Act. The absence of express enforcement wording in many provisions cannot be read as denying the court power to enforce those provisions.
  2. The Court invoked a fundamental principle: where the law creates a right, there must be a remedy to enforce it. The petitioner's conceded right to the copy, if not enforceable by the company's courts, would leave the right without an effective remedy — an outcome inconsistent with legislative intent.
  3. The Court compared the present situation to other statutory duties under the Act (sections 31 and 32) where penalties are prescribed but there is no specific provision expressly empowering the court to order compliance; to accept the applicants' argument would render such statutory obligations nugatory and deny the courts the power to ensure compliance.
  4. The Court interpreted the clause in section 36(3) authorising immediate inspection as addressing particular contingencies (e.g., where inspection must be immediate to achieve its purpose), and not as an exhaustive statement barring other judicial remedies (such as ordering a copy to be supplied).
  5. The Court relied on the English decision in Davies v. Gas Light and Coke Co. to show that where a statutory right to a copy exists, appropriate remedies include injunctions or mandamus directing the company to supply the copy. That decision reinforced the view that a mandatory injunction is an appropriate remedy for enforcement of the statutory right.
  6. As to the Specific Relief Act point, the Court acknowledged that ordinarily mandatory injunctions are granted on a suit, but held that when the Companies Act vests exclusive jurisdiction in a particular court (the District Judge here) to enforce company provisions, that court may grant injunctions in company proceedings to ensure compliance with the Companies Act. The Companies Act and rules made under it contemplate petitions to the empowered district courts for enforcement.
  7. On this basis the Court concluded that the District Judge had inherent jurisdiction (by virtue of being a court empowered under section 3) to order the company to furnish the copy and to issue mandatory relief in the company petition context.

Holding and Implications

Holding: The High Court dismissed the application in revision and held that the District Judge of Cawnpore had jurisdiction to order the British India Corporation, Ltd. to supply a copy of the register of members to Mr. Menzies.

Immediate consequences and orders:

  • The revision application by the Corporation was dismissed with costs both in the High Court and below.
  • The stay of the District Judge's order (previously granted by the applicants) was discharged.
  • The Court concluded that the District Judge's order directing the company to furnish the copy was the appropriate order under the circumstances.

Broader implications as stated in the opinion:

The Court expressly held that courts specified under section 3 of the Companies Act have jurisdiction to enforce the mandatory statutory obligations of companies under the Act and to give redress to persons aggrieved by illegal omissions of a company. The opinion treats the power to enforce such provisions (including by mandatory injunctions in company proceedings) as inherent in those courts where necessary to effectuate the statutory rights conferred on members.

    British India Corporation, Ltd. v. Robert Menzies

    Iqbal Ahmad and Harries, JJ.:— The broad question that arises for consideration in the present application in revision is whether a company Judge has jurisdiction to enforce compliance with the provisions of the Indian Companies Act though such power is not expressly conferred on the Judge by the provisions of the Act. In particular, the question for decision is whether a company Judge has jurisdiction to order a company to deliver a copy of the register of members of the company to a shareholder of the company.

    There is very little controversy about the facts. The opposite party, Robert Menzies, is a shareholder of the British India Corporation, Ltd. He joined the Corporation in 1920 as a Secretary of the Corporation, and in or about March, 1930, he was, in addition to his duties as Secretary, appointed to act as a Managing Director also. Mr. Menzies held the position of Secretary Page: 990and Managing Director of the Corporation till April, 1935, when he went on leave to England. During his absence on leave from India the Corporation informed him that his services were no longer required, as certain retrenchments were being effected on grounds of economy. Mr. Menzies returned to India in the autumn of 1935 and he then, on the 14th of November, made an application to the Corporation for a copy of the register of the members. Some correspondence followed between Mr. Menzies and the officers of the Corporation as regards the amount of fees to be paid by Mr. Menzies on account of the copy and eventually a sum of Rs. 500 was placed by Mr. Menzies at the disposal of the Corporation so far back as on the 27th of November, 1935. The Corporation, however, did not furnish the copy to Mr. Menzies and put him off by pretexts which can only be characterised as scandalous if not dishonest.

    After waiting for a considerable time Mr. Menzies did what any one in his position would have done. He sought the protection of the company court and filed an application before the District Judge of Cawnpore praying that the Corporation be ordered to supply him a copy of the names and addresses of the shareholders of the Corporation immediately and also “to deal with them according to law”. It may here be mentioned that the petition was filed in the court of the District Judge as in accordance with the proviso to section 3 of the Act the Local Government has, by notification in the local official Gazette, empowered the District Judge of Cawnpore to exercise jurisdiction under the Companies Act. The registered office of the Corporation is within the jurisdiction of the district court of Cawnpore and therefore the petition was filed in the court of the District Judge, on the 22nd of January, 1936. It would be noted that more than two months had by this date elapsed since the request was made by Mr. Menzies for Page: 991the first time for a copy of the register of members. The learned District Judge fixed the 31st of January for the disposal of the petition, and notice of the date was given to the opposite parties viz., the British India Corporation, Ltd.

    The petition was brief. It recited the fact of a request having been made by Mr. Menzies for a copy of the register of members being supplied to him and it mentioned the delaying tactics adopted by the opposite parties in complying with what was undoubtedly a reasonable request… The opposite parties succeeded on the 31st of January, in getting an adjournment from the District Judge on the ground that they were not ready with their case. The learned Judge then fixed the 11th of February, 1936, for the hearing of the application and on that date the opposite parties filed a reply to the petition of Mr. Menzies. We are not concerned with that portion of the reply which deals with the question whether Mr. Menzies has a right to claim damages from the Corporation on account of his alleged wrongful dismissal. So far as the request for a copy being furnished to Mr. Menzies is concerned it was pointed out in the reply that the opposite parties had promised to supply the copy to the petitioner as soon as it was ready, and they had issued orders for the copy to be prepared without delay… The Managing Directors are men of education and presumably men with considerable experience in business matters and they ought to have realised that it should not have taken more than two or three days to supply to Mr. Menzies the copy that he asked for. They, however, chose to have the question of the jurisdiction of the District Judge to enforce compliance with the provisions of section 36 debated and discussed in his court. The learned Judge held that he had jurisdiction to direct the opposite parties to hand over the copy to the petitioner and accordingly directed the opposite parties to supply the copy to the petitioner within one week Page: 992from the date of his order, viz., from the 13th of February, 1936. By this time three months had elapsed from the day on which Mr. Menzies had requested for a copy being given to him. The copy was not yet ready. At any rate the court's order was not complied with and the copy was not handed over to Mr. Menzies.

    The opposite parties then came in revision to this Court and successfully applied for a stay order, with the result that the operation of the order of the District Judge was stayed till the decision of the application to revision filed by the opposite parties.

    The application has been argued at some length today. At the very outset. We inquired from the learned counsel for the applicants whether the copy was now ready and could be handed over to Mr. Menzies. The answer was in the negative. It is clear that if the reasons communicated to Mr. Menzies from time to time for the delay in the preparation of the copy were genuine, one would have expected the copy to be ready by this time. The fact that the opposite parties were not prepared to hand over the copy even now is proof positive of the fact that they intended from the very outset not to let Mr. Menzies have a copy of the register of members.

    The question, however, remains and has to be decided whether the order of the District Judge was, as contended by learned counsel for the applicants, without jurisdiction.

    It is provided by section 36(1) of the Act that the register of members of a company shall be kept at the registered office of the company and shall, except when closed under the provisions of the Act, be open to inspection by any member during business hours, subject to certain restrictions. Clause (2) of section 36 provides that any member of the company or other person may require a copy of the register or any part thereof to be handed over to him on payment of a certain amount on account of copying charges.

    The penalty for non-compliance with clauses (1) and (2) of section 36 is provided for by clause (3) of the section and as the argument of the learned counsel for the applicants has turned on the wording of that clause it is necessary to quote the same. It runs as follows: “If any inspection or copy required under this section is refused, the company shall be liable for each refusal to a fine not exceeding Rs. 20 and to a further fine not exceeding Rs. 20 for every day during which the refusal continues, and every officer of the company who knowingly authorises or permits the refusal shall be liable to the like penalty, and the court may by order compel an immediate inspection of the, register.” The argument is that as the only penalty laid down by the Act for refusing to allow inspection or to hand over a copy of the register is the imposition of fine provided for by section 36(3), and as the court is not vested with the authority to direct the company to furnish a copy of the register to a person applying for the same, the District Judge had no jurisdiction to pass the order that he did. In this connection particular emphasis is laid on the concluding portion of clause (3) of section 36 which provides that “the court may by order compel an immediate inspection of the register”. It is pointed out that though clause (3) lays down the penalty both for the failure to allow inspection or to furnish a copy of the register and goes on to vest the court with the jurisdiction to order inspection of the register, it is silent as to the powers of the court to order a copy of the register to be given. It is said that in the absence of a specific provision authorising the court to order a copy to be given the court has no jurisdiction to direct a company to supply a copy of the register of members even though it may have failed to comply with the mandatory provisions of section 36(1) of the Act. We are wholly unable to agree with this contention.

    It is distinctly provided by section 3 that the courts specified in that section have jurisdiction under the Page: 994Companies Act. A reference to the Act shows that there are various statutory obligations cast upon companies by the Act and that with respect to most of those obligations penalties had been provided for by the Act. There is, however, in many cases no specific provision in the Act as regards the authority of the court to enforce compliance with the provisions that define and regulate those obligations. Nevertheless it seems to us that the courts referred to in section 3 of the Act have inherent jurisdiction to compel due observance of the mandatory provisions of the Act. As has been pointed out by the learned District Judge, it is a fundamental principle of legal administration that where the law requires something to be done there must be in existence a court that can directly order it to be done. It is well understood in all systems of civilized jurisprudence that where there is a right there is a remedy. It is conceded on behalf of the applicant that Mr. Menzies had the right to demand and to be furnished with a copy of the register of members of the Corporation. But if the argument of the applicant is pressed to its logical consequences it follows that there was no remedy available to Mr. Menzies for the enforcement of this right. It is needless to say that we cannot credit the legislature with an omission of this description.

    Section 31 of the Act requires every company to maintain a register of members and section 32 directs an annual list of members to be prepared by companies. Both these sections lay down the penalty for non-compliance with the provisions of those sections, but there is no provision in those sections expressly authorising the court to direct the preparation of the register of members and the annual list referred to therein. According to the argument of the learned counsel for the applicant the court has no jurisdiction to enforce compliance with the provisions of those sections, however much a company may be in default. To accept this argument would be to render nugatory the provisions Page: 995of the Act and to deny to the court, on which the legislature has expressly conferred jurisdiction under the Act, the power of enforcing compliance 7 with the provisions of the Act. This could never have been the intention of the legislature and we therefore hold that the courts referred to in section 3 of the Act have jurisdiction to pass orders for the enforcement of the statutory obligations of a company and for giving redress to a person aggrieved by an illegal omission on the part of a company.

    Mr. Menzies had undoubtedly the right to get the copy applied for. The Corporation was determined from the very outset to deny him that right. Mr. Menzies could have had no other remedy except to seek the protection of the court of the District Judge, which court has the sole jurisdiction in company matters in Cawnpore. The District Judge, therefore, had inherent jurisdiction to direct the copy to be given to Mr. Menzies and his order is not open to any legal objection.

    Before leaving this part of the case we may observe that the provision in clause (3) of section 36 authorising the court to compel immediate inspection in no way leads to the conclusion that the jurisdiction of the court to order a copy of the register of members to be given is either expressly or impliedly barred. A reference to clause (1) of section 36 shows that the right to inspect the register is subject to certain limitations, e.g, the inspection can be had only during business hours and subject to such reasonable restrictions as the company in a general meeting may impose. The provision as regards immediate inspection being ordered by the court was presumably inserted in the Act with a view to provide for those contingencies in which the court, for sufficient reasons, is satisfied that the purpose of the inspection will be frustrated unless immediate inspection is ordered.

    The view that we take finds support from the decision in Davies v. Gas Light and Coke Company [1909] 1 Ch., 708. The decision at page 708 is the decision of the Court of Appeal affirming the decision of Warrington, J., which is reported at page 248 of the same volume. It was held in that case that the right given to a shareholder by section 10 of the Companies Clauses Consolidation Act, 1845, to require the company to supply him with a copy of the shareholders' address book is a private right conferred on him by statute by reason of his being a member of the company and not as being a member of this public. It was further held in that case that in the event of the company refusing to supply to a share-holder a copy of the register of members the proper remedy open to the shareholder is either an injunction to restrain the company from continuing to refuse to supply him or an action of mandamus or for a mandatory injunction directing the company to supply him the required copy. In the case before us it is admitted that Mr. Menzies is a shareholder and a director, and, as such, is a member of the Corporation. He, therefore, had the statutory right to demand and to be supplied with a copy of the register of members. This right of Mr. Menzies arose out of his proprietary right as a shareholder of the Corporation. He was, therefore, entitled to the protection of that right. This right was infringed by the Corporation refusing to supply him a copy within a reasonable time, and, therefore, he was entitled to a mandatory injunction directing the Corporation to supply him with the required copy. But it is contended on behalf of the Corporation that as, in accordance with the provisions of the Specific Relief Act, a mandatory injunction can only be prayed for in a suit and granted by a decree, the District Judge of Cawnpore had no jurisdiction, in a summary proceeding of the nature arising out of the petition filed by Mr. Menzies, to grant the mandatory injunction prayed for by him. In our judgment there is no force in this contention. It Page: 997may be conceded that ordinarily mandatory and perpetual injunctions can be granted only on a regular suit being filed, but injunctions to ensure compliance with the mandatory provisions of the Companies Act can be granted only by the court having jurisdiction under that Act. It has already been observed that the District Judge of Cawnpore has jurisdiction under the Act. He was, therefore; competent to direct the Corporation by a mandatory injunction to comply with the provisions of section 36. A regular suit by Mr. Menzies for an injunction in a court other than the court of the District Judge could not have been entertained because of the fact that court could have had no jurisdiction under the Companies Act. This Court has made rules under the Indian Companies Act both for this Court and the courts subordinate thereto and it is laid down by rule 2 of those rules that “Where any district court has been empowered under section 3, clause (1) of Act No. VII of 1913, all petitions shall be presented, applications made to, and proceedings taken under the direction of, the Judge for the time being of the district court within whose jurisdiction the registered office of the company may be situate.” We take this rule to indicate that ordinarily proceedings for the enforcement of the provisions of the Companies Act are to be initiated by petitions presented to the court having jurisdiction under the Act. On such a petition being filed the jurisdiction of the court to give effect to the provisions of the Act comes into play, and, as pointed out in the English decision referred to above, one of the appropriate methods for giving redress to a party aggrieved by the omission of a company to comply with the provisions of the Act is to issue a mandatory injunction. The District Judge of Cawnpore had, therefore, on a petition being filed in his court, jurisdiction to order the Corporation to supply the copy to Mr. Menzies.

    For the reasons given above we held that the learned District Judge had jurisdiction to pass the order sought Page: 998to be revised. Indeed we consider that the only possible order under the circumstances was the order passed by the District Judge. We accordingly dismiss this application with costs both here and below. The stay order is discharged.

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    British India Corporation, Ltd. v. Robert Menzies
    (Mar 16, 1936)