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Moni Mohan Mukherjee v. Jalpaiguri Cinema Co., Ltd.
Factual and Procedural Background
The petitioner, Moni Mohan Mukherjee, applied to the court under section 155 of the Companies Act, 1956, seeking rectification of the company's register of members by inserting his name in place of prior registered owners of shares he purchased. The shares were purchased between 2 December 1966 and 26 December 1966 and were lodged with the company for registration between 4 January 1967 and 12 January 1967. The company refused to register the transfers.
The petitioner appealed against the refusal under section 111 of the Companies Act, 1956, before the Company Law Board on 25 March 1967. The Company Law Board allowed the appeals by orders dated 19 December 1969 and 22 December 1969, directing the company to register the shares in the petitioner's name. The company challenged those orders by filing a writ petition under Articles 226 and 227 of the Constitution, which was dismissed on 13 May 1970. A subsequent appeal to the Division Bench was dismissed on or about 26 February 1971. The company sought leave to appeal to the Supreme Court under Article 133 and applied for a stay of execution, which was rejected, and later applied for special leave under Article 136, which was dismissed by order dated 26 October 1971.
Despite the orders in the petitioner's favour from the Company Law Board and the subsequent dismissals of the company's challenges, the company failed and neglected to rectify its register as ordered. The petitioner made repeated demands by letters to secure compliance. He therefore applied under section 155 of the Companies Act, 1956, seeking the statutory remedy of rectification and other reliefs because the company had defaulted in carrying out the earlier orders.
Legal Issues Presented
- Whether the remedies under section 111 and section 155 of the Companies Act, 1956, are alternative to each other such that pursuing one bars pursuing the other.
- Whether an application under section 155 is maintainable after an order has been made under section 111 (and declined compliance by the company).
- Whether the Limitation Act (and in particular the articles of the Limitation Act discussed in the authorities) applies to applications under section 155 of the Companies Act, 1956.
- If limitation were relevant, what is the starting point for limitation: the original date of refusal to register or some later date (e.g., date of default in complying with orders)?
Arguments of the Parties
Petitioner's Arguments
- The petitioner sought rectification under section 155 because the company has persistently refused to comply with orders directing registration and has been in continuing default despite repeated demands.
- The petitioner contended that certain points were not dealt with in a prior decision (Roy Chowdhury J.'s judgment in Jalpaiguri Cinema Co. Ltd. v. Pramatha Nath Mukherjee) and therefore argued the present matter at length before the court.
- Regarding limitation, the petitioner argued that he had diligently pursued remedies in different courts and that there was no delay or laches—furthermore the default by the company was continuing, so limitation was not a bar.
Respondent Company's Arguments (as presented by Mr. Bikas Sen / Mr. Sen)
- The respondent relied on Harinagar Sugar Mills Ltd. v. Shyam Sundar Jhunjhunwala (A.I.R. 1961 S.C. 1669), arguing that the remedy under section 111 is an alternative to the remedy under section 155 and that the power to entertain an appeal under section 111 is not unrestricted and must be subject to the same limitations implicit in the exercise of power by a civil court under section 155.
- On limitation, Mr. Sen relied on a bench decision (Techno Metal India Ltd. v. P. N. Anand, 77 C.W.N. 957) and contended that Article 136 of the Limitation Act, 1963 (as argued in that bench decision) would be applicable to applications under the Companies Act, 1956 (i.e., that the Limitation Act might apply to section 155 applications).
- Mr. Sen argued that the starting point for limitation should be the original date of the company's refusal to register the shares, which occurred prior to the central government order of 2 December 1969, and hence limitation would have elapsed.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Harinagar Sugar Mills Ltd. v. Shyam Sundar Jhunjhunwala, A.I.R. 1961 S.C. 1669 | The Supreme Court observed that the power to entertain the appeal under section 111 is not unrestricted and, being an alternative right to approach the civil court, must be subject to the same limitations implicit in the exercise of power by the civil court under section 155; and that the central government, when deciding appeals under section 111, must act with judicial character and give reasons. | The court considered this authority but held that the quoted observation concerned the status and functioning of the central government under section 111 and did not establish that remedies under sections 111 and 155 are alternative such that pursuing one bars the other. The court distinguished the principle and treated the Harinagar decision as addressing the central government's duty to give reasons, not as a rule that precludes resort to section 155. |
| Arjun Singh Bir Singh v. Panipat Wollen and General Mill Co. Ltd., A.I.R. 1963 Punjab 341 | Held by the Punjab High Court that section 155 did not purport to confer overriding powers on the court and that the two sections (111 and 155) provide alternative remedies. | The court reviewed the facts and reasoning of the Punjab decision (including its reliance on Harinagar) but ultimately disagreed with the conclusion that the remedies are alternative in all cases; the present court held the remedies are not the same in effect and an aggrieved person may pursue section 155 where appropriate. |
| Re Coronation Tea Co. Ltd., A.I.R. 1961 Cal. 528 | One of two Calcutta High Court decisions distinguished by the Punjab High Court in the Arjun Singh case (specific principle not fully set out in the opinion). | The opinion notes these Calcutta decisions were distinguished in the Punjab judgment; the present court considered those distinctions in the context of the debate but did not adopt the view that sections 111 and 155 are alternatives in the circumstances of this case. |
| Mst. Nazmunnessa Begum v. Vidyasagar Cotton Mill, A.I.R. 1962 Cal. 380 | Another Calcutta decision distinguished by the Punjab High Court in Arjun Singh. | The present court reviewed the authorities and concluded that the remedies under sections 111 and 155 are not identical; it also referred to a division bench decision in Vidyasagar Cotton Mill which acknowledged the two remedies but did not preclude maintaining a section 155 application after a section 111 order. |
| Budhu Lal v. Chattu Gope, A.I.R. 1918 Cal. 850 | Cited in argument (context in the opinion is that it was invoked to contend a particular conclusion on remedies). | The court held that this 1918 Calcutta decision (and Baikuntha Nath v. Nawab Sammiulla) had no application to the present case and therefore were not followed for present purposes. |
| Baikuntha Nath v. Nawab Sammiulla, 12 C.W.N. 590 | Cited alongside Budhu Lal in the course of submissions disputing availability of section 155 remedy. | The court found these authorities inapplicable on the facts of the present case and did not apply them. |
| Sadashiv v. Gandhi Sewa Samaj, A.I.R. 1958 Bom. 247 | Bombay High Court decision in which the court made an order under section 155 directing registration of shares under circumstances similar to those in the present case. | The present court relied on and cited this decision as supporting authority for granting relief under section 155 where a company defaults in complying with orders to register transfers. |
| Vidyasagar Cotton Mill v. Mst. Nazmunessa Begum, 68 C.W.N. 702 (Division Bench) | A division bench construction that, before amendment in 1960, a person aggrieved had two remedies: apply to the court under section 155 or appeal under section 111. | The opinion cites this decision and treats it as consistent with the proposition that a section 155 application is maintainable even where an order has been made under section 111 by the Company Law Board. |
| Techno Metal India Ltd. v. P. N. Anand, 77 C.W.N. 957 | Bench observations referenced in argument about applicability of the Limitation Act (specifically Art. 136 of the Limitation Act, 1963) to applications under the Companies Act. | The court noted the bench ultimately followed the Supreme Court authority in Town Municipal Council, Athani, and concluded that the Limitation Act does not apply to section 155 applications; thus Techno Metal did not persuade the court to apply the Limitation Act here. |
| Town Municipal Council, Athani v. Presiding Officer, Labour Court and Ors., A.I.R. 1969 S.C. 1335 | Supreme Court authority on the construction and scope of articles of the Limitation Act, and on whether residuary articles were meant to include applications not referable to the Code of Civil Procedure. | The present court followed this Supreme Court authority in concluding that the Limitation Act did not apply to applications under section 155 of the Companies Act, because such applications are under the Companies Act and not under the Code of Civil Procedure. |
| Sha Mulchand & Co. v. Jawahar Mills Ltd., A.I.R. 1953 S.C. 98 | Supreme Court decision holding that Article 181 of the old Limitation Act was not applicable to applications for rectification of the share register because that article applied to applications under the Code of Civil Procedure only. | The court relied on this authority to support its conclusion that the Limitation Act does not apply to section 155 applications for rectification of the register, and that Article-based time-bars under the Limitation Act are inapplicable. |
| Jalpaiguri Cinema Co. Ltd. v. Pramatha Nath Mukherjee, Company Petition No. 289 of 1973 (Judgment of Roy Chowdhury J., 29 November 1973) | A recent company petition decided by Roy Chowdhury J. involving a similar factual situation and application under section 155. | The court considered that the present case was covered by Roy Chowdhury J.'s decision and expressly agreed with that judgment, treating it as supportive of the present disposition and as covering some of the points raised. |
Court's Reasoning and Analysis
The court proceeded by analysing the nature and comparative effect of the remedies under sections 111 and 155 of the Companies Act, 1956, and by addressing the limitation point and the facts of continued non-compliance by the company.
First, the court examined the respondent's reliance on Harinagar Sugar Mills (supra) and the Punjab decision in Arjun Singh. It noted that the Harinagar judgment primarily addressed the status and obligations of the central government when deciding appeals under section 111 (in particular the need to give reasons and to act in a judicial manner), and that the observation quoted about alternative remedies was not a holding that pursuing one remedy necessarily bars the other. The court concluded that the Harinagar observation had been made "wholly for the purpose of finding out the exact status of the central government" and should not be read as precluding recourse to section 155 after pursuing section 111.
The court then contrasted the practical effects of the two provisions: section 111 provides for a penalty in case of non-compliance with the central government's order, which may act as a deterrent and have public-policy consequences, but does not necessarily furnish the aggrieved individual with the complete relief he seeks. By contrast, section 155 provides an "efficacious" remedy enabling the court to execute an order and give full relief to the person in whose favour the order is made (for example, rectification of the register to reflect the true shareholder). On that comparative basis the court reasoned that the reliefs available under the two sections are not the same in effect.
Having found that the remedies are different in substance, the court held that adopting the remedy under section 111 does not operate as a bar to pursuing the remedy under section 155 where full relief has not been obtained and the company remains in default of compliance. The court cited and relied upon a Bombay High Court decision (Sadashiv v. Gandhi Sewa Samaj) in which an order under section 155 directing registration had been made under similar circumstances.
On the question of limitation, the court reviewed the authorities and followed the Supreme Court approach (Town Municipal Council, Athani and Sha Mulchand) that applications under the Companies Act (such as for rectification under section 155) are not applications under the Code of Civil Procedure and therefore the Limitation Act does not apply to them in the way contended for by the respondent. The court also emphasised factual points: the petitioner had diligently pursued remedies through the Company Law Board and in other courts, and the company's failure to comply with orders was a continuing default. Given that continuing default and the petitioner's active pursuit of relief, the court found no delay or laches and rejected the respondent's contention that limitation should run from the original date of refusal to register.
The court thus concluded, on the combined basis of the distinct substantive effects of sections 111 and 155, the continuing non-compliance by the company, and the inapplicability of the Limitation Act as argued by the respondent, that the petition under section 155 was maintainable and should succeed to the extent prayed.
Holding and Implications
Holding: The court held that the remedies under section 111 and section 155 of the Companies Act, 1956, are not the same in effect and that pursuing the remedy under section 111 does not bar the aggrieved person from pursuing the remedy under section 155 where full relief has not been obtained and the company remains in default. The court concluded that the petitioner is entitled to relief.
Core Ruling: The petitioner is entitled to an order in terms of prayers (a), (b) and (d).
Implications: As a direct effect of this decision, the petition under section 155 was held maintainable and the petitioner was entitled to the specific reliefs sought in prayers (a), (b) and (d). The court rejected the respondent's limitation argument and found no laches on the petitioner's part because the petitioner had diligently pursued remedies and the company's default was continuing. The opinion relied upon existing authorities (including a recent decision by Roy Chowdhury J. and a Bombay High Court decision) in support of these conclusions; the judgment applies those authorities to the facts and orders the reliefs as indicated. The opinion does not purport to state that it is creating a novel, standalone precedent beyond applying and reconciling existing decisions on these points.
Note: This summary is limited to matters expressly stated in the provided opinion and does not add facts or inferences beyond the text.
(1) The petitioner moni mohan mukherjee has applied this court inter alia, under section 155 of the companies act, 1956, for rectification of the share register by inserting therein his name in the place and instead of the previous registered owners of the shares purchased by the petitioner.
(2) The said shares were purchased by the petitioner between december 2, 1966 and december 26, 1966 and the same were lodged with the company between january 4, 1967 and january 12, 1967 for registration thereof. An application was duly made to the company for such registration. The company declined to register the said shares. On 25th march, 1967 the petitioner appealed against such refusal before the company law board and proceeded under section 111 of the companies act, 1956. The appeals were allowed by the company law board by its orders dated december 19, 1969 and december 22, 1969 whereby the company was directed to register the said shares in the name of the petitioner and to enter the same in the register of members. The company filed a writ petition under articles 226 and 227 of the constitution of india against the said order of the company law board but the same was dismissed on may 13, 1970. The company thereafter preferred an appeal but the same was also dismissed by the order of the division bench on or about february 26, 1971. The the company thereupon asked for leave to appeal to the supreme court under art. 133 of the constitution and applied for stay of execution but the same was rejected. Thereupon the company applied for special leave to appeal to the supreme court under art. 136 of the constitution but the same also was dismissed by an order dated october 26, 1971.
(3) Inspite of the aforesaid orders the company has failed and neglected and defaulted in rectifying the share register in terms of the said orders and in spite of demands made by the petitioner requiring the company to comply therewith by various letters written from time to time.
(4) It appears that the company is bent upon not to carry out the orders. Under those circumstances the petitioner has applied, inter alia, under section 155 of the companies act, 1956 to pursue an efficacious remedy provided therein to meet such a situation.
(5) A similar application in respect of the same company was made and an order was made by roy chowdhury j. By delivering a judgment on 29th november, 1973 in company petition no. 289 of 1973 in the matter of jalpaiguri cinema co. Ltd. Vs. Pramatha nath mukherjee. It appeared to me that the present case is covered by the said decision of roy chowdhury j. But it was contended on behalf of the petitioner, that certain points have not been dealt with in that judgment and, accordingly the matter was argued before me at full length.
(6) Mr. Bikas sen on behalf of the respondent company referred to the case of harinagar sugar mills ltd. Vs. Shyam sundar jhunjhunwala reported in a. I. R. 1961 s. C. 1669 and contended that the remedy provided under section 111 of the companies act, 1956 was a remedy which was an alternative to the remedy provided under section 155 thereof and drew my attention to the following observation of the supreme court appearing at p. 1678 of the said report :
"but the power to entertain the appeal is not unrestricted : being an alternative right to approach the civil court, it must be subject an alternative right to be subject to the same limitations which are implicit in the exercise of the power by the civil court under section 155."
(7) In the above case the supreme court considered the exact status of the central government in deciding an application under section 111 of the companies act, 1956 and held that in making an order under sec. 111 the central government has to exercise its power by giving reasons in support of its orders because it functions as a tribunal exercising judicial powers. The supreme court also held that there had been no proper trial of the appeals, no reasons having been given in support of the orders by the deputy secretary who heard the appeals and as such quashed the orders passed by the central government and ordered re - hearing and disposal of the appeal according to law.
(8) In my opinion, by the said observation it was not held that the remedies provided under the said two sections were alternative to each other or that if one such remedy would be pursued then the applicant would be debarred from pursuing the other. The above observation was made wholly for the purpose of finding out the exact status of the central government in functioning and giving its decision under the said provision.
(9) Mr. Sen relied on a single bench judgment of the punjab high court in the case of arjun singh bir singh vs. Panipat wollen and general mill co. Ltd. Reported in a. I. R. 1963 punjab 341 in which the learned judge held that
"since section 155 did not purport to confer over - riding powers on the court, it should be held that the said two sections provide alternative remedies."the learned judge relied on the said supreme court case and distinguished two of the cases of this court, in re coronation tea co. Ltd. A. I. R. 1961 cal. 528 and mst. Nazmunnessa begum vs. Vidyasagar cotton mill a. I. R. 1962 cal. 380. In the punjab case the company rejected the application for transfer but when directed by the central government by an order under section 111 implemented the order but a little beyond the statutory period. Thereafter a shareholder made the application under section 155 of the act and complained against such transfer so made in pursuance of the order of the central government. The petitioner therein challenged the transfer as illegal because certain formalities were not observed by the managing agents in transferring the said shares in pursuance of the said order of the central government. It was also alleged that the person concerned, whose claim was so transferred in the register was an undesirable person and as such he should not be allowed to be connected with the company as a shareholder.
(10) In the said punjab case the remedy as provided under section 111 was quite adequate to the applicant thereto because the company complied with the said order of the central government. But what would not be complied with ? all that the section has provided is that in default some penal consequences would follow. In other words, the applicant himself will not get the remedy he asked for but in the interest of public by way of public policy the persons concerned would be punished if default would be committed in complying with the order of the central government. At best the penal provision might act as a defer - rent but nothing more so far as the aggrieved person is concerned. Therefore, if sufficient relief has been provided under section 155 of the companies act, 1956, i fail to see, why the same cannot be adhered to in seeking complete relief which could not be had under section 111 of the said act. To my mind, the reliefs provided under the two sections are not the same and the one is not the alternative of the other. It is true that if in effect the applicant gets relief under section 111 then in respect of the same subject matter another remedy cannot be sought for under section 155 so as to upset the orders of the central government and to obtain a relief against such order as was the case before the punjab high court. I respectfully agree with the views of the learned judge of the punjab high court that the court has no overriding powers under section 155 because to have such powers would mean that the court would sit on appeal over the decision of the central government. That was never the intention of the legislature in enacting the said two sections.
(11) In this application we are concerned primarily with the nature of the remedies provides under the said two sections. Section 111 provides for penalty in case of non - compliance but the most efficacious remedy has been provided under section 155 whereby the order passed by the court can be executed to the full extent as ordered by giving complete relief to the person in whose favour the order is made. There is no reason why the aggrieved person should not be allowed to pursue his remedy by applying under section 155 of the said act under such circumstances.
(12) In view of my finding that the said two sections do not provide similar remedy to the applicant concerned, the case of budhu lal v. Chattu gope reported in a. I. R. 1918 cal. 850 at page 856 and the case of baikuntha nath v. Nawab sammiulla 12 c. W. N. 590 have no application to the case before me.
(13) I hold that in the facts and circumstances of this case, the two remedies provided under the said two sections are not the same and as such by adopting the remedy provided under section 111, the action does not operate as a bar in pursuing the remedy provided under section 155 of the companies act, 1956. The view i have taken is supported by a decision of the bombay high court in the case of sadashiv v. Gandhi sewa samaj a. I. R. 1958 bom. 247 where the learned judge made an order under section 155 directing the company to register the shares in the books of the company under similar circumstances.
(14) The case of harinagar sugar mills ltd. V. Shyam sundar jhunjhunwala (supra) was considered by the division bench of this court in the case of vidyasagar cotton mill v. Mst. Nazmunessa begum reported in 68 c. W. N. 702. The bench construed the observations in the supreme court judgment and at page 709 held as follows :
"under section 155 of the indian companies act as it stood before its amendment in 1960 it was well settled that a person aggrieved by the refusal to register the transfer of shares had two remedies namely, (1) to apply to the court for rectification of the register under sec. 155 and (2) to appeal against the resolution refusing to register under section 111."
(15) Under those circumstances. I have no hesitation to hold that the application is maintainable, even though, an order was made under section 111 by the company law board.
(16) The next point, which has been specifically argued before me, is the point of limitation. Mr. Sen contends, following certain observations made in a bench decision of this court in the case of techno metal india ltd. V. P. N. Anand reported in 77 c. W. N. 957, that art. 136 of the limitation act, 1963, would be applicable to applications under the companies act, 1956. But whatever be the observations made therein, the bench ultimately followed the observation made by the supreme court in the case of town municipal council, athani v. Presiding officer, labour court and ors. Reported in a. I. R. 1969 s. C. 1335, where it observed as follows :
"we think that, on the same principle, it must be held that even the further alteration made in the articles contained in the third division of the schedule to the new limitation act containing references to applications under the code of civil procedure cannot be held to have materially altered the scope of the residuary art. 137 which deals with other applications. It is not possible to hold that the intention of the legislature was to drastically alter the scope of this article so as to include within it all applications, irrespective of the fact whether they had any reference to the code of civil procedure".
(17) In the above case, the bench of this court considered the question of the applicability of art. 137 of the limitation act in respect of winding up applications. But after considering the matter from various angles, ultimately, it was of the opinion that an application for winding up of the company was an application under the companies act and not under the code of civil procedure and as such held that the limitation act did not apply. Following the said supreme court case the bench dismissed the appeal. That being the position, i am bound to hold that the limitation act has no application in an application under section 155 of the companies act, 1956. The question was directly raised and considered in the case of sha mulchand and co. V. Jawahar mills ltd. Reported in a. I. R. 1953 s. C. 98. In that case it was held that in an application for rectification of share register an. 181 of the old limitation act was not applicable because the said article applied to applications under the code of civil procedure only.
(18) In any event, since the petitioner had been diligently pursuing his remedy in the different courts of law there was no point in making an application under section 155 so long as the petitioner was pursuing the same. There is no delay or laches on his part in seeking his remedy. The company is in default in complying with the order and the default is a continuing one and i do not see any reason how the question of limitation becomes material in the facts of this case. Mr. Sen argues that the starting point of limitation should be from the original date of refusal by the company to register the shares in the name of the petitioner. That happened prior to the order dated december 2, 1969 made by the central government and as such the time has now expired. In my opinion, there is no substance in that contention and the same should be rejected. In my opinion, the other points are covered by the judgment delivered by roy chowdhury j. In the company petition no. 289 of 1973 dated 29th november, 1973 as mentioned hereinabove and i agree with the said decision.
(19) The result, therefore, is that the petitioner is entitled to an order in terms of prayers (a) , (b) and (d).
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