Second respondents filed an application seeking for dismissal of this company petition filed by the petitioner seeking rectification of the share register of R-1 Company.
2. The case of the petitioner is that the petitioner received a letter dated 7-8-2007 from 1 respondent stating that 2.500 shares being distinctive numbers 12023 to 12522 and 12523 to 14522 belonging to the petitioner were transferred on 1-8-2007 to second respondent on being instrument of transfer and other documents placed by second respondent. To which, the petitioner company filed this CP stating that it has never sold its shares to second respondent, thereby whatever documents filed by second respondent for registration of us name in the place of the petitioner is fabricated, forged and without consideration, hence sought for rectification.
3. Whereas the case of second respondent is one Pradeep Kumar Kayan, one of the Directors of the petitioner, signed the transfer form on behalf of the petitioner, also raised invoice for the same, in view of the same, second respondent says that the case of the petitioner is false, hence sought for dismissal of same.
4. The petitioner, in its rejoinder, categorically denied the defense of second respondent saying said Pradeep Kumar Kayan never signed upon the transfer form or invoice shown by second respondent.
5. On seeing categorical denial of the petitioner, second respondent filed an application of interrogatories against Pradeep Kumar Kayan to know as to whether he signed upon the transfer form and the sale invoice. Having this Bench allowed the said application; he filed an affidavit before this Bench stating that he signed upon the transfer form and invoice as a director of the petitioner at request of one Santh Kumar Sutodiya, who is director of the petitioner company and person filed affidavit on behalf of Petitioner Company. On seeing Kayan filed affidavit saying he signed upon the documents, the petitioner has come up with CA 166/2011 to cross examine Pradeep Kumar Kayan, the same is still pending before this Bench.
6. While case stands in this position, second respondent filed this CA 245/2011 seeking dismissal of this case, on the ground this case deserves to be tried by Civil Court for this is involved with complicated facts.
7. Second respondent counsel Mr. Jishnu Shaha argued that the petitioner saying second respondent forged the signature of the petitioner director is false, as second respondent placed documents showing the transfer is valid under the provisions of Companies Act and articles of Association and it is not a forgery as contended by the petitioner. In this factual situation, the counsel of second respondent submits it is hardly possible to decide this issue in a summary manner unless and until the issue between the parties is tried by civil court.
8. The respondent counsel relied upon following para from National Insurance Co. Ltd.… v. Glaxo India Ltd.…. (AIR 1999 Bom 240) to say that dispute will go to civil court as and when fraud is an issue and when the same could not be decided on the material placed by both sides.
“It is, therefore now dear from the judgment of the Apex Court in A.S Corporation (P) Ltd. (supra), the Apex Court has held that in so for as the matters of rectification ore concerned, it is the Compony Court alone which would have jurisdiction. If issues, which have to be answered, ore not peripheral to rectification but issues regarding title, etc. then such other issues will have to be decided by the Civil Court. The Apex Court has now recognised that it is the Company Court which would be the Court of exclusive jurisdiction in so far as rectification is concerned. However, if issues arise, whether the applicant is the owner of the shares; whether there is fraud or forgery in holding the shares or the very title to the shares, then such issues will be beyond the jurisdiction of the Company Court and will have to be decided by the Civil Court. To that extent, the judgment of the Full Bench of the Delhi High Court where it held that there is a jurisdiction in the Company Court to relegate the parties to a suit has been departed from. The earlier judgment of the Apex Court in the case of Public Passenger Service Ltd. will have to be read in the context of the observations of the Apex Court in the case of A.S Corporation (P.) Ltd. (supra).”
The respondent counsel relied upon Harbaksh Singh Batra v. Larsen & Tubro Ltd. (2010) 158 Comp Cat page 313 (CLB-Bombay) to say that whenever serious dispute is involved, proper forum is civil court as because this provision is ordinarily not intended for settling controversies necessitating a regular investigation.
The respondent counsel relied upon Charanjith Singh Ghumman v. Dr. Reddy's Laboratories Ltd. (97 Comp Cas page 356 CLB) to say that when any party acquiesced transfer, then said party is stopped from questioning it under this provision as because company is not a wrong doer.
The respondent counsel says Ammonia Supplies case ((1998) 7 SCC 105 : 1998 AIR (SC) 3153) is not applicable in the present set of facts, because here the petitioner himself has come up saying transfer deeds are forged ones, which categorically denied by the director of the petitioner company affirming on oath saying he signed upon the transfer deeds relied upon by second respondent. Thereby this issue cannot be decided by only perusing the documents available in the record, he says, even according to ratio in Ammonia Supplies, this case is a case triable by Civil Court.
9. Whereas, the petitioner counsel Mr. D. Basak argued this application by taking two stands, one is transfer shown by second respondent is a forgery and another is this transfer is without consideration as because second respondent itself admitted in its reply that consideration would be adjusted against the debts due and payable by the petitioner to second respondent. He has gone to an extent saying if the petitioner fails on first ground to have jurisdiction before this tribunal, as to second ground of no consideration plea, the petitioner has a case to be decided by this Bench in the light of second respondent admission regarding consideration. He relied basically on Ammonia Supplies Corporation (P.) Ltd. v. Modern Plastic Containers Pvt. Ltd. ((1998) 7 SCC 105 : 1998 AIR (SC) 3153) to say that civil court is impliedly barred when a petition under section 111(4) of the Companies Act and this tribunal ought not to relegate the case to be tried by civil court on just seeing forgery plea taken up by the parties.
10. The petitioner counsel relied upon Khurshid Alam v. P. Pagnaon Company (P.) Limited (108 Comp Cas page 523) to say that whenever the point involved is not complicated, jurisdiction remains with Company Law Board only.
The petitioner counsel relied upon Eternit Everest Ltd. v. Neelmani Bhartiya (AIR 1999 Rajasthan 235) where share certificates and transfer forms kept for sale with broker are lost, to say that jurisdiction lies with Company Law Board, but not civil court.
The petitioner relied upon Smt. Nupur Mitra v. Basubani Private Limited (108 Comp Cas page 359) to say that when allotment is bad, issue could be decided by CLB itself.
The petitioner counsel also relied upon John Tinson & Co. Pvt. Ltd. etc v. Mrs. Surjeet Malhan etc., ((1997) 9 SCC 651 : AIR 1997 Supreme Court 1411) to say that transfer is void when there is no consideration, he further says there being admittedly no consideration passed from second Respondent, transfer shown by second Respondent is void in the eye of law.
11. On hearing the submissions of either side, the point for consideration in this application is whether this case could be heard by this Board or relegated to civil court considering it as case studded with complicated facts and as matter deserved to be tried by fact-finding court.
12. It is clear that the petitioner itself has come up with a pleading second respondent cooked up documents to get shares of the petitioner transferred to it. As I said above, the petitioner counsel rests his case on two stands, one is on forgery, and another is on no consideration plea. These two pleas arise on two different situations. If forgery plea is pleaded, then factual situation would be forgery of documents and made use of them for the benefit of the maker. In this situation, fact of forgery would be against the interest of a person whose signature is forged, and without the knowledge of the that person, then consent of the person required is absent and his interest would be affected without consent, hence it will become void ab in to in the eyes of law, as because it is not binding upon such person. When the transfer of interest itself is void ab initio, then it need not be separately pleaded that it is without consideration.
13. In no consideration plea, it is different, for factual situation would be the instrument or an agreement will come into existence at the instance of the parties, thereafter if one of the parties, who is to make consideration good fail to do the same, then it will be considered as void at the instance of the party who has not received consideration. In this second situation, you will find consent of parties to a contract, a valid agreement is there, it will fail only when consideration is not paid as per Section 25 of Contract Act, here onus of proof lies upon the party who comes up with a plea of no consideration.
14. The factual situations in these two being altogether different, party who comes to court for relief cannot show alternative factual situations, because cause of action will arise out of one factual history, there cannot be two factual histories in the pleadings of a party seeks relief. Of course, party can seek alternative reliefs, consequential reliefs, but not alternative factual situations. As to defending party, he is at liberty to take inconsistent pleas in his defense, which is not the case with party seeking relief.
15. So the stand of the petitioner seeking reliefs on two factual stands will fail, because it is not possible to happen two factual situations, if forgery is the plea, then there is no scope for no consideration plea, if no consideration is the plea, then there is no scope for forgery plea, hence I have not noticed any merit in this argument.
16. Now, second respondent has come up with an application for dismissal of the company petition on the ground that the issue before this Bench is indeed triable by a civil court not by this Tribunal, which usually deals with cases on affidavits moved by the parties. It is further said that the petitioner herein has come up with a plea of forgery, which is to be decided, by a fact-finding court; moreover, it is a dispute in between the petitioner and second respondent not relating to the company as because the petitioner has not come up with a case saying registration of second respondent name as bad for non-compliance of Companies Act provisions.
17. Though it is on maintainability point, facts of either side and related documents have already come on record; I believe there is no scope to say that case is disposed of at threshold without going into the merits of the case. It is apparent that the material papers placed by either side are not enough to draw a conclusion to say whose version is correct unless oral evidence let in.
18. On the interrogates sought by second respondent, one Pradeep Kumar Kayan, admittedly continued as director of the petitioner at the time of purported transfer, categorically stated, that he, signed the share transfer, form and sale invoice on 1-8-2007 on behalf of the petitioner company, at the instance of another director of the petitioner company, who gave affidavit on behalf of the petitioner company. It is pertinent to note that this petitioner company plainly stated that Pradeep Kumar Kayan did not sign the transfer form or sale invoice. It is its case that they are forged, but when the person, whose signature is purported to have forged, filed an affidavit saying he signed those documents as a director of the company, then the petitioner must prove that either Pradeep Kumar Kayan is giving false statement to help the respondent or must prove the affidavit said to have filed by Pradeep Kumar Kayan is not sacrosanct.
19. The other point to be looked into is whether it is a dispute squarely falling under Section 111(4) Companies Act when there is no averment saying R-1 Company violated the provisions of Companies Act and articles of the association.
20. As the citations relied upon by the petitioner indicate civil court will not have jurisdiction whenever an issue could be decided by CIS, this bench having observed that this case is comprised of complicated facts with assertions and denials; this could be decided only when oral evidence is let in, so the case facts being different from facts in the citations relied upon by the petitioner, it is held that those citations are not applicable to the given facts.
21. When the petitioner pleaded its case as forgery of transfer deeds, it cannot turn around take out an alternative pleading saying no consideration passed to it, which is not consistent with the plea of forgery, thereby the ratio mentioned in the case John Union & Co. Pvt. Ltd. supra is no doubt applicable when it is a case on no consideration plea, but when it is a case on forgery plea, as in the present case, it is not applicable. It is also pertinent to mention here the defense pleas of the responding party cannot become the case of the petitioner.
22. It is clear that the petitioner has come with a case saying that the transfer deeds placed by second respondent before the company are forged transfer deeds, thereby unless and until forgery is proved, it cannot be said that the rectification made in favor of second respondent as invalid. For proving that transfer deeds are forgery, evidence is to let in this case beyond documents available to prove those documents are forged documents. Though rectification is consequential to the transfer of shares, the transfer ipso facto will not come under the purview of rectification. I he jurisdiction under Section 111 is only limited to rectification of share register that part could be decided only when admitted factual position is present before this Bench or a point to be decided is only relating to law or at best if issue could be decided on the documents available. The company is not expected to be visited with unnecessary litigation when issue is not relating to rectification as enunciated under Section 111. What is said by Honorable Apex Court in Ammonia Supplies Case (supra) is Tribunal need not relegate it to a Civil Court just by seeing a party coming up with a defense of forgery as and when an aggrieved files an application under Section 111 of Companies Act. It is nowhere held in the said citation that company law board alone to decide an issue relating to transfer of shares, the only caution given by Apex Court is to see any possibility is there to decide on its own, before coming to a conclusion to direct a party to approach civil court. Moreover, Honorable Supreme Court came to that conclusion to avert further delay in that case and giving a direction to CLB to see whether plea taken by defending party is frivolous and vexatious, but here the petitioner itself has come up with that plea.
23. Since the petitioner has come up with an application under Section 111 of the Act stating transfer as fraud on the ground of forgery, such issue will be a triable issue by a Civil Court, especially in the light of affidavit of Pradeep Kumar Kayan, thereby Civil Court could decide this issue effectively, not Company Law Board.
24. In view of the same, the application moved by second respondent is allowed giving liberty to the petitioner to proceed against second respondent before civil court on the self same cause of action. In the result, main petition is dismissed vacating interim orders if any subsisting.