Final Order 1

Order Details: Notice of Motion
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MHCC010019642020
IN THE CITY CIVIL COURT FOR GR. BOMBAY AT MUMBAI
NOTICE OF MOTION NO.732 OF 2020
IN
COMMERCIAL SUIT NO.96 OF 2021
1. Mrs. Marium Joseph ]
2. Mr. Joseph Thomas ]
Adult, Both Indian Citizen ]
Having present address at:Villa No.107 ]
Street No.12C, Community 342 A ]
C/o. Mr.Joseph Thomas, MI Gulf Services LLC, ]
P.O.Box No.2851, Dubai UAE ]....Plaintiffs
V/s
1. Mrs. Padmaja Chandrashekar Vaidya ]
2. Mr. Chandrashekar S.Vaidya ]
Residing at, A1/65, Flat No.8, Sneha Dham, ]
Gokuldham, Goregaon (E), Mumbai400 063 ]
3. HDFC Bank Ltd. ]
An Indian Banking & Financial Institution Company]
Registered under the Companies Act, 1956 ]
having their registered office address at, HDFC ]
Banking House, Senapati Bapat, Marg, ]
Lower Parel (W), Mumbai400013 ]
HDFC Bank Ltd. Legal & Secretarial Department ]
Trade House, 2nd floor, Kamala mills Compound ]
Lower Parel, Mumbai400 013 ]...Defendants
Appearances:
Ld. Adv. J.M.Puranik for defendant Nos.1 and 2.
Ld. Adv. Arvind Giriraj I/by P.D.Gandhy & Associates for the plaintiffs.
CORAM : HIS HONOUR ADHOC JUDGE SHRI.
RAJESH A. SASNE
(C.R.No.32)
DATED : 30th September, 2021
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ORDER
This notice of motion is taken out by the defendant Nos.1
and 2, requesting the Court to reject the plaint under Order VII, Rule 11
(d) of the Code of Civil Procedure, 1908.
2. It is the contention of the present defendants that the suit is
filed for declaration that the plaintiffs are owner of the shares under
folio No.HB 205941 of HDFC Bank (the 3rd defendant). The matter is
concerned with the ownership of shares and the same comes within
purview of National Law Tribunal as set up under Company Act and
hence the suit is barred by the Company Act. It is further contention of
the present defendants that such kind of suit is not maintainable in Civil
Court and the suit is expressly and impliedly barred. As per Section 424
of Companies Act, 2013, the Tribunal has power of Civil Court while
trying the suit contemplated under Section 424 (2) of the said Act.
Section 58 and 59 of Companies Act, 2013 deals with rectification of
register of members on refusal of registration and appeal. As per the
Section 430 of Companies Act, the jurisdiction of Civil Court is ousted in
respect of the cases in which the National Company Law Tribunal is
empowered to determine the same. With these contentions, the present
defendants have prayed to allow the notice of motion and to reject the
plaint.
3. The notice of motion is resisted by the plaintiffs by filing
reply thereon. It is the contention of the plaintiffs that the notice of
motion has no merit. The National Company Law Tribunal cannot
entertain the suit for declaration and damages as it has no power to
declare as provided under Section 34 of the Specific Relief Act. It
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cannot grant damages. The issue of jurisdiction is mixed question of fact
and law. The prayers in the suit are not under Section 58 and 59 but
under Section 34 of the Specific Relief Act.
4. Heard the learned Advocates for defendant Nos.1 and 2
and for the plaintiffs.
5. As the defendant Nos.1 and 2 have raised objection under
Order VII, Rule 11 (d) of the Code of Civil Procedure, it is required to
verify the pleadings in the plaint. It is the case of the plaintiffs that the
plaintiffs have purchased 700 shares of HDFC Bank from defendant
Nos.1 and 2. The said shares were purchased in physical form. After the
purchase of shares, the original shares were physically received by the
plaintiffs alongwith share transfer forms, duly signed by the defendant
Nos.1 and 2. However, the said shares could not be duly registered in
the plaintiffs' name with defendant No.3 as they were inadvertently
misplaced by the plaintiffs and later on found. The shares still stood in
the name of defendant Nos.1 and 2. In or about, 2016, the plaintiffs
found the misplaced shares and realised that they have not received any
dividends or bonus. After correspondence with the defendant No.3,
HDFC Bank, it was discovered that defendant Nos.1 and 2 are receiving
all benefits of the said shares. These defendants with a malafide
intention applied and secured 700 duplicate shares. Therefore, the
plaintiffs are seeking declaration that they are rightful owners of the
shares and defendant Nos.1 and 2 shall transfer the same in the name
of the plaintiffs. The plaintiffs have also claimed an amount of dividend
of Rs.2,14,000/ from the present defendants. They have also prayed for
an injunction restraining the defendants from transferring said shares.
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6. It is the contention of the present defendants that such kind
of suit is not maintainable before Civil Court and the plaintiffs are
required to approach the Company Law Tribunal. The learned Advocate
for the plaintiffs have relied upon the judgment of the Hon'ble Madras
High Court in N.Ramji Vs. Ashwath Narayan Ramji & Anr.2017 SCC
Online Mad 37591, wherein at paragraph No.27, it is held that,
"reading of Section 58 of the Companies Act, 2013, shows that
rectification of register of members has to be decided by the Tribunal
and as per Section 430 of the Companies Act, 2013, the Civil Court has
no jurisdiction.......". "It is relevant to note that as per Section 111A of
the Companies Act, the Company Law Board was empowered to decide
the issue of title also. The word title was not included in Section 58 of
the Companies Act. Even while considering the Section 111A, it was
held by the Hon'ble Apex Court that seriously disputed question of title
cannot be decided by the Company Court or Company Law Board. This
conclusion was arrived by the Hon'ble Apex Court by taking into
consideration of the jurisdiction of the Company Law Board is summary
in nature."
7. In paragraph No.28, it is also held that, ''from the
provisions of the Companies Act, 1956, it is clear that "the Tribunal or
Board as the case may be can decide only the rectification of register of
members with regard to shares and connected incidental issues......." In
paragraph No.29, it is held that, "a seriously disputed question of title
could be left to be decided by the Civil Court. The question in whose
favour, the shares are to be transferred, the Tribunal/Company Law
Board has no power to adjudicate the issue."
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8. In the present case also, there is dispute regarding the
transfer of shares. It is also alleged that the present defendants with
malafide intention have obtained duplicate share certificates, though
they have transferred said shares to the plaintiffs. It is required to be
decided that in whose favour shares are required to be transferred. The
plaintiff's case is that the defendant Nos.1 and 2 have transferred 700
shares of defendant No.3 in their favour but later on by obtaining
duplicate share certificate, they are taking benefits of the dividends of
the said shares. The plaintiffs are seeking declaration as to the
transaction held with the defendant Nos.1 and 2. They are claiming title
of shares on the basis of said transfer. The plaintiffs are also claiming
the amounts of dividends received by the defendant Nos.1 and 2. They
have also claimed injunction and relief of appointment of receiver. Such
seriously disputed question of title of share shall be decided by the Civil
Court and hence, there is no bar as alleged by the present defendants
for the maintainability of the suit before this court. Hence, the notice of
motion is liable to be dismissed. In the result, I pass the following order.
ORDER
1. Notice of Motion No.732 of 2020 is dismissed.
2. Costs of this notice of motion shall be in cause.
(Rajesh A.Sasne)
Judge,
City Civil & Sessions Court,
Date : 30.09.2021 Mumbai.
Dictated on :30.09.2021
Transcribed on :04.10.2021
Signed by HHJ on :04.10.2021
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“CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL
SIGNED JUDGMENT/ORDER”
04.10.2021 at 05.10 p.m.
UPLOAD DATE AND TIME
(Mrs. K.S.Bhosale)
NAME OF STENOGRAPHER
Name of the Judge HHJ SHRI R.A.Sasne
(COURT ROOM NO.32)
Date of pronouncement of
judgment/order
30.09.2021
Judgment/order signed by P.O. on 04.10.2021
Judgment/order uploaded on 04.10.2021
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