C.A. No. 127/2011 in C.P. No. 90/2005-CLB. Case: 1. Shri Rajesh Patil, 2. Moonshine Films Pvt. Ltd. and Ors. Vs 1. Moonshine Films Pvt. Ltd. and Ors., 2. Shri Rajesh Patil. Company Law Board

Case Number:C.A. No. 127/2011 in C.P. No. 90/2005-CLB
Party Name:1. Shri Rajesh Patil, 2. Moonshine Films Pvt. Ltd. and Ors. Vs 1. Moonshine Films Pvt. Ltd. and Ors., 2. Shri Rajesh Patil
Judges:Vimla Yadav, Member (J)
Issue:Company Law
Judgement Date:May 12, 2011
Court:Company Law Board
 
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Order:

Vimla Yadav, Member (J), (Principal Bench, New Delhi)

  1. In this order I am considering the Company Application No. 127/2011 which has been filed by the R-1 company namely M/s Moonshine Films Pvt. Ltd. contending that the New Delhi Bench of the CLB is not vested with the territorial jurisdiction to decide this remand matter to be heard pursuant to the Hon'ble Gujarat High Court's order dated 26.4.2010 in Special Civil Applications impugning the Company Law Board Principal Bench New Delhi's order dated 9th June 2006 in CP No. 90 of 2005. CA No. 127/2011 has been filed in Company Petition No. 90 of 2005 Under Regulation 7 & 44 of the Company Law Board Regulations, 1991. This order is in continuation of my order dated 18.04.2011 which reads as under:

    Heard. CA No. 127/11 is hereby dismissed as the CLB has jurisdiction in this matter Detailed order to follow. Hearing in CP 90/2005 qua the 45 shareholders to continue on 26th, 27th and 30th May 2011 and R-1 to he heard on 7th and 8th July 11 at 10.30 a.m., Petitioner to continue their arguments on 11th, 12th & 13th July 2011 at 10.30 a.m.

  2. The Company Petition No. 90 of 2005 was filed in the year 2005 by Mr. Rajesh Patil, the Petitioner, before the Company Law Board, Principal Bench, New Delhi under Sections 397 & 398 of Companies Act, 1956 (hereinafter referred to as the Act') against the R-1 Company and Ors. alleging oppression and mismanagement. The R-1 Company has its registered office at 604, B Building, President Plaza, Near R T O, Ring Road, Surat-395 001. The Principal Bench New Delhi of the CLB allowed the Company Petition vide its order dated 9th June 2006 giving the following directions:

    1. The issue of 8800 shares on 11.12.2002 is hereby sustained with the directions that 4400 shares out of the total 8800 shares issued on 11.12.2002 be transferred by R-2 to the Petitioner names - Sh. Rajesh Patil by conversion of his unsecured loans.

    2. The issue of 2,90,000 shares on 8.1.2003 being totally malafide, only motive being to gain control of company is hereby declared null and void and all allotment are set aside with the directions that the name of 48 persons be struck off from the register of members.

    3. Since I have held that the stand of the company that the Petitioner and his nominees had vacated office of the director under Section 283(1)(g) cannot be sustained for the reasons given above, I declared that the Petitioner and his nominees shall continue as directors of the company.

    The cancellation of allotment of 290000 shares of Rs. 10/- each included 450 shares allotted by the Respondents to 45 persons (10 shares of Rs. 10/- each to each such person) held to have been issued mala fidely with only motive to gain control. These 45 persons were not parties before the CLB in CP No. 90 of 2005. The R-1 Company preferred an Appeal (O.J. Appeal No. 8 of 2007) against the CLB's order before the Hon'ble Gujarat High Court Under Section 10 F of the Act. Appeal is pending for adjudication. These 45 persons who were not parties before the CLB filed Special Civil Applications Nos. 19635, 20839 and 20840 all in the year 2006 to be given an opportunity of being heard with regard to cancellation of allotment of total 450 shares. Vide order dated 26.4.2010 the Hon'ble Gujarat High Court remanded the matter qua 45 shareholders to be heard by the CLB, Principal Bench, New Delhi. R-1 Company's Appeal Under Section 10 F of the Act is still pending before the Hon'ble Gujarat High Court.

  3. The Applicant (R-1 Company) drew my attention to a Notification/Circular bearing No. G.S.R. 185(E) which was issued by Company Law Board on 17.3.2008 and which came into force w.e.f. 1st day of April, 2008 in respect of the Regional Benches namely New Delhi Bench, Mumbai Bench, Kolkatta Bench and Chennai Bench and it was argued that in view of the said notification, it becomes crystal clear that the matters filed before the Principal Bench before 31st March, 2008 and still pending will be dealt by any one of the abovementioned Regional Benches. Further, the said notification states that only the Sections 247, 250, 269 and 388B of the Act, shall be dealt by the Principal Bench at New Delhi and the matters falling under all the other sections of the Act shall be dealt by Regional Benches namely, New Delhi Bench, Mumbai Bench, Kolkatta Bench & Chennai Bench. It was pointed out that the Benches may, at their discretion, hold sittings in any other city or town falling within their respective Geographical Jurisdiction or any other place outside their Jurisdiction only with the consent of the parties. It was argued that in view of the said notification and also by virtue of Regulation 7 & 44 of the Company Law Board Regulations, 1991, the instant petition is not maintainable before the New Delhi Bench and should be adjudicated before the appropriate Bench.

  4. It was further argued that, by virtue of the said Notification/circular the present company petition lies within the jurisdiction of Mumbai Bench as the registered office of the R-1 Company is situated at 604, 'A' Building, President Plaza, Near R.T.O. Office, Ring Road, Surat-395 001, thus, it is the Mumbai Bench which has the sole Authority to adjudicate this matter in the interest of justice and law. It was pointed out that the issue of jurisdiction was also mentioned by the Respondent Company in its Additional Affidavit in Reply at para 3, as the same goes into the root of instant matter. It was prayed that before adjudicating the present matter on merits, the issue of jurisdiction should be decided in the interest of justice and law.

  5. It was contended by the Applicant that the matter was remanded back to the Company Law Board on 26.04.2010 and the notification/circular dated 17.03.2008 came into force on 01.04.2008, thus the matter should have been remanded to the Mumbai Bench, being the appropriate forum to adjudicate the matter instead of being remanded to Delhi Bench. In another appeal preferred before the Hon'ble Gujarat High Court for the clarification of the order dated 26.04.2010, the Hon'ble Gujarat High Court vide its order dated 25.11.2010 directed the Principal New Delhi Bench to decide the matter and the contentions afresh (qua the 45 shareholders who held 450 shares) on merits and in accordance with law.

  6. My attention was drawn to the two separate company petitions 46 of 10 and Company petition No. 01 of 2011 which have been filed before the Mumbai Bench having the Geographical Jurisdiction in the matter. It was emphatically contended that the balance of convenience is entirely in favour of the R-1 Company as having its registered office situated at Surat and within Geographical Jurisdiction of the Mumbai Bench, so the present application of the Respondent Company should be allowed. The Applicant reiterated its contention that the original petition was filed by the Petitioner in the year 2005 before the Principal Bench, New Delhi. Subsequently, in the year 2008 the abovementioned notification was issued by the Company Law Board, where 4 Regional Benches have been constituted and accordingly the matter or Company petition is to be filed in respect to the Registered Office of the Company, therefore, after the order of the Hon'ble Gujarat High Court passed on 26.04.2010, the aforesaid Petition shall be adjudicated by Company Law Board, Mumbai as the R-1 Company has its registered office at Surat, which is in the geographical jurisdiction of Company Law Board, Mumbai, the jurisdiction in this matter does not lie with the New Delhi Bench.

  7. The R-3 (Mr. Jaywant Shah)'s contention is the same as that of the Applicant's (R-1 Company's)

  8. R-3 pointed out that Regulation 4 of Company Law Board Regulations 1991 provides that it shall be lawful for the Hon'ble Chairman to provide that matters falling under Sections 247, 250, 269, 388B of the Act and under Section 2A of the MRTP Act, 1969 shall be dealt with by the Principal Bench. Sub regulation (3) of Regulation 4 postulates that it shall be lawful for the Hon'ble Chairman to provide that matters falling under all other Sections of the Act shall be dealt with by Regional Benches viz. by the Benches at New Delhi, Chennai, Kolkata and Mumbai. The only exception in the proviso to sub regulation (3) is that matters which were pending before the Principal Bench and Additional Principal Bench as on 1st April, 2008 shall continue to be disposed of in the name of the Principal Bench and Additional Principal Bench respectively.

  9. Further, it was pointed out that Regulation 7, states that all proceedings other than proceedings before the Principal Bench under Regulation 4 shall be instituted before the Bench within whose jurisdiction the registered office of the company is situated.

  10. It was argued that in terms of the Regulations, the CLB discharges its judicial functions through various Benches. The Principal Bench at New Delhi is now a Bench with a stipulated jurisdiction covering certain specific provisions of the Companies Act, 1956 (Sections 247, 250, 269 and 388B of the Act) and of the MRTP Act 1969. New Delhi Bench sits in New Delhi which takes care of all the matters pertaining to New Delhi Bench. The Regional Benches are vested with the other jurisdiction to adjudicate upon matters falling under all other Sections of the Act, save and except for those upon which the jurisdiction has been conferred upon the Principal Bench, which, inter alia, means that proceedings under Sections 397 and 398 of the Companies Act, 1956 not being specifically assigned to the Principal Bench of the CLB, fall squarely within the jurisdiction of the Regional Benches, where the Registered office of the company is situated.

  11. Further, it was contended that on 17.03.2008, a Notification/Circular bearing No. G.S.R. 185 (E) was also issued by Company Law Board, which came into force w.e.f. 1st day of April, 2008 in respect of the Regional Benches namely New Delhi Bench, Mumbai Bench...

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