AMMONIA SUPPLIES CORPORATION (P) LTD. versus MODERN PLASTIC CONTAINERS PVT. LTD. AND ORS.

Citation: [1998] SUPP. 1 S.C.R. 413 · Decided: 04-09-1998 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Case Partly allowed

Judgment (excerpt)

AMMONIA SUPPLIES CORPORATION (P) LTD. 
v. 
MODERN PLASTIC CONTAINERS PVT. LTD. AND ORS. 
SEPTEMBER 4, 1998 
[G.B. PATTANAIK AND A.P. MISRA, JJ.) 
Companies Act, 1956: Sections 155, 446, 2(JJ) and 10. 
Company Cowt:-Jurisdiction of-Nature and scope-Held: Summary 
not exclusive in nature-Company court has to adjudicate on the facts and 
circumstances of each case and to find out whether the dispute raised is really 
for rectification and not projected claims under the garb of rectification-If 
dispute relates to peripheral field of rectification then Company Court has 
exclusive jurisdiction and jurisdiction of civil court is implicitly barred-Other-
wise jurisdiction of civil court is not barred-Jurisdiction of Company Judge 
under S. 446 is discretionary. 
Sections 155 and 446-Scope of-Held: S.446 deals with cases of the 
company under winding up-While S.155 deals with companies both under 
mi1di11g up and not under winding up. 
Words and Phrases : 
"Rectification" and "sufficient cm1se'!-Mea11ing of-111 the conteJ.1 of S. 
155 of the Companies Act, 1956. 
"Except by leave of the Court''-Meaning of-In the context of S. 446 of 
A 
B 
c 
D 
E 
the Companies Act, 1956. 
F 
The appellant-Company made investment in the shares of the 
respondent-Company to the extent of 50% shares. According to the respon-
dent there was no such investment made by the appellant nor the respon-
dent transferred any share in favour of the appellant. The appellant, 
therefore, filed a Company Petition before the High Court under Sections G 
397, 398 and 155 of the Companies Act, 1956 for Rectification of the 
Register of Members. The High Court dismissed the petition on the 
. ground that it was not a fit case for exercising discretion of the Court for 
invoking the summary jurisdiction under Section 155 of the Act and 
directed the appellant-Company to file a civil suit, if so advised. 
H 
413 
414 
SUPREME COURT ~EPORTS (1998) SUPP. 1 S.C.R. 
A 
On behalf of the appellant-Company it was contended that the Court 
should not have directed the appellant-Company to file a civil suit only 
because the respondent for dispute's sake stated that the dispute raised 
was a complicated question of facts including fraud to be adjudicated; and 
that the jurisdiction of the Court in proceedings under Section 155 of the 
B Act was exclusive and not summary in nature. 
c 
The question before this Court was : 'Whether in the proceedings 
under Section 155 of the Companies Act, 1956, the Court has exclusive 
jurisdiction in respect of all the matters raised therein or has only sum-
mary jurisdiction"? 
Allowing the appeal in part, this Court 
· HELD: 1.1. Section 155 of the Companies Act, 1956 deals with power 
of the Court to rectify the Register of Members maintained by a Company. 
The word "rectification" connotes something what ought to have been done 
D but by error not done and what ought not to have bt!en done was done 
requiring correction. Rectification in other words, is the failure on the part 
of the company to comply with the directions under the Act. To show this 
error the burden is on the applicant, and to this extent any matter or 
dispute between persons raised in such Court it may generally decide any 
E matter which is necessary or expedient to decide in connection with the 
rectification. In order to qualify for rectification, every procedure as 
prescribed under the Companies Act before recording the name in the 
Register of the company has to be stated to have been complied with by 
the applicant - at least that part as required by the Act - and assertion of 
what has not been complied with under the Act and the Rules by the person 
F or auth~rity of the respondent- Company before the applicant claims for 
the rectification of such Register. [ 432-H; 433-A] 
1.2. Field or peripheral jurisdiction of the Court under it would be 
what comes under rectification, not projected claims under the garb of 
rectification. So far exercising of power for rectification within its field 
G there could be no doubt the Court as referred under Section 155 read with 
Section 2(11) and Section 10, it is the Company Court alone which has 
exclusive jurisdiction. Similarly, under Section 446 the 'Court' refers to the 
Company Judge, which has exclusive jurisdiction to decide matters, which 
are covered under it by itself. But this does not mean by interpreting such 
H 'court' having exclusive jurisdiction to include within it what is not covered 
·--
AMMON

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