Kanthi Narahari - (1.) THE present petition is filed under sections 111A and 111(4) of the Companies Act, 1956 ('the Act') seeking directions from this Bench to rectify register of shareholders by entering 14,78,832 equity shares of Rs. 10 each. It is stated that the petitioner -company entered into an agreement, dated 2nd August, 2005 with the R1 -company jointly to develop a villa project with Good Earth Estates a partnership firm. Further another agreement dated 24th March, 2006 was entered into between the respondent -company and the petitioner -company with the terms and conditions as stated in the agreement. As per the second agreement, the respondent -company agreed to issue its shares against the sale proceeds of the land of the petitioner -company. The actual sale proceeds of land of the petitioner -company sold by Good Earth Estates is Rs. 3,31,28,950 out of which an amount of Rs. 1,83,40,025, has been received and the balance amount of Rs. 1,47,88,325 has to be converted into equity shares of the respondent -company and the shares are to be issued in the name of the petitioner -company. All the attempts made by the petitioner -company to get the shares against the sale proceeds from the respondent -company have failed. In view of the reasons he requested the Bench to grant the relief as prayed for. The respondent -company filed a preliminary objection to the petition. It is stated that the company petition is not maintainable on the ground that the petitioner -company tried to agitate the right emanating from a contract which does not fall within the purview of sections 111(4) and 111A of the Act. The petitioner's alleged grievances are based on the agreements dated 2nd August, 2005 and 28th February, 2006. Under the said agreements the petitioner -company claiming to be entitled for certain sums of money and further issue of shares to the petitioner -company by the respondent company. It is stated that the petitioner -company is attempting to enforce his right only under the agreement and seeking specific performance of the said agreements. In view of the reasons the petition is devoid of merits and liable to be dismissed as not maintainable.
(2.) HEARD the learned counsel appeared for the respective parties. It is an admitted fact that the respondent -company had entered into a sale -cum -development agreement dated 2nd August, 2005 with the petitioner -company and agreed to execute the terms and conditions as stated therein, further the respondent entered into another agreement dated 24th March, 2006 with the petitioner -company to fulfil certain terms and conditions as stated therein. According to clause 4 of the agreement the petitioner -company agreed to give sale proceeds of 5.05 acres of their land at Vadavathoor Kothayam at the rate of Rs. 62,500, per cent to the respondent -company herein after adjusting Rs. 137.68 lakh towards payment of dues to Mr. John Mathew and such amount will on payment, automatically be converted in respondent -company as shares. The claim of the petitioner -company is only based on the agreement executed on 24th March, 2006 between the respondent -company and the petitioner -company. Admittedly the petitioner -company is not a shareholder of the respondent company. All is not the case of the petitioner -company that the respondent -company after having allotted the shares to the petitioner -company has not entered the name of the petitioner -company in its register of members. It is not the case of the petitioner -company that it has complied with the provisions as contemplated under section 168 of the Act and seeks rectification of register of members of the respondent -company. As the claim of the petitioner is in the nature of a specific performance it does not attract either the provisions of section 111(4) or section 111A of the Act. Section 111 consists of two parts. The first part relates to appeal to the Company Law Board ('CLB') against refusal by the company to register transfer of shares. The second part deals with the rectification of register of members. Admittedly, the proceedings are summary in nature. The CLB exercises its discretionary power in such matters depending upon the facts and circumstances of the each case. Section 111A of the Act provides for the rectification of register of members in public limited company. From the plain reading of the provision it is unequivocally clear that the said provision is applicable only in respect of the transfer of existing shares. Hence, the above provisions will not apply to the facts of the present case. The jurisdiction under the above provisions of the Act conferred upon this Bench could not be expanded to cases where the very allotment shares is an issue or enforcement of an agreement for allotment of shares which cannot be a subject -matter of adjudication under sections 111(4) and 111A of the Act. In the facts of present case the relief is in the nature of specific performance and the petitioner cannot invoke the jurisdiction of this Bench under sections 111(4) and 111A of the Act and this Bench prima facie does not have jurisdiction and cannot exceed its jurisdiction to entertain such claims. The counsel for the petitioner -company relied upon a judgment reported in the matter of Nazamunnessa Begum v. Yidyasagar Cotton Mills Ltd., [1963] 33 Comp Cas 36 (Cal.). The said judgment is not applicable to the facts of the present case. On the other hand the counsel for the respondent relied upon a judgment reported in the matter of Ammonia Supplies Corporation (P.) Ltd. v. Modern Plastic Containers (P.) Ltd. : [1998] 30 CLA 355 (SC) : [1998] 7 SCC 105. The hon'ble Supreme Court has held at para 27 the relevant portion of the para is extracted here at: [T]he court has to examine on the facts of each case whether an application is for rectification or something else. So field or peripheral jurisdiction of the court under it would be that comes under rectification, not projected claims' under the grab of rectification. So far exercising of power for rectification within its field there could be no doubt the court has referred under section 155 read with section 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 what is covered under it by itself. But this does not mean by interpreting such "court having exclusive jurisdiction to include within it what is not covered under it merely because it is cloaked under the nomenclature rectification does not mean the court cannot see the substance after removing the cloak. Further it is more apt in this regard to mention that the word rectification connotes something what ought to have been done but by an error not done and what ought not to have been done was done requiring correction. In other words, the rectification is the failure on the part of the company to comply with the directions under the Act. The burden shall be on the petitioner to prove that the company failed to comply with the directions mandated under the Act. I am of the view that the petitioner -company under the guise of is seeking to enforce a specific performance and in the circumstances detailed aforesaid invoking the jurisdiction of this Bench under sections 111(4) and 111A of the Act is completely misplaced and in my view an abuse of process of law. The petition is considered an exercise in futility and liable to be dismissed. Accordingly, the petition is dismissed. No order as to costs.;