# CANARA BANK v. NUCLEAR POWER CORPORATION OF INDIA LTD. AND ORS

- **Citation:** [1995] 2 S.C.R. 482
- **Court:** Supreme Court of India
- **Decided:** 1995-03-06
- **Case number:** Civil Appeal No. 3206 of 1995
- **Bench:** J.S. Verma, S.P. Bharucha, K.S. Paripoornan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/canara-bank-v-nuclear-power-corporation-of-india-ltd-and-ors-12785
- **Pages:** 31

## Headnote

Special Court (Trial of Offences relating to Transactions in Securities)
Act, 1992-Section 9A-Whether Company Law Board a Court-Whether it
is divested of the jurisdiction powers and authority to entertain matters .or
C claims arising out of transactions in securities entered into between the stated
dates in which a notified person is involved-Whether by reason of Sub-section
(2) claims or matters pending"before it on the commencement of the Amendment Ordinance stand transfen-ed to the Special Court-Yes.
Companies Act, 1956 : 'Court' meaning of-Whether Company Law
D Board is a Court.
Wordr & Phrases: 'Court'-Meaning of in the context of sections 111 &
155 of Companies Act, 1956.
I
I
The Canara Bank had made an application before the Company Law
E Board (CLB) under section 111 of Comp,anies Act seeking relief against
the Nuclear Power Corporation of India Ltd, which had refused to register
in its books bonds of the Noel.ear Power Corporation purchased by Canara
Bank. The Standard Chartered Bank had also claimed ownership of the
said bonds. Canara Bank alleged that it had acquired the said bonds from
F the Andhra Bank Financial Services Ltd, through a broker, a person
notified under the provisions of Section 3(2) of the Special Court Act. The
application of the Canara Bank was pending disposal before C.L.B. when,
on 25th January, the Special Court Act was amended by the Special Court
(Trial of offences relating to Transactions in Securities) Amendmet Ordinance, 1994 and Section 9-A was introduced. Tite Canara Bank and the
G Nuclear Power Corporation took the stand that the application of Canara
Bank stood transferred to the Special Court Act; the Standard Chartered
Bank contended that the CLB retained the jurisdiction to deal with the
application. The CLB held that it was not a court within the meaning of
the Companies Act nor was it a civil court. Its jurisdiction was, therefore_,
H ''unaffected by the provisions of Section 9-A(2) of the Special Court AcL
482
..
\ i'
--'i
\
. CANARA BANK v. NUCLEARPO\VERCORPN.
483
Aggrieved by the' order or CLB Canara Bank prererred the present appeal. A
Allowing the appeal, this Court \
HELD: 1.1. Sub-secito~· cll ~r s~ction 9A or the'special Co~rt Act
mandates tr.insrer to the Special Court or 'evecy suit, claim.or othe; legal
proceedings'. (492-B)
· · ·
· · ·
'
:. ... . .
· ·
.. B
.
-
• .
i
'''
· 1.2. The word "court" must be read in the context in which it ls used
in a statute. It is permissible given the conteXt, to read it as comprehending
. the courts of civil judicature and courts or tribunais exercising curial or
judicial powers. In the context In which the word "court" Is ~ed In 'section
9A of the Special Court Act, it Is intended to encompass all curial or · C
judicial bodies \1-hich 'have the jurisdiction to' decide in~ttei:-s or claims; .
int~r iilia, arising ou't of transactions .In seeuritie's -~ntered Into between the
sbted dates in which a P.rson notified hi lnvolved.'(506-F] > .
. : .- . :
-
'
'
•
•
$
~.
•'
''
~ • \.:
,·,
f ·_ !
.. 1.3. The judgine~t In Mis.' Harindar Budar Mills LuL.v. S~yarn Swidar. , D
Jhunjhunwala and· Ors., (1962) 2 SCR 339 Is determinative In deciding .
'
.
·-
-
-
-
-
.
whether a tribunal Is subject to the jurisdictions under A.136 and 227, but
. It does not hold that a "court• Is only a court of Civil judleature In the
hierarchy of courts: .. :.
.•
·:· --:· ...... ,
...
. ''~ ·-
.. ;'
' ,_
'~ '
Kihoto Holiohan v. Zachillhu and Ors, (1992) Suppl. 2 S.C.C. 651, E
referred to.
. .
. .
-- ' '' ~ . ---~
2. The occasion for.enacting the Special Court Act most not be lost
sight ot The, Statement of Objects and Reasons of the Bill to replac'e the
Amendment Ordinance has been quoted. Joint Parliamentary Committee
was constituted to Investigate what the Statement of Objects and Reasons . F
called "the large scale irregularities and malpractices which were noticed
In the Securities transactions of banks". (506-Gl .,
... · · ;- ·
'
: • .
•
. i.
•- • ~. '" '
3. Havi

## Text

_Characters 0–39,904 of 74,297. This is a partial read: ask again with offset=39904 for what follows._

A
CANARA BANK
v.
NUCLEAR POWER CORPORATION OF INDIA LTD. AND ORS.
MARCH 6, 1995
B
[J.S. VERMA, S.P. BHARUCHA AND K.S. PARIPOORNAN, JJ.]
Special Court (Trial of Offences relating to Transactions in Securities)
Act, 1992-Section 9A-Whether Company Law Board a Court-Whether it
is divested of the jurisdiction powers and authority to entertain matters .or
C claims arising out of transactions in securities entered into between the stated
dates in which a notified person is involved-Whether by reason of Sub-section
(2) claims or matters pending"before it on the commencement of the Amendment Ordinance stand transfen-ed to the Special Court-Yes.
Companies Act, 1956 : 'Court' meaning of-Whether Company Law
D Board is a Court.
Wordr & Phrases: 'Court'-Meaning of in the context of sections 111 &
155 of Companies Act, 1956.
I
I
The Canara Bank had made an application before the Company Law
E Board (CLB) under section 111 of Comp,anies Act seeking relief against
the Nuclear Power Corporation of India Ltd, which had refused to register
in its books bonds of the Noel.ear Power Corporation purchased by Canara
Bank. The Standard Chartered Bank had also claimed ownership of the
said bonds. Canara Bank alleged that it had acquired the said bonds from
F the Andhra Bank Financial Services Ltd, through a broker, a person
notified under the provisions of Section 3(2) of the Special Court Act. The
application of the Canara Bank was pending disposal before C.L.B. when,
on 25th January, the Special Court Act was amended by the Special Court
(Trial of offences relating to Transactions in Securities) Amendmet Ordinance, 1994 and Section 9-A was introduced. Tite Canara Bank and the
G Nuclear Power Corporation took the stand that the application of Canara
Bank stood transferred to the Special Court Act; the Standard Chartered
Bank contended that the CLB retained the jurisdiction to deal with the
application. The CLB held that it was not a court within the meaning of
the Companies Act nor was it a civil court. Its jurisdiction was, therefore_,
H ''unaffected by the provisions of Section 9-A(2) of the Special Court AcL
482
..
\ i'
--'i
\
. CANARA BANK v. NUCLEARPO\VERCORPN.
483
Aggrieved by the' order or CLB Canara Bank prererred the present appeal. A
Allowing the appeal, this Court \
HELD: 1.1. Sub-secito~· cll ~r s~ction 9A or the'special Co~rt Act
mandates tr.insrer to the Special Court or 'evecy suit, claim.or othe; legal
proceedings'. (492-B)
· · ·
· · ·
'
:. ... . .
· ·
.. B
.
-
• .
i
'''
· 1.2. The word "court" must be read in the context in which it ls used
in a statute. It is permissible given the conteXt, to read it as comprehending
. the courts of civil judicature and courts or tribunais exercising curial or
judicial powers. In the context In which the word "court" Is ~ed In 'section
9A of the Special Court Act, it Is intended to encompass all curial or · C
judicial bodies \1-hich 'have the jurisdiction to' decide in~ttei:-s or claims; .
int~r iilia, arising ou't of transactions .In seeuritie's -~ntered Into between the
sbted dates in which a P.rson notified hi lnvolved.'(506-F] > .
. : .- . :
-
'
'
•
•
$
~.
•'
''
~ • \.:
,·,
f ·_ !
.. 1.3. The judgine~t In Mis.' Harindar Budar Mills LuL.v. S~yarn Swidar. , D
Jhunjhunwala and· Ors., (1962) 2 SCR 339 Is determinative In deciding .
'
.
·-
-
-
-
-
.
whether a tribunal Is subject to the jurisdictions under A.136 and 227, but
. It does not hold that a "court• Is only a court of Civil judleature In the
hierarchy of courts: .. :.
.•
·:· --:· ...... ,
...
. ''~ ·-
.. ;'
' ,_
'~ '
Kihoto Holiohan v. Zachillhu and Ors, (1992) Suppl. 2 S.C.C. 651, E
referred to.
. .
. .
-- ' '' ~ . ---~
2. The occasion for.enacting the Special Court Act most not be lost
sight ot The, Statement of Objects and Reasons of the Bill to replac'e the
Amendment Ordinance has been quoted. Joint Parliamentary Committee
was constituted to Investigate what the Statement of Objects and Reasons . F
called "the large scale irregularities and malpractices which were noticed
In the Securities transactions of banks". (506-Gl .,
... · · ;- ·
'
: • .
•
. i.
•- • ~. '" '
3. Having regard to the 1'J!ormity or the "scam" and its vast ramifica-
.
. ~ .
'
. .
.
-· .
' .
lions, Parliament thought It was·necessary that all the matters or claims
arising out of transaction in securities entered Into between th~· stated · G
dates In which a 'person notified was Involved should be brouiibt before .
and tried by the same forum. That forum had been invested with the
jurisdiction to try persons accused of offences relating to transactions 'in
securities entered Into between the stated dates. It was also required to
gh·e directions to the Custodian In regard to property belougingto persons : H
/
'
'
/
....
-
~j-,..'_,,<·'>o; \\;
- \
(' ;'.\",
........ .
. ..... _-: . /,\ » ,_\_
-----\
,
I
'·'1: 484 ._·, '\"
SUPREME COURT REPORTS
(1995] 2 S.c.R.
'-.... ..
A notified which stood attached under the provisions ~r th; Special Courts
AcL (508·B·C)
'
\
4. It is proper to attribu~ to the word "Court" in Section 9A(l) or
the Special Cmirt Act, not" the 'narrower meaning or a' court or civil
judicature which 'is 'a part ~r the ordinary hierarchy' or courts but the
B broader meaning or a curial' body, a body acting judicially to deal with
matters and claims arising out or transactions in securities entered into
betwttn the ~tate'd d3tes In which a pers~n notified Is involved. An. interpretation that ,suppresses the-Dilschid and advances the 'remedy iniist be
~
given. (508-D-E)
.
- ..
. , .
. . ; .
. C . . ' ' 5. Under section 111 of the Companies Act as amended with elfect
rroin 31st May, 1991, theCLB perrorms the rwict1ons that were theretorore
P'erroniied by courts or civil judicature under Section 155. It b empowered .
\
.
-·
'
.
; .. -
.
'
-· .....
to make orders directing-rectification or the company's register;·as to
damages, costs and incidental and consequential orders. It may decide any
D question relating t.; the title or any person who is a party be£ore it tO have .
' bl! _name entered upon the company's register and any question which it
b necessary or expedient to decide. It may make interim orders. Failure
to' comply with any ~rder visits the company with a line.. In regi.rd to an
these matter It has exclusive jurisdiction (except under the provblom or
E Special Court Act); In exercise or its £unction under section 111 the CLB
"acts judicially. Its orders are appealable. The CLB, rurtber, b a permanent
body constituted under a statute. It b, thererore a court, particularly for
the purposes or Section 9A of the Special Court Act. (510-E-G).
"
,.,; ·,,.-:.
,.-_, ·. :'
,-._ -_
6. A share-holder whose name the company has rerused to enter in
F Its register might be put to some difficulty in deciding 1'hether be should
approach the Special Court or the CLB, but that Is no reason to interpret
-~
the provision.! or Section 9A lo a manner that would ddeat Its iotendement
and adversely affect the public interest. In any event the time takm in
approaching the CLB in a mati.,r that should have been filed before the
G Special Court would not be, or any comequence £or there Is no time limit
within which ihe' Speci;.i CoUrt has to be approached. (510-H, 511-A]
,.~-"·-,:
'-;~ ·--.· •'
... · ..
~
.-
i
. '-'-; ---:;-
.·
_:;
· " · ~ 7. Section 3 (2) or the Special Court Act empowers the Custodian, on
being 'satisfied on inroJ;matlon rei:eived, that any person has been involved
in· any olfence· relating to transactions in secnritles entered Into between
. H the stated dates to notify the name or sncb person in the omcial GuaUe.
•
f
>
CANARA BANK v. NUCLEAR POWER CORPN.
485
On such notification, by reason of Section 3(3), the property of the person A
notified stands attached. That property, by reason of Section 3(4), is to be
dealt with by the Custodian in such manner as the Special Court may
direct. Section 4 states that if the Custodian is satisfied after such inquiry
as he may think fit that any contract or agreement entered into at any time
between the stated dates in relation to the property of a person notified B
has been entered into fraudulently or to defeat the provisions of the Special
Court Act, he may cancel such contract or agreement whereupon such
property stands attached. The scope, therefore, of Section 4 is limited. It
applies only in regard to property that belong to a person notified. Section
9A(l) is much wider and it invests the Special Court with jurisdiction to
entertain matters or claims arising out of transactions in securities C
entered into between the stated dates in which a person notified is involved
not only as a party but also as a broker, intermediary or in any other
manner. (511-D-G)
8. The words "appeal" and 'application, in the context of the
provisions of Section 111 have, therefore, the same meaning and it is, D
plainly, an original application that is made. The shareholder does not
resort to a superior court to review the decisions of an inferior court or
tribuaal. The fact, therefore, that Section 9A(2) of the Special Court Act
speaks of the transfer of "every suit, claim or other legal proceeding (other
than an appeal) "does not exclud~ the application or 'appeal' made under E
the provisions of Section 111 of Companies Act from the purview of Section
9 A(l) of the Special Court Act. (512-B)
9. The application of Canara Bank pending before the CLB shall
stand transferred to the Special Court constituted under the provisions of
the Special Court (Trial of Offences Relating to Transactions in F
Securities) Act, 1992. (512-D)
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3206 of
1995.
From the Judgment and Order dated 29.7.94 of the Company Law G
Board Northern Region, New Delhi in Com.P.No. 5/111 of 1992 CLB
(NR).
Barish N. Salve, Ms. Sunita Dutt and Ms. Meenakshi Grover for the
Appellant.
H
486
SUPREME COURT REPORTS
(1995] 2 S.C.R.
A
J.C. Seth and Ms. Rachana Joshi Issar for the Respondent No. 1.
B
F.S. Nariman, M .. H. Baig, Ms. Ritu Bhalla, Ms. Monika Sharma and
S.S. Shroff for the Respondent No. 4.
The Jud~ent of the Court was delivered by
BHARUCHA, J. Leave granted.
This is an appeal from the judgment and order of the Company Law
C · Board which raises an interesting question as to the exclusive jurisdiction
· of the Special Court constituted under the provisions of the Special Court
(Trial of Offences relating to Transactions in Securities) Act, 1992. The
Company Law Board (CLB) has held that its jurisdiction to deal with
matters relating to securities, provided by the Companies Act, 1956, is not
D affected by the Special Court Act.
The question arose in these circumstances. The Canara Bank (the
appellant) had made an application before the CLB under Section 111 of
the Companies Act seeking relief against the Nuclear Power Corporation
of India Ltd. (the first respondent), which had refused to register in its
E books in the name of the Canara Bank bonds of the Nuclear Power
Corporation purchased by the Canara Bank. The Standard Chartered Bank
(the fourth respondent) had also claimed ownership of the said bonds. The
Canara Bank alleged that it had acquired the said bonds from the Andhra
Bank Financial Services Ltd. (the third respondent) through one Hiten P.
p
Dalal, (the second respondent) who had acted as a broker. Hiten P. Dalal
is a person notified under the provisions of Section 3(2) of the Special
Court Act and was, as the application of the Canara Bank before the CLB
showed, involved as a broker in the transaction relating to the said bonds.
The application of the Canara Bank was pending disposal before the CLB
when, on 25th January, 1994, the Special Court Act was amended by the
G Special Court (Trial of Offences Relating to Transactions in Securities)
Amendment Ordinance, 1994, and Section 9-A was introduced. The
Canara Bank and the Nuclear Power Corporation took the stand that the
application of the Canara Bank stood transferred to the Special Court by
virtue of the provisions of Section 9-A(2) of the Special Court Act. The
H Standard Chartered Bank (Stanchart) contended that the CLB retained the
'\ ...
i
CANARA BANK v. NUCLEARPOWERCORPN.(BHARUCHA,J.)
487
jurisdiction to deal with the application. The CLB held that it was not a A
court within the meaning of the Companies Act nor was it a civil court. Its
jurisdiction was, therefore, unaffected by the provisions of Section 9-A(2)
of the Special Court Act.
The Special Court Act
B
The Special Court Act was enacted to provide for the establishment
of a special court for the trial of offences relating to transactions in
securities and matters connected therewith or incidental thereto. Securities
were defined in Section 2( c) to include shares, scrips, stocks, bonds, C
debentures, debenture stock, units and olher marketable securities of a like
nature, Government securities and rights or interests in securities. _Section
3(1) provided for the appointment by the Central Government of a Custodian. By reason of Section 3, the Custodian was empowered, on being
satisfied on information received that any person had been involved in any D
offence relating to transactions in securities after 1st April, 1991, and
before 6th June, 1992 (the stated dates), to notify the name of such person
in the Official Gazette. On and from the date of such notification, by reason
of Section 3(3), property, movable and immovable, belonging to the person
notified stood attached and, by reason of Section 3( 4), could be dealt with
by the Custodian in such manner as the Special Court directed. Section E
4(1) empowered the Custodian, if he was satisfied, after such inquiry as he
thought fit, that any contract or agreement entered into at any time
between the stated dates in relation to any property of a person notified
had been entered into fraudulently or to defeat the provisions of the
Special Court Act, to cancel such contract or agreement and, on such F
cancellation, such property stood attached. Such cancellation was required
to be preceded by a reasonable opportunity to the parties to the contract
or agreement to be heard. Any p~rson aggrieved by a notification under
Section 3(2) or Section 4(1) was entitled to file a petition of objection
before the Special Court. The Special Court was established by Section 5.
It was to consist of a sitting Judge. of the High Court nominated by the G
Chief justice of the High Court within the local limits of whose jurisdiction
the Special Court was situated, with the concurrence of the Chief Justice
of India. Section 6 empowered the Special Court to take cognizance of and
try such cases as were instituted before it or transferred to it. Section 7
dealt with the jurisdiction of the Special Court and it read thus:
H
488
SUPREME COURT REPORTS
[1995) 2 S.C.R.
A
"7. Jurisdiction of Special Court - Notwithstanding anything contained in any other law, any prosecution in respect of any offence
referred to in sub-section (2) of section 3 shall be instituted only
in the Special Court and any prosecution in respect of such offence
pending in any court shall stand transferred to the Special Court."
B Section 9 made provision for the procedures and powers of the Special
Court. It stated that the Special Court should in the trial of cases before it
follow the procedure prescribed by the Code of Criminal Procedure for
the trial of warrant cases before a Magistrate. It was also provided that the
Special Court would be deemed to be a Court of Session, having all the
C powers of such a court. Section 10 provided that an appeal would lie from
any judgment, decree, sentence or order, not being an interlocutory order,
of the Special Court to the Supreme Court, both on facts and on law. By
reason of Section 11(1), the Special Court could make such order as it
deemed fit directing the Custodian in the matter of disposal of property
under attachment. Section 11(2) set out the order in which the liabilities.
D of the persons notified had to be discharged. Section 13 stated that the
provisions of the Special Court Act . would have effect notwithstanding
anything inconsistent therewith contained in any other la"'. for the time · ·
being in force, or in any instrument having effect by virtue of any law, or
in any decree or order of any court, tribunal or other authority. By reason
E of Section 15 the Special Court (Trial of Offences Relating to Transactions
in Securities) Ordinance, 1992, which preceded the Special Court Act, was
repealed.
The Special Court (Trial of Offences Relating to Transactions in
Securities) Amendment Ordinance, 1994, was brought into effect on 25th
F January, 1994. The provision thereof which is most relevant for our purpose
is Section 9-A. It reads tlius:
G
H
"9A. Jurisdiction, powers, authority and procedure of Special
Court in civil matters - (1) On and from the commencement of the
Special Court (Trial of Offences Relating to Transactions in
Securities) Amendment Ordinance, 1994, the Special Court shall
exercise all such jurisdiction, powers and authority as were exercisable, immediately before such commencement, by any civil court
in relation to any matter or claim -
(a) relating to any property standing attached under sub-sec-
)
'
CANARA BANK v. NUCIBARPOWERCORPN.(BHARUCHA,J.]
489
tion (3) of section 3:
A
(b) arising out of transactions in securities entered into after
the 1st day of April, 1991 and on or before the 6th day of
June, 1992, in which a person notified under sub-section (2)
of section 3 is involved as a party, broker, intermediary or in
any other manner:
B
(2) Every suit, claim or other legal proceedings (other than on
appeal) pending before any court immediately before the commencement of the Special Court (Trial of Offences Relating to Transactions in Securities) Amendment Ordinance, 1994, being a suit C
claim or proceeding, the cause of action whereon it is based is
such that it would have been, if it had arisen after such commencement, within the jurisdiction of the Special Court under sub-section (1), shall stand transferred on such commencement to the
Special Court and the Special Court may, on receipt of the records
of such suit, claim or other legal proceeding, proceed to deal with D
it, so far as may be, in the same manner as a suit, claim or legal
proceeding from the stage which was reached before such transfer
or from any earlier stage of de novo as the Special Court may deem
fit.
E
(3) On and from the commencement of the Special Court (Trial
of Offences Relating to Transactions in Securities) Amendment
Ordinance, 1994, no court other than the Special Court shall have
or be entitled to exercise, any jurisdi.ction power or authority in
relation to any matter 'or claim referred to in sub-section (1).
( 4) While dealing with cases relating to any matter or claim under
this section, the Special Court shall not be bound by the procedure
laid down by the Code of Civil Procedure, 1908 (5 of 1908), but
shall be guided by the principles of natural justice, and subject to
F
the other provisions of this Act and of any rules, the Special Court G
shall have the power to regulate its own procedure.
(5) Without prejudice to the other powers conferred under this
Act, the Special Court shall have, for the purposes of discharging
its functions under this section, the same powers as are vested in
a civil court under the Code of Civil Procedure, 1908 (5 of 1908}, H
490
SUPREME COURT REPORTS
[1995) 2 S.C.R.
A
while trying a suit, in respect of the following matters, ·namely:
B
c
D
(a) summoning and enforcing .the attendance of any person
and examining him on oath:
(b) requiring the discovery and production of documents;
( c) receiving evidence on affidavits;
( d) subject to the provisions of the sections 123 and 124 of
the Indian Evidence Act, 1872, requisitioning any public
. record or document or copy of such record or document
from any office;
( e) issuing commissions for the examination or witnesses or
documents;
(f) reviewing its decisions;
(g) dismissing a case for default or deciding it a parte;
(h) setting aside any order of dismissal of any case for default
or any order passed by it ex parte; and
.
E
(i) any other matter which may be prescribed by the Central
Government under sub~section (1) of section 14."
"
The Amendment Ordinance also introduced Section 9B. It invested the
Special Court with the jurisdiction and powers of a court conferred under
the Arbitration Act, 1940, to. decide any question forming the subject
F matter of a reference relating to any matter or claim mentioned in Section
9A(1). Every suit or other proceeding (other than an appeal) in relation
to any matter or claim referred to in section 9A(l) pending before any
court and governed by the Arbitration Act stood transferred to the Special
Court on the date of commencement of the Amendment Ordinance.
G
H
An Act replaced the Amendment Ordinance. The Statement of
Objects and Reasons thereof said:
"Under the provisions of the Special Court (Trial of Offences
Relating to Transactions in Securities) Act, 1992, a Special Court
was set up at Bombay and a Custodian was appointed to deal with
•
CANARA BANK v. NUCLEAR POWER CORPN. [BHARUCHA,J.] an
the situation arising out of the large scale irregularities and A
· malpractices which were noticed in the securities transactions of
banks, to ensure the speedy trial of the offenders, to recover the
amounts involved and to attach the properties of the offenders with
a view to prevent diversion of such properties by the persons
responsible fol\ these offences.
2. During the course of the trial of these cases, the jurisdiction of
the Special Court, particularly in matters of civil claims, was being
challenged for want of specific provisions in the Act. The Special
Court, therefore, needed to be conferred with civil jurisdiction.
B
For the said purpose, the Special Court (Trial of Offences Relating C
to Transactions in Securities) Amendment Ordinance, 1994, was
promulgated by the President on the 25th January, 1994 .... "
Analysis of Section 9A
By reason of sub-section (1) of Section 9-A on and from the date of D
commencement of the Amendment Ordinance the Special Court exercises
all such jurisdiction, powers and authority as were exercisable by any civil
court in relation to any matter or claim (a) relating to any property standing
attached and (b) arising out of transactions in securities entered into
between the stated dates in which a notified person was in any manner
involved. By reason of sub-section (2) any suit, claim or other legal E
proceeding (other than an appeal) pending before any court immediately
before the commencement of the Amendment Ordinance, being a suit or
proceeding the. cause of action whereof was such that it would have, if it
had arisen after the commencement of the Amendment Ordinari.te, been
within the jurisdiction of the Special Court, stands transferred to the F
Special Court. By reason of sub-section (3), on and from the· commencement of the Amendment Ordinance no court other than the Special Court
may exercise any jurisdiction, powers or authority in relation to any matter
or claim referred to in sub-section (1).
Sub-section (1) of Section 9A empowers the Special Court to exer- G
cise the jurisdiction, powers and authority exercisable by a civil court. It so
empowers the Special Court in relation to any matter or claim, inter alia,
that arises out of transactions in securities entered into between the stated
dates in which a notified person is involved. The words 'civil court' are used
in the context of the jurisdiction, powers and authority that the Special H
492
SUPREME COURT REPORTS
(1995) 2 S.C.R.
A
Court may exercise. The Special Court is empowered to exercise such
jurisdiction, powers or authority in relation to the matters or claims therein
specified. These matters or claims include those arising out of transactions
in securities entered into between the stated dates in which a ·notified
person is involved. Sub-section (2) of Section 9A deals with the transfer of
B certain suits, claims or other legal proceedings (other than an appeal) to
the Special Court. Every suit, claim or other legal proceeding pending
before any court the cause of action whereof is such that, had it arisen after
the commencement of the Amendment Ordinance, the suit, claim or other
legal proceeding would have had to be filed before the Special Court,
stands transferred to the Special Court. Every suit, claim or other legal
C proceeding pending before any court the cause of action whereof arises
out of transactions in securities entered into between the stated dates in
which a notified person is involved would, therefore, if it is pending before
any court on the date on which the Amendment Ordinance came into
force, stand transferred to the Special Court. By reason of sub-section (3)
D of Section 9A, on and after the commencement of the Amendment Ordinance, no court other than the Special Court may exercise any jurisdiction, powers or authority in relation to any matter or claim referred to in
sub-section (1), that is to say, in relation to any matter or claim, inter alia,
arising out of transactions in securities entered into between the stated
dates in which a notified person is involved.
E
A "court" other than the Special Court is debarred, by reason of
sub-section (3) of Section 9A, from exercising any jurisdiction, powers or
authority, after the commencement of the Amendment Ordinance, in relation to any matter or claim arising out of transactions in securities entered
F into between the stated dates . in which a notified person is involved.
Sub-section (2) of Section 9A also speaks of a 'court'; a proceeding before
a court, the cause of action of which arises out of a transaction in securities
entered into between the stated dates in which a notified person is involved,
stands transferred to the Special Court. The question, in these circumstances, is whether the use of the words 'civil court' in sub-section (1) excludes
G the application of Section 9-A to the CLB?
Sub-section (1) of Section 9-A is divisible into two parts. By the first
part, the Special Court is empowered to exercise, on and from the commencement of the Amendment Ordinance, all such jurisdiction, po_wers
H and authority as were exercisable before such commencement by any ciV:il
i
CANARA BANK v. NUCLEARPOWERCORPN.[BHARUCHA,J.]
493
court. By the second part, the Special Court is empowered to exercise such A
jurisdiction, powers or authority in regard to the matters or claims therein
specified, which include matters or claims arising out of transactions in
securities entered into between the stated dates in which a notified person
is involved. So read, the Special Court has the jurisdiction, powers and
authority of a civil court to exercise the same in regard to matters or claims
arising out of transactions in securities entered into between the stated
dates in which a notified person is involved. Sub-section (1) of Section 9A,
therefore, invests the Special Court with the jurisdiction, powers and
authority necessary for the purposes of entertaining matters or claims of
the nature specified therein. Sub-section (2) provides for the transfer of
such matters or claims pending in any court to the Special Court on the
commencement of the Amendment Ordinance. And sub-section (3) expressly debars any court other than the Special Court from exercising any
jurisdiction, powers or authority in relation to such matters or claims.
B
c
The question to pose, therefore, is: is the CLB a court..-lf it is, it is
divested of the jurisdiction, powers and authority to entertain matters or D
claims arising out of transactions in securities entered into between the
stated dates in which a notified person is involved, by reason of sub-section
, ... (3); and, by reason of sub-section (2), such matters or claims pending
before it on the commencement of the Amendment Ordinance stand
transferred to the Special Court.
E
While on Section 9A, it must also be noted that sub-section (2)
thereof mandates transfer to the Special Court of "every suit, claim or other
legal proceedings (other than an appeal)" which is pending before any
court on the commencement of the Amendment Ordinance in which the
cause of action, inter alia, arises out of a transaction in securities entered
into between the stated dates in which a notified person is involved. It is,
therefore, the proceeding in the court of first instance that stands transferred. If the court of first instance has finally disposed of the proceeding
and its order thereon is the subject of an appeal, the appeal does not stand
transferred.
Section 111 of the Companies Act.
Section 111 of the Companies Act, 1956, with effect from 31st May
F
G
1991, reads thus:
H
r.
494
A
B
c
D
E
F
SUPREME COURT REPORTS
(1995] 2 S.C.R.
"Power to refuse registration and appeal against refusal - (1) If a
company refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the transfer of, or
the transmission by operation of law of the right to, any shares or
interest of a member in, or debentures of, the company, it shall,
within two months from the date on which the instrument of
transfer, or the intimation of such transmission, as the case may
be, was delivered to the company, send notice of the refusal to the
,Jransferee and the transferor or to the person giving intimation of
.,~ch transmission, as the case may be, giving reasons for such
refusal.
(2) The transferor or transferee, 01· the person who gave intimation
of the transmission by operation of law, as the case may be, may
~ppeal to the Company Law Board against any refusal of the
company to register the transfer or transmission, or against any
failure on its part .within the period referred to in sub-section (1),
either to register the transfer or transmission or to send notice of
its refusal to register the same.
(3) An appeal under sub-section (2) shall be made within two
months of the receipt of the notice of such refusal or, where no
m1tice has been sent by the company, within four months from the
date on which the instrument of transfer, or the intimation of
transmission, as the case may be, was delivered to the company.
(4) If -
(a) the name of any person -
(i) is without sufficient· cause, entered in the register of
members of a company, or
(ii) after having been entered in the register, is, without
G
sufficient cause, omitted therefrom; or
(b) default is made, or unnecessary delay takes place, in entering
in the register the fact of any person having become, or ceased
to be, a member [including a refusal under sub-section (1))
H
the person aggrieved, or any member of the company, or the
·-~
I
CANARA BANK v. NUCLEAR POWER CORPN. [BHARUCHA,J.]
495
company, may apply to the Company Law Board for rectification A
of the register.
(5) The Company Law Board, while dealing with an appeal
preferred under sub-section (2) or an application made under subsection (4) may, after hearing the parties, either dismiss the appeal
or reject the application, or by order -
B
(a) direct that the transfer or transmission shall be registered by
the company and the company shall comply with such order
within ten days of the receipt of the order; or
(b) direct rectification of t~e register and also direct the company C
to pay· damages, if any, sustained by any party aggrieved.
(6) The Company Law Board, while acting under sub-section (5),
may, at its discretion, make -
(a) such interim orders, including any orders as to injunction or D
stay, as it may deem fit· and just;
(b) such orders as to costs as it thinks fit; and
( c) incidental or consequential orders regarding payment of E
dividend or the allotment of bonus or rights shares.
(7) On any application under this section, the Company Law
Board -
(a) may decide any question relating to the title of any person F
who is a party to the application to have his name entered in,
or omitted from, the register;
(b) generally, may decide any question which it is necessary or
expedient to decide in connection with the application for
rectification.
G
(8) The provisions of sub-sections ( 4) to (7) shall apply in relation
to the rectification of the register of debenture - holders as they
apply in relation to the rectification of the register of members.
(9) If default is made in giving effect to the orders of the Company H
496
SUPREME COURT REPORTS
(1995) 2 S.C.R.
A
Law Board under this section, the company and every officer of
the company who is in default shall be punishable with fine which
may extend to one thousand rupees and with a further fine which
may extend to one hundred rupees for every day after the first day
after which the default continues.
B
c
D
E
F
G
(10) Every appeal or application to the Company Law Board under
sub-section (2) or sub-section (4) shall be made by a petition in
writing and shall be accompanied by such fee as may be prescribed.
(11) In the case of a private company which is not a subsidiary of
a public company, where the right to any shares or interest of a
member in, or debentures of, the company is transmitted by a sale
thereof held by a Court or other public authority, the provisions
of sub-sections ( 4) to (7) shall apply as if the company were a
public company:
Provided that the Company Law Board may in lieu of an order
under sub-section (5), pass an order directing the company to
register the transmission of the right unless any member or members of the company specified in the order acquire the right
aforesaid within such time as may be allowed for the purpose by
the order, on payment to the purchaser of the price paid by him
therefor or such other sum as the Company Law Board may
determine to be a reasonable compensation for the right in all the
circumstances of the case.
(12) If default is made in complying with any of the provisions of
this section, the company and every officer of the company who is
in default, shall be punishable with fine which may extend to fifty
rupees for every day during which the default continues.
(13) Nothing in this section and section 108, 109 or 110 shall
prejudice any power of a private company under its articles to
inforce the restrictions contained therein against the right to transfer the shares of such company.
Section 111, as set out above, was incorporated in the Companies
Act subsequent to the report of a committee appointed to consider amendH ments to the Companies Act. The Sachar Committee, as it came to be
\
""'
CANARA BANK v. NUCLEAR POWER CORPN. [BHARUCHA, J.]
497
called, said:
A
"under the existing law, there are two remedies open to an aggrieved person - to file an appeal under section 111, or to apply
to the Court for rectifica.tion of the share register under section
155. We think that these two remedies should now be assimilated
and provision be made (at one place) for a person aggrieved B
(including any person aggrieved by a refusal of the Board of
Directors to register a transfer or transmission of shares) to apply
to the Company Law Board - as proposed to be constituted - for
rectification of the share register on any of the grounds mentioned
in sub-clause (a) or (b) of sub-section (1) of the present section C
155.
'
Our proposals are -
Accordingly, we would recommend as follows :
Sections 111 and 155 should be assimilated into a single statutory
provision."
D
Section 155, as it read before 31st May, 1991, entitled a person
aggrieved or any member of a company or a company to apply to the court
for rectification of the company's register of members if the name of any E
person was, without sufficient cause, entered in it or, after having been
entered in it, was, without sufficient cause, omitted therefrom or default
was made or unnecessary delay took place in entering on it the fact of any
person having become, or ceased to be, a member. The court was entitled
to order rectification of the register and to direct the company to pay the F
damages, if any, sustained by a partly aggrieved. The court was entitled to
decide any question relating .to the title of any person who was a party to
the application to have his name entered in or omitted form the register.
An appeal from the order of the court was provided for.
It will be seen that the CLB now exercises the powers that were G
exercisable by the court under Section 155. It is entitled to direct rectification of the register and the payment of damages by the company. It is
entitled to decide any question relating to the title of any person who is a
party to the application to have his name entered in or omitted form the
register and to decide any question which it is necessary or expedient to H
\
498
SUPREME COURT REPORTS
(1995) 2 S.C.R.
A decide in this connection. An appeal to the High Court against any decision
or order of the CLB on a question of law is available to any person
aggrieved, thereby under the provisions of Section lOF.
Whereas sub-sections (2) and (3) of Section 111 term the' pleading
that the person aggrieved has to file before the CLB an 'appeal', sub-secB tion (4) requires the person aggrieved to apply, sub-section (5) speaks of
it as an 'appeal' or an 'application', sub-section (7) as an 'application' and
sub-section (10) as an "appeal or application", which shall be made "by a
petition in writing". The words "appeal' and "application" in the context of
'the provisions of Section 111 have the same meaning. Plainly, it is an
C application that has to be made.
The powers under Section 155 were exercised by a civil court.
Reference may be made to the definition of "court" in the Companies Act.
Section 2(11) defines "court" to mean, with respect to any matter relatmg
to a company, other than any offence against the Companies Act, the court
D having jurisdiction under the Companies Act with respect to that matter
relating to that company. "District Court" is also defined. The definition
thereof in Section 2(14) is that it is the principal civil court of original
jurisdiction in a district, but does not include a High Court in the exercise
of its ordinary original civil jurisdiction. Section 10 deals with the jurisdicE tion of courts and it reads thus:
F
G
"Jurisdiction of Courts - (1) The Court having jurisdiction under
this Act shall be -
(a) the High Court having jurisdiction in relation to the place at
which the registered office of the company concerned is
situate, ·except to the extent to which jurisdiction has been
conferred on any district Court or District Courts subordinate
to that High Court in pursuance of sub-section (2); and
(b) where jurisdiction has been so conferred, the District Court
in regard to matters falling within the scope of the jurisQiction
conferred, in respect of companies having their registered
offices in the district.
(2) The Central Government may, by notification in the Official
·H
Gazette and subject to such restrictions, limitations and conditions
\
\
I
~.
,,./
CANARA BANK v. NUCIBAR POWER CORPN. [BHARUCHA, J.]
499
as it thinks fit empower any District Court to exercise all or any A
of the jurisdiction conferred by this Act upon the Court, not being
the jurisdiction conferred -
(a) in respect of companies generally, by sections 237, 391, 394,
395 and 397 to 407, both inclusive;
(b) in respect of companies with a paid-up share capital of not
less than one lakh of rupees by Part VII (sections 425 to 560)
and the other provisions of this Act relating to the winding
up of companies.
(3) For the purposes of jurisdiction to wind-up companies, the
expression "registered office" means the place which has longest
been the registered office of the company during the six months
immediately preceding the presentation of the petition for winding
up.
The provisions of Section 10-E of the Companies Act, as they were
amended with effect from 31st May, 1991, read thus:
"S.10 E.