Raghu Nayyar, Member (T)

1. This Appeal, CA No. 182/58(3)/JPR/2019, was filed vide Diary No. 1332/2019 on 22.07.2019 where under the Appellant has asserted that he is a purchaser of 16 shares of Rs. 10/- each issued by the Respondent Company as tabulated herein below. Photostat Copies of share certificates are marked as Exhibit No. A/1 to A/1A. The purchase bills for consideration thereof of Rs. 25,000 and Rs. 24,000 are marked as Exhibit No. A/2 to A/2A. Corresponding Transfer Deeds, together with other attachments, lodging shares vide covering letter dated 30.11.2018 with the Registered Transfer Agent ('RTA') are attached as Exhibit No. A/3 to A/3F.

2. Vide letter dated 12.12.2018, the Respondent returned the original transfer deed along with copy of shares certificates and the following observations:

(i) Date of presentation of the transfer deed is 24.05.2007, whereas the execution of transfer deed is 31.03.2014. Kindly note, the validity of transfer deed is one year from the date of presentation.

(ii) Signature of both the transferors is completely varying from the specimen records maintained by the Company.

3. It seems certain other shares standing in the name of Shridhar Iyer & Mangalabal Eswari were also returned. However, these other shares are not the subject matter of the appeal under consideration.

4. Respondent raised another objection dated 30.01.2019, pertaining to Folio No. M01645 (copy at Exhibit No. A/5) whereby it demanded 4 formalities to be complied with by the Applicant which are (a) Certified Copy of Bank Passbook with last 6 Months Bank Statement; (b) Affidavit for change in signature as per the draft format; (c) Attested Copy of Pancard of Transferors and Transferee; and (d) Life Certificate of Transferors.

5. Thereafter the Applicant/Appellant sent a legal notice on 07.02.2019 (received on 12.02.2019 by the Company) for redressal of his grievances. The Company responded on 22.02.2019 declining transfer of shares related to Folio No. M01645 and with respect to Folio No. S04110 asked for the compliance of letter dated 12.12.2018. All 16 original share certificates were returned. Copy of the said legal notice and response thereto is marked as Exhibit No. A/6 to A/7.

6. It was submitted by the Applicant/Appellant that the Respondent Company indulged in dilatory tactics. During the period July, 2019 and February, 2020, little progress was achieved except for completion of pleadings.

7. Further, IA No. 385/JPR/2019 was filed by the Appellant, as reply to the appeal had been filed by the General Manager Secretarial rather than the Company Secretary who had been arrayed as the Respondent in the Appeal. Notice was issued to the Registered Office of the Company at Chennai. The Company responded to the IA stating that the Company Secretary was engaged in various other tasks and had delegated the power for handling of the matter to the General Manager Secretarial. This IA is a hyper-technical Application and does not warrant any further observations, as a satisfactory reply thereto has been filed by the Company.

8. The Company submitted the following preliminary objections:

a. Registered Office of the Respondent Company is situated in Chennai as per cause title as well as MCA 21 Master Data and, hence, as the territorial jurisdiction of the Tribunal covers the State of Rajasthan, the appeal does not fall within appropriate territorial jurisdiction.

b. The appeal is barred by limitation period as enshrined in Section 58(4) of Companies Act, 2013 and deserves to be dismissed at the threshold.

c. The purported grievance relates to refusal to record transfer of 10 shares which were held in name of Shri Jivanchand Ratanchand Motishaw, Smt. Rama Pravinchand Jhaveri and Sri Praful Jivanchand Motishaw; and 6 shares which were held in names of Mrs. Malti V. Shah and Mr. Vinodchandra M. Shah. Since these shares stood on a different pedestal, one appeal in relation to both share holdings could not have been clubbed together and, hence, there has been misjoinder of the cases and on this ground also the appeal is liable to be dismissed on threshold.

d. For 6 shares held by Mrs. Malti V. Shah and Mr. Vinodchandra M. Shah, there were major discrepancies in the signature and validity of transfer deed was endorsed on 24.5.2007 but was executed on 31.03.2014, which was beyond the validity period of one year from the date of endorsement.

e. With respect to 10 shares, it was stated that one of the transferors was deceased on 07.05.1983; how could such person sign a transfer document in the year 2000. It was also submitted that the Company was in respect of a communication from M.P. Police about fraudulent sale of the shares of dead persons in which Mr. Bimal Kumar Shah and Mr. R.K. Meena were named as persons to be investigated.

9. The Applicant/Appellant has persistently insisted that this Bench of the Tribunal has jurisdiction to consider the matter. In support of his contention in this regard, he relies on decision of the Hon'ble Supreme Court in case of M/s. Patel Roadways Limited Bombay Vs. Prasad Trading Company, : AIR 1992 (SC) 1514 [LQ/SC/1991/361] , and has referred to Section 20 of CPC, 1908, to hold that action is maintainable at the place where the cause of action has arisen; particularly since explanation to Section 20 clarifies that if a corporation has a subordinate office in such place, it cannot be stated that it does not carry on business at that place. Such places would be convenient to plaintiff and corporation would not have any disadvantages. He further relied on the case before the Hon'ble Supreme Court of Laxman Prasad Vs. Prodigy Electronics Ltd. & Anr. AIR 2008 (SC) 685 [LQ/SC/2007/1509] , wherein the issue was that in an Employment Contract between a company and its employees it was stated that applicable law would that of Hong Kong Administrative Region. The Court therein differentiated between the place where cause of action arose and the applicability of relevant law. He further relied on the citation of Angile Insulations Vs. Davy Ashmore India Ltd. and Another, : AIR 1995 SC 1766 [LQ/SC/1995/525] , in which it had been agreed by the parties to submit to the jurisdiction within the High Court of Karnataka in case of any dispute and in absence of any other reason for consideration of jurisdiction in any other location. The court held that the parties were bound by the contract.

10. While the above citations revolved around concept of cause of action and its proximate genesis, it is strictly not valid in the context of this case.

11. The Tribunal is governed by territorial jurisdiction of specified geography as per notification No. SO 1935(E) : dated 01.06.2016, vesting jurisdiction in respect of various Benches where under the initial jurisdiction for the State of Rajasthan vested with the Principal Bench, New Delhi. However, vide notification No. SO 3145(E) : dated 28.06.2018, the State of Rajasthan was brought under the jurisdiction of Jaipur Bench.

12. The critical issue emphasised in submissions of the Respondent Company is that the NCLT would exercise company oriented dominion for various corporate entities registered within its jurisdictional area, rather than any matter arising in respect of, or linked to, any company operating with an office within the area under its span. The latter may not fall in its control.

13. In this regard, it is apposite to consider the decision of the Hon'ble Supreme Court in the case of Stridewell Leathers Private Limited and Ors. Vs. Bhankerpur Simbhaoli Beverages Private Limited, AIR 1994 (SC) 158 [LQ/SC/1993/850] . Therein the question before the Hon'ble Supreme Court was with respect to the expression 'High Court' in Section 10F of the Companies Act, 1956; as to which High Court would have jurisdiction in respect of an appeal against an order of the Company Law Board ('CLB') - whether it would be the High Court in relation to the place at which the registered office of the company may be situated, or the High Court having jurisdiction in relation to the place at which the CLB may pronounce the order appealed against. Section 10F was inserted in the Companies Act, 1956 with effect from 31.05.1991 by Companies (Amendment) Act, 1998. The Hon'ble Supreme Court noted that jurisdiction in respect of various winding up petitions and appeal there against lay at the concerned High Court where the registered office of the company is located. In this respect the Hon'ble Supreme Court also referred to Section 10(1) of the 1956 Act to infer that the relevant High Court would be where registered office of the company is situated.

14. A similar situation was analysed by the Hon'ble NCLAT in the matter of 63 Moons Technologies Ltd. Vs. Union of India & Ors., Company Appeal (AT) No. 03 of 2017. The question involved therein was whether a petition under Section 388-B of the Companies Act, 1956, was to be heard only by the Principal Bench of NCLT, New Delhi or NCLT bench with jurisdiction over the area where the registered office of the company was situated. Section 388-B of the 1956 Act dealt in cases against Managerial personnel of a company being referred to the 'Tribunal'. However, reference therein was to the CLB which stood substituted by 'Tribunal' due to the Companies (Second Amendment Act, 2002). The then, CLB in exercise of its power to frame Regulations had directed that all such matters would be listed before, and heard by, CLB Principal Bench at New Delhi. After constitution of the National Company Law Tribunal ('NCLT') under Section 408 of the Companies Act, 2013 with effect from 01.06.2016, the concerned company in the extant case before the NCLT Principal Bench sought transfer of the relevant petition to the bench with territorial jurisdiction over registered office address of the company. Such plea was rejected by the NCLT Principal Bench. In challenge at Hon'ble NCLAT the Appellant contented:

a. Jurisdiction of relevant NCLT bench would be dependent on whether the registered office of a company is located in its jurisdictional area.

b. Such jurisdiction was always followed prior to the Amendment which came into effect in 1991. Further, proceedings and appeals pertaining to Sections 388-B, 388-C, 391-396, 397-406 of the Companies Act, 1956, have always been instituted in the High Court within whose jurisdiction the registered office of the company was situated.

c. The Hon'ble NCLAT noted that original jurisdiction has always been dependent on Section 10(1)(a) of the 1956 Act, with the High Court of jurisdiction being in relation to the place where the registered office of the company concerned may be situated and appeal against any order passed by the Company Judge of the concerned High Court would also be to the Division Bench of the same High Court.

d. The Hon'ble NCLAT referred to the notification of 2016 constituting the various Benches of NCLT and the territorial jurisdiction thereof; and also NCLT Rules, 2016, which laid down mandate of transfer of pending proceedings with CLB to the respective benches of the corresponding territorial jurisdiction, i.e. based on location of registered office. The said Rules do not provide that such benches will have jurisdiction in situations where cause of action has arisen within its territorial limits.

e. The Hon'ble NCLAT further examined the power of the erstwhile CLB Chairperson to provide for certain matters to be considered by the Principal Bench but noted that the President of NCLT has not been similarly empowered. It further concluded that the pre-existing circular of CLB could not override NCLT Rules, 2016 and could not be deemed as still continuing.

15. For the aforesaid reasons, inter-alia, the insistence of the Appellant that this Bench has jurisdiction to entertain this case on basis of place of relevance vis-a-vis cause of action, or Section 20 CPC, cannot be countenanced.

16. Though pleadings were under completion at the early stages of the case, IA No. 385/JPR/2019 was filed in between seeking closure of the Respondent Company's reply as the reply was filed by the General Manager Secretarial instead of the Company Secretary, and the matter was posted for arguments in February, 2020. However, the matter could not be taken up. Thereafter, the case went into a limbo due to onset of Covid-19 pandemic and came up for hearing after a long hiatus, with three intervening spells of Covid-19.

17. Due to quirk of circumstances that prevailed in 2020-2021, this matter did not come up for effective hearing, as mainly urgent and important matters were taken up during the said period. Further, the Bench was handicapped in absence of a full time Judicial Member and functioned for 18 months with Judicial Member Chandigarh and Technical Member Jaipur dividing time for consideration of matters of both Chandigarh and Jaipur Benches.

18. The matter remained pending without an analysis of the factual matrix and determination of the question of relevant jurisdiction. The basic issue raised in the reply by the Respondent Company relating to territorial jurisdiction is important. This is a critical issue since records of the Company and statutory registers are maintained at the Registered Office of the Company. In addition to what has been stated hereinbefore, it is important to also note that affairs of companies are monitored with respect to registered office addresses falling within territories under different Registrars of Companies.

19. Upon hearing the parties, perusing the records and citations, it is clear that proceedings should be carried out at the NCLT Bench having jurisdiction where the Registered Office of the Company is located, i.e. Chennai.

20. The Tribunal feels that the Appellant should not be burdened with the overhead of any formality related to withdrawal/refiling etc. Under the circumstances, the Bench feels that the entire record, including IAs, of the existing proceedings, may be transferred to NCLT Chennai for continuance hereafter without any discontinuity for the Appellant. In the given facts and circumstances of the case, the Registry may seek concurrence of the Hon'ble President under Rule 16 of the NCLT Rules, through the Registrar NCLT, Principal Bench for the direct transfer of the case rather than withdrawal and refiling. Factual analysis herein may not be considered as observations on merits. Accordingly, this Bench directs that subject to the directions of the Hon'ble President the record of the case may be sent by the Registry to NCLT Chennai Bench for directions for listing and further orders or otherwise as may be directed by the Hon'ble President.