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2019 (8) TMI 1631 - DELHI HIGH COURTRejection of plaint - rejection on the ground of (i) the plaint not disclosing any cause of action; (b) the suit claim being barred by time; and (c) the plaintiff being not entitled to maintain the suit as a derivative action on behalf of Umang - HELD THAT:- Section 241, not only provides for a member to approach the NCLT when the affairs of a company are being conducted in a manner prejudicial to the member or any other member or members, but also when the affairs are being conducted in a manner prejudicial to public interest and to the interests of the company itself. It thus appears to me that a derivative action, which is filed to protect the interests of the company, would come within the ambit of Section 241, and the Parliament, in Section 241 supra of the Companies Act envisaged a remedy that included within its scope oppression, mismanagement and derivative actions. Once it is found that the plaintiff, as a member/shareholder of Umang, for the cause of action of affairs of Umang being conducted in a manner prejudicial to Umang, has statutory remedy available to him, a derivative action for the benefit of Umang, by way of civil suit would not be maintainable. It is also worth mentioning that while against the order of the erstwhile CLB, appeals were provided to the High Court under Section 10 of the Companies Act, 1956, under the Companies Act, 2013, appeals against the order of NCLT lie to the NCLAT and against the order of NCLAT directly to the Supreme Court, eliminating the subject jurisdiction of the High Court in matters relating to companies - the Parliament having constituted the NCLT and NCLAT and vested them with jurisdiction over all matters arising from Section 241, and having also vide Section 430 expressly barred the jurisdiction of civil courts in respect of any matter that the NCLT or NCLAT are empowered to determine, derivative actions in common law, to the extent the statutory regime for oppression and mismanagement is equipped to deal with, are no longer maintainable in India, and the proper remedy for suits such as the present one would be under Section 241 before the NCLT. Merit is also found in the contention of the counsel for Uppal that the plaintiff holding majority shares of Umang and also having its nominee as Managing Director of Umang was entitled to make Umang make a claim against Uppal as is made by the plaintiff by way of this derivative action, and having not done so, is not entitled to maintain a derivative action - A derivative action for the benefit of a company has always been held to be an exception to the democratic process governing the actions of a company. The said exception will not be permitted to be invoked in the aforesaid facts. Umang does not qualify as a deadlock company notwithstanding having equal representation of plaintiff and Uppal on its Board of Directors, and notwithstanding having no provision in the Articles of Association for a casting vote for either. The plaintiff, as majority shareholder of Umang could always, in shareholder meeting, take a decision, binding on the Board of Directors. Thus, not only is the present suit as a derivative action for the benefit of Umang, on appointment of IRP with respect to Umang, deadwood and liable to be struck off from the docket of this Court, but for the reasons aforesaid, this suit from the date of institution thereof is also not found to be maintainable - the suit is dismissed with costs in favour of Uppal and against the plaintiff, and with professional fee assessed at ₹ 5 lacs.
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