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2009 (8) TMI 1227 - HC - Companies LawAnnual Report and audited accounts revealed that they were "grossly inaccurate and/or lacking in several material particulars" and "do not reflect a true and fair view of the Company's affairs - Violation of the provisions of the Companies Act, 1956 (Act) - Provisions of the Listing Agreement with the Bombay Stock Exchange (BSE) and the Company's own Code of Business Conduct and Ethics" - constituted "unjust and unlawful acts - likely to "cause irreparable harm and injury not only to the Plaintiff but also to over one lakh other shareholders of the Defendant No.1 company"- Application Seeking rejection of the plaint under Order 6 Rule 11 r/w Section 151 CPC - The plaintiff H.B. Stockholdings Limited (HBSL) claims to hold 24.8% of expanded issued and paid-up capital of DCM Shriram Industries Limited (DSIL), Defendant No. 1 and thereby being its single largest shareholder. Implied or express bar u/s 9, CPC - Whether there is any implied or express bar to the maintainability of the suit? - Section 9 of the CPC, states that the civil court shall have jurisdiction to try all suits of a civil nature "excepting suits of which their cognizance is either expressly or impliedly barred. HELD THAT:- For the purpose of examining the above question, the court is accepting as correct the averments in the plaint as originally filed. For the sake of completeness, although the application for amendment has not yet been allowed, this court has also kept in purview the plaint as sought to be amended. The amendments, if allowed, would add to the prayers in the suit to seek a declaration that the resolutions passed at the AGM/Poll held on 25th September 2008/26th September 2008 would be null, void and non est. The amendment does not seek to delete the mandatory injunction originally sought directing the appointment of an independent Chartered Accountant to carry out a fresh audit of the books of account of DSIL. Further the prayer of removal of the auditor (Defendant No.14) as auditor of DSIL and directing the appointment of another auditor in place thereof also remains. In effect, the suit even after the proposed amendments continues to be one seeking the relief of declaration and consequential injunction. Emphasizing that the powers of the Court were wide, given the object that is sought to be achieved by the exercise of such power u/s 397 and 398, it was explained that Clauses (a) to (g) of Section 402 "indicate the widest amplitude of the court's power". The wide nature of the powers under the Act has been explained recently by the Supreme Court in Kamal Kumar Dutta v. Ruby General Hospital Limited [2006 (8) TMI 313 - SUPREME COURT]. It was observed in the context of Sections 397 and 398 that "the Act is a complete code". Likewise, the ld Single Judge in Anil Gupta v. J.K. Gupta [2001 (11) TMI 913 - HIGH COURT OF PUNJAB AND HARYANA] held that the jurisdiction of the civil court was impliedly barred in relation to the question of oppression or mismanagement. The aggrieved persons could certainly approach the CLB. Notice was taken of the judgment of the Supreme Court in Ammonia Supplies Corporation (P) Limited v. Modern Plastic Containers Pvt. Limited AIR [1998 (9) TMI 427 - SUPREME COURT. Applying the ratio of Ammonia Supplies Corporation (P) Limited to the instant case (supra), it requires to be noticed that the claim made in the suit does not contain any aspect which cannot be adjudicated by the CLB. U/s 402 (g), the power of the CLB would include the passing of an order which may provide for "any other matter for which in the opinion of the Tribunal it is just and equitable that provision should be made." the power of the CLB would include the passing of an order which may provide for "any other matter for which in the opinion of the Tribunal it is just and equitable that provision should be made." U/s 398 (1), the scope of the power of the CLB is to determine whether "the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company". A perusal of the application filed on 28th February 2008 would show that the very averments made in the plaint, i.e out about the investments in DSIL and in DHL and other facts set out in the plaint have been included in the application before the CLB. It is not, therefore, possible to accept the plea of the learned Senior counsel for the plaintiff that what constitute the subject matter of the suit is different and distinct from what is being presently agitated before the CLB. Likewise u/s 397, it is called upon to adjudicate on whether the affairs are being conducted "in a manner oppressive to any member or members". Further, both u/s's 397(2) and 398 (2), the CLB may "with a view to bringing to an end the matters complained of, make such order as it thinks fit." The inevitable conclusion is that the jurisdiction of the civil court is impliedly barred. A perusal of the application filed on 28th February 2008 would show that the very averments made in the plaint, i.e out about the investments in DSIL and in DHL and other facts set out in the plaint have been included in the application before the CLB. It is not, therefore, possible to accept the plea of the learned Senior counsel for the Plaintiff that what constitute the subject matter of the suit is different and distinct from what is being presently agitated before the CLB. To this Court, it appears that the facts of the present case are different inasmuch as the plaintiff here has already approached two other fora namely the CLB with a petition u/s 397 and 398 as well as the SEBI and SAT. This is, therefore, not a case where the plaintiff first sought remedy before a civil court. Here the Doctrine of election would apply. If the plaintiff chooses to enforce its right first before the CLB, can it then be permitted to also approach the civil court particularly when CLB refuses interim relief? Such a question was never considered in CDS Financial Services (Mauritius) Limited. This Court is therefore unable to accept the arguments of Mr. Haksar that notwithstanding the availability of a remedy before the CLB, this Court should entertain the present suit. Having carefully examined the plaint as well as the averments made in the petition before the CLB, as further sought to be amended by the subsequent application, it appears to this Court that the grounds on which the relief is being sought for are more or less similar to what has been sought in the CLB. In the considered view of this Court, therefore, the answer to the question first posed is that there is an implied bar to this Court entertaining the present suit. Although the learned Senior counsel for the Plaintiff may be right in his contention that the suit is itself not barred u/s 41 (h) SRA, the fact remains that the suit is reduced to one seeking a bare declaration if the consequential prayers for injunction are barred since they have already been sought in other earlier proceedings before the CLB and SAT. Such a suit for a bare declaration (which in any event is not the form of prayer even after the proposed amendments) would be barred expressly by Section 34 SRA. For the above reasons, the application is allowed. The plaint is rejected. Consequently, the suit is dismissed with costs. The other pending applications are also dismissed.
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