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2022 (8) TMI 838 - HC - Companies LawOppression and mismanagement - misappropriation of crores of rupees - increase of shareholdings illegally - misuse of capacity as Managing Director of the company and had transferred lands belonging to the appellant company illegally in his favour and in favour of his family members - entitlemet to injunctions prayed for - maintainability of suit of appellant - HELD THAT:- In the case on hand, the complaint is not by the individual member of the company, but by the company itself seeking to cancel the sale deeds executed by the then Managing Director/first respondent representing the company in his own name or in the name of his family members, a total of 79 transactions and sale transactions were made much prior to three months from the date of filing of the civil suit. Therefore, even if course suggested by Section 242 is to be followed, no such action can be taken under Section 242 (2)(g). Therefore, perforce, provisions in Sections 241 and 242 are not attracted to the cases on hand - Juxtaposing Section 59 with Section 241, it is apparent that while under Section 59 a company can also file complaint or application before the Tribunal, under Section 241 only a member can file such a complaint. A company has no remedy before the Tribunal. Further, the course suggested by Section 242 (2)(g) can be adopted when the Tribunal is satisfied that winding-up process be set in motion. Therefore, it cannot be assumed that jurisdiction of the civil Court is ousted. In SHASHI PRAKASH KHEMKA (DEAD) THROUGH LRS. AND ANOTHER VERSUS NEPC MICON (NOW CALLED NEPC INDIA LTD.) AND OTHERS [2019 (2) TMI 971 - SUPREME COURT], matter concerns transfer of shares. On appeal filed against the order of Company Law Board, Madras High Court reversed the decision of the Company Law Board and appellants were left to avail a remedy of civil suit. The issue raised therein is covered by the provision in Section 59 of the Act. Section 59 vests jurisdiction in the NCLT. In view thereof the civil suit remedy completely barred and only National Company Law Tribunal alone is entitled to adjudicate the dispute raised under Section 59. Cumulatively, unless, there is specific bar excluding the jurisdiction of the civil Court on any matter, which is also traceable to Companies Act, the jurisdiction of the civil Court to decide the civil dispute is not ousted - what is urged before the civil Court is a dispute civil in nature and the civil Court has jurisdiction under Section 9 of the CPC and the jurisdiction of civil Court is not ousted by Section 241 of the Companies Act. Except Section 241 no other provision is brought to our notice, which ousted the jurisdiction of the civil Court to adjudicate the dispute raised by the plaintiff company. The Cross Objection No. 24 of 2022 on maintainability of suit is rejected. Grant of injunction pending trial of a suit - HELD THAT:- The elementary principles to consider application to grant injunction pending trial of a suit are prima facie case, balance of convenience and irreparable loss and hardship to the plaintiff - The proceeds of sale transactions are not reflected in the company accounts. The appellant marked Exs.P96 - bank statement, to show that it does not reflect depositing of sale proceeds. Sale deeds may reflect payment of full sale consideration, but in 49 sale deeds he represented the company as vendor and he is the vendee and in 15 other sale deeds his family members are the vendees. Therefore, it was only nominal transaction. At any rate, sale proceeds are not credited to the company account. As no money is credited to the bank accounts of the company, prima facie, it cannot be said that the sale of land was in the interest of the company. The allegations leveled by the appellant, if proved, are serious. It may be possible that what all was done by the first respondent was justified and in the interests of the company. Parties are entitled to lead evidence in support of respective claims. While so, if injunction is not granted, respondents/defendants are free to change the physical features of the land and create third party interests. If that happens, in the event of plaintiff succeeding in the suit it would be difficult to enforce the decree and secure possession of the land and might lead to more litigation. Appellant has made out a prima facie case. In the peculiar facts of these cases, balance of convenience is in favour of the appellant and unless injunction is granted, grave prejudice would be caused to the appellant which cannot be remedied later. Appeal allowed.
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