TMI Blog2007 (9) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... sections 397 to 407 of the Companies Act," is decided against the defendants holding that the suit of the plaintiffs is not barred and is maintainable. The said issue is thus decided accordingly. Since it is held that the suit is maintainable, learned counsel for the defendants seek time to file the documents. Original documents or certified copies of documents, if not already filed be filed within four weeks. - C.S. (OS) NO. 305 OF 1996 - - - Dated:- 24-9-2007 - ANIL KUMAR, J. Ms. Sunita Harish, Ashish Bhagat and Pramod Aggarwal for the Appearing parties. JUDGMENT Anil Kumar, J. This order shall dispose of the preliminary issue, whether the suit as framed is not maintainable in view of the provisions of sections 397 to 407 of the Companies Act ? (OPD), framed on November 14, 2002. The plaintiffs have filed this suit for partition and rendition of accounts contending, inter alia , that Sh. Banwari Lal was the common ancestor of plaintiffs and defendants Nos. 1 to 6. Plaintiff No. 1 is the grand-daughter of late Sh. Banwari Lal, daughter of Sh. Bal Kishan Das, son of Sh. Banwari Lal. Plaintiff No. 2 is the son, plaintiff No. 3 is the widow and plaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent by defendant No. 5 at a rate which is much lower man the market rate and the said property has been sub-let at a much higher rate. The plaintiffs have also made allegations that movable assets of late Sh. Bal Kishan Das have been transferred by Sh. S.K. Das, defendant No. 6 in his personal name and in the name of his family members. The plaintiffs in the circumstances have sought partition of the properties as shown in schedules. Schedule B gives the details of share in the companies, defendant Nos. 7 to 12 and schedule C gives the details of movable properties, schedule D gives the premises which were taken on rent at different places, schedule E gives the details of misused properties of defendants Nos. 7 to 12 which schedules are annexed with the plaint. The plaintiffs have claimed the following shares in the properties: plaintiff No. 1, one-eighth share ; plaintiff No. 2, one-third share out of one-eighth share; plaintiff No. 3, one-third share out of one-eighth share and plaintiff No. 4, one-third share out of one-eighth share. The suit is contested by the defendants. Defendant No. 4 has contended that defendants Nos. 7 to 12 are limited companies incorporated under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astic Containers P. Ltd. [1998] 94 Comp Cas 310 (SC) ; [1998] 7 SCC 105, Mrs. Bacha F. Guzdar v. CIT [1955] 25 Comp Cas 1 ; [1955] 27 ITR 1; AIR 1955 SC 74, Marikar ( Motors ) v. M.I Ravikumar [1982] 52 Comp Cas 362 (Ker), Pradip Kumar Sarkar v. Luxmi Tea Co. Ltd. [1990] 67 Comp Cas 491 (Cal), Maharaja Exports v. Apparels Exports Promotion Council [1986] 60 Comp Cas 353 (Delhi) ; ILR 1985 II Delhi 459 and Dwarka Prasad Agarwal v. Ramesh Chandra Agarwala [2003] 117 Comp Cas 206 (SC) ; AIR 2003 SC 2696, to contend that bar of jurisdiction of civil court is not to be readily inferred and the Company Act does not contain any express provision barring the jurisdiction of the ordinary civil courts in matters covered by the provisions of the Act and only in certain cases the jurisdiction of civil courts is impliedly barred and, therefore, the jurisdiction of this court is not barred under sections 397 to 407 of the Companies Act, 1956. I have heard learned counsel for the parties at length and have also perused the pleading and the documents. It cannot be disputed that except in cases where the Companies Act 1956, confers jurisdiction in company court or some oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be resolved through a forum of civil court. The Calcutta High Court in Pradip Kumar Sarkar v. Luxmi Tea Co. Ltd. [1990] 67 Comp Cas 491 had held that jurisdiction of civil court is not barred expressly or by necessary intendment by sections 397 and 398 of the Companies Act. It was held by a single judge of that court that sections 397 and 398 of the Companies Act, 1956, conferred a right on the shareholders who have the requisite qualification under section 399 of the Act to apply to the court for appropriate reliefs and these sections do not either expressly or by necessary intendment oust the jurisdiction of the civil court to entertain suits on the same subject-matter. In the facts of the case it was held that the conduct of the company had made it clear that many of the transfers in favour of defendants had been improperly executed and the company and its board of directors had taken a partisan attitude in the matter of approval of transfer of such shares and that person in whose favour shares were transmitted had executed the transfer deeds even prior to their becoming the registered members although they had no absolute interest in the shares on the date when the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62 , holding that a suit would lie by a minority when the grievance is chat a fraud is being perpetrated and they are being oppressed by lack of probity and fair dealing. It is open for the shareholders to sue for restraining a threatened breach of provisions of the memorandum or article of association and they can also seek a declaration against the resolution altering the memorandum or article though passed in proper form on the ground that it is not in good faith and for the benefit of the members as a whole. Where a resolution is passed by a general meeting when it should have been passed as a special or extra-ordinary resolution, its validity can likewise be challenged by the members. Similarly, a representative action to restrain the company from doing an Act contrary to the provisions of the Companies Act or the general law or from giving effect to an invalid decision of the general meeting is also permissible. Five classes of cases have been crystallised where a suit by a shareholder instead of by the company is considered permissible : ( i ) when it is complained that the company is acting or proposing to act ultra-vires ; ( ii ) when the act complained of, though not u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat these companies were started from the assets of the common ancestor and they have rights in them and some of the properties have been misappropriated by defendants Nos. 1 to 6, do not have a right to get their pleas adjudicated and their relief is barred under sections 397 to 407 of the Companies Act, 1956, is not tenable. The said sections of the Companies Act, 1956, do not bar the suit of the plaintiff specifically. In the absence of words expressly or clearly barring the jurisdiction of the civil court, it will not be appropriate to hold that the jurisdiction of the civil court is barred under sections 397 to 407 of the Companies Act, 1956, in the present facts and circumstances. These inferences are further fortified on account of ratio of the judgment of the Supreme Court. The apex court in Dwarka Prasad Agarwal v. Ramesh Chandra Agarwala [2003] 117 Comp Cas 206 ; AIR 2003 SC 2696, relying on Lallu Yeshwant Singh v. Rao Jagdish Singh AIR 1968 SC 620 and R. Prakasam v. Sree Narayana Dharma Paripalana Yogam [1980] 50 Comp Cas 611 (Ker), had held that unlike some other statutes, the Companies Act does not contain any express provision barring the jurisdiction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder clause 11 of section 2 and section 10 of the Companies Act does not oust the jurisdiction of the civil court completely. Both the parties have also relied on Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad [2005] 123 Comp Cas 566 (SC) ; AIR 2005 SC 809. In this case, a class I heir of a majority shareholder had raised a grievance regarding allotment of shares by inheritance. A pure question of title had arisen on account of dispute raised in the proceedings and it was held mat a pure question of title is alien to an application under section 397 of the Companies Act where the lack of probity is the only test. What emerges in the facts and circumstances is that a dispute as regards right of inheritance between the parties is eminently a civil dispute and cannot be said to be a dispute as regards oppression of minority shareholders by the majority shareholders and/or mismanagement. Plaintiffs are not even the shareholders. They are seeking partition of properties which are the companies and their rendition of accounts which will involve determination whether those properties are the properties acquired from the common properties of common ancestor or of defendants Nos. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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