9911796707
TMI Blog2010 (10) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... lopers (P) Ltd. (for short "the Company") is a company incorporated at Bangalore. The Company has its registered office at Bangalore. The authorised capital of the said Company is Rs. 20 lakhs divided into 20,000 equity shares of Rs. 100 each. One Mrs. Pushpaben Rawal and Shri Lava Ponnappa were the first Directors of the said Company. Subsequently one Mr. Hasmukh Rawal was appointed as a Director of the said appellant on 1-8-1992. On or about 3-2-1989 the said Company entered into an agreement with one M/s. Hemadri Associates and Association of Persons/Co-owners to construct a Hostel-cum-Shopping Complex for the consideration, that the said M/s. Hemadri Associates would sub-lease the entire building (except the shopping area in basement and ground floor and no other consideration) On 17-11-1995 Mrs. Pushpa Rawal and Mr. Lava Ponnappa the first directors of the appellant entered into an agreement with one Mr. Jagpaul Singh Gill, a resident of Vancouver, Canada for sale of full paid up equity shares of Rs. 100 each as also the entitlement of the Directors to the allotment of further shares of Rs. 41,17,000/- of the appellant for a consideration of Rs. 7,25,00,000/-. In terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erritorial jurisdiction to entertain the above appeals. The said objection has been taken on the touchstone of Section 35 of the Foreign Exchange Management Act, 1999 (for brevities sake refers to as "the FEMA) and especially the Explanation thereto, the said Explanation is reproduced herein under :- "(a) The High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain. Since the parties were of the view that the issue of jurisdiction goes to the root of the matter as regards maintainability of the appeals before this Court, they were desirous of the said issue being decided at the threshold. 6. We therefore heard the learned counsel Shri Nankani for the appellants, the learned counsel Shri Rodrigues for the Respondent Nos. l and 3. 7. The submissions made on behalf of the respondents on the said preliminary issue as regards jurisdiction of this Court can be culled out as under :- It is submitted on behalf of the respondents that in terms of Section 35 of the FEMA, the High Court means, the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business was carried out in Bangalore, the instant appeals would not lie in this Court and would lie in the High Court of Karnataka. The respondents in support of their said submission have relied upon the judgment of the Apex Court in the case of Stridewell Leathers (P) Ltd. and others v. Bhankerpur Simbhaoli Beverages (P) Ltd. reported in (1994) 1 SCC 34. 8. Submissions on behalf of the Appellants :- It is submitted that by a Board Resolution dated 20-8-1998, the company has set up an administrative office at Bombay and also opened a bank account with Indian Overseas Bank and, therefore, this Court would have jurisdiction. For the said purpose, the appellants relied upon the judgment of the Apex Court in the case of Ambica Industries v. Commissioner of Central Excise reported in (2007) 6 SCC 769 = 2007 (213) E.L.T. 323 (S.C.). It is submitted that the investigations were started at Bombay in relation to the said Agreement in the course of which, statements were recorded at Bombay; that the show cause notice dated 22-2-2002 was issued at Bombay answerable to the Special Director, Bombay; that the case was adjudicated by the Special Director, Bombay vide order dated 27-12-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this section and in Section 55, "High Court" means- (i) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and (ii) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents ordinarily resides or carries on business or personally works for gain." Since the said Act has been repealed and in its place FEMA has come into force. Section 35 of the FEMA is the governing section and the same is reproduced herein under :- "Section 35 Appeal to High Court. - Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law arising out of such order. Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he registered office of the company is at Bangalore; that the company was to develop a property in Bangalore, is unequivocally a pointer to the fact that the company ordinarily carries on its business in Bangalore. Though it is sought to be contended on behalf of the appellants by relying upon the fact that by the resolution passed in the year 1998, an administrative office of the company was opened in Mumbai as also a bank account in Mumbai. In our view, the said contention has been raised by the appellants to extricate themselves from the situation where the appellants would have to approach the High Court of Karnataka. In our view, the fact that the administrative office was opened in Mumbai and that the company had a bank account in Mumbai would not confer jurisdiction on this Court, in the absence of any material on the basis of which it could be said that the company ordinarily carried on its business in Mumbai. 11. We are also not impressed by the submission made on behalf of the appellants that as the said directors had entered into an agreement for sale of their share holdings in their individual capacity and since the said directors reside in Mumbai, this Court wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was having its corporate office at Bombay from where it was carrying on its business. The appellant's entire senior management and Directors was stationed at Bombay and during pendency of the said appeal, the appellant had shifted its registered office at Bombay. In the said context, the Apex Court has held that this Court would have jurisdiction to entertain the appeal filed by the respondents. The said decision was rendered by the Apex Court considering Clause 12 of the Letters Patent and Section 20 of the Code of Civil Procedure. The last judgment relied upon by the appellant is in the case of Ambica Industries (supra). The Apex Court has held that even if a small fraction of the cause of action accrues within the jurisdiction of a Court, the said Court will have jurisdiction in the matter though the doctrine of forum conveniens may also have to be considered. 14. As indicated above, the said judgments were rendered by the Apex Court on the touchstone of Section 20 of the Civil Procedure Code. The efficacy of the said judgments would have to be considered in the context of Section 35 of the FEMA which inter alia governs the aspect of the jurisdiction of the High Courts in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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