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TMI Blog2017 (8) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... nachalam Nadar of Pioneer Group (33% shares) and Chelladurai Nadar of Bell Group (33% shares). The 34% shares in M/s Standard Fireworks Private Limited Company held by Yennarkay Ravindran family are with three companies run by that family. Those three companies are M/s Rajarathnam Matches Private Limited, M/s Chiranjeevi Rathnam Matches Private Limited and M/s Selvarathnam Matches Private Limited. Each of these three companies hold 11.09% of share in M/s Standard Fireworks Private Limited. While so, due to heavy pressure and burden of work, Yennarkay R.Ravindran and Mrs.Thilagavathi/Directors of M/s Rajarathnam Matches Private Limited resigned from their directorship in the year 2003 and co-opted the plaintiffs, who are the employees of M/s Rajarathnam Matches Private Limited, as the Directors of the Company. 3. The plaint averment is that, Mr.Yennarkay Selvarathnam/second defendant requested calling for Extraordinary General Body Meeting(EGM), removal of directors, payment of dividend and external audit for the machinery investment. Those requests were considered and declined in the Board of Directors Meeting held on 31.08.2015 for the reasons stated. Since he was not able to suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and empowered to determine. Hence, even as per Section 9 of Code of Civil Procedure, Civil Court has no jurisdiction, The trial Court not convinced with the said submission dismissed the application in I.A.No.1015 of 2016 for the following reasons:- (i)on a bare perusal of this provision, it is clear that Section 430 of the Act, does not completely bar the jurisdiction of Civil Courts in respect of the matter relating to Companies. (ii)It is further made clear that the jurisdiction of civil court is barred only in respect of matter, in which, the Tribunal is empowered to determine by (or) under the Companies Act (or) any other law for time being in force. Hence, duty is cast upon the petitioner to establish that there is a specific provision in the Companies Act to deal with the issues raised in this suit. (iii) Apart from that the respondents/plaintiffs are not members of the Company and hence, they cannot approach the Tribunal in case of oppression and mis-mangement. 7. The said dismissal order of the trial Court in the interlocutory application is under challenge in this revision petition. 8. The learned counsel for the revision petitioners submitted that, the new Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appropriate to record the law and dictum, which governs the law of ouster of civil court jurisdiction in the light of Section 9 of the Civil Procedure Code. The bedrock judgment, on this point is, judgment of the Hon'ble Supreme Court rendered in Dhulabai vs. State of M.P reported in AIR 1969 SC 78, wherein the Hon'ble Supreme Court laid down the following principles: (1) Whether the statute gives a finality to the orders of the special tribunals the civil court's jurisdiction must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particulars Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure. (2) Where there is an express bar of the jurisdiction of the Court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil Court. Where there is no express exclusion the examination of the remedies and the scheme of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute itself provided a machinery for the enforcement of the right, both the right and the remedy having been created uno flatu and a finality is intended to the result of the statutory proceedings, then, even in the absence of an exclusionary provision the civil courts' jurisdiction is impliedly barred. If, however, a right pre-existing in common law is recognised by the statute and a new statutory remedy for its enforcement provided, without expressly excluding the civil courts' jurisdiction, then both the common-law and the statutory remedies might become concurrent remedies leaving open an element of election to the persons of inherence. To what extent, and on what areas and under what circumstances and conditions, the civil courts' jurisdiction is preserved even where there is an express clause excluding their jurisdiction, are considered in Dhulabhai's case." 15. Therefore, the point for determination is, whether the relief sought is based on the common law right (or) right conferred under any Statute and whether the said Statute oust the jurisdiction of the Civil Court for redressal of that right by providing alternate redressal mechanism 16. The relief sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is a matter which the Tribunal is empowered to determine. The subject matter squarely falls within the ambit of Section 242 and 242(2)(c)(h) of the Companies Act, 2013. 20. Section 242 -Power of Tribunal reads as under: "(1) If, on any application made under Section 241, the Tribunal is of the opinion- (a) that the company's affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company, and (b)that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding- up order on the ground that it was just and equitable that the company should be wound up, the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. (2)Without prejudice to the generality of the powers under sub-section (1), an order under that sub-section may provide for- (a)the regulation of conduct of affairs of the company in future. (b)the purchase of shares or interests of any members of the company by other members thereof or by the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic interest, it may itself apply to the tribunal for an order under this Chapter. 24. The right to approach tribunal is given to the members, because none-else can have any cause of action or complaint against the indoor- management of the company. Whether the Company calls for Extraordinary General Body Meeting(EGM) is legal (or) whether or not its Directors are elected following the mandate of the procedure contemplated in the statue or the bye laws of the respective company are all matters of concern only to members of the Company and not for outsiders/non-members. 25. In the light of the facts and circumstances of this case, this Court is of the opinion that the word member employed in Section 241 of the Act cannot be given a restricted meaning. If restricted meaning is given, it may lead to abuse of the process law, as it is found in this case. Hence, it is essential to apply the doctrine of reading down to make the provisions under Chapter XVI of the Act purposeful. The golden Rule of statutory construction is that the words and phrases or sentences should be interpreted according to the intent of the legistature that passed the Act. Section 241 and 242 should be read tog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplained of must affect a person in his capacity or character as a member of the company; harsh or unfair treatment in any other capacity, e.g., as a director or a creditor is outside the purview of the section; (2)there must be continuous acts constituting oppression up to the date of the petition; (3) the events have to be considered not in isolation but as a part of a continuous story. 28. If the plaintiffs claim status as non-member, the disclosed cause of action in the plaint is illusion and irrelevant for third parties, since they have no locus standi to interfere with the affairs of the indoor- management of a Private Limited Company. If they claim status as Directors of the Company, they carry all trappings/characters of a member of the Company. So, to protect the interest of the Company, the remedy for them is under Section 242 of the Companies Act, 2013. Either way the Civil Court has no jurisdiction to entertain the subject matter of the suit. In the light of Section 430 of the Companies Act, 2013 and the alternate redressal forums being adequately provided under the Act, the plaint is not maintainable. 29. In the result, the Civil Revision Petition is allowed. Fair a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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