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2019 (7) TMI 107

d is undervalued and the plaintiff, on being required by the Court to correct the valuation within the time to be fixed by the Court, fails to do so - The suit as aforesaid is for the reliefs of declaration and permanent injunction. Section 8 of the Suits Valuation Act, 1887 provides that in suits other than those referred to in Section 7(v), (vi), (ix) and (x)(d), the value as determined for the computation of court fees and the value for the purposes of jurisdiction shall be the same - The present suit, where the plaintiffs as a consequence of declaration are seeking permanent injunction, qualifies under Section 7(iv)(c) as a suit for declaratory decree and consequential relief and in accordance therewith the plaintiffs are required to set out in the plaint the value at which they value the relief and court fees is to be computed thereon - The Suits Valuation Act provides for valuation for the purposes of jurisdiction to be the same as for the purposes of court fees. The plaintiffs have valued the relief of declaration with consequential relief claimed in the suit, for the purposes of court fees and jurisdiction, at ₹ 2 crores and paid appropriate court fees thereon - It is .....

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efore this Court on 10th October, 2018 when while issuing summons/notice, vide ex parte ad interim order, the proceedings in terms of Show Cause Notices dated 6th October, 2018 were ordered to be kept in abeyance. 3. The defendant filed IA No.14868/2018 under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC) and which came up before this Court on 29th October, 2019 when the counsel for the defendant stated that the said application was filed only because the plaintiffs had not paid the requisite court fees but the counsel had subsequently learnt that the plaintiffs had since paid the court fees and was thus withdrawing the said application. Accordingly, the application was dismissed as withdrawn. 4. Thereafter the defendant filed this application which came up first before this Court on 2nd November, 2018 when the following order was passed thereon:- 7. The application under Order VII Rule 11 of the CPC runs into about 93 pages and such a bulky application itself is an indication that no ground for rejection of the plaint at the threshold is made out. 8. Be that as it may, the counsel for the applicant/defendant has been heard. The counsel has handed over a synopsis of o .....

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ately. 14. I have enquired from the counsel for the applicant/defendant that (i) once Article 19 provides for decision of the majority vote of not less than 2/3rd of the members present at a General Committee especially convened for the purpose, how does the decision aforesaid in the Annual General Meeting satisfy the requirement of a General Committee convened especially for the purpose; (ii) on what basis, the Show Cause Notice dated 6th October, 2018 was issued since the decision taken at the AGM held on 30th September, 2018 was for suspension; (iii) once Article 19 provides for a decision of a majority, whether not each step taken towards termination requires decision of the majority in a Committee convened for that purpose; (iv) what will be the procedure followed pursuant to the Notice to show cause issued; and, (v) who will hear the plaintiffs. 15. The counsel for the applicant/defendant states that he has only yesterday received new Bye-laws of the applicant/defendant and needs time to study the same. 16. I have also enquired from the counsel for the plaintiffs, whether the plaintiffs have taken any such ground impugning the decision of the applicant/defendant. 17. The coun .....

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all members of the General Committee are elected from the General Body on a yearly basis; (iii) the General Committee operates as the Board of Directors of the Club which is incorporated as a not for profit company; (iv) in the previous two years, there have been various allegations of serious misconduct and financial irregularities in the management of the Club by certain members of the General Committee which held office during the period 2015-2017; (v) accordingly several members of the Club had written to the present General Committee for action against the said members of the previous General Committee but to no avail except for appointing of an auditing concern to carry out investigation; (vi) the investigation report confirmed the irregularities, mismanagement and misappropriation by the members of the previous General Committee; (vii) again, the members of the Club sought action on the basis of the report but to no avail except for appointing another Committee; (viii) the plaintiffs have been continuously petitioning for action against the members of the erring Committee and upon no action being taken, wrote to the Serious Fraud Investigation Office (SFIO) on 20th August, .....

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from NCLT by invoking first proviso to Section 244(1) thereof by seeking waiver of the eligibility prescribed. 9. With respect to the undervaluation of the relief claimed in the suit, it is pleaded (i) the pecuniary jurisdiction of the subject matter of the suit being ₹ 100/-, the Court of minimum pecuniary jurisdiction competent to entertain the suit is the Court of the Civil Judge and not this Court; and, (ii) while it is open to the plaintiffs to declare a higher valuation for the purposes of calculation of court fees, the valuation of a suit for the purposes of assessment of pecuniary jurisdiction cannot be enhanced at the ipse dixit of the plaintiffs. It is argued, that under the Memorandum and Articles of Association of the defendant, the liability of past member of the defendant for the debts and liabilities of the defendant is not to exceed ₹ 100/-; the valuation of the suit for the purposes of jurisdiction cannot be more than ₹ 100/-. 10. The plaintiffs, in their reply to the application, qua bar of the jurisdiction of this Court as the Civil Court and the remedy of the plaintiffs being before the NCLT only, have pleaded (i) that the plaint does not discl .....

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ion. 14. Order VII Rule 11(b) of the CPC permits rejection of the plaint where the relief claimed is undervalued and the plaintiff, on being required by the Court to correct the valuation within the time to be fixed by the Court, fails to do so. 15. The suit as aforesaid is for the reliefs of declaration and permanent injunction. 16. The Court Fees Act, 1870, in Section 7(iv)(c) thereof provides that in a suit to obtain a declaratory decree or order where consequential relief is claimed, the plaintiff shall set out in the plaint the amount at which he values the relief sought and the amount of court fees payable shall be computed thereon. 17. Section 8 of the Suits Valuation Act, 1887 provides that in suits other than those referred to in Section 7(v), (vi), (ix) and (x)(d), the value as determined for the computation of court fees and the value for the purposes of jurisdiction shall be the same. 18. The present suit, where the plaintiffs as a consequence of declaration are seeking permanent injunction, qualifies under Section 7(iv)(c) as a suit for declaratory decree and consequential relief and in accordance therewith the plaintiffs are required to set out in the plaint the value .....

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e Court to interfere with such discretion. 23. Thus no merit is found in the contention qua valuation, for seeking rejection of the plaint. 24. The only other ground for rejection is, of the jurisdiction of this Court being barred by Section 430 of the Companies Act, 2013. 25. Though during the hearing on 2nd November, 2018 there was no clarity about the constitution of the defendant, as is also evident from the order of that date reproduced above, but the pleadings show both plaintiffs and the defendant to admit the defendant to be a company within the meaning of Companies Act, 1956 and the plaintiffs to be the members of the defendant. Section 241 of the Companies Act, 2013 entitles a member of a company who complains that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company, to apply to the NCLT. Thus the remedy for the grievance of mismanagement and oppression would be before the NCLT. However the grievance in the present suit, though may have its genesis in the complaints of the plaintiffs of mismanagemen .....

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