TMI Blog2022 (8) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 - - - Dated:- 4-8-2022 - HON BLE SRI JUSTICE P. NAVEEN RAO HON BLE DR. JUSTICE G. RADHA RANI Counsel for the petitioner : Sri A Venkatesh Counsel for the Respondents: Sri S Ravi, Senior counsel for M/s. R.S. Associates COMMON JUDGMENT: (Per Hon ble Sri Justice P.Naveen Rao) Heard Mr. A. Venkatesh learned counsel for the appellant and Sri S.Ravi learned senior counsel for the respondents. 2. The appellant is the company, registered under the provisions of The Indian Companies Act, 2013, represented by Sri Mahesh Kedia, Managing Director of the company. The first respondent was initially appointed as Managing Director of the petitioner company on 02.05.2015 and subsequently, his term was extended for a period of five years with effect from 02.05.2019 to 01.05.2024. 3. Appellant alleges that during his tenure, the first respondent has committed several illegalities, played fraud and acted against the interest of the appellant company, misappropriated crores of rupees belonging to the appellant by withdrawing them or depositing them into his own account or to his family members accounts, increased his shareholding from 1,25,000 shares to 19,65,000 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cel all the sale deeds where under properties of the appellant company were sold and to grant mandatory injunction in favour of the plaintiff and against the defendants directing defendants 1 to 6 and 15 to 21 to return the original link documents pertaining to the properties mentioned in the schedule to the plaint. 8. I.A.No.771 of 2021 is filed by the appellant/plaintiff under Order XXXIX Rules 1 and 2 read with Section 151 of Code of Civil Procedure, 1908, (for short, CPC ) to grant ex parte ad-interim injunction restraining the respondents 1 to 6 and 15 to 21, their agents, workmen from changing the nature of the suit schedule properties. 9. I.A.No.772 of 2021 is filed by the appellant/plaintiff under Order XXXIX Rules 1 and 2 read with Section 151 of CPC to grant temporary injunction restraining the respondents 1 to 6 and 15 to 21, from alienating the suit schedule properties in favour of the third parties, till further orders. 10. By common order dated 25.02.2022 the trial Court dismissed both I.As. Challenging the decision of the trial Court these two Civil Miscellaneous Appeals are preferred. 11. During the course of hearing these two I.As., the first responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t respondent as Managing Director was authorized to represent the company in all aspects. He was competent to execute sale deeds on behalf of the company. The company sold the land. All sale transactions reflect receiving full sale consideration and there was no illegality in executing the sale deeds. The sale deeds are in compliance of law. 15.3. He would submit that as sale transactions were in compliance of law, balance of convenience is not in favour of the appellant. The trial Court has assigned reasons in rejecting the applications to grant injunctions. There is no illegality committed by the trial Court in rejecting the injunction applications. 15.4. Learned senior counsel placed reliance on the decision of the Hon ble Supreme Court in Prem Singh and others vs. Birbal and others (2006) 5 SCC 353 (paragraph-27). 16. In reply, learned counsel for appellant contended that what is prayed in the suit is not barred by Section 430 of the Companies Act and the suit is maintainable. He placed reliance on the decision of Hon ble Supreme Court in Darshan Anilkumar Patel vs. Pravinkumar Jinabhai Patel and others MANU/SCOR/46567/2020. He would submit that Section 241 onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as warranted including winding-up and taking action under Section 242 (2) (g) (i) 3 of the Act. From the reading of clause (g) of sub-section (2), it is manifest that to take action to set aside any transfer, delivery of goods, payment, execution or other act relating to property that action ought to have been made or done by or against the company within three months before the date of filing application under Section 241. 21. 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. 22. Section 9 4 of the CPC vests jurisdiction in a civil Court to try all suits of a civil nature excepting suits of which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a lessee of another firm by name Avanthi Enterprises, which in turn was the principal lessee from the owners of the building. The 2nd respondent-plaintiff was a partner of Avanthi Enterprises with whom the petitioner-company entered into the sub-lease. It was alleged that 2nd respondent did not specifically disclose the fact of his being a partner of Avanthi Enterprises to the company as required by Section 293 read with Section 299 of the Indian Companies Act, 1956. On that ground, the other Directors are said to have passed a resolution holding that the plaintiff has become disqualified from being a Director with retrospective effect from 13.06.1980. Second respondent filed the civil suit contending that he was present at the meeting which took place on 13.02.1984 and no such resolution disqualifying him was passed. He claimed that 2nd respondent-plaintiff continues to be the Managing Director of the 1st defendant (petitioner-company) and for further declaration that any Board meeting held by the petitioner subsequent to 13.02.1984 is null and void and also for further declaration that any change effected in the composition of the Board of the petitioner subsequent to 13.02.1984 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 10 does not purport to invest the Company Court with jurisdiction over every matter arising under the Act. It may be that, in view of the elaborate provisions contained in the 1956 Act in regard to the Managing and the conduct of a Company's affairs including important internal matters of administration, the Court's interference by Civil Court has become more limited, but the power has not at all been taken away. Every suit for redress of individual wrongs cannot be considered as merely concerned with matters of internal management. ( M.P. Menon, J. in P. Prakasam v. Sri Narayana Dharma Paripalan Yogam (1) 1980 (50) Company Cases page 611. xx 23. In our High Court in Bhagwandas v. Canara Bank Ltd. (16) (1978) 1 An. W.R. 504 Chennakesav Reddi, J. (as he then was) held that a suit for recovery of money against the Canara Bank in respect of the deposit amount payable by the plaintiff in respect of twelve shares was maintainable, observing:- Section 10 of the Companies Act also confers exclusive jurisdiction on the High Court only in respect of matters covered by Sections 237, 391, 394, 395 and 397 to 407 (both inclusive) and in respect of matters cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Judge was deciding contrary to the view taken in the earlier decision of the court in Avanthi Explosives P.Ltd. v. Principal Subordinate Judge (1997) 5 Com LJ 345 (AP) it was necessary to have referred the case to a larger Bench. A judgment of a co-ordinate Bench is binding unless it is overruled by a larger Bench. Besides, the view was also not legally correct. The civil court would have jurisdiction in all matters unless its jurisdiction is either expressly or by implication ousted. We hence overrule the decision. 27. In Bakshi Faiz Ahmad v. Bakshi Farooq Ahmad and another 2018 SCC Online J K 249, it was contended that the suit instituted by the respondent no.1 for declaration, partition, possession with mandatory and permanent injunction against appellant and second respondent was not maintainable. Elaborately considering the various provisions of the Companies Act, learned single Judge of J K High Court held as under: 35. Qua applicability of provisions of Companies Act, 2013, it is well settled law that a serious question of fraud and collusion cannot be decided by the Tribunal in a summary proceeding. Given the relief solicited for by respondent no. 1 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 SCC 94, it was observed that jurisdiction of Tribunal being summary in nature, a seriously disputed question of title could be left to be decided by the civil court as same being more appropriate remedy for investigation and adjudication of such seriously disputed question of title. In Luxmi Tea Company Limited v. Pradip Kumar Sarkar, 1989 Supp (2) SCC 656, it was observed that a company did not have any discretion in rectifying its register except to require the procedure being followed. 28.1. In Shashi Prakash Khemka (dead) through Legal Representatives and another vs. NEPC MICON (now NERPC India Limited) and others (2019) 18 SCC 569, 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. 28.2. 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. Paragraph-6 reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the NCLT, having been created by amending the law, and having been vested with all the trappings of the Civil Court, in view of the amendments, the bar under Section 430 of the Act is triggered. 29.2. On appeal, Hon ble Supreme Court upheld the view taken by the learned single Judge of Bombay High Court. Hon ble Supreme Court in Darshan Anilkumar Patel - [SLP Civil Diary No.9209/2020], held as under: 2. There is no error in the finding that the suit which was filed for a declaration in regard to the invalidity of the sale deeds was properly instituted before the civil court and there was no occasion to transfer the appeal to the National Company Law Tribunal. Section 430 of the Companies Act, 2013 bars the jurisdiction of a civil court to entertain a suit or proceeding in respect of any matter which the tribunal or the appellate tribunal is empowered to determine under the Act or any other law for the time being in force. The jurisdiction to decide the validity of a sale deed would fall within the ambit of the civil court. Hence, we are in agreement with the impugned order of the High Court dated 5 February, 2020. 29.3. Learned senior counsel Sri S.Ravi cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to protect the interests of the company at any cost. That being so, the appellant company now alleges that the first respondent siphoned of money and illegally transferred the assets of the company. It is not in dispute that large extent of land parcels were transferred to himself and his close family members and his known persons. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 3. S.242. Powers of Tribunal. (2) Without prejudice to the generality of the powers under sub-section (1), an order under that sub-section may provide for- (g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilization of the recovery including transfer to Invest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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