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TMI Blog2019 (7) TMI 1944X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case are that the plaintiff-appellant was one of the Directors in the respondent no.1 Company. The defendant-respondent No.1 is a Limited Company. It purchased an immovable property being House No.19/1, B.L.K.-B, Okhla Industrial Area, Phase -2, New Delhi (hereinafter referred to as the "disputed property"). The plaintiff-appellant and the defendant-respondent No.2 and their family members were Directors in six companies, namely, M/s. Himalayan Bioxteracts Pvt. Ltd., Kamero Technosys Ltd., Virat Residency Ltd., Dynacon Cares Ltd., Dynacon Systems Ltd. and Duet Marketing Pvt. Ltd. The plaintiff-appellant and the defendant-respondent no.2 and their two guests drawn Minutes of the Meeting dated 10.2.2016, which is reproduced below :- "MINUTES OF THE MEETING OF THE DIRECTORS OF KAMERO TECHNOSYS LIMITED HELD ALONGWITH TWO OTHER GUESTS ON 10/02/2016 AT ROOM NO. 600 OF VIJAY INTERCONTINENTAL HOTEL AT 12.30 P.M. The Following person were present - 1. Nirbhay Kapoor -Director Kamero Tecnosys Ltd. 2. Pankaj Kumar Gupta- -Director of Kamero Technosys Ltd. 3. Brijesh Saxena -Guest 4. Muqaddar Ali -Guest This meeting was convened with a basic object of finishing the problems f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnosys Ltd. Dynacon Systems Ltd. Virat Residency Ltd. Duet Marketing Pvt. Ltd. 4. The matter of immovable assets in the above six companies was discussed and it was amicably decided to find out the valuation of immovable assets and divide them amongst both the directors. Both the directors were agreeable to this proposition readily. After discussions with various property dealers by both the directors the following valuation of the properties was made which was readily acceptable to both the directors - Name of the Property Valuation reached amicably (Rs in Crores) 1. C-6, Panki Industrial Area, Site - 1, Kanpur 17.00 2. Okhla factory at Delhi 6.00 3. Land at Rania, Kanpur Dehat 7.50 4. Property at Sarojini Nagar, Kanpur 1.25 5. Flat at Lajpat Nagar, Kanpur 0.30 6. Flat at Jangpura Extension, Delhi 1.25 7. Factory at G-116, Site-3, Panki, Kanpur 1.00 Total 34.30 5. That the above properties will be divided amongst both the directors as mentioned below - Pankaj Gupta Valuation Nirbhay Kapoor Valuation C-6 Site-1, Panki 17.00 Okhla, Delhi 6.00 Flat at Jangpura ext. 1.25 Land at Rania 7.50 Sarojini Nagar, Kanpur 1.25 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amongst both the directors in equal proportion, after deducting expenses of Rs 4.00 lacs incurred on its sale and Tax on Long term capital gains to be calculated as per I. Tax Act, 1961. 9. It was also decided that the advance payment of flats made in one of the Company of Rs 23.00 Lacs approx. which was received back will be divided equally amongst both the directors. 10. Both the directors also readily agreed that the payments received from Defence Organizations for sale of Shoes in Kamero Technosys Ltd will go to the credit of Shri Nirbhay Kapoor and will be paid to him even after separation. In the event of payment received being less than the liabilities then that shortfall will be borne by Shri Nirbhay Kapoor. 11. It was also readily agreed by both the directors that any liability of the common six companies arising of the period prior to 31st July, 2012 will be borne equally by both the directors even after separation. 12. It was also readily agreed between both the directors that the Brand "KAMERO" will be the sole property of Shri Pankaj Kumar Gupta and the brand "DYNACON" will be the sole property of Shri Nirbhay Kapoor. 13. It was also decided amicably that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of Section 430 of the Companies Act, 2013"? Submissions on behalf of the plaintiff-appellant 6. Sri Ashish Kumar Srivastava, learned counsel for the plaintiff-appellant submits, as under: i) That the plaintiff-appellant was Director and share holder in the companies in respect of which declaratory relief was sought in the suit. An agreement dated 10.2.2016 was entered between the Directors of the companies under which with respect to the disputed property, it was agreed that when the defendant-respondent no.1, shall sell the aforesaid property, the proceeds thereof shall be transferred to the plaintiff-appellant. The defendant-respondent no.1 has sold the said property for Rs.5,40,00,000/- but has not transferred/paid that amount to the plaintiff-appellant. This caused the plaintiff-appellant to file the suit in question i.e. O.S. No.79 of 2019, seeking a relief for declaration and permanent injunction against the defendant no.1 - Company. ii) The Civil Court was having jurisdiction to decide the aforesaid suit and not the NCLT. The bar provided under Section 430 of the Companies Act, 2013, was not applicable. Section 230 of the Act, 2013, relates to the proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief of permanent injunction have been sought were not parties either in the aforesaid suit No.79 of 2019 or are parties in this appeal. iii) The reference of paragraph 10 of the plaint made by learned counsel for the plaintiff-appellant is wholly irrelevant in as much as the averment made in paragraph 10 does no give any cause of action to the plaintiff-appellant since the plaintiff-appellant has no concern with the defendant-respondent no.1 - Company. iv) Cause of action disclosed in paragraphs 17 & 18 of the plaint is that some person came to the plaintiff-appellant on 15.1.2019 and requested him to sign the sale deed being Ex-Director of the Company so that there may not arise any dispute in future. On 17.1.2019, the plaintiff-appellant came to know about the sale of the properties and on 21.1.2019, the defendant-respondent no.1 has refused to make payment of the sale proceeds of the properties in question. v) Clause (a) of the Order VII Rule 11 C.PC. provides for rejection of plaint in the event the plaint does not disclose any cause of action. Since the plaintiff-appellant has not disclosed any cause of action with respect to the disputed property, therefore, the plaint was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred. [Explanation I].--A suit in which the right to property or to an office is contested is a suit of a civil nature, notwithstanding that such right may depend entirely on the decision of questions as to religious rites or ceremonies. [Explanation II]. For the purposes of this section, it is immaterial whether or not any fees are attached to the office referred to in Explanation I or whether or not such office is attached to a particular place.]. Order VII Rule 11 Rejection of plaint-- The plaint shall be rejected in the following cases:-- (a)where it does not disclose a cause of action; (b)where the relief claimed is undervalued, and the plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so; (c)where the relief claimed is properly valued, but the plaint is returned upon paper insufficiently stamped, and the plaintiff, on being required by the Court to supply the requisite stamp-paper within a time to be fixed by the Court, fails to do so; (d)where the suit appears from the statement in the plaint to be barred by any law : Provided that the time fixed by the Court for the correction of the valuat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll and diligence and shall exercise independent judgment. (4) A director of a company shall not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company. (5) A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company. (6) A director of a company shall not assign his office and any assignment so made shall be void. (7) If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees." 13. Sub-Section (4) of Section 166 mandates in clear terms that a Director of the Company shall not involve in a situation in which he may have a direct or indirect interest that conflicts or possibly may conflict, with the interest of the Company. Sub-Section (1) and (2) mandates that a director of a Company shall act in accordance with the ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain circumstances provided such member has a right to apply under Section 244, for an order under Chapter XVI and in that event power has been conferred upon the Tribunal for appropriate action under Section 242 of the Act. 15. Sections 241, 242 and 245 of the Act are relevant, which are reproduced below:- "241. Application to Tribunal for Relief in Cases of Oppression, etc (1) Any member of a company who complains that-- (a) the affairs of the company have been or 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; or (b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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; (h) removal of the managing director, manager or any of the directors of the company; (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 utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims; (j)the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause (h); (k) appointment of such number of persons as directors, who may be required by the Tribunal to report to the Tribunal on such matters as the Tribunal may direct; (l)imposition of costs as may be deemed fit by the Tribunal; (m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made. (3) A certified copy of the order of the Tribunal under sub-section (1)shall be filed by the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (b) to restrain the company from committing breach of any provision of the company's memorandum or articles; (c) to declare a resolution altering the memorandum or articles of the company as void if the resolution was passed by suppression of material facts or obtained by mis-statement to the members or depositors; (d) to restrain the company and its directors from acting on such resolution; (e) to restrain the company from doing an act which is contrary to the provisions of this Act or any other law for the time being in force; (f) to restrain the company from taking action contrary to any resolution passed by the members; (g) to claim damages or compensation or demand any other suitable action from or against-- (i) the company or its directors for any fraudulent, unlawful or wrongful act or omission or conduct or any likely act or omission or conduct on its or their part; (ii) the auditor including audit firm of the company for any improper or misleading statement of particulars made in his audit report or for any fraudulent, unlawful or wrongful act or conduct; or (iii) any expert or advisor or consultant or any other person for any incorrect or misleading stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or omission could be, and in the circumstances would be likely to be-- (i) authorised by the company before it occurs; or (ii) ratified by the company after it occurs; (f) where the cause of action is an act or omission that has already occurred, whether the act or omission could be, and in the circumstances would be likely to be, ratified by the company. (5) If an application filed under sub-section (1) is admitted, then the Tribunal shall have regard to the following, namely:-- (a) public notice shall be served on admission of the application to all the members or depositors of the class in such manner as may be prescribed; (b) all similar applications prevalent in any jurisdiction should be consolidated into a single application and the class members or depositors should be allowed to choose the lead applicant and in the event the members or depositors of the class are unable to come to a consensus, the Tribunal shall have the power to appoint a lead applicant, who shall be in charge of the proceedings from the applicant's side; (c) two class action applications for the same cause of action shall not be allowed; (d) the cost or expenses connected with the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to in Clause (e). A class of member or members, depositor or depositors may also apply to the Tribunal in the circumstances mentioned in sub-section 1 of Section 245 of the Act. 17. Thus, the alleged Minutes of the Meeting drawn by the Directors plaintiff-appellant and the defendant-respondent no.2, dated 10.2.2016 relating to property held by the Company in its own name under Section 187 of the Act fall within the powers of the Tribunal conferred under Section 242 of the Act. Section 430 of the Act specifically provides that no Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under the Act or any other law for the time being in force. 18. Under Section 9 of the C.P.C. civil court shall have jurisdiction to try all suits of a Civil nature excepting suits of which their cognizance is either expressly or impliedly barred. Thus, the Civil Court shall have jurisdiction to try all types of suits unless the same is ousted, expressly or by necessary implication vide Robust Hotels (P) Ltd. and others Vs. EIH Limited and others (2017)1 SCC 622 (para 31), Nahar Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be brought before Tribunals constituted under that Act. Even the High Court cannot go into that question on a revision or reference from the decision of the Tribunals. (4) When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit. (5) Where the particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegally collected a suit lies. (6) Questions of the correctness of the assessment apart from its constitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case the scheme of the particular Act must be examined because it is a relevant enquiry. (7) An exclusion of the jurisdiction of the civil court is not readily to be inferred unless the conditions above set down apply. " (Emphasis supplied by me) 21. The aforesaid princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant with regard to purchase by them the Plot No.C-6, Panki Industrial Area, Site 1, Panki, Kanpur and requested him to sign the sale deed and thereupon the plaintiff-appellant contacted the defendant-respondent no.2 and demanded money in terms of the Minutes of the Meeting dated 10.02.2016 which the defendant-respondent no.2 refused. Thus, the cause of action disclosed in the plaint clearly indicates the complaint of the plaintiff-appellant with respect to the property of the defendant-respondent-Company and conduct of its affairs. Therefore, the suit was clearly barred by the Provisions of Section 430 of the Act. 25. The Scheme of the Act 2013, exhaustively provides for all matters relating to a Company and its conduct and affairs. Jurisdiction has been exhaustively provided in such matters to Tribunal which is a specialised body constituted under the Act. The matters for which jurisdiction has not been conferred upon the Tribunal, has been provided specifically. In this regard reference may be had to Section 37 of the Act which provides for filing of a suit in certain circumstances. The case of the plaintiff-appellant is not covered by Section 37 of the Act. 26. All the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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