Civil court jurisdiction upheld for director disqualification disputes where individual rights and non-ratifiable illegality are alleged.

Civil court jurisdiction was held not to be excluded merely because the dispute concerned alleged disqualification of a company director under the Companies Act, 1956. The court construed sections 2(11) and 10 as identifying the competent court for matters under the Act, not as ousting ordinary civil jurisdiction in every company-related dispute. It applied the distinction between corporate rights and individual rights, and the rule in Foss v. Harbottle, to hold that a suit lies where an individual right is infringed or the challenged act is incapable of ratification by the majority. The alleged disqualification and challenge to continuance in office were treated as individual-right claims, so the civil suit was maintainable.

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Issues: Whether the civil court has jurisdiction to entertain a suit challenging the alleged disqualification of a company director under the Companies Act, 1956 and seeking declarations and injunctions concerning continuance in office and validity of subsequent board actions.

Analysis: The jurisdictional scheme under sections 2(11) and 10 of the Companies Act, 1956 was construed as identifying the court competent to decide matters arising under the Act, but not as expressly ousting the ordinary jurisdiction of civil courts in every dispute touching company affairs. The absence of an express or implied exclusion of civil court jurisdiction was material. The distinction between corporate rights and individual membership rights was applied, together with the principle that the rule in Foss v. Harbottle does not bar a suit where the complaint concerns infringement of an individual right or an illegal act that cannot be ratified by the majority. The court treated the alleged disqualification and the attendant challenge to the plaintiff's office as a matter of individual right rather than a matter of internal management reserved exclusively to company proceedings. It also held that the Companies Act, 1956 is regulatory in nature and that sections 283(1)(i) and 299 do not create a wholly new right or remedy so as to compel resort only to the company court.

Conclusion: The civil suit was maintainable, and the writ petition challenging that maintainability failed.

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