1996 (7) TMI 462 - HC - Companies Law

Company Court Jurisdiction: Companies Act Does Not Bar Civil Courts

The High Court, acting as the Company Court, clarified that jurisdiction under the Companies Act does not automatically exclude Civil Courts unless ... Courts - Jurisdiction of, Issues:1. Jurisdiction of the High Court as the Company Court under the Companies Act, 1956.2. Maintainability of the petition in the High Court regarding the removal of a director under section 283(1)(g) of the Act.3. Interpretation of the jurisdiction of the Civil Court in matters concerning companies under the Companies Act.Analysis:The petitioner sought a declaration that he had not vacated the office of Director of the respondent-company due to alleged illegal removal based on absence from board meetings. The petitioner argued that the High Court, as the Company Court, had jurisdiction to grant relief under section 10 read with section 2(11) of the Act since the company's registered office was within its jurisdiction. However, the respondent's counsel raised a preliminary objection, contending that the petition was not maintainable as jurisdiction regarding section 283 matters was not specifically conferred on the High Court.The petitioner's counsel argued that jurisdiction over matters in section 283 was vested in the Company Court, Central Government, and Company Law Board, not in District Courts. They asserted that the High Court had exclusive jurisdiction over all company-related matters unless delegated otherwise. Additionally, the petitioner contended that Civil Courts lacked jurisdiction over disputes concerning companies due to the Companies Act being a special enactment with specific forums for adjudication.The Court examined precedents from other High Courts but disagreed with the view that Civil Courts' jurisdiction was automatically curtailed by the High Court being designated as the Company Court. The Court emphasized that the Companies Act did not expressly bar Civil Courts' jurisdiction unless explicitly stated. The Act's provisions did not restrict Civil Courts from adjudicating on matters not exclusively under the Company Court's purview.Regarding section 283, the Court clarified that it only outlined conditions for a Director's office to become vacant and did not provide for petitions to declare the office's status. While acknowledging the desirability of vesting exclusive jurisdiction in the Company Court for all company matters, the Court noted that the Act, as it stood, did not preclude Civil Courts' jurisdiction unless expressly specified.In conclusion, the Court dismissed the company petition, allowing the petitioner to seek redress in the Civil Court. The judgment highlighted that the Companies Act did not automatically bar Civil Courts' jurisdiction in matters not explicitly under the Company Court's authority, emphasizing the need for specific statutory provisions for such limitations.This judgment clarifies the scope of jurisdiction of the High Court as the Company Court under the Companies Act, addressing the maintainability of petitions related to director removal under section 283 and interpreting the Civil Court's jurisdiction in company disputes.