1992 (3) TMI 347 - HC - Companies Law

City Civil Court lacks jurisdiction over directorship issues in companies, plaintiffs directed to High Court

The High Court upheld the decision that the City Civil Court lacked jurisdiction to entertain suits regarding directorship issues in a company, directing ... - Issues Involved:1. Jurisdiction of the City Civil Court to entertain and try the suits.2. Interpretation of Section 10 of the Companies Act.3. Exclusion of jurisdiction of Civil Courts by the Companies Act.4. Applicability of the Bombay City Civil Court Act, 1948.Summary:1. Jurisdiction of the City Civil Court to entertain and try the suits:The plaintiffs initially filed suits in the City Civil Court at Bombay, seeking declarations regarding the cessation and continuation of directorships in Poddar Tyres Limited. The City Civil Court framed a preliminary issue on jurisdiction based on Section 10 of the Companies Act and concluded that it lacked jurisdiction, directing the plaints to be presented to the High Court. The High Court, upon appeal, upheld this decision, stating that the reliefs pertained to Sections 256 and 283 of the Companies Act and thus fell within the High Court's jurisdiction.2. Interpretation of Section 10 of the Companies Act:Section 10 of the Companies Act specifies that the High Court has jurisdiction over matters relating to companies unless jurisdiction is conferred on a District Court by a notification. The High Court examined whether the suits, which sought declarations on directorship issues and board meetings, fell under the jurisdiction of the High Court as per Section 10. The Court concluded that the term 'the Court' in the Companies Act refers to the High Court or a notified District Court only for specific proceedings under the Act, not for general civil suits.3. Exclusion of jurisdiction of Civil Courts by the Companies Act:The High Court reviewed various precedents and held that the Companies Act does not expressly oust the jurisdiction of Civil Courts. It emphasized that unless the Act specifically prescribes a forum for certain reliefs, ordinary Civil Courts retain jurisdiction. The Court cited multiple judgments supporting the view that civil suits are maintainable for matters not exclusively assigned to the Company Court by the Companies Act.4. Applicability of the Bombay City Civil Court Act, 1948:The defendants argued that the suits should be entertained by the High Court under the Companies Act, a special law, and thus fall within the exceptions of Section 3(c) of the Bombay City Civil Court Act, 1948. The High Court rejected this argument, reiterating that the present suits are not governed by Section 10 of the Companies Act and should be tried by the City Civil Court based on their valuation.Conclusion:The High Court concluded that the City Civil Court has jurisdiction to entertain and try the suits. The plaints were returned for presentation to the proper court, and the plaintiffs were advised to seek a review of the earlier orders if necessary. The Prothonotary was directed to act accordingly.