2018 (4) TMI 1626 - HC - Companies Law

Appeal dismissed against trial court's ad interim relief order maintaining status quo in injunction suit

Bakshi Faiz Ahmad Versus Bakshi Farooq Ahmad and another

The J&K HC dismissed an appeal challenging a trial court's order granting ad interim relief and maintaining status quo in a civil suit for permanent ... Jurisdiction of Civil Court under Order VII Rule 11 CPC and applicability of Sections 241 and 430 of the Companies Act, 2013 - Suit for Permanent and Mandatory Injunction - application for grant of ad interim relief filed in a Civil Suit - meaning of 'status quo' - Held that:- An appeal against exercise of discretionary jurisdiction is really an appeal in principle and that is why, unlike a regular appeal, in ordinary sense, where whole evidence on record is examined anew by appellate court, what is really examined, in an appeal against exercise of discretionary jurisdiction, is legality and validity of the order and it can be set aside and should be set aside only when there is a patent error on the face of the record or the order is against established or settled principles of law. If two views are possible and a view, which is reasonable and logical, has been adopted by Trial Court, the other view, howsoever appealing, would not be allowed to be substituted in place of the Trial Court's views, which are, otherwise, reasonable and logical. [See: Radhabari Tea Company (P) Ltd. v. Mridul Kumar Bhattacharjee and others - [2009 (12) TMI 501 - HIGH COURT OF GAUHATI]. Injunction is a discretionary relief pending adjudication of the suit. Discretion has to be exercised on sound principles keeping in mind golden principles governing grant of injunction. Appeal against exercise of discretion is an appeal on principle. Appellate Court would normally not interfere with exercise of discretion if conclusion reached by Trial Court is reasonably possible based on materials on record. [Vide: Sharmila Vijay Shetty v. Hemendra Prasad Barooah and others - [2012 (11) TMI 1225 - GUJARAT HIGH COURT]. The Court's interference is also necessary to protect plaintiff from species of irreparable injury before he can establish his title before Trial Court. In case suit property is allowed to be wasted, damaged or alienated the trial itself shall become infructuous and purposeless. Nature of controversy, nature of suit and particular rights asserted by parties, which give rise to be triable Issue, require to be determined/adjudicated upon, on the basis of evidence in main suit. Once status of parties is in issue in a regularly instituted suit, due course of law had to be applied for determination of nature of parties' possession over property in question. From above it is deducible that meaning of 'status quo' is that the court is not adjudicating rights of parties finally. By passing the order of status quo, the civil court only gives direction to parties in terms of the order passed by said court, without giving any finding on any of the issues in respect of which order of status-quo was passed and legal commutation of the word 'status quo', it implies existence state of things at the said given point of time. The Trial Court has taken into account all above aspects of matter while passing order of status quo. Having said so, impugned order, passed by court below in the present case, need not be interfered with because interference, at this stage, will disturb the whole Lis. The appeal on hand is devoid of any merit and is accordingly, dismissed Issues Involved:1. Jurisdiction of Civil Court under Order VII Rule 11 CPC and applicability of Sections 241 and 430 of the Companies Act, 2013.2. Applicability of Order II Rule 2 CPC regarding splitting of claims.3. Powers of the Tribunal under the Companies Act, 2013, particularly Sections 58, 59, and 430.4. Granting of temporary injunction and principles governing such discretion.Detailed Analysis:1. Jurisdiction of Civil Court under Order VII Rule 11 CPC and applicability of Sections 241 and 430 of the Companies Act, 2013:The appellant argued that the civil court lacked jurisdiction to entertain the suit due to Sections 241 and 430 of the Companies Act, 2013, which mandate that matters to be determined by the Tribunal or Appellate Tribunal cannot be entertained by a civil court. The respondent countered that the Company Law Tribunal cannot deal with questions of fact, which are within the purview of civil courts. The court concluded that the Tribunal has no power to decide the title of shares in summary proceedings, and the civil court has jurisdiction over disputed questions of title.2. Applicability of Order II Rule 2 CPC regarding splitting of claims:The appellant contended that the second suit for declaration and injunction was barred under Order II Rule 2 CPC as it related to the same property and cause of action as the earlier suit for permanent and mandatory injunction. The respondent argued that the two suits were based on distinct causes of action: one for injunction and the other for declaration and partition. The court agreed with the respondent, stating that the cause of action for a suit for permanent injunction is distinct from that for a suit for declaration and partition. The earlier suit had not been decided on merits and was still pending adjudication.3. Powers of the Tribunal under the Companies Act, 2013, particularly Sections 58, 59, and 430:The court examined the provisions of the Companies Act, 2013, noting that the Tribunal or Board can only decide issues related to rectification of the register concerning shares and connected incidental matters, not disputed questions of title. The court cited various judgments, including Ammonia Supplies Corporation (PT) Limited v. Modern Plastic Containers (P) Ltd and Standard Chartered Bank v. Andhra Bank Financial Services Limited, which held that seriously disputed questions of title cannot be decided by the Company Law Board due to the summary nature of its proceedings. The court concluded that the civil court has jurisdiction to decide disputed questions of title.4. Granting of temporary injunction and principles governing such discretion:The court emphasized that granting or refusing temporary injunctions rests on the sound exercise of discretion by the courts. Such discretion should not be lightly interfered with unless shown to be unreasonable or capricious. The court noted that the trial court had considered all factors, including the prima facie case, balance of convenience, and irreparable injury, before passing the order of status quo. The appellate court should not reassess the material and seek to reach a different conclusion if the one reached by the trial court was reasonably possible. The court cited various judgments, including Wander Ltd v. Antox India P. Ltd, to support this principle.Conclusion:The appeal was dismissed as devoid of merit, with the court affirming that the civil court had jurisdiction to entertain the suit and that the order of status quo passed by the trial court was appropriate. The dismissal of the appeal does not preclude the appellant from approaching the court below to urge and exhort all arguments projected in the appeal.