2016 (10) TMI 1320 - HC - Companies Law

Court allows appeal, restores case to Civil Judge, emphasizes Civil Court jurisdiction, not barred under Companies Act

Candolim Developers Pvt. Ltd. And Another Versus Pravin Grover And Others

The Court partly allowed the appeal, quashed the order rejecting the plaint, restored the case to the Civil Judge, and directed the Judge to proceed with ... Jurisdiction of Civil Courts - rejection of plaint on the ground that the jurisdiction of the Civil Court is barred under Order VII Rule 11(d) of the CPC which came to be allowed by the impugned order dated 12.11.2013 - HELD THAT:- The learned Trial Judge was not justified to come to the conclusion that the suit is barred in terms of Order 7 Rule 11 of the Civil Procedure Code. The jurisdiction of the Civil Court is not barred taking into account the relief sought by the Appellants which, prima facie, suggests that they are under the general law applicable to the facts of the case. The suit is also filed on on behalf of the Complainant who is the Appellant no. 1 herein. Whether the Company has been duly represented is a matter which has to be examined on its own merits in accordance with law and not while examining the application for rejection. The question as to whether the suit itself is maintainable will have to be considered looking into the defence of the Respondents which exercise cannot be carried out whilst considering an application under Order 7 Rule 11. In such circumstances, the learned Judge was not justified to pass the impugned Order - Appeal allowed in part. Issues Involved:1. Whether the jurisdiction of the Civil Court is barred under Section 10GB of the Companies Act, 1956.2. Whether the plaint filed by the appellants should be rejected under Order VII Rule 11(d) of the CPC.Detailed Analysis:1. Jurisdiction of the Civil Court under Section 10GB of the Companies Act, 1956:The primary issue in this case is whether the jurisdiction of the Civil Court is barred by Section 10GB of the Companies Act, 1956. The appellants challenged the order of the Civil Judge, Senior Division, Panaji, which rejected their plaint on the grounds that the Civil Court's jurisdiction was barred. The appellants argued that the learned Judge misconstrued Section 10GB, which led to the erroneous conclusion that the Civil Court lacked jurisdiction. They contended that their suit was based on allegations of fraud committed by the respondent while managing the affairs of the company, and that documents were fabricated to defraud.The Court examined the provisions of Section 10GB, which was inserted by the Companies (Second Amendment) Act, 2002. This section stipulates that no Civil Court shall have jurisdiction over matters vested in the Tribunal or Appellate Tribunal, and no injunction shall be granted in respect of actions taken by these Tribunals. However, the Court emphasized that the exclusion of jurisdiction must be explicit, expressed, or clearly implied, and that the scope of such exclusion is not to be readily inferred.The Court referred to the judgment in the case of Sahara Fabrics Pvt. Limited & Ors V/s Smt. Kailash w/o Ramprashad Mehra & Anr., which discussed the principles laid down by the Supreme Court in Dhulabhai's case regarding the exclusion of Civil Court jurisdiction. It was noted that where a statute provides a finality to the orders of special tribunals, the Civil Court's jurisdiction is excluded if there is an adequate remedy provided by the statute. However, this exclusion does not apply in cases where the statutory tribunal has not acted in conformity with fundamental judicial principles.2. Rejection of the Plaint under Order VII Rule 11(d) of the CPC:The second issue is whether the plaint should be rejected under Order VII Rule 11(d) of the CPC. The defendants argued that the suit was barred under Section 10GB of the Companies Act, and thus the plaint should be rejected. The Court, however, emphasized that while examining an application under Order VII Rule 11, only the plaint should be considered, not the defense of the defendants.The Court observed that the appellants sought several reliefs, including declarations that certain forms filed by the defendant before the Registrar of Companies were null and void, and a mandatory injunction directing the defendant to hand over company property and documents. The Court noted that these reliefs were under the general law applicable to the facts of the case and did not fall exclusively within the jurisdiction of the Tribunal as per Section 10GB.The Court further referred to the judgment in Dwarka Prasad Agarwal and Anr. V/s Ramesh Chander Agarwal and others, which supported the view that the jurisdiction of Civil Courts is not ousted unless explicitly stated. The Court concluded that the trial judge was not justified in rejecting the plaint under Order VII Rule 11, as the jurisdiction of the Civil Court was not barred in this case.Conclusion:The Court quashed and set aside the impugned order dated 12.11.2013, restored the Special Civil Suit No. 122/2000 to the file of the Civil Judge, Senior Division, Panaji, and directed the learned Judge to proceed and decide the suit in accordance with law. All contentions of the respondents on merits were left open. The appeal was thus partly allowed and disposed of accordingly.Order:1. The appeal is partly allowed.2. The impugned order dated 12.11.2013 is quashed and set aside.3. The Special Civil Suit No.122/2000 is restored to the file of the learned Civil Judge Senior Division, Panaji.4. The learned Judge is directed to proceed and decide the suit in accordance with law.5. All contentions of the respondents on merits are left open.6. The appeal stands disposed of accordingly.