2017 (7) TMI 1413 - HC - Companies Law

Exclusive NCLT Jurisdiction Upheld in Companies Act Dispute

Selvarathnam, M/s Selvarathnam Matches Industries Private Limited Versus M/s. Standard Fire Words Pvt. Ltd., Rep. by its Director Mr. P. Jaisankar

The Civil Court dismissed the defendants' application to reject the plaint, ruling that the jurisdiction of Civil Courts is only ousted when matters are ... Seeking to declare the EGM notice illegal - injunction restraining the defendants from convening AGM of the plaintiff company - plaint averment is that the defendants are attempting to capture the management by calling for EGM in violation of Section 100 of the Act - HELD THAT:- After notification of Sections 241 and 242 except Section 242(1)(b), 242(2) clauses(c) and (g) vide S.O.1934(E) dated 01.06.2016 and Section 242(1)(b) and 242(2)(c) and (g) vide, Notification S.O.2912(E), dated 09.09.2016, the National Company Law Tribunal (in short “NCLT) alone is empowered to deal matters relating to oppression. Likewise Section 100 of the Act, which was notified and brought into effect on 12.09.2013 lays down the procedure to be adopted to call for EGM by the Board. In case of any breach or violation, by virtue of the supervisory power conferred under Section 98 of the Act, the Tribunal either suo motu or on application can call for meeting of members. Member aggrieved by the decision of the EGM or the manner it was convened can challenge it before the Tribunal under Section 242 of the Act. Such power is exclusively conferred to Tribunal under Section 98 and 242 of the Act. In this case, the plaintiff company right to seek redressal is very well taken care by the statute under Section 242 of the Act. On considering the plaint averments, cause of action and the statute governing the dispute in entirely undoubtedly indicates that the subject matter for determination squarely falls within the domine of the NCLT and therefore, Civil Court jurisdiction is ousted expresssly by Section 430 of the Act. The Trial Court has erroneously dismissed I.A.No.1080 of 2016 without taking note of Section 98, 100 and 242 of the Companies Act, 2013. Failure to mention specific provision of Law by the petitioner cannot be an excuse for the Court to overlook the provisions relevant for the case. What the lower Court ought to have looked for is whether a real cause of action has been set out and clear right to sue is made out in the plaint. The Civil Revision Petition is allowed. Issues:1. Jurisdiction of Civil Court in a dispute related to company management and conduct of meetings.Analysis:The judgment involves a dispute where the plaintiff, a Private Limited Company, represented by its Director, filed a suit against the defendants, who are revision petitioners, alleging unethical conduct affecting the business of the plaintiff company. The plaintiff sought a declaration that certain notices calling for meetings were illegal and invalid, along with a permanent injunction restraining the defendants from conducting any meetings until the internal dispute was resolved. The defendants filed an application to reject the plaint, arguing that Civil Court jurisdiction was ousted by Section 430 of the Companies Act, 2013. The Trial Court dismissed the application, stating that the jurisdiction of civil courts is barred only in matters specifically empowered to be determined by a tribunal under the Act. The defendants failed to establish any such specific provision, leading to the dismissal of their application.The plaintiff contended that the defendants were attempting to capture the management by calling for meetings in violation of Section 100 of the Act. The judgment highlighted that after the notification of certain sections, the National Company Law Tribunal (NCLT) was exclusively empowered to deal with matters related to oppression. The plaintiff's right to seek redressal was well-taken care of by Section 242 of the Act, which confers power to challenge decisions of meetings before the Tribunal. The judgment referenced a previous case to emphasize the importance of considering the contentions raised in the plaint to determine the jurisdiction of a Civil Court.The judgment delved into the provisions of the Companies Act, outlining the procedures for convening meetings, consequences of default, and the powers of the Tribunal in such matters. It emphasized that the subject matter of the dispute fell within the domain of the NCLT, leading to the ousting of Civil Court jurisdiction as expressly provided under Section 430 of the Act. The Trial Court's dismissal of the application was deemed erroneous for overlooking relevant provisions of the Companies Act and failing to consider the clear right to sue as set out in the plaint. The judgment concluded by allowing the Civil Revision Petition, rejecting the plaint, and closing the connected Miscellaneous Petition without costs.In summary, the judgment addresses the jurisdictional issue concerning a dispute related to company management and the conduct of meetings, emphasizing the statutory provisions governing such matters and the exclusive jurisdiction of the NCLT in cases of oppression. It underscores the importance of establishing a clear cause of action and right to sue in the plaint while considering the ouster of Civil Court jurisdiction under Section 430 of the Companies Act, 2013.