Civil court jurisdiction over directors' appointment disputes is not barred unless the statute clearly excludes it.
Civil court jurisdiction was held not to be barred by the Companies Act, 1956 because no express or necessary implication excluded ordinary suits challenging the validity of directors' appointments, so the dispute remained cognizable in civil court. Section 10A of the Banking Regulation Act, 1949 likewise did not oust jurisdiction, because sub-section (6) applies only to appointments, removals, reconstitutions, or elections made "under this section"; appointments made merely in conformity with section 10A(2), and not pursuant to sub-sections (3), (4), or (5), fell outside that bar. The statutory exclusion was confined to its precise language.
Issues: (i) Whether the civil court's jurisdiction to entertain a challenge to the appointment of company directors was barred under the Companies Act, 1956. (ii) Whether section 10A of the Banking Regulation Act, 1949 barred a civil court from entertaining a challenge to the appointment of directors of a banking company where the appointments were made in compliance with section 10A(2) and not under section 10A(3), (4) or (5).
Issue (i): Whether the civil court's jurisdiction to entertain a challenge to the appointment of company directors was barred under the Companies Act, 1956.
Analysis: The jurisdiction of civil courts is not excluded unless the statute expressly or by necessary implication creates such a bar. The Companies Act, 1956 did not prescribe a special forum for disputes concerning the validity of appointment or cessation of directors in general civil proceedings. The earlier Division Bench view was applied, and the contrary single-judge view was treated as per incuriam because it conflicted with binding precedent. The dispute as to validity of directors' appointments was therefore held to be cognizable by the civil court.
Conclusion: The bar of civil court jurisdiction under the Companies Act, 1956 was not attracted, and the suit was maintainable on that ground.
Issue (ii): Whether section 10A of the Banking Regulation Act, 1949 barred a civil court from entertaining a challenge to the appointment of directors of a banking company where the appointments were made in compliance with section 10A(2) and not under section 10A(3), (4) or (5).
Analysis: Section 10A regulates the composition of the board of a banking company, but sub-section (6) bars only appointments, removals, reconstitutions, and elections made "under this section." The appointments in question were not made pursuant to reconstitution under sub-sections (3) or (4), nor pursuant to Reserve Bank action under sub-section (5); they were only made in conformity with the requirements of sub-section (2). The expression "under this section" was held not to extend the bar to ordinary appointments made in compliance with the section. The legislative object was found to be regulation of board composition, not wholesale exclusion of civil remedies against appointment disputes.
Conclusion: Section 10A(6) did not oust civil court jurisdiction over the challenge, and the objection based on section 10A failed.
Final Conclusion: The appeal failed because neither the Companies Act, 1956 nor section 10A of the Banking Regulation Act, 1949 barred the civil court from entertaining the suit challenging the directors' appointments.
Ratio Decidendi: A statutory bar on civil court jurisdiction will be confined to the precise field covered by its language, and section 10A(6) of the Banking Regulation Act, 1949 excludes only appointments, removals, reconstitutions, or elections made under that section, not ordinary appointments merely made in conformity with section 10A(2).
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