1980 (9) TMI 219 - HC - Companies Law

Summary

Issues Involved:
1. Revocation of leave granted under clause 12 of the Letters Patent.
2. Jurisdiction of the High Court of Calcutta.
3. Balance of convenience.
4. Allegations of misrepresentation and fraud.
5. Applicability of section 20 of the Civil Procedure Code.

Issue-wise Detailed Analysis:

1. Revocation of Leave Granted under Clause 12 of the Letters Patent:
The defendants, Eastern Tea Co. Ltd. and its directors, sought an order to revoke the leave granted under clause 12 of the Letters Patent and to stay all further proceedings in the suit. The plaintiff had obtained leave under clause 12 based on averments in paragraphs 15 and 19 of the plaint, alleging misrepresentation by the company and its auditors regarding the investments made, which were received within the jurisdiction of the High Court of Calcutta. However, the court found that the plaintiff did not challenge the balance-sheet itself nor claimed any relief against the auditors, rendering the receipt of the balance-sheet not a part of the cause of action.

2. Jurisdiction of the High Court of Calcutta:
The court examined whether it had jurisdiction to entertain the suit. The plaintiff argued that part of the cause of action arose within the jurisdiction due to the receipt of the balance-sheet and a letter at Calcutta. However, the court noted that the defendant company's registered office was in Jalpaiguri, outside the jurisdiction of the court, and that the company only had a liaison office in Calcutta. The court held that the mere receipt of a balance-sheet does not confer jurisdiction and that the defendant did not carry on business within the court's jurisdiction as required by clause 12.

3. Balance of Convenience:
The court considered the balance of convenience, noting that the defendant company's registered office, statutory books, and documents were located in Jalpaiguri. The court found that requiring the company to produce documents and defend the suit in Calcutta would cause significant inconvenience. The court applied the doctrine of forum conveniens, emphasizing that the balance of convenience favored the defendants.

4. Allegations of Misrepresentation and Fraud:
The plaintiff alleged that the company and its auditors made wrongful and fraudulent representations regarding investments, which were in excess of the maximum limit provided under section 372 of the Companies Act, 1956. However, the court observed that no relief was claimed against the auditors and that the balance-sheet itself was not challenged. The court concluded that the allegations did not form a substantial part of the cause of action within its jurisdiction.

5. Applicability of Section 20 of the Civil Procedure Code:
The court clarified that section 20 of the Civil Procedure Code, which allows suits to be instituted where a corporation carries on business, did not apply to suits filed on the Original Side of the High Court. Therefore, the plaintiff's argument that the defendant had a subordinate office in Calcutta was of no avail. The court reiterated that the relevant consideration was whether the defendant carried on business within the jurisdiction, which was not established in this case.

Conclusion:
The court concluded that no part of the plaintiff's cause of action arose within its jurisdiction and that the balance of convenience favored the defendants. Consequently, the court revoked the leave granted under clause 12 of the Letters Patent and stayed further proceedings in the suit. The court emphasized that the plaintiff's right to choose the forum is not absolute and can be interfered with in appropriate cases. The order included a stay of operation for a fortnight to allow for any potential appeals.