1994 (4) TMI 264 - HC - Companies Law

Summary

Issues:
1. Jurisdiction of the trial court to hear and decide the suits.
2. Procedural error in the trial court's decision.
3. Consideration of relevant legal principles in deciding preliminary issues.
4. Requirement to decide all issues together in a suit.

Jurisdiction of the Trial Court:
The civil revision applications arose from a common order directing the trial court to frame the issue of its jurisdiction to try the suits challenging various transactions. The trial court initially rejected the defendant's applications challenging its jurisdiction, leading to the filing of revision applications before the High Court. The High Court found a jurisdictional error in the trial court's decision, emphasizing the need to consider legal principles and evidence before determining jurisdiction. The trial court was directed to proceed expeditiously with the suits in accordance with the law.

Procedural Error:
The High Court noted a procedural error in the trial court's decision, where the judge delved into the merits of the issues while deciding whether they should be tried as preliminary issues. The High Court held that the trial court's comprehensive judgment discussing the merits at that stage was unnecessary. The error led to the quashing and setting aside of the trial court's decision, requiring a remand for proper consideration of the preliminary issues.

Consideration of Legal Principles:
In analyzing the trial court's decision, the High Court referred to a previous judgment highlighting the need to follow legal principles and consider evidence before determining the validity of resolutions and actions challenged in the suits. The court emphasized the importance of recording evidence to assess whether the issues fell within the purview of relevant provisions of the Companies Act, 1956. The trial court's failure to consider binding decisions was deemed a jurisdictional error.

Requirement to Decide All Issues Together:
The High Court reiterated the principle that all issues in a suit should be decided together to avoid piecemeal trials and subsequent delays in the legal process. Citing a previous judgment, the court emphasized that trying preliminary issues separately could lead to prolonged proceedings and exhaustion for the litigants. Therefore, the trial court's order to raise only the jurisdictional issue as a preliminary matter was quashed, and the defendant's application was dismissed.

In conclusion, the High Court allowed the revision applications, quashed the trial court's order, and directed the trial court to proceed with the suits expeditiously, considering all issues together. The request for a stay on the implementation of the order was refused, allowing the opponents to challenge the decision before the Supreme Court.