2003 (3) TMI 549 - HC - Companies Law

Trial court had left question of jurisdiction open and decided application for amendment of plaint

Summary

Issues Involved:
1. Application for amendment of the plaint.
2. Jurisdiction of the Civil Court.
3. Cause of action determination.
4. Jurisdiction under the Companies Act.
5. Pending suit in Delhi High Court.
6. Revision against the trial court's order.

Issue-wise Detailed Analysis:

1. Application for Amendment of the Plaint:
The plaintiff sought to amend the plaint after filing the suit for various reliefs including permanent injunctions against the defendant. The amendment was sought due to subsequent developments, including the acquisition of shares and decisions regarding dividends. The trial court allowed the amendment without addressing the jurisdictional question raised by the defendant.

2. Jurisdiction of the Civil Court:
The defendant contended that the Civil Court lacked jurisdiction to entertain the suit, as the issues pertained to the allotment of shares, which falls under the purview of the Securities and Exchange Board of India (SEBI) and the Company Law Board as per sections 397 and 398 of the Companies Act. The trial court deferred the jurisdictional issue, stating it should be decided after the amendment.

3. Cause of Action Determination:
The court emphasized that the cause of action is determined by the facts required to be proved by the plaintiff. The cause of action comprises every fact necessary to be proved to support the plaintiff's right to the judgment of the court. The court referred to various precedents to define the cause of action and concluded that the bundle of facts stated by the plaintiff should be examined to determine the cause of action.

4. Jurisdiction under the Companies Act:
Sections 10, 397, and 398 of the Companies Act specify the jurisdiction of courts in company matters. Section 10 outlines that the High Court or District Court has jurisdiction, except for matters conferred to the Company Law Board. Sections 397 and 398 empower the Company Law Board to address complaints regarding the conduct of company affairs being prejudicial to public interest or oppressive to members. The court noted that the amendment to the Companies Act in 1988 transferred such jurisdiction from the courts to the Company Law Board.

5. Pending Suit in Delhi High Court:
The defendant highlighted that a similar suit was pending in the Delhi High Court, and the relief sought in the present suit was also not maintainable due to the provisions of section 10 of the Code of Civil Procedure. This contention was not addressed by the trial court before allowing the amendment.

6. Revision Against the Trial Court's Order:
The revision was filed against the trial court's order allowing the amendment without deciding the jurisdictional issue. The court cited precedents indicating that granting an amendment presupposes the court's authority to entertain the suit. If the court lacks inherent jurisdiction, it cannot make any order for amendment, as it would amount to usurping jurisdiction not vested in it.

Conclusion:
The court concluded that the trial court should have decided the jurisdictional issue before allowing the amendment. The civil court has no jurisdiction to entertain complaints under section 397 of the Companies Act, as such matters fall under the purview of the Company Law Board. The revision was allowed, and the trial court's order was set aside with a direction to return the plaint for want of jurisdiction.