2007 (2) TMI 328 - HC - Companies Law

Issues Involved:
1. Civil court's jurisdiction to try the suit.
2. Compliance with conditions of the revocation order by the plaintiff.
3. Territorial jurisdiction of the trial court.
4. Plaintiff's claim for enforcement of trading rights and damages.

Issue-wise Analysis:

1. Civil Court's Jurisdiction to Try the Suit:
The primary issue was whether the civil court had jurisdiction to try the suit filed by the plaintiff. The trial court decided against the petitioner-defendants, holding that the civil court has jurisdiction. The defendants argued that Section 22E read with Section 23L of the Securities Contracts (Regulation) Act, 1956, and Rule 19(5) of the Securities Contracts (Regulation) Rules, 1957, barred the civil court's jurisdiction. They contended that the plaintiff should have appealed under Section 23L if aggrieved by the BSE's actions. The plaintiff countered that they were not challenging any BSE order but were enforcing their civil rights under the listing agreement. The court noted that ouster of civil court jurisdiction cannot be readily inferred unless expressly or impliedly barred by statute. The court concluded that based on the plaint allegations, the suit was not barred by law, and the civil court had jurisdiction.

2. Compliance with Conditions of the Revocation Order by the Plaintiff:
The plaintiff claimed that they had complied with all conditions imposed by the BSE for revocation of the suspension order dated 17-8-2005. The BSE had set three conditions: payment of Rs. 2,40,000, locking-in of promoters' shares, and furnishing a declaration. The plaintiff asserted compliance, while the defendants disputed it, particularly the lock-in of all promoters' shares. The court observed that the defendants' claims about non-compliance were defenses that needed to be proved and could not be summarily accepted at the preliminary stage. The trial court's decision on this issue was based on pleadings and documents without evidence, which the High Court found inappropriate.

3. Territorial Jurisdiction of the Trial Court:
The trial court had framed several issues, including issue No. 7, which was assumed to relate to the territorial jurisdiction. The High Court noted that both parties proceeded on this assumption, and the trial court decided issue No. 7 accordingly. However, the High Court clarified that issue No. 5, which was about the jurisdiction of the civil court based on the defendants' pleas, should be decided after evidence. The trial court's order on issue No. 7 was set aside to avoid legal complications in deciding issue No. 5.

4. Plaintiff's Claim for Enforcement of Trading Rights and Damages:
The plaintiff sought a declaration that no legal proceedings were pending against them that would justify the BSE's refusal to allow trading of their shares. They also sought an injunction against the BSE and claimed damages. The plaintiff argued that the suspension was revoked, and they complied with all conditions, yet trading was not permitted. The defendants argued that the revocation order was itself revoked, but they failed to provide evidence. The court held that the plaintiff's suit was for enforcement of their civil rights under the agreement with the BSE and not a challenge to any BSE order. The trial court was directed to proceed with the trial and decide all issues after evidence.

Conclusion:
The High Court partially allowed the revision petition, setting aside the trial court's order dated 12-1-2007 to ensure that the trial court is not influenced while deciding issue No. 5 and other issues. The trial court was directed to proceed with the trial and decide all issues after evidence.

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