2009 (2) TMI 464 - HC - Companies Law

Jurisdiction of trial court - Whether trial court has no jurisdiction to decide on the issue inasmuch as the same issue is pending before the Company Law Board Bench, Southern Region, Chennai in C.P.94/07 and further ought not to have passed the interim order of injunction in respect of allotment of shares? Held that - This Court without going into the merits of the matter opines that the civil revision petitioners cannot invoke the jurisdiction of this Court under Article 227 of the Constitution of India when they have two concurrent remedies, (a) As per Order 39 Rule 4 of Civil Procedure Code to vary or vacate or discharge the order passed by the trial Court in I.A. 8812/08 in O.S. 3737/08 dated 11-6-2008 and (b) to file an appeal under Order 43 Rule 1(r) of Civil Procedure Code whether the said ex parte order is a reasoned or non-reasoned one and moreover, the supervisory jurisdiction under Article 227 of the Constitution of India has to be sparingly resorted to by this Court and in this view of the matter, the civil revision petition is dismissed. Liberty is given to the revision petitioners to raise all factual and legal contentions before the trial Court including the plea of maintainability of the suit on the point of jurisdiction in accordance with law. Thus civil revision petition is dismissed

Issues Involved:
1. Jurisdiction of the Trial Court.
2. Interim Injunction.
3. Allegations of Fraud and Misrepresentation.
4. Compliance with Civil Procedure Code.
5. Concurrent Remedies and Supervisory Jurisdiction.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Trial Court:
The revision petitioners contended that the trial court lacked jurisdiction to decide the issue as it was pending before the Company Law Board (CLB), Southern Region, Chennai in C.P.94/07. They argued that the trial court should not have passed the interim order of injunction regarding the allotment of shares. The first respondent/plaintiff sought a declaration that the return of allotment in Form II and FC-GPR dated 30-1-2006 was illegal, null, and void. The court held that the jurisdiction of civil courts is not ousted by the Companies Act, as per sections 9 and 10 of the Civil Procedure Code, 1908, and cited relevant case law to support this position (Dwarka Prasad Agarwal v. Ramesh Chandra Agarwal [2003] 117 Comp. Cas. 201 (SC)).

2. Interim Injunction:
The trial court granted an ad interim injunction till 17-6-2008. The revision petitioners argued that the trial court's order was a non-speaking one and lacked the necessary legal requirements for issuing an interim injunction. The court noted that the interim injunction application should be disposed of within 30 days as per Order 39 Rule 3A of the Civil Procedure Code and found that the trial court had adjourned the case multiple times without providing reasons. The court emphasized the need for a reasoned order when granting ex parte injunctions (Shiv Kumar Chadha v. MCD [1993] 3 SCC 161).

3. Allegations of Fraud and Misrepresentation:
The revision petitioners alleged that the respondents had committed fraud by not disclosing the pending proceedings before the CLB and by falsifying documents to cheat the petitioners of their investment. They cited several Supreme Court decisions to support their claim that fraud vitiates all judicial acts (State of Andhra Pradesh v. T. Suryachandra Rao [2006] 1 LW 547, S.P. Chengalvaraya Naidu v. Jagannath AIR 1994 SC 853). The court acknowledged that fraud must be established through evidence and cannot be used as a mere allegation to invoke supervisory jurisdiction under Article 227 of the Constitution.

4. Compliance with Civil Procedure Code:
The revision petitioners argued that the trial court failed to comply with the mandate of the Civil Procedure Code by not hearing the matter within 30 days from the date of passing the order. The court agreed that the trial court's order lacked detailed reasoning and did not meet the requirements of a reasoned order as mandated by law. The court highlighted the importance of providing reasons for granting ex parte injunctions to ensure transparency and fairness in judicial proceedings.

5. Concurrent Remedies and Supervisory Jurisdiction:
The court emphasized that the revision petitioners had concurrent remedies available, including filing an application under Order 39 Rule 4 of the Civil Procedure Code to vary or vacate the interim order and filing an appeal under Order 43 Rule 1(r). The court held that supervisory jurisdiction under Article 227 of the Constitution should be exercised sparingly and only in cases of gross injustice or patent violation of elementary principles of law. The court dismissed the civil revision petition, granting liberty to the petitioners to pursue their remedies as per the Civil Procedure Code.

Conclusion:
The civil revision petition was dismissed, and the court directed the petitioners to work out their remedies under the Civil Procedure Code. The trial court's order was found to be lacking in detailed reasoning, and the court emphasized the need for compliance with legal mandates when granting interim injunctions. The jurisdiction of civil courts was upheld, and the allegations of fraud were noted to require evidence for substantiation.

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