1965 (11) TMI 153 - HC - Companies Law

Issues Involved:
1. Jurisdiction of the Civil Judge, First Class, Rajnandgaon.
2. Validity of the notice of the annual general meeting.
3. Compliance with the Companies Act, 1956.
4. Validity of the managing agency agreement and voting rights.
5. Application of Sections 87, 89, 329, and 346 of the Companies Act, 1956.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Civil Judge, First Class, Rajnandgaon:
The primary issue was whether the Civil Judge, First Class, Rajnandgaon, had jurisdiction to entertain and try the suit filed by Shri Hajarimal. The court held that the jurisdiction to deal with matters covered by the Companies Act is vested exclusively in the Courts specified under Section 10 of the Companies Act, 1956. The Civil Judge, Rajnandgaon, was not a Court specified under Section 10, thus it lacked jurisdiction. The court emphasized that matters related to the Companies Act must be handled by the designated Company Court. The decision was supported by precedents such as British India Corporation Ltd. v. Robert Menzies and Harish Chandra v. Kavindra Narain Sinha, which affirmed that the jurisdiction conferred on the Courts mentioned in the Companies Act is exclusive.

2. Validity of the Notice of the Annual General Meeting:
Shri Hajarimal challenged the validity of the notice of the annual general meeting scheduled for 22nd January 1965, particularly items 4 and 5 of the agenda. The court noted that the plaintiff's objection was based on the alleged cessation of the managing agents' office and not on the grounds of non-compliance with Sections 171, 172, and 173 of the Companies Act. The notice was claimed to be vitiated due to alleged "fraudulent, mischievous, and tricky" nature, but the court found that these terms were used to describe the alleged non-compliance with the Act rather than actual fraud.

3. Compliance with the Companies Act, 1956:
The plaintiff's suit was essentially for ensuring compliance with Sections 87, 89, 329, and 346 of the Companies Act. The court held that the reliefs sought by the plaintiff, such as prohibitory injunctions, could only be granted by the Court having jurisdiction under Section 10 of the Act. The court emphasized that the specific remedies provided under the Companies Act must be availed of, and the jurisdiction of the Civil Court is impliedly barred in such matters.

4. Validity of the Managing Agency Agreement and Voting Rights:
The plaintiff questioned the validity of the managing agency agreement and the exercise of voting rights by the managing agents. The court noted that the plaintiff's claim was based on the alleged non-compliance with Sections 87, 89, 329, and 346, which are matters falling under the Companies Act. The court reiterated that such issues must be addressed by the designated Company Court under Section 10 of the Act.

5. Application of Sections 87, 89, 329, and 346 of the Companies Act, 1956:
The court examined the plaintiff's allegations regarding the non-compliance with Sections 87, 89, 329, and 346 of the Companies Act. It was noted that the plaintiff alleged that the managing agents ceased to hold office due to non-compliance with these sections. The court held that the plaintiff had the remedy of approaching the Court having jurisdiction under Section 10 for redressal of these grievances. The court emphasized that the exclusive jurisdiction of the Company Court in matters falling under the Companies Act cannot be nullified by approaching an ordinary Civil Court.

Conclusion:
The petition was allowed, and the order of the Civil Judge, First Class, Rajnandgaon, dated 18th February 1965, was set aside. The Civil Judge was directed to return the plaint to the plaintiff with proper endorsement as required by Order 7, Rule 10 of the C.P.C. The respondent Hajarimal was ordered to pay the petitioners' costs here and in the Court below, with counsel's fee fixed at Rs. 200. The outstanding amount of the security deposit was to be refunded to the petitioners.

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