2002 (7) TMI 824 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the Civil Court.
2. Validity of the ex parte ad interim order of injunction.
3. Suppression of material facts by the plaintiff.
4. Proper exercise of discretion by the Trial Court.
5. Conduct of the Annual General Meeting (AGM).

Issue-wise Detailed Analysis:

1. Jurisdiction of the Civil Court:
The appellant challenged the jurisdiction of the Civil Court in passing the ex parte ad interim order of injunction, citing Section 10 of the Companies Act read with Section 2(11). It was argued that the registered office of the Club is outside the territorial jurisdiction of the Trial Court. The plaintiff/respondent countered that the jurisdiction of the Civil Court under Section 9 of the CPC is very wide and should be decided based on the averments made in the plaint. The Court held that the question of jurisdiction raises an arguable issue and should be decided when the injunction petition is heard.

2. Validity of the ex parte ad interim order of injunction:
The appellant contended that the Trial Court did not follow the mandate of recording reasons under Order 39 Rule 3 of the CPC when granting the ex parte ad interim order of injunction. The Court referred to the Supreme Court's rulings in Shiv Kumar Chadha v. Municipal Corporation of Delhi and Morgan Stanley Mutual Fund v. Kartick Das, which emphasized the mandatory nature of recording reasons for such orders. The Court found that the Trial Court's failure to record reasons invalidated the order.

3. Suppression of material facts by the plaintiff:
The appellant argued that the plaintiff suppressed material facts, particularly his awareness of the AGM scheduled for 21st June 2002, as evidenced by a document dated 5th June 2002. The Court agreed, noting that the plaintiff's pleadings lacked candor and clarity, which is essential for ex parte applications. The Court held that this suppression of facts warranted staying the Trial Court's order.

4. Proper exercise of discretion by the Trial Court:
The Court found that the Trial Court did not properly exercise its discretion in granting the ex parte ad interim order of injunction. The Court highlighted that the plaintiff approached the Court at the last minute, despite being aware of the AGM well in advance. The Court also noted that the Trial Court failed to consider the balance of convenience or inconvenience of issuing such an order a day before the AGM.

5. Conduct of the Annual General Meeting (AGM):
The Court permitted the Club to hold the AGM on 19th July 2002 at its registered office, based on the notice dated 24th May 2002. The Court directed that the AGM be conducted under the supervision of Hon'ble Justice Chittatosh Mookerjee, assisted by two learned advocates, to ensure fairness. The decisions taken at the AGM would be subject to the final order of the Court below in the injunction petition or the suit.

Conclusion:
The ex parte ad interim order of injunction passed by the Trial Court was stayed until the hearing of the injunction petition. The AGM was allowed to proceed under judicial supervision, with the decisions taken at the AGM to abide by the final order in the ongoing suit. The appeal and the stay application were disposed of with specific directions to ensure a fair process.