2012 (6) TMI 903 - HC - Companies Law

Summary

Issues Involved:
1. Territorial jurisdiction of the City Civil Court at Calcutta.
2. Application and interpretation of Order 14 Rule 2 of the Code of Civil Procedure.
3. Cause of action and its implications on jurisdiction.

Summary:

1. Territorial Jurisdiction:
The primary issue in this case is the territorial jurisdiction of the City Civil Court at Calcutta to try the suit filed by the plaintiff. The plaintiff, a holder of 1000 Equity shares in the defendant company, filed a suit for declaration of ownership over these shares, claiming non-receipt of the shares sent for transfer. The defendant company argued that the registered office is in Punjab, and therefore, the Calcutta court lacks jurisdiction. The court, however, found that the cause of action, including the non-receipt of shares and the plaintiff's residence, arose in Calcutta, thus conferring jurisdiction to the City Civil Court at Calcutta.

2. Application and Interpretation of Order 14 Rule 2 CPC:
The defendant company filed an application u/s Order 14 Rule 2 CPC, requesting the court to decide the issue of jurisdiction as a preliminary issue. The court considered the amended provision of Order 14 Rule 2, which allows the court to try an issue of law first if it relates to the jurisdiction of the court or a statutory bar to the suit. The court referenced the Hon'ble Supreme Court's decision in Ramesh B. Desai & Ors. vs. Bipin Vadilal Mehta & Ors., which held that mixed issues of law and fact cannot be tried as preliminary issues. Despite this, the court noted that the defendant company had invited the court to decide the jurisdiction issue first and thus could not later contest the court's decision.

3. Cause of Action and its Implications on Jurisdiction:
The court examined the concept of 'cause of action,' emphasizing that it consists of every fact necessary for the plaintiff to prove to support their right to judgment. The court cited several precedents, including Laxman Prasad vs. Prodigy Electronics Ltd. & Anr., which defined 'cause of action' as a right to sue. The court concluded that the cause of action in this case, including the plaintiff's purchase and non-receipt of shares at Calcutta, conferred jurisdiction on the City Civil Court at Calcutta. The court rejected the defendant's argument that the suit should be filed where the company's registered office is located, referencing the broader interpretation of 'cause of action' and the plaintiff's right to seek relief in Calcutta.

Conclusion:
The court found no infirmity in the order of the City Civil Court at Calcutta and dismissed the revisional application, affirming the court's territorial jurisdiction to try the suit. The application of Order 14 Rule 2 CPC and the interpretation of 'cause of action' were pivotal in this decision. The revisional application failed, with no order as to costs.