2020 (8) TMI 431 - HC - Companies Law

Maintainability of suit - Jurisdiction of Civil Court to try the suit in view of specific bar under Section 430 of the Companies Act, 2013 - grant of ad-interim injunction in favour of the petitioner - whether Title Suit No.781 of 2019 is maintainable under the facts and circumstances of this case or that under various provisions of the Companies Act 2013 Civil Court s jurisdiction is barred to entertain such suit? HELD THAT - Section 9 CPC gives jurisdiction to try all suits of civil nature excepting those which are expressly or impliedly barred by any other law. A bar to file a civil suit may be expressed or implied. An express bar is whether statue it is contain a provision that the jurisdiction of a civil court is barred, as for example Section 430 of the Companies Act. An implied power may rise when a statue provides a special remedy to an aggrieve party like a right of appeal - Exclusion of civil court jurisdiction cannot be readily inferred on the ground of availability of remedy and forum under Special Act when the action in question was taken without complying with the provisions of the Act. The civil court s jurisdiction cannot be said to be barred under the Law. Before I conclude, let me state few words about the nature of the dispute between the parties. Allegation against the petitioner is that the petitioner allowed an outstation cricketer to play second division cab league for defendant No.1 club though according to the rules of CAB no outstation player is permitted to take part in cricket during tournament on behalf of any club registered under CAB. It is also alleged that by engaging the said outstation cricketer the petitioner compelled the club to spent huge sum of money towards conveyance charges and stay of the said outstation cricketer - Importantly enough, till date CAB did not raise any allegation against defendant No.1 club. On the contrary, the petitioner also did not make his grievance challenging the memorandum of article or any resolution taken by the Board of Directors virtually altering the memorandum of articles or any other action of the defendant No.1 club or its Board of Directors which is prejudicial to him or any class of member or members at large. On the contrary, the allegation of the defendant is that the rules of natural justice procedure audi altarem partem were not given to him before passing an order of suspension. The learned District Judge, South 24 Parganas sitting in appellate jurisdiction failed to exercise her jurisdiction and the order passed by her to the extent regarding maintainability of the suit is liable to be set aside - revision allowed.

Summary

Issues Involved:
1. Maintainability of the suit under the provisions of the Companies Act, 2013.
2. Jurisdiction of the Civil Court in light of Section 430 of the Companies Act, 2013.
3. Granting of ad-interim injunction in favor of the petitioner.

Issue-wise Detailed Analysis:

1. Maintainability of the Suit:
The petitioner challenged the legality of the order dated 24th July 2019, which dismissed his appeal and held that the suit filed was not maintainable. The petitioner argued that his suit, which sought a declaration that his suspension from the club was null and void, was maintainable under Section 9 of the Code of Civil Procedure read with Section 34 of the Specific Relief Act. He contended that the Companies Act, 2013, did not apply to his case as it concerned individual grievances and not the management or control of the company. The court acknowledged the petitioner's argument, stating that the cause of action for the subsequent suit arose after the institution of the first suit, thus making the second suit maintainable.

2. Jurisdiction of the Civil Court:
The court examined whether the Civil Court had jurisdiction to entertain the suit in light of Section 430 of the Companies Act, 2013, which bars civil courts from adjudicating matters that fall within the jurisdiction of the National Company Law Tribunal (NCLT). The petitioner argued that his case did not involve issues of oppression or mismanagement under Section 241 of the Companies Act but rather the legality of his suspension, which did not affect the management of the club. The court agreed with the petitioner, stating that the suspension of an individual member did not fall within the jurisdiction of the NCLT and that the civil court's jurisdiction could not be said to be barred.

3. Granting of Ad-interim Injunction:
The petitioner sought an ad-interim injunction to restrain the club from giving effect to the suspension order. The trial court had refused the injunction on the grounds of a pending caveat and the non-applicability of a cited precedent. The appellate court dismissed the appeal, holding that the suit was not maintainable and that the question of granting an interim injunction did not arise. The High Court found that the trial judge had not disposed of the application for injunction on merit and directed the trial court to hear the application for injunction on merit within one month.

Conclusion:
The High Court allowed the revision, setting aside the judgment and order of the District Judge, South 24 Parganas. The court held that the suit was maintainable and directed the trial court to hear the application for injunction on merit. The court emphasized that the jurisdiction of the civil court could not be said to be barred under the Companies Act, 2013, as the case concerned individual grievances and not issues of oppression or mismanagement.