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2023 (7) TMI 444 - HC - Companies LawOppression and mismanagement - Appointment of the Ombudsman cum Ethics Officer of the DDCA - Scope of Articles of Association (AoA) the company (DDCA) - Validity of notice for convening the Extra-Ordinary General Meeting (the EGM) of the Members of the DDCA - Article 226 of the Constitution of India - HELD THAT - It is well settled that the jurisdiction of a High Court under Article 226 of the Constitution of India is couched in wide terms and the exercise thereof is not subject to any restrictions except the territorial restrictions which are expressly provided in the Articles but the exercise of the jurisdiction is discretionary and it is not exercised merely because it is lawful to do so. The very amplitude of the jurisdiction demands that it will ordinarily be exercised subject to certain self-imposed limitations and the resort to that jurisdiction is not intended as an alternative remedy for relief which may be obtained in a suit or other mode prescribed by statute. It is well settled that availability of alternative remedy does not operate as an absolute bar to the maintainability of the writ petition and that the rule which requires a party to pursue the alternative remedy provided by the statute is a rule of policy for convenience and discretion rather than a rule of law. Undoubtedly, entertainability and maintainability of the writ petition are two distinct concepts. If the objection to maintainability is sustained then the Courts are rendered incapable of receiving the lis for adjudication. However, on the other hand, the question of entertainability is entirely within the discretion of the High Courts and writ remedy is a discretionary remedy. A writ petition, despite being maintainable may not be entertained by High Courts for many reasons or relief could be refused to the Petitioner despite setting up a sound legal point. Chapter 16 of the Companies Act deals with prevention of oppression and mismanagement. Section 241 of the Companies Act provides that any member of a company who complaints that the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or to any other member or members or in a manner prejudicial to the interests of the company may approach the NCLT - Section 242 of the Companies Act provides that if NCLT is of the opinion that the company s affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company then the NCLT can pass orders for regulating the conduct of the affairs of the company. Section 242 (4) of the Companies Act gives power to the NCLT to make any interim order which it thinks fit for regulating the conduct of the company s affairs upon such terms and conditions as the NCLT deems to be just and equitable - Section 245 of the Companies Act gives the power to the NCLT to restrain a company from committing an act which is ultra vires the articles or memorandum of the company. If the appointment of Ombudsman is contrary to the laws laid down in the AoA, it is always open for the NCLT to stay the effect of the resolution dated 10.04.2023 and reverse any order passed by the Ombudsman or any action taken by him/her if it is not in the interest of the DDCA. The Petitioner has not made out a case that it is imperative for this Court to entertain the present Writ Petition even though an equally efficacious alternative remedy/forum is available to the Petitioner and that the Ombudsman can pass such orders which are irreversible in nature and cannot be rectified if they are found to be faulty - The present case also does not fall within the exceptions that have been laid down by the Apex Court in M/S. SOUTH INDIAN BANK LTD. ORS. VERSUS NAVEEN MATHEW PHILIP ANR. ETC. ETC. 2023 (5) TMI 798 - SUPREME COURT which would compel this Court to entertain the present Writ Petition even in the presence of an equally efficacious alternative remedy to the Petitioner. This Court is, therefore, not inclined to entertain the present Writ Petition at this stage and grants liberty to the Petitioner to approach the NCLT for the redressal of its grievances - Petition disposed off.
Issues Involved:
1. Validity of the Notice for Convening the EGM. 2. Jurisdiction of the High Court under Article 226 of the Constitution. 3. Availability of Alternative Remedy through NCLT. Summary: 1. Validity of the Notice for Convening the EGM: The petitioner, the Secretary of the Delhi and District Cricket Association (DDCA), challenged the notice dated 10.06.2023 issued by the Apex Council for convening an Extra-Ordinary General Meeting (EGM) on 05.07.2023. The purpose of the EGM was to ratify the resolution dated 10.04.2023, appointing Justice M M Kumar (Retd.) as the Ombudsman cum Ethics Officer of the DDCA. The petitioner contended that the resolution was passed clandestinely and was invalid because it did not follow the procedure laid down in the Articles of Association (AoA) of the DDCA. Specifically, the petitioner argued that the appointment of the Ombudsman cum Ethics Officer should be done only at the Annual General Meeting (AGM) of the General Body, as stipulated in Article 10(5)(f) of the AoA. 2. Jurisdiction of the High Court under Article 226 of the Constitution: The respondent raised a preliminary objection regarding the maintainability of the writ petition, arguing that the petitioner should have approached the National Company Law Tribunal (NCLT) for redressal of grievances as DDCA is a company incorporated under Section 8 of the Companies Act, 2013. The respondent cited various sections of the Companies Act, including Sections 241, 242, and 245, which grant the NCLT the power to regulate the conduct of the company's affairs and to provide relief in cases of oppression and mismanagement. The court acknowledged that its jurisdiction under Article 226 is discretionary and should not be exercised merely because it is lawful to do so, especially when an equally efficacious alternative remedy is available. 3. Availability of Alternative Remedy through NCLT: The court emphasized that the NCLT has the power to address the grievances raised by the petitioner, including quashing the notice for the EGM and staying the effect of the resolution dated 10.04.2023. The court noted that Section 244 of the Companies Act allows the NCLT to waive the requirement of support from one-fifth of the total number of members for filing an application under Section 241. Therefore, the petitioner should have approached the NCLT first. The court also highlighted that the NCLT is situated in Delhi, making it a convenient forum for the petitioner. Conclusion: The court decided not to entertain the writ petition at this stage and granted liberty to the petitioner to approach the NCLT for redressal of grievances. The court made it clear that it had not made any observations on the merits of the case. The writ petition and pending applications were disposed of accordingly.
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