9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (12) TMI 1317 - HC - Companies LawEntitlement to 1/3rd of all the family assets and properties including business, assets and property - Challenge to an order whereby, while deciding an application of the defendant/respondent no. 25 under Order VII Rule 11 of the Code of Civil Procedure, the learned Trial Judge treated the same to be one under Order VII Rule 10 of the Code and directed return of the plaint to be presented before the appropriate forum - Principles of res judicata - Partial rejection/return of plaint - Jurisdiction of the NCLT - Concept of quasi-partnership - Applicability of the Benami Transactions Act. Principles of res judicata - HELD THAT - It is well-settled that the principle of res judicata operates at different stages of the same suit. Since both the applications have been filed under Order VII Rule 11 of the Code, no distinction can be drawn between the powers of the court or the competence of the court to decide the issues involved, which were similar in the present case as that on the earlier occasion, when a similar prayer was rejected by the order dated July 15, 2017. The said order has attained finality, having not been assailed successfully. Hence, the present application of respondent no. 25 is barred by the principle of res judicata. Partial rejection/return of plaint - HELD THAT - It is found from the reliefs sought in the plaint that the argument as to the NCLT having jurisdiction applies only to certain consequential reliefs sought in the suit in respect of alleged mismanagement of the funds of the defendant-Companies. Even if the said reliefs are held to be barred at the final hearing of the suit, the primary relief of declaration and partition cannot be held to fall within the domain of the NCLT s jurisdiction. As held in Ammonia Supplies 1998 (9) TMI 427 - SUPREME COURT and Sangramsinh P. Gaekwad 2005 (1) TMI 409 - SUPREME COURT , disputed questions which are pure questions of title cannot be adjudicated under the Companies Act. As held in Dwarka Prasad Agarwal (D) by LRS. 2003 (7) TMI 481 - SUPREME COURT , the jurisdiction of the Civil Court is not completely ousted by the Companies Act, 1956. Importantly, the reliefs pertaining to the management of the affairs of the Companies are only consequential to the primary reliefs of declaration of the shares of the parties in respect of the subject-matter of the suit, flowing from the claim that those can be traced back to the joint family nucleus, and partition of such joint assets. The said primary reliefs cannot be granted by the NCLT but comes squarely within the purview of the Civil Court. Even as per the judgments cited by the respondents, if the disputes pertain to questions of title and squarely fall within the domain of the Civil Court, the exclusion of the jurisdiction of the Civil Court under Section 9 of the Code of Civil Procedure is not readily inferred. Thus, if at all, the plaint would have to be rejected/returned partially. Such split being not permissible in law, the impugned order returning the plaint as a whole is bad on such count as well. Jurisdiction of the NCLT - HELD THAT - The reliefs do not confine themselves to mismanagement of the affairs of the Company standing on an independent footing. The plaintiffs claim over the entire subject-matter of the suit, including in the assets of the Company and the shares of the Companies, apart from certain other immovable properties which do not belong to the Companies. Such claim of title by inheritance to the shareholding and other assets is entirely beyond the jurisdiction of the NCLT to adjudicate upon under Sections 241 and 242 of the 2013 Act - The bar in Section 430 of the 2013 Act is only applicable in respect of reliefs which come within the exclusive jurisdiction of the NCLT and cannot be stretched beyond the same. Reliefs which can be granted exclusively by the Civil Court, thus, cannot be covered by Section 430 of the 2013 Act. Hence, the NCLT does not have jurisdiction to grant the primary reliefs claimed in the suit. Concept of quasi-partnership - HELD THAT - The cross-holdings in the shares of the different Companies as pleaded in the plaint indicate pervasive control over the Companies by the descendants and family-members of Late Sukhdeo Prasad. The Directorship in most of the Companies is substantially held between the family-members and the plaint case is that the Companies were formed from the joint funds of the family. The cross-shareholdings averred in the plaint clearly show that control over all the assets of the defendants-Companies vests in the joint family. Hence, the concept of quasi-partnership can definitely by borrowed in the backdrop of the plaint case. It is to be noted that the decisions in Ammonia Supplies 1998 (9) TMI 427 - SUPREME COURT and Shashi Prakash Khemka (Dead) by LRS 2019 (2) TMI 971 - SUPREME COURT highlight the fact that the NCLT has jurisdiction only in cases covered by the Companies Act, 2013. In the said judgment, the Supreme Court also noted that Section 430 of the 2013 Act bars the jurisdiction of the Civil Courts only in matters in respect of which exclusive power has been conferred on the NCLT and not otherwise. Unless the remedy of a Civil Suit is completely barred, Section 430 is not attracted at all. Thus, in the present case, the primary reliefs sought are declaration of title and partition. In view of the cross-shareholdings and pervasive control over the defendants-Companies by the joint family-members, it is opined that the concept of quasi-partnership can be applied to the present case in view of the plaint averments. Applicability of the Benami Transactions Act - HELD THAT - Section 2 (9) (A) (b) of the Benami Act, in sub-clauses (i) and (iv) thereof, incorporates certain exceptions to the bar of benami. Sub-clause (i) contemplates, as one of such exceptions, a scenario when the property is held by a Karta or a member of a Hindu Undivided Family (HUF), if the property is held for his benefit or for the benefit of the other members in the family and the consideration for such property has been provided or paid out of the known sources of the HUF. In the present case, the said exception is very much applicable at a glance, since the entire title to the suit properties and the shares of the parties in the suit properties are claimed on the premise of the joint family nucleus which allegedly forms the basis of acquisition of the properties - the bar under the Benami Act is, to say the least, an arguable issue and required to be decided upon adduction of detailed evidence on facts. Hence, no occasion arises at this premature stage for the court to return the plaint or reject the plaint on the ground of benami. Conclusion - The learned Trial Judge committed a patent error of law and fact in entertaining and deciding the application under Order VII Rule 11 of the Code at the behest of the respondent no. 25 and ultimately moulding the relief to return the plaint to be presented before the appropriate forum - Appeal allowed.
Issues Involved:
1. Res Judicata 2. Partial Rejection/Return of Plaint 3. Jurisdiction of the National Company Law Tribunal (NCLT) 4. Concept of Quasi-Partnership 5. Applicability of the Benami Transactions Act Issue-wise Detailed Analysis: Res Judicata: The appellants argued that the principle of res judicata applies because a similar application under Order VII Rule 11 of the Code of Civil Procedure was previously rejected by the Trial Court. The court found that the grounds for rejection of the plaint raised by respondent no. 25 were identical to those raised by respondent no. 19 in an earlier application, which had been rejected and attained finality. Therefore, the current application was barred by res judicata, as it is well-settled that this principle operates at different stages of the same suit. Partial Rejection/Return of Plaint: The court noted that the primary reliefs sought in the suit were declarations of title and partition, which are within the jurisdiction of the Civil Court. Consequential reliefs related to the management of the companies could not determine jurisdiction. The court emphasized that there cannot be a partial rejection of the plaint, as established in Sejal Glass Limited v. Navilan Merchants Private Limited. If at the final hearing, the court finds that some claims fall outside its jurisdiction, it can direct parties to the appropriate forum for those specific reliefs. Consequently, the order returning the plaint as a whole was deemed incorrect. Jurisdiction of the NCLT: The court examined the reliefs claimed against the defendant companies and concluded that they were ancillary to the primary reliefs of declaration and partition. The NCLT does not have jurisdiction under Sections 241 or 242 of the Companies Act, 2013, to decide on the title of parties to shares or company assets. The plaintiffs claimed joint ownership based on the joint family nucleus, which was beyond the NCLT's jurisdiction. The bar in Section 430 of the Companies Act applies only to matters exclusively within the NCLT's jurisdiction, not to reliefs that fall under the Civil Court's purview. Concept of Quasi-Partnership: The court recognized the concept of quasi-partnership in the context of the family companies involved, given the pervasive control by the descendants of the family patriarch. The cross-shareholdings and directorships indicated that the companies were formed from joint family funds. The court held that the concept of quasi-partnership was applicable, allowing the Civil Court to adjudicate the primary reliefs of declaration and partition, as these were not purely issues of company mismanagement. Applicability of the Benami Transactions Act: The respondents raised the Benami Transactions Act as a bar for the first time in the appeal. The court allowed this argument, noting that a court can suo moto reject or return a plaint based on legal bars apparent from the plaint itself. However, the court found that exceptions under Section 2 (9) (A) (b) of the Benami Act could apply, as the properties were claimed to be held for the benefit of the family. These exceptions warranted a detailed examination during trial, not at the preliminary stage. Therefore, the court concluded that the Benami Act's applicability was an arguable issue requiring evidence and could not justify rejecting or returning the plaint at this stage. Conclusion: The court concluded that the Trial Judge erred in applying Order VII Rule 11 of the Code to return the plaint. The appeal was allowed, setting aside the order to return the plaint and confirming the Civil Court's jurisdiction to hear the case. The court emphasized that the primary reliefs sought were within the domain of the Civil Court and not the NCLT.
|
