1971 (8) TMI 160 - HC - Companies Law

Documents, etc., to be delivered to registrar by foreign companies, carrying on business in India, Company s failure to comply with part xi not to affect its liability under contracts, etc.

Issues Involved:
1. Jurisdiction of the High Court of Bombay to entertain and try the suit concerning the affairs of the 1st defendant company or its directors.
2. Jurisdiction of the High Court of Bombay to entertain and try the suit regarding the validity of the resolution dated 8th December 1970, and the meeting held on that date.
3. Pecuniary jurisdiction of the High Court of Bombay to entertain and try the suit.

Detailed Analysis:

Issue 1: Jurisdiction to Entertain and Try the Suit

Contentions and Arguments:
- The defendants argued that the High Court of Bombay lacks jurisdiction because the company is incorporated and registered in the UK.
- The plaintiffs contended that the company has established a place of business in Bombay, and the cause of action has arisen in Bombay, thus conferring jurisdiction on the Bombay High Court.
- The defendants also argued that the company did not carry on business in Bombay within the meaning of clause XII of its Letters Patent.

Court's Analysis:
- The court noted that the company has delivered documents to the Registrar of Companies in Bombay, indicating it has established a place of business in India.
- The court found that the company is carrying on business in Bombay, including speculative badli transactions and investing in shares, which, even if ultra vires, still constitutes business.
- The court rejected the argument that the business being ultra vires would negate it being business for jurisdictional purposes.
- The court also addressed the defendants' contention regarding the cause of action arising in England, holding that foreign law is not a part of the cause of action under clause XII of the Letters Patent.
- The court dismissed the argument that the company "dwells" in Bombay, noting that a corporation cannot "dwell" in the literal sense but can be considered resident where its central management and control are located.
- The court concluded that the company, by nominating a person to receive service of process and by participating in the proceedings, has submitted to the jurisdiction of the court.

Conclusion:
The court held that it has jurisdiction to entertain and try the suit concerning the affairs of the 1st defendant company or its directors.

Issue 2: Jurisdiction Regarding the Validity of the Resolution

Contentions and Arguments:
- The defendants argued that the High Court of Bombay lacks jurisdiction to entertain the suit regarding the validity of the resolution dated 8th December 1970, as it pertains to the alteration of the company's memorandum of association, which should be governed by English law.
- The plaintiffs contended that the suit falls within the ambit of section 5(2) of the English Companies Act, 1948, and was filed within the prescribed 21 days.

Court's Analysis:
- The court examined section 5 of the English Companies Act, 1948, noting that it allows for the alteration of a company's objects by special resolution without court approval, but provides for an application to the court by dissenting shareholders.
- The court found that section 5(9) recognises other remedies apart from the application under section 5(2) and does not create a right of action but acknowledges its existence.
- The court rejected the argument that the British Parliament legislates only for its own country and that the short period of 21 days for filing a suit indicates it must be filed in England.
- The court concluded that the High Court of Bombay has jurisdiction to entertain the suit regarding the validity of the resolution dated 8th December 1970, and the meeting held on that date.

Conclusion:
The court held that it has jurisdiction to entertain the suit regarding the validity of the resolution dated 8th December 1970, and the meeting held on that date.

Issue 3: Pecuniary Jurisdiction

Contentions and Arguments:
- The defendants contended that the suit is valued at less than Rs. 25,000 and is cognisable by the Bombay City Civil Court, thus excluding the jurisdiction of the High Court of Bombay.
- The plaintiffs valued the reliefs claimed at Rs. 26,000 for the purpose of court fees and jurisdiction.

Court's Analysis:
- The court noted that the plaintiffs have paid court fees on Rs. 26,000 in respect of the claim for accounts and money decree alone, and valued the declarations and injunctions at Rs. 300 each as per the Bombay Court Fees Act.
- The court held that for the purpose of jurisdiction, the aggregate value of several reliefs must be considered.
- The court concluded that whether the suit is valued at Rs. 26,000 or Rs. 27,800, it falls outside the jurisdiction of the Bombay City Civil Court and within the jurisdiction of the High Court of Bombay.

Conclusion:
The court held that it has pecuniary jurisdiction to entertain and try the suit.

Final Judgment:
All three preliminary issues of jurisdiction were decided against the defendants, and they were ordered to pay the costs of the hearing on the preliminary issues to the plaintiffs.

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