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2020 (9) TMI 16 - HC - Companies LawDisqualification of petitioners to act as Director - Territorial Jurisdiction - Section 164(2)(a) of the Companies Act, 2013 - HELD THAT - In the present case the counsel for the petitioners has been unable to show as to what part of the cause of action arose within the territorial jurisdiction of this Court. There is also no averment in the present writ petition as to how any part of the cause of action had arisen within the territorial jurisdiction of this Court. The present writ petition seems to have been filed only to gain benefit of the interim order (Annexure P-7) passed by this Court in GURDEEP SINGH AND OTHERS VERSUS THE UNION OF INDIA AND ANOTHER 2017 (11) TMI 1910 - PUNJAB AND HARYANA HIGH COURT and other similar cases though the initiation of the writ proceedings before this High Court was clearly unsustainable and an abuse of jurisdiction. The filing of the present writ petition before this High Court was not bonafide. The writ petition deserves to be dismissed with exemplary costs. Dismissed with costs of ₹ 1,00,000/- to be deposited by the petitioners with the PM-CARES Fund.
Issues:
Jurisdiction of the High Court under Articles 226/227 of the Constitution of India. Analysis: The judgment deals with a civil writ petition seeking to set aside an action disqualifying the petitioners as Directors under Section 164(2)(a) of the Companies Act, 2013. The key contention was the jurisdiction of the High Court to entertain the writ petition. The Union of India argued that the petitioners and the company in question were residents of Mumbai, falling outside the jurisdiction of the Punjab and Haryana High Court. The Court emphasized that Article 226 empowers the High Court to entertain a writ petition only if the cause of action arises within its territorial jurisdiction. It cited the case of ONGC vs. Utpal Kumar Basu, highlighting the necessity of the cause of action to arise within the court's jurisdiction for it to exercise power under Article 226. The Court found that the present writ petition lacked any connection to the territorial jurisdiction of the Punjab and Haryana High Court. It noted that the petitioners failed to demonstrate any part of the cause of action arising within the court's jurisdiction. Referring to previous judgments, the Court stressed the importance of upholding the dignity of the institution and preventing abuse of jurisdiction. The judgment highlighted the need to deter litigants from filing unsustainable petitions to gain interim benefits. Consequently, the Court dismissed the writ petition and imposed exemplary costs of ?1,00,000 to be deposited with the PM-CARES Fund. In conclusion, the judgment underscores the significance of maintaining the integrity of the judicial system by ensuring that litigants do not abuse the process by filing petitions lacking territorial jurisdiction. It reiterates the principles governing the jurisdiction of High Courts under Article 226 of the Constitution of India and emphasizes the need for bona fide initiation of legal proceedings to prevent unwarranted litigation.
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