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2021 (8) TMI 550 - HC - Companies LawSuit for declaration and injunction - application filed under Order VII Rule 11 of the Code of Civil Procedure for rejection of the plaint - doctrine of estoppel - HELD THAT - Sections 397 and 398 of the 1956 Act in cases of oppression and mismanagement and were similar in scope to Sections 241 and 242 of the 2013 Act. Since admittedly the CLB order was inter alia passed under the former provisions the same operates as an issue estoppel against the plaintiffs from urging similar issues in the subsequent suit. The plaintiffs submitted to the jurisdiction of the CLB by participating in the proceeding before the CLB. The principle of res judicata squarely applies since the CLB elaborately considered the family settlement/arrangement-in-question in the context of the transfer of the shares of both the companies HCM and HF - in view of the CLB having already adjudicated the issue on merits at length in similar context as in the present suit the principle of res judicata comes into operation squarely debarring the plaintiffs from filing the present suit. The suit is barred by law as contemplated in Order VII Rule 11(d) of the Code of Civil Procedure - impugned order set aside - application allowed.
Issues Involved:
1. Jurisdiction of the Civil Court vs. NCLT. 2. Application of res judicata and issue estoppel. 3. Grounds for rejection of plaint under Order VII Rule 11 of CPC. 4. Abandonment of relief under Order XXIII Rule 1 of CPC. Detailed Analysis: 1. Jurisdiction of the Civil Court vs. NCLT: The primary issue was whether the Civil Court had jurisdiction to entertain the suit or if it was barred under Section 430 of the Companies Act, 2013, which grants exclusive jurisdiction to the National Company Law Tribunal (NCLT) for matters related to oppression and mismanagement in companies. The court noted that Sections 241 and 242 of the 2013 Act empower the NCLT to decide on issues related to the conduct of the affairs of a company, including shareholding disputes. The reliefs sought in the suit, including declarations regarding shareholding and the interpretation of a family settlement, fell within the purview of the NCLT's jurisdiction. Therefore, the Civil Court's jurisdiction was barred. 2. Application of Res Judicata and Issue Estoppel: The petitioners argued that the suit was barred by res judicata and issue estoppel because the Company Law Board (CLB) had previously adjudicated similar issues in a company petition under Sections 397 and 398 of the Companies Act, 1956. The court agreed, noting that the CLB had already considered the family settlement and the transfer of shares in its order, which was cited in the plaint. The plaintiffs had also appealed the CLB's decision, which was still pending. Thus, the principle of res judicata and issue estoppel applied, barring the plaintiffs from raising the same issues in the present suit. 3. Grounds for Rejection of Plaint under Order VII Rule 11 of CPC: The petitioners filed an application under Order VII Rule 11 of the Code of Civil Procedure (CPC) for rejection of the plaint on the grounds that it did not disclose a cause of action and was barred by law. The court emphasized that a meaningful reading of the plaint showed that the issues pertained to shareholding and the family settlement, which fell under the NCLT's jurisdiction. Additionally, the court found that the plaint was barred by the principles of res judicata and issue estoppel. Consequently, the plaint was rejected under Order VII Rule 11(d) of the CPC. 4. Abandonment of Relief under Order XXIII Rule 1 of CPC: The plaintiffs sought to abandon the relief related to the rectification of the Register of Members of the defendant companies and intended to approach the NCLT for such relief. The trial court allowed this application. However, the High Court found that since the entire plaint was rejected, the application for abandonment of relief became infructuous and was dismissed. Conclusion: The High Court allowed the revisional application, set aside the trial court's order, and rejected the plaint of Title Suit No.13 of 2019. The court held that the Civil Court lacked jurisdiction under Section 430 of the Companies Act, 2013, and that the suit was barred by res judicata and issue estoppel due to the prior adjudication by the CLB. The application for abandonment of relief was rendered infructuous and dismissed. No order as to costs was made, and urgent certified copies of the order were directed to be supplied to the parties upon compliance with requisite formalities.
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