2022 (4) TMI 631 - HC - Companies Law

Suit seeking mandatory and permanent injunction against the defendants - seeking restraint from passing off and violating the registered trademark and trade names of the defendant no. 4 Company - seeking declaration in respect of the properties purchased by the defendants from the income and revenue of the defendant no.4 Company - Order VII Rule 10 of the CPC - HELD THAT - Admittedly, some of the reliefs claimed in the plaint, which pertain to enforcement of intellectual property rights, can only be granted by a Civil Court and cannot be a subject matter of proceedings under the Companies Act, even as per the contesting defendants. Even if the contention of the contesting defendants is accepted that there is similarity of reliefs sought in the present suit with the relief sought under the Company Petition, whereby the defendants are sought to be injuncted from continuing or carrying out the competing businesses, it may be relevant to note that the defendants no.5 and 6, in respect of whom the present reliefs are sought, were not parties to the proceedings before the NCLT. Furthermore, there cannot be a partial rejection of a suit under the provisions of Order VII Rule 11 of the CPC. In any event, the proceedings before the NCLT had been instituted by the defendant no.7 and not by the plaintiffs herein. Just because one of the shareholders has chosen to invoke their grievance under the provisions of the Companies Act, cannot imply that another shareholder with similar grievance cannot invoke their grievance before a Civil Court, if the jurisdiction of the Civil Court is otherwise made out. In respect of the contention of the contesting defendants that the present suit, filed as a derivative suit, is not maintainable as the plaintiffs are majority shareholders in the defendant no. 4 Company, it may be relevant to note that a derivative action on behalf of a company is filed to redress a wrong done to a company by the persons in control of the company. In the normal circumstances, the company itself would have filed a suit, but is unable to do so on account of the wrong doers being in control of the company. Therefore, the concept of derivative action was derived by courts in the United States of America, where shareholders/persons file an action to redress or undo the wrong done to the company, on behalf of the company. Therefore, in reality, company is the actual plaintiff. It cannot be said that the present action is not maintainable in this regard because the plaintiffs are majority shareholders in the defendant no.4 Company. In the opinion of this Court, even though the plaintiffs have given a tentative value of ₹ 50,00,00,000/- in the plaint, that is only an estimate and cannot be a basis for the plaintiffs to be asked to pay ad valorem Court fees on the said figure. Since in the present case also, the plaintiffs have already given an estimate, they can avail the benefit the making up the deficiency once the accounts are settled and the amount is determined. In this regard, the contesting defendants reliance placed on the provisions of Order XII Rule 6 of the CPC is misplaced as there is no clearcut admission on behalf of the plaintiffs - Furthermore, the plaintiffs have undertaken to deposit such Court fees, as be directed by this Court to be paid in respect of the reliefs being sought in the present suit. Thus, the plaintiffs would only be liable to pay the Court fees upon the final determination that is arrived by the Court, of the amounts payable after rendition of accounts. The present suit cannot be rejected under the provisions of Order VII Rule 11 of CPC on account of deficiency of Court fees - Application dismissed.

Issues Involved:
1. Territorial Jurisdiction
2. Bar under Section 430 of the Companies Act
3. Cause of Action
4. Court Fees

Detailed Analysis:

1. Territorial Jurisdiction:
The contesting defendants argued that the Court lacked territorial jurisdiction because two properties involved were situated in Gurugram, Haryana. They cited Section 16(a) and (d) of the CPC, which states that suits related to immovable property must be filed where the property is located. However, the plaintiffs contended that the proviso to Section 16 applied, allowing the suit to be filed where the defendant resides or works for gain if the relief can be obtained through personal obedience. The Court agreed with the plaintiffs, noting that the defendant no.1 resided and worked in Delhi, making the proviso applicable. Additionally, Section 17 of the CPC allows suits involving properties in different jurisdictions to be filed in any court where any portion of the property is situated. Since one property was in Delhi, the Court had jurisdiction.

2. Bar under Section 430 of the Companies Act:
The contesting defendants claimed the suit was barred under Section 430 of the Companies Act, arguing that the National Company Law Tribunal (NCLT) had jurisdiction over the issues raised. They pointed out that similar reliefs were sought in a company petition before the NCLT by defendant no.7. The plaintiffs countered that the reliefs sought in the suit, such as declaratory reliefs regarding immovable properties and intellectual property rights, were beyond the NCLT's jurisdiction. The Court agreed with the plaintiffs, referencing the Supreme Court's decision in Aruna Oswal Vs. Pankaj Oswal, which held that questions of right, title, and interest in immovable property are civil disputes that must be decided by civil courts. The Court also noted that partial rejection of a plaint is not permissible under Order VII Rule 11 of the CPC.

3. Cause of Action:
The contesting defendants argued that the suit lacked a cause of action, asserting that it was a derivative suit filed by majority shareholders, which is not maintainable. The plaintiffs responded that a derivative action is meant to redress wrongs done to a company by those in control, and the company itself is the actual plaintiff. The Court found the plaintiffs' argument persuasive, referencing the High Court of Calcutta's decision in Starlight Real Estate (Ascot) Mauritius Limited, which held that majority shareholders could file a suit to protect the company's interests.

4. Court Fees:
The contesting defendants contended that the suit was undervalued for court fees, arguing that the plaintiffs should pay ad valorem court fees based on the estimated value of the properties and reliefs sought. The plaintiffs maintained that they could not assign a definitive value to the reliefs at this stage and had undertaken to deposit court fees as determined upon rendition of accounts. The Court sided with the plaintiffs, citing the Delhi High Court's decision in Surinder Kaur, which allows plaintiffs to pay a tentative court fee and make up any deficiency once the accounts are settled. The Court also noted that an application (I.A. No. 746/2021) was pending, seeking to use the defendant no.4 Company's funds to pay the court fees, and this application needed to be decided before rejecting the suit for deficiency in court fees.

Conclusion:
The Court dismissed both applications filed by the contesting defendants, finding that the suit was maintainable in terms of territorial jurisdiction, not barred by Section 430 of the Companies Act, had a valid cause of action, and the issue of court fees was not a ground for rejection at this stage. The suit was scheduled for further proceedings on 29th July, 2022.

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