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TMI Blog2009 (2) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... on is dismissed. Liberty is given to the revision petitioners to raise all factual and legal contentions before the trial Court including the plea of maintainability of the suit on the point of jurisdiction in accordance with law. Thus civil revision petition is dismissed - C.R.P. (PD) NO. 3911 OF 2008 AND M.P. NO. 1 OF 2008 - - - Dated:- 13-2-2009 - M. VENUGOPAL, J. A.K. Mylsamy for the Petitioner. N.R. Chandran, K. Ramasamy and L.G. Sahadevan for the Respondent. ORDER 1. The Civil Revision petitioners/R2 and R3/D2 and D3 have filed this civil revision petition as against the order dated 11-6-2008 in I.A.8812/08 in O.S.3737/08 passed by the learned XV Assistant City Civil Judge, in granting ad interim injunction till 17-6-2008, on an application filed by the first respondent/petitioner/plaintiff under Order XXXIX R.1 and 2 of the Civil Procedure Code. 2. The trial court while passing orders in I.A.8812/08 has inter alia observed that "the original minutes book was placed before me, it appears that the Company passed a resolution on 13-1-2006 itself not to allot shares. Prima facie case made out. Ad interim injunction is granted till 17-6-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and a sum of Rs. 21,541,700.11 and later, the Company has filed a declaration in Form FCGPR to Foreign Exchange Department, Reserve Bank of India, Chennai stating that 5,87,000 equity shares of Rs. 100 each has been allotted to the first civil revision petitioner and that the Certificate from the Statutory Auditor of the Company, N.C. Rajagopal Co. dated 31-1-2006 certifying that 5,87,000 equity shares has been allotted by the Company to the first civil revision petitioner and also a Certificate has been obtained from Practicing Company Secretary V. Suresh dated 31-1-2006 certifying that the first civil revision petitioner has been allotted 5,87,000 equity shares of Rs. 100 each and that all the requirements of the provisions of the Companies Act has been complied with and that the Company is eligible to issue shares under these regulations, etc., and that the respondents 1 and 2 in collusion with his wife Arulmozhi and son A. Raja, S. Sriharan is in creating and falsifying the document to suit their requirement and cheat the revision petitioners of their own investment in the company and that the Company has manipulated the Registers of Members of the Company as if the revision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner during the financial year 2004-05 Rs. 3.82 crores and Rs. 2.05 crores for the current financial year 2005-06, which has been proved by the Reserve Bank of India. 6. The substance of the revision petitioners case is that to deprive the revision petitioners investment in the share capital of the Company, the second respondent and his family members along with S. Sriharan have fabricated records as if no allotment is made to the first civil revision petitioner. 7. According to the learned counsel for the revision petitioners, the second civil revision petitioner has been appointed as the Chairman of the Company and that the Company has filed Form 32 with the Registrar of Companies, Chennai stating that the second revision petitioner has been appointed as the Chairman with effect from 22-12-2004 and further that out of funds remitted by the first revision petitioner, the Company has purchased a land measuring an extent of 2.16 acres in Kallapatti Village, Coimbatore for a sum of Rs. 3,25,00,000. 8. Advancing the arguments, the learned counsel for the revision petitioners submits that the first and second respondents along with one S. Sriharan have played a fraud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras v. D. Sahayadoss 2002 (1) CTC 458, whereby and whereunder it is inter alia observed that "when trial Court granted ex parte order of injunction without complying with mandatory provision to record reasons for granting such injunction, High Court can exercise revisional powers under article 227 of Constitution and set aside such orders." He also presses into service the decision of the Honourable Supreme Court A.V. Papayya Sasrty v. Government of A.P. [2007] 4 SCC 221, wherein it is observed that "Fraud vitiates all judicial acts whether in rem or inpersonam and that the Judgment, decree or order obtained by fraud has to be treated as non est and nullity, whether by Court of first instance or by the final Court and that it can be challenged in any Court, at any time, in appeal, revision, writ or even in collateral proceedings." 10. Yet another decision in V.M. Rao v. Rajeswari Ramakrishnan [1976] 1 M.L.J. 393 is relied on the side of the revision petitioners wherein this Court has held that "the solemnity attached to the articles (of a company) and the binding nature thereof cannot be lightly whittled down by another contract which is in the nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f action and no right, title or interest accrued to the respondents for getting the relief. That apart, they have suppressed material facts before the Court of law. In that view of the matter, I am of the opinion that the plaint itself suffers from fatal defect, and it has to be struck off to avoid any needless delay in conclusion of the futile litigation between the parties and that in the instant case, the relief claimed by the respondents before the Court below are identical and the case of action is also one and the same. Therefore, there is clear abuse of process of Court in the present case by the respondents. Therefore, for all the foregoing reasons, the interim ex parte order granted by the Court below is set aside, etc." (p. 472) He also relies on the decision of the Honourable Supreme Court in Ram Chandra Singh v. Savitri Devi [2003] 8 SCC 319 wherein it is inter alia held that : "...An act of fraud on Court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directors of the Company including the second respondent and that the first petitioner/Company has been incorporated in Malaysia and that the second revision petitioner is the Managing Director of the first petitioner s company and that the first respondent/Company has filed a counter on 16-4-2008 and that the present suit O.S.3737/08 has been filed during May 2008 before the City Civil Court, Chennai and that the second respondent/first defendant is the Director of the first respondent/plaintiff and his wife and son are shareholders of the first respondent Company and the first revision petitioner being a Foreign Company (a Body Corporate) has applied to Reserve Bank of India and as a matter of fact, the first revision petitioner has applied to the Bank of Negara, Malaysia to invest in share capital of the first respondent Company and thereafter, the first revision petitioner/Company has sent by way of inward remittance on two occasions totalling a sum of Rs. 5,87,00,000 and after receipt of money, the first respondent/Plaintiffs Company has filed a return in Form II and that the Company has obtained a Certificate from the Statutory Auditor on 30-1-2006 disclosing that the first r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Director from the date of incorporation of the first respondent Company and this return has been filed by the Company and that in the minutes of the meeting of the Board of Directors of the first respondent-company dated 13-1-2006, A. Raja has been elected unanimously as the Chairman of the meeting and this is a fabricated one and therefore, prays for allowing the revision filed by the petitioners herein. 16. Apart from the above, the learned counsel for the revision petitioners contends that the second revision petitioner has signed a sale agreement for purchasing the Coimbatore property and that the sale agreement dated 10-3-2005 contains the name of the second revision petitioner in Rs. 20 stamp paper and from 2004 till 2007, the respondents have not permitted the revision petitioners to know about the exact details and all their efforts ended in vain and that the father, son and the wife reside in the same premises and that the first respondent/Company has filed a civil suit before the said City Civil Court and the real aggrieved persons, namely, the mother and son have not initiated action and that the first respondent-company has initiated action as if the returns have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve Bank of India and there is a conspiracy by the father and son and by that they created the proceedings of the Board and the Agenda for the Board Meeting dated 27-3-2007 refers to the resignation of S. Sriharan from the post of Managing Director, the appointment of new Managing Director and another issue and the same has been addressed to S. Sriharan, S. Alagurajan, Sekar Rajasekaran and Mrs. A. Arulmozhi and that the Bank of Negara and Statutory Auditor of the first revision petitioner Company Mr. Jeya Balasingam wanted details regarding the investment in India made by the first revision petitioner s Company and that the said Auditor and the second revision petitioner has come to India and asked for the Balance Sheet of the first respondent/Plaintiffs Com- pany and the first respondent has given the Balance Sheet and now the first respondent/Company takes a plea that these documents have been fabricated and that the Balance Sheets of Shanita Hotel for the year 2005-06, unaudited trial balance upto 31-3-2007 in respect of Shanita Hotel have been handed over on 13-6-2007 to the first revision petitioner s Auditor Jeya Balasingam and the Balance Sheet for 2005-06 and the unaudite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Civil Revision Petition has been filed by the revision petitioners on the ground of fraud and it is not possible for this Court to interfere under article 227 of the Constitution of India and moreover, the fraud must be established and can be established only by means of evidence and that the revision petitioners cannot use the term fraud as Mantra and issues involved in the matter are of arguable points and that the criminal case has been filed by the petitioner and that the trial Court has passed a reasoned order and that the petitioners if they are aggrieved against the order of the trial Court passed in I.A.8812/08 then they have got a remedy of appeal in law before the appropriate forum and, therefore, prays for dismissal of the revision petition. 18. The further pleas of the learned counsel for the first respondent are to the effect that Article 227 of the Constitution of India cannot be converted into a Court of Appeal and that section 10 of the Civil Procedure Code will not apply because of the fact that the forum has changed and Form II has been filed as if the petitioners are the shareholders and the revision petitioners cannot take advantage of the loan transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a common law right, it can be enforced through the civil court even though the forum under the statute also will have jurisdiction to enforce that right. Section 10 of the Companies Act, 1956, only proceeds to enumerate or specify the court having jurisdiction under the Act wherever such jurisdiction is conferred on the court by the other provisions of the Act. Section 10 by itself does not confer jurisdiction on the High Court or the District Courts on all matters relating to companies." (p. 216) Further, he brings to the notice of this Court the decision Kaushiklal Nanalal Parikh v. Mafatlal Industries Ltd. [1995] 84 Comp. Cas. 752 (Guj.) at pg. 753, whereunder it is held that "Whether the resolutions were invalid being in contravention of a law or whether they were prejudicial to the interest of the company within the meaning of sections 397 and 398 of the Companies Act, 1956, would require the recording of evidence; without the recording of evidence, this question could not have been decided." He also invites the attention of this Court to the decision in Spices Vally Estates Ltd. v. TC Forexpress Ltd. [2007] 37 Comp. Cas. 364 1 , at pg. 365 wherein this Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of High Court under Article 227 of the Constitution cannot correct the errors of law." 23. The learned counsel for the first respondent lays emphasis on the decision of this Court Ganesa Naicker v. Kikilamabal [2006] 1 LW 677, wherein it is held that "Power under Article 227 must be exercised with restraint and only for the purpose of keeping the subordinate courts and Tribunals within the bounds of their authority." Further, in the decision Ganapathy Subramanian v. S. Ramalingam [2007] 7 MLJ 13, wherein this Court has held that "only wrong decisions may not be a ground for the exercise of jurisdiction under article 227 of the Constitution, unless the wrong is referable to grave dereliction of duty and flagrant abuse of power by the subordinate Courts and Tribunals resulting in grave injustice to a party." 24. On the side of the first respondent, reliance is placed on the decision Gandhi v. Sakthivel [2008] 4 TNLJ 360, this Court has held that "under Or.39 R.3A of the Civil Procedure Code an interim injunction application has to be disposed of within 30 days and adjourning the case for the respondents side argument to different dates is incorrect and not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It specifies in such conduct of affairs as constituting a discrimination of the shareholders much less the minority shareholders for the purposes by this extent, in discriminatory conduct is a fraudulent conduct. As a matter of fact, when no specific remedy is provided under the Companies Act, the proper remedy is a suit which is to be filed in an appropriate Court, which may be a Court Subordinate to High Court. Indeed, unless a particular matter is specified in the act to be dealt with by Company Court it cannot exercise its jurisdiction merely because it is also a matter which relates to the Company. 29. It is an axiomatic fact that the exclusion of jurisdiction of the Civil Court is not to be readily inferred and such exclusion must either be explicitly expressed or clearly implied, as per Principles of Statutory Interpretation. 30. Generally speaking, presumption is in favour of existence of the jurisdiction rather than exclusion of jurisdiction of Civil Courts. Normally, the Civil Court s jurisdiction has three dimensions : ( a ) It must have jurisdiction regarding the subject-matter, ( b ) Civil Court should have pecuniary jurisdiction and ( c ) Civil Court must hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-12-2000 issued by the Company Law Board]. Added further, the Company Law Board may pass such orders as may be necessary for the ends of justice or to prevent abuse of process of the Bench as per Regulation 44 and this power is similar to the power of a Civil Court under section 151 of the Civil Procedure Code. 34. As far as our country is concerned, a Share is not merely a chose-in-action; it is also as per the definition of Share or Debentures under section 82 of the Companies Act is a movable property . However, Shares or Debentures become equivalent to Goods as per the decision Kunhunni Elaya Nayar v. P.N. Krishna Pattar [1942] 12 Comp. Cas. 180 (Mad.) but shares are not equivalent to Goods before the allotment. As a matter of fact, an applicant for allotment of shares is a prospective investor, though he is not an immediate Buyer of Goods . No wonder, the shares are simply bundle of intangible rights against the Company which has issued them. After all, share Certificates are just evidence of true property, which are the proportionate interests of the shareholders in the ownership of the Company. As such, each Share Certificate with the depository evidences the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the proceedings pending before the Company Law Board are substantially the same and that the Company Law Board has the jurisdiction to grant the claim and that the two proceedings are between the same parties or their representatives and as such parties are litigating in both matters under the same title. On the facts, it was held that all the conditions precedent necessary for invoking section 10 of the Code of Civil Procedure were not present, the suit could not be stayed. The mere fact that the application was filed by this from plaintiffs would not be of much consequence unless the subject matter, both before the Court and before the Company Law Board is substantially same but rather altogether different, the proceedings before the Court could not be stayed under section 10 of the Civil Procedure Code." (p. 242) 39. In the decision in Shiv Kumar Chadha v. MCD [1993] 3 SCC 161, the Honourable Supreme Court has emphasised the need to assign reasons before passing ex parte orders of injunctions and the same is as follows : "... The Parliament has prescribed a particular procedure for passing of an order of injunction without notice to the other side, under exception ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that such orders are temporary or interim or provisional. Similarly, by their very nature ad interim injunctions passed under O.1 or 2 are always rendered ex parte, Parliament being fully aware of the situation permitted appeals against such orders. In our opinion, therefore, an ex parte order of temporary injunction, whether provisional, temporary or interim, are appealable, if rendered under O.39, Rr. 1 and 2. On perusal of Order 43, R.1( r ) we notice that it speaks that an appeal shall lie from an "order" under R.1, R.2A, R.4 and R.10 of Order 39. Therefore, any order under Rr.1, 2, 2A and 4 is appealable... However, there is a line of decisions in which it has been held that an ex parte or ad interim order of injunction under O.39, Rr.1, 2, 2A is not appealable, as it is temporary or ex parte or non-speaking. But in the same breath the High Courts recognise the right of petition against such orders under O.39, R.4 of the Code. An ex parte non-speaking temporary or ad interim order of injunction is revisable but it is not appealable, although the characteristics of the impugned order are absolutely the same both in O. 39, R.4 as well as in O. 43, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unction was granted by the appeal Court on refusal to grant by trial court, therefore, ordinarily going by wording of Order 39. Rule 4 of Civil Procedure Code the petitioner would have to approach the Division Bench of High Court for the appeal, but for the leave reserve in the order itself the defendants approach the trial Judge that is now being dealt with by the High Court under article 226 and High Court under article 226 if varies or modifies the order of injunction granted by the Appeal Court it would not be deemed to be variation of order of Appeal Court by it in an exercise of its jurisdiction of the Trial Court and so it will not be committing judicial in discipline. It is futile to contend that the defendant cannot make such an application, as the Appeal Court did not grant such permission because permission or no permission when the law enjoined the right to the litigating parties to approach the Court for further interlocutory reliefs one can approach the court straightway if it causes undue hardship...." (p. 56) 45. This Court at this juncture recalls the observations of the Honourable Supreme Court in the decision T. Arivandandam v. T.V. Satyapal AIR 1977 SC 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then the plaint should not be merely rejected on the ground that the averments are not sufficient to prove the facts stated therein. All the more, a Court of Law can examine the parties to clear the pleadings. 49. In the plaint, the first respondent/Plaintiff has averred in para 12 that the trial Court has power to entertain the present suit as the dispute is purely in civil nature and that by virtue of sections 9 and 10 of the Companies Act, 1956, the jurisdiction of Civil Court has not been ousted, etc. In this connection, it is relevant for this Court to point out that Order 39 Rule 3A of Civil Procedure Code specifies that an interim injunction application is to be disposed of within 30 days and adjourning the case from time to time to different dates beyond 30 days by the trial court is not proper in the considered opinion of this Court. 50. On a conspectus of respective contentions and in view of the fact that the respective parties have taken a rival stand, which are a mixed question of fact and law to be proved by means of oral and documentary evidence, besides raising arguable points this Court without going into the merits of the matter opines that the civil revi ..... 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