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TMI Blog2017 (8) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... inevitable to call in aid the ground and cause of making the statute and the mischiefs, which the Act intends to redress. Under the new Companies Act, 2013, the intention of the legistature is to vest the power of adjudication the matters referred in Section 242 to the Tribunal. On applying the Doctrine of Reading Down, an internal aid to construe the word in a statute to give reasonable meaning, so as to give the supposed purpose the word member referred in Section 241 of the Act, should not be read in isolation or in strict meaning. The word should be read down along with Section 242 of the Act. Therefore, the phrase 'member of the company' in Section 241 mean and include person not only member of the company is strict sense but, also person who bears the character of a member or have substantial interest in the internal affairs of the company . If the plaintiffs claim status as non-member, the disclosed cause of action in the plaint is illusion and irrelevant for third parties, since they have no locus standi to interfere with the affairs of the indoor- management of a Private Limited Company. If they claim status as Directors of the Company, they carry all trappi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors, payment of dividend and external audit for the machinery investment. Those requests were considered and declined in the Board of Directors Meeting held on 31.08.2015 for the reasons stated. Since he was not able to succeed with his attempts, he wanted to remove the Directors, who are not accepting his demands. To achieve his illegal object, he has decided to capture all these three Match Industries viz. M/s Rajarathnam Matches Private Limited, M/s Chiranjeevi Rathnam Matches Private Limited and M/s Selvarathnam Matches Private Limited, held by his family members, which possess 33.27% of shares in the 9th defendant company namely, M/s Standard Fireworks Private Limited. 4. In order to hold the 11.09% of shares in M/s Standard Fireworks Private Limited, the second defendant has manipulated the signature of the first plaintiff and had created records as if the 5th defendant-Mrs.Pallavi has been inducted as Director of the first defendant company namely, M/s Rajarathnam Matches Private Limited. The fifth defendant, in turn, has co- opted six persons as the Directors of the first defendant company. Expressing their apprehension that with manipulated records, If any Extraordina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and mis-mangement. 7. The said dismissal order of the trial Court in the interlocutory application is under challenge in this revision petition. 8. The learned counsel for the revision petitioners submitted that, the new Companies Act, 2013 has consolidated the laws governing the affairs of Companies in India,. It is a comprehensive legislation, taking note of the courts delay and has constituted National Company Law Tribunal and National Company Law Appellate Tribunal, which are the heirarcial forums for redressal. The Companies Act 2013 has created rights and liabilities and has provides Tribunal for determination of such right and liability. The constitutional validity of ouster of civil court jurisdiction and vesting the power with tribunal has already been tested before the Hon'ble Supreme Court and the Court has upheld the constitutional validity of the Act. The reading of the plaint and the remedy sought falls within the purview of the rights determined by the statute. What is sought to be protected is not a common law right. Therefore, the civil court is ousted of its jurisdiction to entertain the plaint. However, the trial Court without proper appreciation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil Court. Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the siad right and liability shall be determined by the Tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not. 12. Applying the above principles, several judgments have been rendered by the courts in India. Some of the judgments cited by the learned counsel for the respondents are as follows: (i) 2005 (10) SCC 51 (Swamy Atmananda and others -vs- Sri Ramakrishna Tapovanam and others) (ii) 2009 (8) SCC 646 ( Nahar Industrial Enterprises Ltd -vs- Hong Kong and Shanghai Banking Corporation) (iii) 2017(1) SCC 622 ( Robust Hote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determination is, whether the relief sought is based on the common law right (or) right conferred under any Statute and whether the said Statute oust the jurisdiction of the Civil Court for redressal of that right by providing alternate redressal mechanism 16. The relief sought and cause of action as pleaded are related to the indoor management of a Private Limited Company. The plaintiffs, at one breath, say that they are non-members. If so, they cannot have any locus standi to question the internal affairs of the company. As an individual, if they have any grievance under common law, their right to seek remedy before civil court is not taken away. But, neither the pleadings nor the cause of action disclose any infringement of civil right vested on them as individual. The allegations are all related to the company's management alleging oppression and coup to take-over the management of the company and violation of procedures in convening Extraordinary General Body Meeting (EGM). All these allegations can have relevancy to the plaintiffs only in their status as Directors of the first defendant's company and not as individual. 17. If we read the provisions of the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. (2)Without prejudice to the generality of the powers under sub-section (1), an order under that sub-section may provide for- (a)the regulation of conduct of affairs of the company in future. (b)the purchase of shares or interests of any members of the company by other members thereof or by the company; (c)in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital; (d)......... (e)........ (f)......... (g)........ (h)removal of the managing director, manager or any of the directors of the company 21. Thus, in the case in hand, National Company Law Tribunal alone is empowered to consider complaints of oppression or conduct of the Company found to be prejudicial to the interest of the company or to public and redress the same. 22. It is contended by the learned Senior Counsel appearing for the respondents that under Section 242 of the Act only application made under Section 241 of the Act can be entertained and determined by the Tribunal. Whereas, only member of a company can give complaint under Section 241 of the Act. So, the combined reading of Sections 241, 242 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as it is found in this case. Hence, it is essential to apply the doctrine of reading down to make the provisions under Chapter XVI of the Act purposeful. The golden Rule of statutory construction is that the words and phrases or sentences should be interpreted according to the intent of the legistature that passed the Act. Section 241 and 242 should be read together. If the words of the statutes raises doubt, it is inevitable to call in aid the ground and cause of making the statute and the mischiefs, which the Act intends to redress. Under the new Companies Act, 2013, the intention of the legistature is to vest the power of adjudication the matters referred in Section 242 to the Tribunal. 26. On applying the Doctrine of Reading Down, an internal aid to construe the word in a statute to give reasonable meaning, so as to give the supposed purpose the word member referred in Section 241 of the Act, should not be read in isolation or in strict meaning. The word should be read down along with Section 242 of the Act. Therefore, the phrase 'member of the company' in Section 241 mean and include person not only member of the company is strict sense but, also person who bears ..... X X X X Extracts X X X X X X X X Extracts X X X X
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