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TMI Blog2019 (9) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... any, relating to the affairs of the defendant no.1 and which power cannot be exercised by the Civil Court. NCLT / CLB are known to often make orders providing for sale / transfer of shareholdings inter se shareholders and / or of transfer of immovable properties of the company in favor of a shareholder in lieu of his shareholding in the company and which, this Court as the Civil Court, will be able to do. Once it is found that NCLT has jurisdiction, the jurisdiction of the Civil Court to determine the matter which the NCLT is empowered to determine would stand excluded under Section 430 of the Act. The question of bar of jurisdiction of the Civil Court would depend upon the nature of the averments in the plaint. If the averments in the plaint, though not using the words mismanagement, prejudicial to interest and oppression, are found to be amounting thereto and the relief sought are also which fall in the domain of Section 442(2) of the Act, the jurisdiction of the Civil Court would be barred. This Court lacks jurisdiction to entertain this suit - suit dismissed. - CS(COMM) NO.242/2019 - - - Dated:- 22-5-2019 - MR. RAJIV SAHAI ENDLAW J. Plaintiff Through: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owns 13.5%, defendant no.5 owns 16% and the defendant no.6 owns 16% of the issued, subscribed and paid up share capital of the defendant no.1; the remaining 5% of the shareholding is held by family members of defendants no.2 to 6; (vii) defendants no.2 to 6 have taken loans and advances in the sum of ₹ 3,34,70,000/- as on 31st March, 2011 against the aforesaid property of the defendant no.1 and which are reflected in the balance sheet of the defendant no.1; the defendants no.2 to 6 have apparently mortgaged the entire business undertaking of the defendant no.1 but the use of the huge advances by the defendant no.1 cannot be deciphered from the financial accounts of the defendant no.1; thus the entire business undertaking of the defendant no.1 has been put in severe jeopardy by defendants no.2 to 6; the sale consideration of the two apartment blocks already sold, has also not been reflected in the books of the defendant no.1 and has been siphoned off by the defendants no.2 to 4 for their personal benefits; in fact the plaintiff was party to sale of only one of the apartment blocks and was not even informed of the sale of the other apartment block; (viii) the defendants no.2 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction at ₹ 2.25 crores and for the purpose of court fees at ₹ 200/-. 4. The Registry raised objection. On insistence of counsel for the plaintiff, the suit was listed before this Court first on 10th May, 2019, subject to the said objection. However, on 10th May, 2019, the counsel for the plaintiff, instead of justifying the separate valuations for purpose of jurisdiction and court fees, sought time to deposit the requisite court fees and the suit posted to 22nd May, 2019. The plaintiff has since paid the requisite court fees. 5. I have however enquired from the counsel for the plaintiff, about the maintainability of the suit and the locus of the plaintiff to file the present suit, admittedly relating to the properties of the defendant no.1 company and in which the plaintiff holds 20% of the shareholding. It has been enquired from the counsel for the plaintiff, whether not the appropriate remedy of the plaintiff is before the National Company Law Tribunal (NCLT), under Sections 241 and 242 of the Companies Act, 2013 and whether not the jurisdiction of this Court to entertain this suit is barred by Section 430 of the said Act. 6. Though t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vashisht 2013 SCC OnLine Del 4063, Himangni Enterprises Vs. Kamaljeet Singh Ahluwalia (2017) 10 SCC 706, N. Radhakrishnan Vs. Maestro Engineers (2010) 1 SCC 72, Sahara Fabrics Pvt. Ltd. Vs. Kailash Ramprashad Mehra (2006) 134 Com. Cas. 472, Premwati Vs. Bhagwati Devi 2015 SCC OnLine Del 11563, Greenline Transit System Pvt. Ltd. Vs. The Secretary-cum-Commissioner Transport 2012 SCC OnLine Del 6355, Samar Kumar Roy Vs. Jharna Bera (2017) 9 SCC 591 and Dwarka Prasad Agarwal Vs. Ramesh Chander Agarwal (2003) 6 SCC 220; (x) the actions of the defendants sought to be restrained have jeopardized the plaintiffs 20% share in the defendant no.1 company; and, (xi) the objection as raised cannot be decided at the threshold and an issue qua the same has to be framed after completion of pleadings. On enquiry, it is informed that the plaintiff is not in possession in of the Resolution dated 21st April, 2017 of the defendant no.1 company in pursuance whereto the apartment block was sold in favour of Dandona Infrastructure Pvt. Ltd. 8. I have considered the aforesaid contentions of the counsel for the plaintiff. 9. Chapter XVI of the Companies Act titled Prevention of Oppressi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inated, set aside or modified except after due notice and after obtaining the consent of the party concerned; (g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (h) removal of the managing director, manager or any of the directors of the company; (i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims; (j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause (h); (k) appointment of such number of persons as directors, who may be required by the Tribunal to report to the Tribunal on such matters as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deed admittedly executed by defendant no.1 acting through the defendants no.2 to 4 of one of the apartment blocks to Dandona Infrastructure Pvt. Ltd. and alternatively deposit by the defendants no.2 to 6 in the account of the plaintiff of the sale proceeds. Attention of the counsel for the plaintiff has been drawn to Section 242(2)(f) supra of the Act, which empowers the NCLT to terminate, set aside or modify any agreement between the company and any person other than those referred to in Section 242(2)(e) of the Act. The same, in my view, empowers the NCLT to grant the relief as sought by the plaintiff, of setting aside of the sale deed in favour of Dandona Infrastructure Pvt. Ltd. 15. Not only so, Section 242(2)(m), being the residuary power and which is equivalent to Section 402(g) of the Companies Act, 1956, is very widely worded and has been widely interpreted in M.S.D.C. Radharamanan Vs. M.S.D. Chandrasekara Raja (2008) 6 SCC 750, V.S. Krishnan Vs. Westfort Hi-Tech Hospital Ltd. (2008) 3 SCC 363, Pearson Education Inc. Vs. Prentice Hall India (P) Ltd. 2005 SCC OnLine Del 945, Debi Jhora Tea Co. Ltd. Vs. Barendra Krishna Bhowmick 1979 SCC OnLine Cal 37 (DB) and Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upervise the working of the company and also appoint such persons as may be deemed necessary to regulate affairs of the company; (d) the powers of NCLT are wider than that of the Civil Court; and, (e) the bar under Section 430 is absolute. 19. As far as the judgments cited by the counsel for the plaintiff are concerned, (i) Dhulabhai Etc. supra was concerned with a suit instead of a writ petition under Article 226 of the Constitution of India impugning the Notifications under the Sales Tax Act on the ground of the same being violative of Article 301 of the Constitution. The suits were opposed inter alia on the ground that vide Section 17 of the Sales Tax Act, the jurisdiction of the Civil Court was barred. It was held that where a liability to tax is created by the statute which gives special and particular remedies against illegal exactions, the remedy contemplated by the statute must be followed and it is not open to the assessee to pursue the ordinary civil process of courts. However, the question of ultra vires of the statute, is always open to the Civil Court. The said judgment is found to have no application. The company is a creation of a statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate remedy. It was reasoned, that even the CLB when approached for rectification of share register was empowered to relegate the parties to the Civil Court and thus the jurisdiction of the Civil Court could not be said to be barred. Again, the said judgment is in its own facts and which have no application to the present controversy. I may in this context also refer to the dicta of the Supreme Court in Ammonia Supplies Corporation (P) Ltd. Vs. Modern Plastic Containers Pvt. Ltd. (1998) 7 SCC 105 qua Section 111 of the Companies Act, 1956, also holding to the same effect. (vi) In Premwati supra, the Division Bench of this Court held that since the dispute raised in the suit was of inheritance of shares in a private limited company, it was eminently a dispute of a civil nature and jurisdiction was not barred. (viii) Greenline Transit System Pvt. Ltd. supra was a suit by one Joint Signatory of Account of the company against the other, for injunction restraining deposit of receipts of a contract entered into by the plaintiff in a new bank account of which the former was not a signatory. The suit was held to be maintainable. I may highlight that there wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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