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TMI Blog2019 (7) TMI 1944X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to in Clause (e). A class of member or members, depositor or depositors may also apply to the Tribunal in the circumstances mentioned in sub-section 1 of Section 245 of the Act. The alleged Minutes of the Meeting drawn by the Directors plaintiff-appellant and the defendant-respondent no.2, dated 10.2.2016 relating to property held by the Company in its own name under Section 187 of the Act fall within the powers of the Tribunal conferred under Section 242 of the Act. Section 430 of the Act specifically provides that no Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under the Act or any other law for the time being in force. Under Section 9 of the C.P.C. civil court shall have jurisdiction to try all suits of a Civil nature excepting suits of which their cognizance is either expressly or impliedly barred. Thus, the Civil Court shall have jurisdiction to try all types of suits unless the same is ousted, expressly or by necessary implication - The question of ouster of a jurisdiction of a Civil Court needs to be construed having regard to the Scheme o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the plaintiff-appellant was one of the Directors in the respondent no.1 Company. The defendant-respondent No.1 is a Limited Company. It purchased an immovable property being House No.19/1, B.L.K.-B, Okhla Industrial Area, Phase -2, New Delhi (hereinafter referred to as the disputed property ). The plaintiff-appellant and the defendant-respondent No.2 and their family members were Directors in six companies, namely, M/s. Himalayan Bioxteracts Pvt. Ltd., Kamero Technosys Ltd., Virat Residency Ltd., Dynacon Cares Ltd., Dynacon Systems Ltd. and Duet Marketing Pvt. Ltd. The plaintiff-appellant and the defendant-respondent no.2 and their two guests drawn Minutes of the Meeting dated 10.2.2016, which is reproduced below :- MINUTES OF THE MEETING OF THE DIRECTORS OF KAMERO TECHNOSYS LIMITED HELD ALONGWITH TWO OTHER GUESTS ON 10/02/2016 AT ROOM NO. 600 OF VIJAY INTERCONTINENTAL HOTEL AT 12.30 P.M. The Following person were present - 1. Nirbhay Kapoor -Director Kamero Tecnosys Ltd. 2. Pankaj Kumar Gupta- -Director of Kamero Technosys Ltd. 3. Brijesh Saxena -Guest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies will be divided in the following manner - Pankaj Kumar Gupta Nirbhay Kapoor Himalayan Bioxteracts Pvt. Ltd. Dynacon Cares Ltd. Kamero Technosys Ltd. Dynacon Systems Ltd. Virat Residency Ltd. Duet Marketing Pvt. Ltd. 4. The matter of immovable assets in the above six companies was discussed and it was amicably decided to find out the valuation of immovable assets and divide them amongst both the directors. Both the directors were agreeable to this proposition readily. After discussions with various property dealers by both the directors the following valuation of the properties was made which was readily acceptable to both the directors - Name of the Property Valuation reached amicably (Rs in Crores) 1. C-6, Panki Industrial Area, Site - 1, Kanpur 17.00 2. Okhla factory at Delhi 6.00 3. Land at Rania, Kanpur Dehat 7.50 4. Property at Saro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Pankaj Kumar Gupta also at the above valuation. It was also decided that out of the machines of Shoe division one desma machine of 18 Stations will be taken over by Shri Pankaj Kumar Gupta at a valuation of Rs 0.40 Lacs to which the other director readily agreed. 7. The final position of payment between both the directors is placed below- Particulars Pankaj Kr. Gupta Nirbhay Kapoor Fixed Assets 18.25 16.05 Cash 0.00 1.00 Plant 1.22 2.10 18 Station 0.40 0.00 TOTAL 19.87 19.15 The sum total of the valuation of the Immovable movable properties stated above come to Rs 39.02 Crores (19.87+19.15). Half share of the sum total of valuation comes to Rs. 19.51 Crores (39.02/2) i.e. each director's share of the property comes to Rs 19.51 Crores. To balance both the director's valuation an amount of Rs 0.36 Lacs will be paid by Shri Pankaj Kumar Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the plaintiff-appellant filed O.S. no.79 of 2019 (Nirbhay Kapoor Vs. M/S Kamero Technosys Ltd And Another) praying for declaration of lien over assets of three companies, namely, M/s. Himalayan Bio Extracts Pvt. Ltd., Kamero Technosys Ltd. and Virat Residency Ltd. The relief for permanent injunction was also sought to restrain the defendant-respondents from transferring the disputed property. The aforesaid suit was dismissed by the impugned order dated 25.3.2019, passed by the Additional Civil Judge (S.D.)/ACMM, 9th, Kanpur Nagar, on the ground that it is not maintainable in view of the provisions of Section 430 of the Companies Act 2013 (hereinafter referred to as the Act 2013 ) read with Order 7 Rule 11 (d) of the C.P.C. 4. Aggrieved with this order the plaintiff-appellant has filed the present appeal under Section 96 of the Civil Procedure Code. 5. Both the learned counsel for the parties jointly submit that pure question of law as to the maintainability of the suit is involved in the present appeal and, therefore, without calling for the records and paper book, the appeal may be finally heard on the following question. Accordingly, this appeal has been heard on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground of cause of action under Clause (a) of Order VII Rule 11 CPC but it has been rejected only invoking Clause (d) on a finding that the suit is barred by Section 430 of the Companies Act. iv) The dispute with regard to properties of the Company can be adjudicated only in a civil suit. In the present case the dispute is with regard to the properties of company. Therefore, the suit was maintainable and not barred by Section 430 of the Act 2013. Reliance is placed on the judgment of the Supreme Court in Jail Mahal Hotels Private Limited Vs. Devraj Singh and others (2016) 1 SCC 423 (para 18). Submissions on behalf of the defendants-respondents 8. Sri Nimai Das, learned counsel for the defendants-respondents submits, as under: i) As per own averments of the plaintiff-appellant, in paragraph 5 of the plaint that he and his family members resigned from the Companies, namely, M/s. Himalayan Bioxteracts Pvt. Ltd., Kamero Technosys Ltd. and Virat Residency Ltd. Therefore, after resignation the plaintiff-appellant has no concern or lien of any nature whatsoever over the properties of the aforesaid companies. ii) As per plaint, declaratory relief has been sought aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Tribunal has been provided in Section 424 of the Act, 2013. 9. In support of his submissions, learned counsel for the defendant-respondent no.1 has relied upon the judgments of Hon'ble Supreme Court in Shashi Prakash Khemka Vs. NEPC Micon (Now called NEPC India Ltd.) Others (Civil Appeal Nos. 1965-1966 of 2014, decided on 8.1.2019), Madras Bar Association Vs. Union of India and another (2015) 8 SCC 583, Robust Hotels Private Limited others Vs. EIH Limited another(2017)1 SCC 622, Church of North India Vs. Lavajibhai Ratanjibhai Ors (2005) 10 SCC 760, Jitendra Nath Biswas Vs. M/s. Empire of India and Ceylone Tea Co. and another (1989) 3 SCC 582 and the judgment of Delhi High Court in SAS Hospitality Pvt. Ltd. Vs. Surya Constructions Pvt. Ltd. others 2019 (212) Company Cases 102 and the judgmnts of Calcutta High Court in Prasanta Kumar Mitra Ors Vs. India Steam Laundry (P) Ltd. Ors. APO 112 of 2017 decided on 5.9.2018. Discussion and Findings 10. Before I proceed to examine rival submissions, it would be appropriate to reproduce the provisions of Section 9, Order VII Rule 11 C.P.C. and Section 430 of the Act 2013, as under:- Civil Procedure Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in force, by the Tribunal or the Appellate Tribunal. 11. The Minutes of the Meeting of the Directors of the defendant-respondent no.1 - Company alongwith two guests was drawn on 10.2.2016 to show that by the aforesaid Minutes of the Meeting the plaintiff-appellant and the defendant-respondent no.2 admitted to divide six Companies out of which two were private and four were limited Companies, amongst themselves. This was not the meeting of the Board of Directors of the six Companies or the defendant-respondent no.1 - Company. Such a meeting is not referable any of the provisions of the Act 2013, but it relates to the properties/assets of the Companies. 12. Section 151 and 152 of the Act 2013 provides for appointment of Directors of the Company. Undisputedly, directors are not the owners of the Company. They are merely Officers of the Company. Duties of Directors is provided in Section 166 of the Act, 2013, which is reproduced below:- 166 Duties of Directors. (1) Subject to the provisions of this Act, a director of a company shall act in accordance with the articles of the company. (2) A director of a company shall act in good faith in order to promote the objects of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny in the name of any nominee or nominees of the company, if it is necessary to do so, to ensure that the number of members of the subsidiary company is not reduced below the statutory limit. Contravention of sub-section 1 of Section 187 has been made punishable under sub-section 4. Section 189 provides for maintaining register of all contracts or arrangements in which Directors are interested. It is not the case of the plaintiff-appellant that the disputed minutes of the meeting dated 10.2.2016 is an arrangement under Section 184 or 188 of the Act which has been entered in the register. Section 230(1) of the Act provides that in case a compromise or arrangement is proposed-- (a) between a company and its creditors or any class of them; or (b) between a company and its members or any class of them, then the Tribunal may, on the application of the company or of any creditor or member of the company, or in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the Tribunal directs. Under Section 231 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making of a winding-up order on the ground that it was just and equitable that the company should be wound up, the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. (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) restrictions on the transfer or allotment of the shares of the company; (e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case; (f) the termination, setting aside or modification of any agreement between the company and any person other than those referred to in clause (e): Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act and the said provisions shall apply accordingly to the memorandum or articles so altered. (7) A certified copy of every order altering, or giving leave to alter, a company's memorandum or articles, shall within thirty days after the making thereof, be filed by the company with the Registrar who shall register the same. (8) If a company contravenes the provisions of sub-section (5), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. 245. Class Action (1) Such number of member or members, depositor or depositors or any class of them, as the case may be, as are indicated in sub-section (2) may, if they are of the opinion that the management or conduct of the affairs of the company are being conducted in a manner prejudicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members holding not less than such percentage of the issued share capital of the company as may be prescribed, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares; (b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members. (ii) The requisite number of depositors provided in sub-section (1) shall not be less than one hundred depositors or not less than such percentage of the total number of depositors as may be prescribed, whichever is less, or any depositor or depositors to whom the company owes such percentage of total deposits of the company as may be prescribed. (4) In considering an application under sub-section (1),the Tribunal shall take into account, in particular- (a) whether the member or depositor is acting in good faith in making the application for seeking an order; (b) any evidence before it as to the involvement of any person other than directors or officers of the company on any of the matters provided in clauses (a)to (f) of subsection (1); (c) whether the cause of action is one which the member or depositor could pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Tribunal is found to be frivolous or vexatious, it shall, for reasons to be recorded in writing, reject the application and make an order that the applicant shall pay to the opposite party such cost, not exceeding one lakh rupees, as may be specified in the order. (9) Nothing contained in this section shall apply to a banking company. (10) Subject to the compliance of this section, an application may be filed or any other action may be taken under this section by any person, group of persons or any association of persons representing the persons affected by any act or omission, specified in sub-section (1). 16. Admittedly, the disputed property was purchased by the defendant-respondent no.1 - Company in its own name which is in accordance with the provisions of Section 187 of the Act. Whatsoever may be the nature of the alleged Minutes of the Meeting dated 10.2.2016, but it relates to the affairs of the defendant-respondent-Company which may be complained under Section 241(1)(a) of the Act 2013 by making application before the Tribunal. Under Clause (e) and Clause (f) of sub-Section 2 of Section 242, the Tribunal has the power to terminate, set aside or modify an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion of jurisdiction of Civil Court has been summarised by Hon'ble Supreme Court in Dhulabhai and Others Vs. The State of Madhya Pradesh, AIR 1969 SC 78; as under: (1) Where the statute gives a finality to the orders of the special tribunals, the civil courts' jurisdiction must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure. (2) Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion is that the jurisdiction of Civil Court is excluded in cases where the matter in dispute is required under the Act 2013 to be determined by the Tribunal. If a matter fall outside the jurisdiction of the Tribunal under the Act 2013, the civil court shall have jurisdiction under Section 9 of the Civil Procedure Code. 23. Similar is the ratio of decision in a recent judgment and Hon'ble Supreme Court in Punjab Wakf Board Vs. Sham Singh Harike, 2019 4 SCC 698, where the controversy was with respect to the jurisdiction of Tribunal under the Wakf Act, 1995. 24. Perusal of the plaint of O.S. no.79 of 2019, reveals that the plaintiff-appellant has set up a case that he and the defendant-respondent no.2 and their family members were directors in six companies and there arose some dispute between him and other Directors relating to the conduct of the affairs of the Company and in that event two guests, namely, Brijesh Saxena and Muqadar Ali intervened and an agreement dated 10.2.2016 (alleged minutes of the meeting) was entered on calling of a meeting of Directors but the defendant-respondent no.2 has not complied with the conditions of the aforesaid minutes of the meeting. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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