IMPORTANT POINTS
Dispute between resident nationals of Dubai as regards affairs of a company incorporated and situate in Dubai – Held, cause of action arising in Dubai, hence court at Chennai will not have jurisdiction.
Relationship of plaintiff and the party claimed to be represented by plaintiff is important for determining locus.
Trust property vests in ‘registered owner’ who holds it in trust for beneficiary.
Dispute relating to Defendant No.2 Company – Incorporated and situate in Dubai – Not amenable to jurisdiction of High Court of Madras.
Parties being resident nationals of Dubai and subject matter of dispute, Defendant No. 2 Company, also being incorporated and situate in Dubai, principle of forum convenience applies.
Relief sought for, that too consequential one, cannot give cause of action.

Headnote:(a) Administration of justice – Cause of action and jurisdiction – Suit, derivative action, filed by the plaintiffs, resident nationals of Dubai, UAE on behalf of Defendant No. 2, a Company incorporated in Dubai, UAE – Plaintiff Nos. 1 and 2 holding 34% shares in Defendant No. 2 Company – Defendant Nos. 3, 4 and 7, also resident nationals of Dubai, UAE and holding 66% shares in Defendant No. 2 Company – Disputes between these two groups of share holders as to affairs of Defendant No. 2 Company – Defendant Nos. 3 to 7 together holding 5.16% shares of Defendant No. 1/Indian Company – Instant is case of dispute between resident nationals of Dubai as regards affairs of a company incorporated and situate in Dubai – Held, cause of action arising in Dubai, hence court at Chennai will not have jurisdiction. (Para 44, 45, 47)
       (2012) 6 SCC 613; (2016) 195 Comp Cas 434 (Cal); (2008) 6 Bom CR 499 – Distinguished
       (b) Administration of justice – Locus – Derivative action – An exception to general principle of locus – Relationship of plaintiff and the party claimed to be represented by plaintiff is important. (Para 48)
       (c) Indian Trust Act, 1882 – Section 3 – ‘Beneficial interest’ and ‘beneficial owner’ – Trust property vests in ‘registered owner’ who holds it in trust for beneficiary. (Para 53)
       (1990) 1 FC 199 – Referred
       (d) Administration of justice – Territorial jurisdiction – Dispute relating to Defendant No.2 Company – Incorporated and situate in Dubai – Not amenable to jurisdiction of High Court of Madras. (Para 54)
       (e) Administration of justice – Territorial jurisdiction – Forum convenience – Both party resident nationals of Dubai – Defendant No. 2 Company also incorporated and situate in Dubai – Principle of forum convenience applies – Dubai would be more convenient forum to decide the dispute. (Para 54)
       (2004) 6 SCC 254 – Relied upon
       (f) Administration of justice – Cause of action – Relief sought for, that too consequential one – Cannot give cause of action. (Para 55)
       Facts of the case:
       Dispute between the parties pertain to the shares of Respondent No.1, Star Health Insurance Company, standing in the name of the Respondent Nos. 3-7. As per the appellants/plaintiffs, it is Respondent No. 2 which has the beneficial interest in those shares. In this behalf, the appellants/plaintiffs filed the suit through their Power of Attorney holder (C.S. No. 33 of 2018) before the High Court of Madras seeking, inter alia, the relief of declaration of beneficial interest of Respondent no. 2 herein in the shares which are in the names of Respondent nos. 3 to 7. These constitute a total of 6.16% of the share holding of Respondent No. 1.
       However, issue in this case is very limited which pertains to the territorial jurisdiction, viz., whether High Court of Madras has the territorial jurisdiction to entertain the suit filed by the appellants herein?
       Finding of the Court:
       Madras High Court has no jurisdiction in the matter.
       Result: Appeals dismissed.

JUDGMENT

A.K. SIKRI, J.

This group of thirteen appeals was heard together and is being disposed of by this common judgment as an identical issue is involved therein.

2) At the outset, we may mention that the dispute between the parties pertain to the shares of Respondent No.1, Star Health Insurance Company, standing in the name of the Respondent Nos. 3-7. As per the appellants/plaintiffs, it is Respondent No. 2 which has the beneficial interest in those shares. In this behalf, the appellants/plaintiffs filed the suit through their Power of Attorney holder (C.S. No. 33 of 2018) before the High Court of Madras seeking, inter alia, the relief of declaration of beneficial interest of Respondent no. 2 herein in the shares which are in the names of Respondent nos. 3 to 7. These constitute a total of 6.16% of the share holding of Respondent No. 1. However, issue before this Court is very limited which pertains to the territorial jurisdiction, viz., whether High Court of Madras has the territorial jurisdiction to entertain the suit filed by the appellants herein?

3) As per Clause 12 of the Letters Patent, along with the suit the plaintiffs also filed application for seeking leave to sue on the ground that a substantial part of cause of action had arisen within its jurisdiction. This application was allowed by the High Court vide its order dated January 12, 2018. After the service of summons in that suit, Respondent no. 1 herein (Defendant no. 1 in the suit) filed applications for revoking leave to institute the suit within the jurisdiction of Madras High Court on the ground that it lacked territorial jurisdiction to decide the suit. Similar applications were filed by Respondent nos. 2 and 3 as well. Respondent nos. 4,6,and 7 filed Memos supporting these applications. The learned Single Judge of the High Court dismissed these applications holding that High Court had the jurisdiction to entertain the suit. Appeals against this order were filed by Respondent nos. 1 to 9. The Division Bench has allowed these appeals by the common judgment dated August 03, 2018, thereby rejecting the plaint on the ground that suit in the High Court of Madras was not maintainable due to lack of territorial jurisdiction. This order is impugned in the instant appeals.

4) The brief facts leading to the case may be stated at this stage. It may be mentioned that only those facts which are essential to decide the controversy regarding jurisdictional issue are taken note of. Also, for the sake of clarity and convenience, the parties are addressed as plaintiffs and defendants, on the basis of memo of the parties in the suit.

Since there are multiple parties to the litigations—contesting as well as proforma – we start with the description of these parties, which is as under:

5) Plaintiff No. 1 — Ahmed Abdulla Al Ghurair and Plaintiff no. 2, Ibrahim Abdulla Al Ghurair are brothers. They are residents and nationals of Dubai, UAE and are minority shareholders with 34% shares in defendant No. 2, ETA Star Holdings Ltd., a Company incorporated under the laws of Jebel Ali Free Zone Authority and having its registered office in Dubai, UAE. The remaining 66% shares in the same are held by Defendant nos. 3 to 7.

6) The Defendant no. 1, Star Health Insurance Company (hereinafter “Indian Company”), a Company registered under the Companies Act, 1956 having its registered office in Chennai, Tamil Nadu, India was incorporated on 17.06.2005. It is engaged in the Health Insurance business in India, having an authorised share capital of Rs.600 Crores and issued and subscribed capital of Rs. 455.57 Crores.

7) Defendant nos. 3 and 5 to 7 belong to the same family, viz., the “Buhary Family”. The Defendant no. 3, Mr. Syed Mohamed Salahuddin holds 2.98% of shares in Defendant no. 1/Indian Company. Defendant nos. 5 to 7, sons of Defendant no. 3 and Mr. Arif Buhary respectively, all national and residents of Dubai, UAE hold 0.002% share each in the Indian Company.

8) Defendant no. 4, Mr. Es

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2018 Supreme(SC) 1174

Cases Referred (3)