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HIGH COURT OF CALCUTTA
Harries, Banerjee
BIMAL SINGH KOTHARI - Appellant
Versus
MUIR MILLS CO. LTD. - Respondent
A. F. O. O. 20 Of 1951
Decided On : MARCH 5, 1952
LETTERS PATENT - Clause 12 - Leave to file suit - Revocation - Principles - Cause of action - Part of cause of action arising within jurisdiction - Notice of meeting - Non-disclosure of material facts - Misrepresentation - Service of notice - Place of service - Convenience of trial - Mala fide suit.
Fact of the Case:
The plaintiffs, small shareholders of the defendant company, filed a suit in the Calcutta High Court under Clause 12 of the Letters Patent, alleging that the defendants had misled the shareholders by not making a frank and free disclosure in the Notice of the changes that were going to be made at the Meeting, thereby preventing them from attending the Meeting at which the changes were made on October 20, 1947. The defendant company applied for revocation of the leave granted to the plaintiffs to file the suit.
Finding of the Court:
The Court held that the notice did not disclose fully and frankly the facts upon which the shareholders were asked to vote, and that a part of the cause of action had arisen within the jurisdiction of the Court. The Court further held that the inconvenience of the trial being held at Kanpur was not so great that the leave should be revoked, and that the suit was not a mala fide suit.
Issues: 1. Whether the notice of the meeting disclosed fully and frankly the facts upon which the shareholders were asked to vote? 2. Whether a part of the cause of action had arisen within the jurisdiction of the Court? 3. Whether the inconvenience of the trial being held at Kanpur was so great that the leave should be revoked? 4. Whether the suit was a mala fide suit?
Ratio Decidendi: 1. The Court held that the notice did not disclose fully and frankly the facts upon which the shareholders were asked to vote, relying on the decision in 'bailie v. ORIENTAL TELEPHONE AND ELECTRIC CO. (1915) 1 Ch 503', where the Court of Appeal held that the notice of a proposed resolution to alter Articles involving a large increase in the remuneration of the Directors was invalid on the ground that the proposed increase was not fully and frankly disclosed. 2. The Court held that a part of the cause of action had arisen within the jurisdiction of the Court, as the plaintiffs had received the notice in Calcutta and the misrepresentation was made when the letter reached the hands of the plaintiffs and at the place where it was read. 3. The Court held that the inconvenience of the trial being held at Kanpur was not so great that the leave should be revoked, as the plaintiffs only needed to prove the notice, the service, and the changes in the Articles, which could be done without bringing witnesses or books of account from Kanpur. 4. The Court held that the suit was not a mala fide suit, as there was no evidence to support the defendant's contention that the suit was instigated by the Singhanias and that the Singhanias were helping the plaintiffs in the conduct of the suit.
Final Decision: The Court set aside the order revoking the leave granted to the plaintiffs to file the suit under Clause 12 of the Letters Patent, and sent back the application for injunction to be heard by the learned Judge according to his convenience.
( 1 ) THIS is an appeal from an order made by S. R. Das Gupta J. , on January 5, 1951, revoking leave granted to the plaintiffs to institute the suit under Clause 12 of the Letters Patent. That clause provides that if the cause of action shall have arisen in part within the local limits of the Ordinary Original Jurisdiction of this Court, the plaintiffs may file the suit with leave of the Court first obtained. The leave under this clause is a condition precedent to jurisdiction. Unless the condition is fulfilled by obtaining the necessary leave to sue, the Court will have no jurisdiction to entertain the suit. If the suit is instituted with the leave, and thereafter the leave is revoked, the Court will have no jurisdiction to try the suit. The revocation of leave deprives the plaintiff of his right to have his suit tried by the Court of his choice. The matter, therefore, is very serious to the plaintiff.
( 2 ) THE granting and revocation of the leave is a matter in the discretion of the Court, to be exercised on well established judicial principles.
( 3 ) IN our Court, the practice is that such leave is asked for at the time, of the presentation of the plaint to the Master. The Master goes through the plaint, and if he finds that the allegations in the plaint require that such leave should be obtained, he makes an endorsement on the plaint to the effect that such leave has been asked for. Then the plaint is presented before a Judge of this Court sitting on the Original Side for the grant of the leave. The Judge after perusal of the plaint grants such leave, if he thinks fit. But the whole thing in the first instance is done 'ex parte', and naturally so, because until the leave is granted, there is no suit filed, and, therefore, no question arises as to hearing the defendant on an application for granting the leave. If the defendant is so advised, he may make an application to the Court for revocation of the leave, and the matter is then heard on notice to the plaintiff, and suitable orders are made. If a case is made out, the leave granted is revoked.
( 4 ) THE plaintiffs in this case allege in their plaint that as all the, defendants do not reside or carry on business within the local limits of the Ordinary Original Jurisdiction of this Court, and inasmuch as it may be contended that a part of the cause of action has arisen outside the jurisdiction, they ask for leave under Clause 12 of the Letters Patent to file the suit. The leave was asked for and, as usual, it was granted 'ex parte. '
( 5 ) THE defendants took out a Master's summons dated August 5, 1950, for, 'inter alia' revocation of the leave. The summons was supported by the petition of the defendant Company duly affirmed, and an affidavit was filed in opposition to the petition. The matter came up before S. R. Das Gupta, J. , who after hearing the parties made the order revoking the leave. From this order, the appeal which we have heard has been taken.
( 6 ) THE plaintiffs are small share-holders of the defendant company, Muir Mills Co. Ltd. , referred to in this judgment as the defendant company, described in the cause title as carrying on business through its Managing Agents the Indian Textile Syndicate Ltd. , and its sole selling agent, the Cotton Textile Corporation Ltd. , at 9-A, Esplanade East, Calcutta, within the local limits of the Ordinary Original Jurisdiction of this Court. The first plaintiff is described in the cause title as a merchant residing at No. 26, Indian Mirror Street, Calcutta. It is also alleged that the second plaintiff carries on business at 7, Lyons Range, Calcutta. They have filed the suit in their individual capacity as share-holders of the defendant company, and, also on behalf of all other shareholders of the defendant company, except those shareholders who are defendants to the suit. Besides the defendant company, there are nine defendants. The second defendant is the said Indian Textile Syndicate Ltd. , a company re
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