The jurisdiction of the Civil Court is not ousted by the Companies Act, 2013, if the subject matter of the suit is not mismanagement but a different action by the defendant.

JUDGMENT :

1. The five plaintiffs, namely Vijay Chhibber, Anupam Dev, Col. Sudhir Manchanda, Amitabh Mathur and S.R. Wadhwa, have instituted this suit for (i) declaration that the Show Cause Notices dated 6th October, 2018 issued by the defendant to the five plaintiffs are unenforceable, illegal and void and not binding on the plaintiffs; and, (ii) permanent injunction restraining the defendant from taking any steps in furtherance of the show cause notices.

2. The suit came up first before this Court on 10th October, 2018 when while issuing summons/notice, vide ex parte ad interim order, the proceedings in terms of Show Cause Notices dated 6th October, 2018 were ordered to be kept in abeyance.

3. The defendant filed IA No.14868/2018 under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC) and which came up before this Court on 29th October, 2019 when the counsel for the defendant stated that the said application was filed only because the plaintiffs had not paid the requisite court fees but the counsel had subsequently learnt that the plaintiffs had since paid the court fees and was thus withdrawing the said application. Accordingly, the application was dismissed as withdrawn.

4. Thereafter the defendant filed this application which came up first before this Court on 2nd November, 2018 when the following order was passed thereon:-

“7. The application under Order VII Rule 11 of the CPC runs into about 93 pages and such a bulky application itself is an indication that no ground for rejection of the plaint at the threshold is made out.

8. Be that as it may, the counsel for the applicant/defendant has been heard. The counsel has handed over a synopsis of one page containing three heads (I) breach of sub-rule (a) of Order VII Rule 11 of CPC; (II) breach of sub-rule (b) of Order VII Rule 11 of CPC; and, (III) breach of sub-rule (d) of Order VII Rule 11 of CPC.

9. The said synopsis is taken on record.

10. The counsel for the applicant/defendant has argued that the plaint does not disclose any cause of action. It is argued that the five plaintiffs have instituted this suit impugning the notice to show cause dated 6th October, 2018 issued to the plaintiffs calling upon the plaintiffs to show cause why action should not be taken against them for misconduct as members of the applicant/defendant. It is argued that the said Show Cause Notice has been issued in accordance with the Rules of the applicant/defendant.

11. On being asked to show the said Rules, attention is drawn to page 7 of Part III file being the Bye-laws of the applicant/defendant and to page 39 of Part III file containing Articles of Association of the applicant/defendant, a company Section 8 of the Companies Act, 2013.

12. Bye-laws 17 & 18 lay down the guidelines pertaining to ethics to be observed and interpersonal conduct and Article 19 of the Articles of Association of the applicant/defendant provides for termination of membership. Clause 5 of Article 19 provides that termination shall be by decision of a majority vote of not less than two thirds of the members present at a General Committee especially convened for the purpose and at which not less than twelve members shall be present.

13. The counsel for the applicant/defendant has next drawn attention to the Minutes of the Annual General Meeting (AGM) of the applicant/defendant held on 30th September, 2018 and which at page 339 of Part IIA file, records the proposal of Maj. Atul Dev for appointment of an Enquiry Committee qua the conduct of the plaintiffs and five others and records as under:

“NOTE: THIS MOTION OF THE HOUSE WAS PROPOSED BY MAJ. ATUL DEV AND SECONDED BY BRIG SAPRU. IT WAS READ OUT TO THE MEMBERS AND A VOTE TAKEN.

President recorded the sense of the house as a resounding “YES” to the suspension of the concerned members. He stated that he will bring this forth in the GC and will take a decision accordingly at the earliest.

Mr. S.K. Sethi and other members stated to President to take this decision as passed s