AIR 1985 Mad 257, 1986 60 CompCas 142 Mad
Ratnam
R. Venkataswami Naidu
Versus
South India Viscose Ltd., Coimbatore
Decided on : 8/11/1985
.
INJUNCTION - COMPANY LAW - JURISDICTION - AD INTERIM INJUNCTION - VALIDITY - JURISDICTIONAL DEFECT - EFFECT - COMPANY MEETING - LEGALITY - COURT'S AUTHORITY - NULLITY - WAIVER OF OBJECTION - SUITS VALUATION ACT, 1887, S. 11 - CIVIL PROCEDURE CODE, 1908, S. 21.
Fact of the Case:
The petitioner, a shareholder and former Director of the respondent company, sought an injunction to restrain the company from implementing resolutions passed at a meeting held in contravention of an ad interim injunction granted by the City Civil Court, Bombay. The petitioner argued that the meeting was illegal and invalid as it was held in violation of the ad interim injunction.
Finding of the Court:
The court found that the City Civil Court, Bombay, had no jurisdiction to entertain the suit and pass interim orders, and that any order passed by it would be inoperative and not binding. The court also found that the respondent company had raised an objection regarding the jurisdiction of the City Civil Court at Bombay to entertain the suit and had persisted in that objection, which resulted in the Court coming to the conclusion that the City Civil Court at Bombay did not have jurisdiction to entertain the suit at all and that, therefore, the interim orders passed by it were of no consequence and were not binding on the respondent company.
Issues: 1. Whether the ad interim injunction granted by the City Civil Court, Bombay, was valid and binding on the respondent company. 2. Whether the meeting held by the respondent company in contravention of the ad interim injunction was illegal and invalid. 3. Whether the petitioner was entitled to an injunction to restrain the company from implementing the resolutions passed at the meeting.
Ratio Decidendi: 1. A decree passed by a Court without jurisdiction is a nullity, and its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon. 2. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree, and such a defect cannot be cured even by consent of parties. 3. If a Court has no jurisdiction to entertain a suit, anything done by it, by assuming such jurisdiction, would be totally without competence on its part to do so and merely because such incompetence is discovered subsequently, that would not render the intermediate act valid and binding till the date of discovery of such incompetence.
Final Decision: The court dismissed the petition, holding that the ad interim injunction granted by the City Civil Court, Bombay, was not valid and binding on the respondent company, and that the meeting held by the respondent company in contravention of the ad interim injunction was not illegal and invalid. The court also held that the petitioner was not entitled to an injunction to restrain the company from implementing the resolutions passed at the meeting.
1. The plaintiff in O.S. No. 2017 of 1983, District Munsif's Court, Coimbatore, is the petitioner in this Civil Revision Petition. In the respondent-company, with which the petitioner appears to have been associated since its inception, he holds two shares. Prior to 29-9-1983, the petitioner was one of its Directors. The Twenty-fifth Annual General Meeting of the respondent-company was scheduled to be held on 29-9-1983 at 11.30 am. Item 2 in the agenda for that meeting related to the appointment of a Director in the place of the petitioner, who retired by rotation and was eligible to offer himself for re-appointment. The annual report of the company and the notice of the Twenty-fifth Annual General Meeting were sent to all the shareholders of the 6drapany well in advance. While matters stood thus, on 28-9-1983, one P. J. Joseph, who held two shares in the respondent company instituted S.C. Suit No. 5658 of 1983 before the City Civil Court, Bombay, against the respondent-company, the petitioner herein as well as other Directors and obtained an ad interim injunction restraining the respondent company and its Directors from holding the Twenty-fifth Annual General Meeting of the Company on 29-9-1983. It further appears that the plaintiff in S.C. Suit No. 5658 of 1983, City Civil Court, Bombay, reached Coimbatore in the morning of 29-9-1983 and served the order of ad interim injunction on the petitioner in his house at about 11 a.m. and thereafter proceeded to the place where the Twenty fifth Annual General Meeting of the respondent-company was scheduled to be held and informed the Chairman and Secretary of the company at about 11.20 am. about the ad interim injunction order passed by the City Civil Court at Bombay and also served the order of ad interim injunction on the Secretary of the company and the Chairman for the meeting, Mr. Desai. Though it is claimed that thereafter there was some discussion as well as protests, the Twenty-fifth Annual General Meeting of the company wont, on as scheduled and certain resolutions were passed. In so far as the petitioner was concerned, his reappointment as a director of the company was also considered and the resolution in that regard was declared as lost, as 2,90,732 votes were cast against the reappointment. of the petitioner, while 1,807 votes alone were cast in his favour. The result was, the petitioner ceased to be a Director of the respondent company and was not re-appointed and the resolution of the company to that effect was also communicated to the petitioner. Subsequently, on 7-10-1983, the petitioner instituted O.S. No. 2017 of 1983, District Munsif's Court, Coimbatore, praying for a declaration that the Twenty-fifth Annual General Meeting of the respondent-company held on 29-9-1983 at 11.30 a.m. in contravention of the order of ad interim injunction passed by the City Civil Court at Bombay in S.C. Suit No. 5658 of 1983 is illegal and for a permanent injunction restraining the respondent- company from implementing the resolutions passed at that meeting and also from interfering with the rights of the petitioner from functioning as a Director of the respondent- company and other incidental reliefs. In I.A. No. 2487 of 1983 in O.S. No. 2017 of 1983, the petitioner prayed for an ad interim injunction restraining the respondent-company from implementing the resolutions passed at the Twenty-fifth Annual General Meeting held on 29-9-1983 and from holding any meeting of the Board of Directors without the participation of the petitioner therein. The main ground urged by the petitioner in that application was that the proceedings of the Twenty-fifth Annual General Meeting were held in violation of the order of ad interim injunction passed by a competent Court and all its proceedings were illegal and he was entitled to continue to be a Director in the respondent-company.
2. On 7-10-1983, the learned District Munsif, Coimbatore, granted an ad interim injunction and ordered notice on the
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