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MADRAS HIGH COURT
T.Mathivanan, J.
Gemini Communications Limited - Appellants
Versus.
Merrill Lynch International - Respondents
Civil Revision Petition (PD) No.4058 of 2013 and M.P.No.1 of 2013
Decided on : 11.2.2015
Code of Civil Procedure, 1908 – Order 7 Rule 11, Section 9 – Tamil Nadu Court Fees and Suits Valuation Act, 1955 – Section 25 – Currency Bonds – Plaintiff has filed the above suit in O.S.No.7452 of 2012 as against the defendant, seeking the reliefs To pass a judgment and decree, declaring the Resolution dated 1.11.2012 passed by the Board of Directors of the revision petitioner/defendant, authorising conversion of foreign currency convertible bonds held by the respondent/ plaintiff and allotment of 1,97,46,885/- equity shares at face value of Rs.1/- each in favour of the respondent/plaintiff as null and void, being contrary to the agreement between the parties as well as in law; and To issue a permanent injunction against the revision petitioner/defendant from acting in pursuance of the Resolution passed on 1.11.2012. – Held, Court finds that though it superficially appears to have two compartments, the prayer A portion is singular in nature, because the allotment of 1,97,46,885 equity shares of face value at Re.1/- each in favour of the plaintiff is in pursuance to the Defendants Board Resolution, dated 1.11.2012. – Therefore, the word and, which act as a conjunction, combining these two compartments into one unit. – Another thing is that the plaintiff has not sought for any relief with regard to recovery of money. Since the passing of resolution, dated 1.11.2012 follows the allotment of shares, the said resolution itself is incapable of valuation. – Clause d to Section 25 of the Court fees Act itself is very clear that whether the subject matter of suit is capable of valuation or not, fee shall be computed on the amount at which the relief sought is valued in the plaint or on rupees one thousand, whichever is higher. – Prayer A portion has been valued at Rs.9,32,000/- for which an ad valorem court fee of Rs.69,900.50 seems to have been paid under Section 25(d) of the Tamil Nadu Court Fees and Suits Valuation Act, 1955. – It has been valued at Rs.1000/-, under Section 27 of the Court Fees Act and a sum of Rs.75.50 has been paid – It is to be noted that the plaintiff has also given an undertaking to pay any additional sum as court fee if found necessary. – Therefore, it is the duty of the trial court to scrutinize upon the valuation of the suit and calculate the appropriate fee, if found necessary. – Revision Petition Dismissed
Key Points: - The defendant filed an application under Order 7 Rule 11 of the Civil Procedure Code to reject the plaint, arguing that the civil court lacked jurisdiction under Section 10 of the Companies Act, 1956 (!) [21001176840004]. - The trial court dismissed the application, holding that the civil court has jurisdiction under Section 9 of the Civil Procedure Code because the dispute involves a breach of contract and affects the plaintiff's rights [21001176840005][21001176840112]. - The High Court determined that the civil court's jurisdiction is not ousted because the dispute pertains to a breach of a subscription agreement rather than internal company management governed exclusively by the Companies Act [21001176840112]. - The court found that the plaintiff, as a party to the subscription agreement, has the right to seek a declaration that the Board Resolution and subsequent share allotment are null and void [21001176840118]. - The court concluded that the prayer for declaration is singular in nature because the share allotment was a direct consequence of the Board Resolution [21001176840128]. - The court held that the suit was properly valued under Section 25(d) of the Tamil Nadu Court Fees and Suits Valuation Act, 1955, and that the trial court has the authority to scrutinize and calculate the appropriate court fee [21001176840122][21001176840133]. - The High Court dismissed the revision petition and directed the trial court to dispose of the suit within six months [21001176840137] (!) .
This Memorandum of Civil Revision has been directed against the fair and decretal order dated 19.8.2013 and made in the interlocutory application in I.A.No.3866 of 2013 in O.S.No.7452 of 2012 on the file of the learned XVII Assistant Judge, City Civil Court, Chennai.
2. The revision petitioner herein is the defendant in the suit in O.S.No.7452 of 2012, whereas the respondent is the plaintiff.
3. For easy reference and for the sake of convenience, the respondent herein may hereinafter be referred to as the plaintiff and the revision petitioner be referred to as the defendant wherever the context so require.
4. The plaintiff has filed the above suit in O.S.No.7452 of 2012 as against the defendant, seeking the following reliefs:-
a. To pass a judgment and decree, declaring the Resolution dated 1.11.2012 passed by the Board of Directors of the revision petitioner/defendant, authorising conversion of foreign currency convertible bonds held by the respondent/ plaintiff and allotment of 1,97,46,885/- equity shares at face value of Rs.1/- each in favour of the respondent/plaintiff as null and void, being contrary to the agreement between the parties as well as in law; and
b. To issue a permanent injunction against the revision petitioner/defendant from acting in pursuance of the Resolution passed on 1.11.2012.
5. The defendant instead of filing his written statement had taken out an application in I.A.No.3866 of 2013 under Order 7 Rule 11 of C.P.C. to reject the plaint on the ground that the civil court does not have jurisdiction to entertain the suit of this nature as the suit is barred by the provisions of Section 10 of the Companies Act, 1956.
6. This petition was vehemently contested by the plaintiff by filing their counter affidavit and after hearing both sides, the trial Court had dismissed that application on 19.8.2013 on the ground that since the contractual rights of the plaintiff were affected, the civil court is having jurisdiction under Section 9 of C.P.C. to determine the issue which is purely civil in nature.
7. Having been aggrieved by the impugned order, dated 19.8.2013, the defendant has approached this Court with this revision.
8. Heard M/s. J. Sivanandaraaj, learned counsel appearing for the revision petitioner and Mr.M.S.Krishnan, learned Senior Counsel appearing for M/s.A.K. Law Chambers, who is on record for the respondent/plaintiff.
9. The plaintiff is a financial services company registered with the Registrar of Companies for England and Wales at United Kingdom.
10. The defendant is also a company registered under the Indian Companies Act, 1956, engaged in the business of providing infrastructure implementation services, infrastructure managed services, infrastructure outsourcing services and infrastructure consultancy services and LAN, WAN and telecom solutions.
11. In pursuant to the subscription agreement, dated 29.6.2007 entered into between the plaintiff and the defendant, the foreign currency convertible bonds to the tune of E 15,000,000 (Euros Fifteen Million only) were issued to the plaintiff. The said foreign currency convertible bonds (hereinafter be referred to as FCCBs) were convertible into ordinary equity shares at face value of Rs.10 (Rupees Ten only) each as on 17.7.2007 at the option of the plaintiff.
12. The FCCB's are constituted by the Trust Deed, dated 16.7.2007 executed between the defendant and the Bank of New York, London Branch, who was appointed by the defendant as their trustee and approved by the plaintiff.
13. The Schedule 1 to the Trust Deed sets out the terms and conditions of the FCCBs, which sets out the procedure for conversion of FCCB into the shares at the option of the plaintiff.
14. As per the terms and conditions of the Trust Deed, the FCCBs were matured on 18.7.2012 and in terms of Clause 6.1.1 of the Terms and Conditions, the conversion right had to be exercised by the plaintiff by 18.7.2012. However, in case of default in repayment by the defendant, the conversion rights of the
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