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2017 Supreme(Mad) 2732
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
G. JAYACHANDRAN, J.
Selvarathnam and Ors. - Petitioners
Versus
M/s Standard Fire Words Pvt. Ltd. Rep. by its Director Mr. P. Jaisankar - Respondent
C.R.P (PD)(MD) No. 775 of 2017 and C.M.P. (MD) No. 3536 of 2017
Decided On : 19-07-2017
For the Petitioners: Mr. G. Prabhu Rajadurai
For the Respondent: Mr. Yasothavarathen, Mr. V.R. Shanmuganathan
Headnote:
Civil Procedure Code,1908 - Order VII, Rule 11 - Companies Act, 201 - Section 430,100,241,242,242(1)(b),242(2), clause(c)(g),98,96 to 100,97,100(4)242(1)(a) and 242(2)(h) - Plaintiff is a Private Limited Company represented through its Director - Defendants are revision petitioners herein - Averments in plaint is that the share capital of the plaintiff company has shares and the same is held either by family members in their individual names or by companies formed by family members - Each family represented through three Directors each - Two Directors representing Bell Group of Companies started functioning disadvantage to plaintiff company affecting business of plaintiff company, so they were not elected - In that place, Bell Groups of Company is now represented by other members - From branch of family, which constitutes three matches companies Matches Private Limited Private Limited and Matches Private Limited each hold 11.09 % shares in plaintiffs company - Second defendant owes sum to plaintiff company but has not repaid - Erstwhile Directors have joined hands with second defendant to capture plaintiffs company management in unethical way – Held, Section 430 of Act ousts Civil Court jurisdiction on matters, which the Tribunal is empowered to determine - Tribunal has power to call for AGM under Section 97 of the Act - Similarly, under Section 98 of the Act, Tribunal is empowered to call for any other meeting other than AGM which includes EGM either suo motu or an application of any Director or members of the Company, who would be entitled to vote at the meeting. If there is any resolution passed in such EGM removing Managing Director, Manager or any of Directors of Company which shall be prejudicial or oppression to any member or members or to public interest or in a manner prejudicial to interest of company, application can be made to Tribunal and Tribunal is empowered to consider the said application under Section 242(1)(a) and 242(2)(h) of the Companies Act, 2013 - Trial Court has erroneously dismissed I.A.No.1080 without taking note - Failure to mention specific provision of Law by petitioner cannot be an excuse for Court to overlook provisions relevant for case - Hence, Civil Revision Petition is allowed. Plaint in O.S.No.199 on file of District Munsif Court is rejected - Consequently, connected Miscellaneous Petition is also closed.
Certainly. Based on the provided legal document, here are the key points:
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The plaintiff is a Private Limited Company represented by its Director, and the defendants are the revision petitioners (!) .
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The shareholding structure involves family members and companies formed by family members, with specific percentages held by different family groups and associated companies (!) (!) .
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Disputes arose due to certain Directors representing the Bell Group of Companies acting disadvantageously to the plaintiff, leading to their non-election after 2013, and the Bell Group is now represented by other members (!) .
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Certain family companies hold shares in the plaintiff company, and there is a significant debt owed by one of the defendants, which remains unpaid (!) .
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The defendants attempted to unlawfully remove existing Directors by calling an Extraordinary General Meeting (EGM), which the plaintiff contends is illegal and invalid (!) (!) .
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The plaintiff seeks declarations that notices for the EGM are illegal, and requests a permanent injunction to prevent the defendants from conducting meetings until internal disputes are resolved (!) .
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The cause of action is based on the alleged illegal calling of meetings and attempts to capture management through procedural violations (!) .
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The defendants filed an application to dismiss the suit on the grounds that the Civil Court's jurisdiction is barred by specific provisions of the Companies Act, particularly Section 430, which ousts jurisdiction over matters that the Tribunal is empowered to decide (!) .
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The trial court dismissed this application, stating that the petitioner failed to specify a particular legal provision that bars civil court jurisdiction, and that the jurisdiction of civil courts is not entirely excluded but limited to matters outside the Tribunal’s purview (!) .
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The plaintiff contends that the dispute pertains to issues of oppression and management control, which are exclusively within the jurisdiction of the Tribunal under the relevant provisions of the Companies Act, and that the civil court's jurisdiction is ousted in such matters (!) (!) .
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The appellate decision emphasizes that the entire cause of action, including the procedural violations and management disputes, falls within the scope of the Tribunal’s jurisdiction, and that the civil court was mistaken in dismissing the application without considering relevant statutory provisions (!) (!) .
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Consequently, the civil revision petition is allowed, the suit is rejected, and the connected miscellaneous petition is closed, reaffirming that the civil court does not have jurisdiction over the matter as it pertains to company management disputes governed by the Companies Act (!) .
Please let me know if you need further analysis or specific legal advice related to this case.
The plaintiff is a Private Limited Company represented through its Director. The defendants are the revision petitioners herein.
2. The averments in the plaint is that the share capital of the plaintiff company is as follows and the same is held either by family members in their individual names or by companies formed by family members.
1. Yennarkay Ravindran Family (34% shares)
2. Arunachalam Nadar of Pioneer Group (33% shares)
3. Chelladurai Nadar of Bell group (33% shares)
Each family represented through three Directors each. During 2011, two Directors namely, Mr. C. Subhasingh and Mr. C. Rajasingh representing Bell Group of Companies started functioning disadvantage to the plaintiff company affecting the business of the plaintiff company, so they were not elected after 2013. In that place, the Bell Groups of Company is now represented by Mr. C. Vijayasingh and Mr. C. Rajendrasingh.
3. From the branch of Yennarkay R. Rajarthnam family, which constitutes three matches companies namely, M/s Rajarathnam Matches Private Limited, M/s Yennarkay R. Selvarathnam Private Limited and M/s Chiranjeevirathnam Matches Private Limited each hold 11.09 % shares in the plaintiff's company. The second defendant M/s Yennarkay Selvarathnam owes Rs.7.5 crores to the plaintiff company but has not repaid. The erstwhile Directors Mr. C. Subhasingh and Mr. C. Rajasingh have joined hands with the second defendant to capture the plaintiff's company management in unethical way.
4. The second defendant has adopted hook and cook method to remove the present Directors of the plaintiff's company by calling for Extraordinary General Meeting (in short “EGM”) for 27.09.2016, as if a board meeting was held on 19.08.2016 and he as Director of M/s Selvarathnam Matches Private Limited resolved to remove 2 of the existing Directors.
5. The relief sought are declaration to declare that the notice dated 08.10.2016 issued by the defendants 1 and 2 calling for the EGM on 09.11.2016 is illegal in valid and not binding on the plaintiff's company and consequently declare the notices dated 19.8.2016 and 27.09.2016 are also illegal and invalid and consequently, granting permanent injunction restraining the defendants, their employees, men, servants, agents from conducting any Annual General Body Meeting (in short “AGM”) of the plaintiff company viz., M/s Standard Fireworks (P) Ltd., till the internal dispute of the first defendant is settled amicably and costs of the suit.
6. The cause of action as found in the plaint is as under :
“The cause of action arose for the above suit, when the first defendant gave request dated 27.09.2016 and 08.10.2016 for conducting EGM of M/s Standard Fireworks (P) Ltd., to fulfill his malafide intention”.
7. On receipt of the suit notice, the defendants have filed I.A. No. 1080 of 2016 under Order VII, Rule 11 of C.P.C., to reject the plaint on the ground that Civil Court jurisdiction is ousted by virtue of Section 430 of Companies Act, 2013 (in short “the Act”). The Trial Court, has dismissed the I.A.No.1080 of 2016 for the following reason:
“On a bare perusal of this provision, it is clear that sec.430 of Companies Act, does not completely bar the jurisdiction of civil courts in respect of matters relating to companies. It is further made clear that the jurisdiction of civil courts in respect of matters relating to companies. It is further made clear that the jurisdiction of civil court is barred only in respect of matter in which the tribunal is empowered to determine by or under the companies act or any other law for time being in force. Hence, duty is cast upon the petitioner to establish that there is a specific provision in the companies act to deal with the issues raised in this suit. But the petitioner has failed to mention any such specific provisions in the Companies Act”.
8. The plaintiff is the company represented by one of its Director. The plaint averment is that the defendants are attempting to capture the management by calling for
