IN THE HIGH COURT OF JUDICATURE AT MADRAS
M.M. SUNDRESH, C. SARAVANAN, JJ.
Viji Joseph & Another – Petitioners
Versus
P. Chander & Others – Respondents
Original Side Appeal Nos. 29 & 30 of 2019 & C.M.P.Nos.1884 & 1904 of 2019
Decided On : 26-04-2019
Companies (Management and Administration) Rules 2014 - Section 20 - Companies Act, 2013 - Section 430 ,424 to 429 - English Act - Section 210 and 397 - Election dispute - Post of Vice President and Honourable Secretary - Fraud and illegal manipulation- Respondents 1 and 2/plaintiffs, who were holding post of Vice President and Honourable Secretary of appellant in O.S.A.No. for term, but lost election for year through same procedure adopted by means of electronic voting, filed suit inter alia alleging that there was a connivance between elected office bearers/defendants and scrutinizer - Following are relevant averments made in suit along with relief sought for - plaintiffs further submit that entire e-voting and manual voting conducted in 1st defendant club for term is vitiated by fraud and illegal manipulation by scrutinizer viz., 2nd defendant and defendants 4 to 13 - Office of 1st defendant club is now forcibly and illegally occupied by defendants 4 to 13 - Further 14th defendant has been made as a defendant as he was Chairman of AGM and he has obviously acted in support of defendants 4 to 13 either due to collusion or due to coercion and he is guilty of not ensuring a fair procedure even after realizing huge fraud - Held, golden Rule of statutory construction is that words and phrases or sentences should be interpreted according to intent of legislature that passed Act- Section 241 and 242 should be read together - If the words of statutes raises doubt, it is inevitable to call in aid ground and cause of making statute and mischiefs, which Act intends to redress - It is not in dispute that were a dispute to arise today, civil suit remedy would be completely barred and CA 1965-66/20143 power would be vested with National Company Law Tribunal (NCLT) under Section 39 of said Act - Courtare conscious of fact that in present case, cause of action has arisen at a stage prior to this enactment - However, Court are of view that relegating parties to civil suit now would not be appropriate remedy, especially considering the manner in which Section 430 of Act is widely worded - Appropriate course of action would be to relegate appellants to remedy before the NCLT under Companies Act, 2013 - In view of lapse of time, Court permit appellants to file a fresh petition within a maximum period of two months from today - Court have no hesitation in holding that learned single Judge has not taken note of relevant provisions involved - Incidentally, learned single Judge wrongly held that proper remedy is by an adjudication before Civil Court as complex issues are involved - Accordingly, Court set aside order passed by learned single Judge - These original side appeals are allowed.
M.M. Sundresh, J.
Whether an election dispute of a company involving voting through electronic means done under Section 20 of the Companies (Management and Administration) Rules 2014 to the Board of Directors would be amenable to the jurisdiction of the National Company Law Tribunal is the issue for consideration before this Court.
2. Respondents 1 and 2/plaintiffs, who were holding the post of Vice President and Honourable Secretary of the appellant in O.S.A.No.30 of 2019 for the term 2016-2018, but lost the election for the year 2018-2020 through the same procedure adopted by means of electronic voting, filed the suit inter alia alleging that there was a connivance between the elected office bearers/defendants and the scrutinizer. The following are the relevant averments made in the suit along with the relief sought for.
"15. The plaintiffs further submit that the entire e-voting and manual voting conducted in the 1st defendant club for the term 2018-20 is vitiated by fraud and illegal manipulation by the scrutinizer viz., 2nd defendant and defendants 4 to 13. The office of the 1st defendant club is now forcibly and illegally occupied by the defendants 4 to 13. Further the 14th defendant has been made as a defendant as he was the Chairman of the AGM and he has obviously acted in support of the defendants 4 to 13 either due to collusion or due to coercion and he is guilty of not ensuring a fair procedure even after realizing the huge fraud. The reports of the 2nd defendant is totally manipulated and self-contradictory. There are serious errors in the impugned report also."
The reliefs sought for in the suit.
"In the above circumstances, the plaintiff respectfully prays for a decree and judgment.
(i). Declaring that the impugned consolidated report of the 2nd defendant dated 16.09.2018 regarding the election results of the election of the 1st defendant for the term 2018-20 held through e-voting between 11.09.2018 and upto 5pm on 15.09.2018 in the 88th Annual General Body of the 1st defendant, as illegal, fraudulent manipulated, void and unenforceable;
(ii). Mandatory injunction directing the 1st defendant to conduct the electoral process of the 1st defendant club for the posts of (1) President (2) Vice-President (3) Hony. Secretary (4) Hony. Treasurer (5) and five Managing Committee Members of the 1st defendant for the term 2018-20 under the supervision of a former Judge of this Hon'ble Court or Advocate Commissioner by strictly following the Articles of Association and the rules viz., Companies (Management & Administration) Rules 2015 within a time to be fixed by this Hon'ble Court
(iii). and pass such further or other orders as this Hon'ble Court may deem fit and proper in the circumstances of the case.
(iv). To pay the cost of the suit."
3. An application was filed by the appellant in O.S.A.No.29 of 2019, who was arrayed as defendant No.5 in the suit having been elected as a President invoking the existence of the bar under Section 430 of the Companies Act, 2013, which prohibits Civil Courts from entertaining any suit, which the Tribunal is empowered to determine under the Act. The learned single Judge has dismissed the application inter alia holding that the proceedings before the Tribunal are summary in nature and complex issues and an election dispute cannot be adjudicated before it as the process involves complex questions of fact. Seeking to assail the aforesaid order, both the appeals are before us.
4. As the issue is only on the question of law simplicitor, we are not willing to traverse beyond it.
5. Heard the learned Senior Counsel appearing for the appellant in both the appeals and the learned counsel for the respondents 1 and 2.
6. The learned Senior Counsel appearing for the appellant in both the appeals would contend that the suit is not maintainable in view of the express bar under Section 430 of the Companies Act, 2013. The dispute sought to be raised certainly would come within the purview of Sections 241 to 244
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