Final Order 1

Order Details: Notice of Motion
Pdf Text: 1 NM no.225-19 in L.C.SUIT no.2890-18
IN THE CITY CIVIL COURT FOR GREATER BOMBAY
AT BOMBAY.
NOTICE OF MOTION NO. 225 OF 2019
(CNR no. MHCC010005832019)
IN
L.C. SUIT NO. 2890 OF 2018
(CNR no. MHCC010132452018)
Mr. Niyam Bhasin ]... Plaintiff
Versus
1. Bombay Presidency Radio Club Ltd. and 2 ors. ]... Defendants
Coram : Dr. M. S. Deshpande, Judge
(Court Room no. 01)
Date : 11th March, 2019.
The plaintiff in person.
Mr. Raghuvanshi i/b Mr. Sandip A. Bhagwat, advocate for defendant
nos. 1.
None for remaining defendants.
ORDER
1. The defendant no. 1 has taken out this notice of motion
seeking rejection of the plaint under Order VII Rule 11(a) & (d) of the
Code of Civil Procedure (C.P.C.) and also on the ground of nonjoinder
of necessary parties.
2. The learned advocate for the defendant no. 1 submitted
that the plaintiff challenged the process of election of the defendant no.
1 club, however, in view of completion of the election process, the
reliefs claimed under prayer clause (a to c) of the plaint do not survive.
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The relief which could survive would be under prayer clause (d) of the
plaint. According to him, the jurisdiction of the Civil Court is barred
under the Section 430 of the Companies Act, 2013 (Companies Act).
The plaintiff has to apply to the Tribunal as contemplated under the
Section 241 of the Companies Act as whatever reliefs the plaintiff is
seeking are covered under the Section 242. Thus, considering the
specific bar of the provisions of Companies Act, the plaint is required to
be rejected.
3. On the other hand, the plaintiff in person submitted that
the defendant no. 1 club is a company limited by guarantee having
more than 8000 members. According to him, since last about 10 years
no elections are conducted. The majority or the ruling board of directors
are oppressing the minority. The provisions of the Companies Act as
well as the Memorandum of Association and Articles of Association of
the defendant no. 1 Company are silent about such situation. Therefore,
the plaintiff is required to institute a civil suit for protection of his
rights. According to him, the suit is confined to the nonobservance of
due process of law by the defendant no. 1 during the process of
election. The defendant violated the principles of natural justice and
held the elections illegally. The defendant no. 1 used eballot system
which is not secured. The defendant no. 1 did not supply the copies of
documents, Articles, Memorandum and especially the list of the
members of the company which obstructed the plaintiff from canvassing
the members and contest the election in free atmosphere. In reply, the
learned advocate for the defendant no. 1 submitted that the plaintiff
may seek redressed of his grievance, whatever, by approaching the
Tribunal.
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3 NM no.225-19 in L.C.SUIT no.2890-18
4. The Hon'ble Supreme Court in the case of Sopan Sukhdev
Kamble vs. Asst. Charity Commissioner and ors. reported in A.I.R.
2004 Supreme Court 1801 has held that the consideration of an
application for rejection of plaint should not be on the basis of the
allegations made by the defendant in his written statement or
application for rejection of the plaint. The Court has to consider the
plaint as a whole and in case the plaint comes under the situations
covered by Order VII Rule 11 (a to f) of C.P.C., the same has to be
rejected. The Hon'ble High Court of Bombay in the case of Bajaj Auto
vs. Sandip Polymers reported in 2004(4) Mh.L.J. 396 has held that
for the purpose of deciding issue of rejection of plaint, averments made
in the plaint alone are germane. Plea in the written statement is wholly
irrelevant at that stage.
5. On the basis of the aforesaid ratio, it is necessary to
scrutinize the averments made in the plaint. The plaintiff who is one of
the members of defendant no. 1 company has instituted a suit for
declaration and injunction raising various contentions regarding the
procedure adopted by defendant no. 1 for elections of the members of
the managing committee (board of directors) which was to be held on
28.09.2018 in the 94th Annual General Meeting and further that he was
required to deposit Rs.1,00,000/ for his nomination and was not
supplied with the documents like Memorandum, Articles, list of
members etc. According to him, the elections were not conducted for
more than 10 years since 2008. The managing committee was ruling the
defendant no. 1 club unopposed. If any member hoped to contest
elections, he would be prevented by undemocratic means. The plaintiff
was not supplied with the details and names of the members of the club
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and therefore, he could not canvass the members and contest election.
According to him, by letter dated 30.08.2018 he proposed a subject on
agenda, however, the same was totally ignored. He was forcibly evicted
from the site. The defendant no. 1 adopted evoting techniques in order
to defeat any opposition. It used unfair and unethical process for
election of the board. It did blatant and gross violation of the provisions
of the Companies Act and rules framed there under while appointing
the board of directors. On that basis the plaintiff prayed for declaration
that appointment of all members of committees and sub committees
likely to be done should be declared null and void. He also prayed for
appointment of an administrator and further for a consequential relief
of injunction for restraining the new committee from convening board
meetings or Annual General Meeting etc.
6. The Section 430 of the Companies Act specifically bars the
jurisdiction of the Civil Court which can be read as under :
“Civil Court not to have jurisdiction.
430. No Civil Court shall have jurisdiction to
entertain any suit or proceedings in respect of any
matter which the Tribunal or the Appellate Tribunal
is empowered to determine by or under this Act or
any other law for the time being in force and no
injunction shall be granted by any Court or other
Authority in respect of any action taken or to be
taken in pursuance of any power conferred by or
under this Act or any other law for the time being in
force, by the Tribunal or the Appellate Tribunal”.
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7. The Chapter XVI of the Companies Act, 2013 deals with
prevention of oppression and mismanagement. The Section 241
provides for application to the Tribunal for the relief in cases of
oppression etc. which can be read as under :
“241. (1) Any member of a company who complains
that
(a) the affairs of the company have been or are being
conducted in a manner prejudicial to public interest or
in a manner prejudicial or oppressive to him or any
other member or members or in a manner prejudicial to
the interests of the company; or
(b) the material change, not being a change brought
about by, or in the interests of, any creditors, including
debenture holders or any class of shareholders of the
company, has taken place in the management or control
of the company, whether by an alteration in the Board
of Directors, or manager, or in the ownership of the
company's shares, or if it has no share capital, in its
membership, or in any other manner whatsoever, and
that by reason of such change, it is likely that the affairs
of the company will be conducted in a manner
prejudicial to its interests or its members or any class of
members,
may apply to the Tribunal, provided such member has a
right to apply under Section 244, for an order under
this Chapter.”
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8. The Section 242 provides for the powers of the Tribunal
which can be read as under :
“242. (1) If, on any application made under
Section 241, the Tribunal is of the opinion
(a) that the company's affairs have been or are
being conducted in a manner prejudicial or
oppressive to any member or members or
prejudicial to public interest or in a manner
prejudicial to the interests of the company; and
(b) ******
(2) Without prejudice to the generality of the
powers under subSection (1), an order under that
subSection may provide for
(a) the regulation of conduct of affairs of the
company in future;
(b) ******
(c) ******
(d) ******
(e) the termination, setting aside or modification,
of any agreement, howsoever arrived at, between
the company and the managing director, any
other director or manager, upon such terms and
conditions as may, in the opinion of the Tribunal
be just and equitable in the circumstances of the
case;
(f) the termination, setting aside or modification
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of any agreement between the company and any
person other than those referred to in clause (e);
Provided *****
(g) ******
(h) removal of the managing director, manager or
any of the directors of the company;
(i) ******
(j) the manner in which the managing director or
manager of the company may be appointed
subsequent to an order removing the existing
managing director or manager of the company
made under clause (h);
(k) ******
(l) imposition of costs as may be deemed fit by the
Tribunal;
(m) any other matter for which, in the opinion of
the Tribunal, it is just and equitable that provision
should be made.
(3) ******
(4) The Tribunal may, on the application of any
party to the proceeding, make any interim order
which it thinks fit for regulating the conduct of the
company's affairs upon such terms and conditions
as appear to it to be just and equitable.
(5) ******
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(6) ******
(7) ******
(8) ******
9. The proviso to the Section 241 spells out that the member
of a company who has a right to apply under the Section 244 for an
order may apply to the Tribunal for redress of his complaints about
conducting the affairs of the company in a manner prejudicial or
oppressive to him or any other member/s or public. It appears from
reading of the averments made in the plaint as a whole that the
plaintiff's claim squarely falls within the ambit of the Section 241 and
the Tribunal has power to deal with the same as contemplated under
the Section 242. The plaintiff has not made out any case that he has no
right to apply under the Section 244 for an order under Chapter XVI.
Considering the powers of the Tribunal under the subSections 1(a),
2(a) (e) (f) (h) (j) (l) (m) and 4 of the Section 242 the plaintiff can
very well seek reliefs from the Tribunal for redress of his grievance/s.
10. So far as, the term, “any member of a company” as
contemplated under the Section 241 of the Companies Act is concerned,
the same is explained in Appendix II of the Companies Act and is wide
enough to include the plaintiff or such other aggrieved persons as
applicability of the Section 241 is an equitable jurisdiction which is
intended to protect the minority members of the company from
oppression and mismanagement at the hands of the majority of
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members in view of the ratio laid down by the Hon'ble Supreme Court
in the case of World Wide Agencies (P.) Ltd. vs. Margarat P. Desor
reported in (1990)1 Supreme Court cases 536 to the effect that the
wider meaning of the term, “member” should be given in the context of
the Section 397 and the Section 398 [of the Companies Act, 1956
corresponding to the Section 241 (1) of the Companies Act, 2013]. The
term “member” defined under Companies Act has to be construed on a
larger connotation, which means that a person other than the bearers of
share warrants are to be treated as members. Thus, the plaintiff being
member of a company limited by guarantee can apply very well to the
Tribunal as the averments made in the plaint speaks about the
oppression of minority and mismanagement of the affairs of the
company since about 2008 when the plaintiff was admitted as the
member in the company.
11. The learned advocate for the defendant no. 1 relied on the
ratio laid down by the Hon'ble Supreme Court (Coram : Hon'ble Mr.
Justice L. Nageswara Rao and Hon'ble Mr. Justice Sanjay Kishan
Kaul) by order dated 08.01.2019 passed in Civil Appeal nos. 1965
1966 of 2014 [Shashi Prakash Khemka vs. N.E.P.C. Micon (N.E.P.C.
India Ltd.)] to the effect that in the matters in respect of which power
has been conferred on the N.C.L.T., the jurisdiction of the Civil Court is
completely barred and the civil suit would not be an appropriate
remedy, especially considering the manner in which the Section 430 of
the Act is widely worded and thus, the appropriate course of action to
relegate the appellants to the remedy before the N.C.L.T. under the
Companies Act, 2013. The aforesaid ratio would cover the matter in
controversy as the plaintiff has not shown from the plaint that his right
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to sue only lie before the Civil Court.
12. On the backdrop of these facts and circumstances, the
jurisdiction of the Civil Court is barred in view of the Section 430 of the
Companies Act, 2013 and consequently, the plaint is required to be
rejected under Order VII Rule 11(d) of the C.P.C. Therefore, the
following order is passed:
ORDER
1. The Notice of Motion no. 225 of 2019 is made absolute in terms
of prayer clause (a).
2. Parties to bear their own costs of the notice of motion.
3. An ordinary copy of this order duly authenticated by the
Sheristedar of this Court be supplied to both the parties.
Sd/-
(Dr. M. S. Deshpande)
Judge,
Date : 11.03.2019 City Civil Court, Mumbai.
Directly dictated & typed on dias computer : 11.03.2019
Checked by HHJ on : 12.03.2019
Signed by HHJ on : 12.03.2019
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CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL
SIGNED JUDGMENT/ORDER.”
UPLOAD DATE AND TIME : 14.03.2019 at 12.30 p.m.
NAME OF STENOGRAPHER : Mrs. Gayatri P. Acharekar
Name of the Judge (With Court
Room no.)
HHJ Shri. M. S. Deshpande
C.R. no.01
Date of Pronouncement of
JUDGMENT/ORDER
11/03/2019
JUDGMENT/ORDER signed by
P.O. on
12/03/2019
JUDGMENT/ORDER uploaded
on
14/03/2019
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