Calcutta High Court
Mr. Milan Bhowmik & Anr vs Eastern India Motion Pictures ... on 8 February, 2023
Author: Arindam Mukherjee
Bench: Arindam Mukherjee
OD-42
ORDER SHEET
IA No.GA 2 of 2022
In
CS 224 of 2021
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
MR. MILAN BHOWMIK & ANR.
VS.
EASTERN INDIA MOTION PICTURES ASSOCIATION & ORS.
BEFORE:
The Hon'ble JUSTICE ARINDAM MUKHERJEE
Date: 8th February, 2023.
Mr. Rahul Karmakar, Mr. S. K. Poddar, Ms. Meenakshi Manot,
Advocates for the applicants.
Mr. Anirban Majumder, Advocate for plaintiffs.
Mr. Shamit Sanyal, Ms. Sahana Naznin, Mr. Sabyasachi Roy,
Advocates for defendant no.8.
Mr. Anuran Samanta, Advocate for defendant nos.33 to 39.
The Court : This is an application by the defendant nos.1, 2, 4 to
7, 9 to 18, 20 to 22, 25, 27 to 31 and 32 (hereinafter collectively referred to
as 'the applicants' for the sake of convenience) inter alia for rejection of
the plaint and/or dismissal of the suit. The main grounds on which the
applicants want the plaint to be rejected can be summarised as follows :
1.The plaintiffs have no cause of action to file and maintain this suit.
2. The plaint does not disclose any cause of action.
3. The suit is barred by law.
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4. The plaint is to be rejected for gross suppression of material facts.
The applicants say that in paragraph 25 of the plaint the plaintiff no.2 says that his membership was valid till 31 st March, 2020. In paragraph 27, the applicants say, that the plaintiff no.2 has further clarified that his membership has not been renewed. Thus the plaintiff no.2, according to the applicants, being not a member of defendant no.1 at the time of instituting the suit has no cause of action to file and maintain the suit which primarily arise out of disputes as to the management of the affairs of the defendant no.1. It is further submitted that since the plaintiff no.2 cannot challenge any alleged action of mismanagement for not being a member, no cause of action in his favour is disclosed in the plaint and as such it is to be rejected so far as the plaintiff no.2 is concerned under the provision of Order VII Rule 11(a) of the Code of Civil Procedure, 1908 (in short 'CPC') on the ground that the plaint does not disclose any cause of action.
So far as the plaintiff no.1 is concerned, the applicants raised two fold objections. The applicants say that on a meaningful reading of the plaint it will appear that the plaint discloses no cause of action in favour of the plaintiff no.1. It is not clear from the plaint as the basis of the grievances the applicants further say that the defendant no.1 is a company incorporated within the meaning of the provisions of Section 8 of the Companies Act, 2013 (hereinafter referred to as 'the said Act'). The plaintiff no.1 as will appear from the averments in the plaint, according to the applicants, has challenged the election process as also the affairs of the 3 defendant no.1 being managed by an elected executive committee. The challenge to the affairs of the company, according to the applicants, comes under the provisions of Section 241 of the said Act. In order to challenge such mismanagement as to the affairs of the defendant no.1, the available forum is the National Company Law Tribunal (in short 'NCLT'). In this regard the plaintiffs cite a judgment reported in (2019) 2 Cal LT 382 (Vikram Jairath and Another-Versus-Middleton Hotels Private Limited and Others). The plaintiff no.1 had in fact approached the NCLT by filing an application but without pursuing the same and allowing the said application to be dismissed for default has approached this Court under the self-same cause of action for identical reliefs. The plaint is, therefore, barred by law as enumerated under the provisions of Order VII Rule 11(d) of CPC. The applicants refer to an application filed before the NCLT in this regard. The applicants say that the plaintiff no.1 ought to have applied for restoration of the application before the NCLT as the same was dismissed in the presence of the defendants in this suit for which principle analogous to Order IX Rule 8 of CPC is applicable and not Order IX Rule 4 of CPC and fresh suit is barred under Order IX Rule 9 of CPC. The plaintiff no.1 therefore on this ground alone cannot maintain the suit on the self-same cause of action before this Court once he has approached the NCLT and the proceedings has been dismissed in the presence of the defendants.
The applicants then go to their fourth line of attack that the plaint suffers from gross suppression of material facts as the plaintiffs have nowhere in their plaint stated that the plaintiff no.1 had approached the 4 NCLT prior to filing of this suit. The plaintiffs have cited a judgement reported in (2016) 1 CHN 581 (State Trading Corporation of India Limited & Anr.-Versus- Glencore Grain B.V.) in this regard.
The applicants have also tried to urge an additional point though not specifically raised in their application that under the Election Conduct Rules of the defendant no.1 there is a designated Election Tribunal to ventilate the grievance of a member dis-satisfied with the conduct of the election. The plaintiffs without approaching such authority have filed this suit challenging the election process. The suit is, therefore, not maintainable before this Court for lack of jurisdiction.
On behalf of the plaintiffs it is submitted that the plaintiff no.2 was a member till 31st March, 2020 and despite there being an amnesty scheme to waive default on the part of the members during the covid period to renew the membership, the defendant no.1 for reasons best known to it has not extended such benefits despite the plaintiff no.2 having applied for the same, though the same benefit in identical circumstances has been confirmed to several members including some of the defendants under the same scheme. The plaintiffs further say that for any illegality perpetrated prior to 1 st April, 2020 the plaintiff no.2 has a cause of action to file and maintain the suit. In the plaint the plaintiff no.2 has challenged the management of affairs of the defendant no.1 for the period 2019-2021, a portion of such challenge is admittedly within the time period when the plaintiff no.2 was a member. It cannot be, therefore, said that the plaintiff no.2 has no cause of action or that the plaint does not disclose any cause of action. Taking into all these factors, according to 5 the plaintiffs, it cannot be said at this stage that the plaint does not disclose any cause of action to reject the plaint under the provisions of Order VII Rule 11(a) of CPC. So far as the plaintiff no.1 is concerned on a meaningful reading of the plaint it will clearly appear that the said plaintiff has a cause of action which is also disclosed in the plaint.
Responding to the argument of the applicants that the suit is barred by law the plaintiffs cite Sections 213 and 244 of the Companies Act, 2013 to submit that the plaintiffs do not have the requisite membership criteria which qualifies the same to approach the NCLT. The plaintiffs, therefore, say that it cannot be contended by the applicants that the suit is barred under the provisions of Section 430 of the Companies Act, 2013 by which the jurisdiction of the Civil Court and in particular that of this Court is excluded in respect of the grievance of the plaintiffs as alleged in the plaint.
So far as the argument of the applicants that the plaint suffers from gross suppression of material facts the plaintiffs say that the plaintiff no.1 was not aware about the proceedings before the NCLT at the time of filing of the suit as he never intended to file any proceedings before NCLT and did not authorise any one to file and represent the plaintiff no.1 before NCLT. Subsequently when the plaintiff no.1 was made aware of a proceeding said to have been filed by him before the NCLT, the said plaintiff no.1 enquired into the matter and found that in the proceedings before the NCLT the plaintiff no.1 has been shown as applicant no.2 in the cause title. The plaintiff no.1 says that he had never authorized any one to file an application with regard to the affairs of the defendant no.1 before 6 the NCLT. The plaintiff no.1 also says that he had not executed any Vakalatnama in favour of any advocate to represent him as an applicant before the NCLT. There is, according to the plaintiffs, therefore, no suppression of material facts as alleged.
The applicants in response say that the plaintiff no.1 had given a power of attorney by virtue of which the applicant no.1 had been carrying on with the proceedings before the NCLT the plaintiffs, therefore, cannot now fain ignorance and say that the plaintiff no.1 was not an applicant before the NCLT. The applicants also say that in any event the plaintiffs were required to exhaust their remedy available under the said Act before the NCLT. Even if the plaintiffs did not have the qualifying criteria to maintain an application under Section 241 of the said Act then also in view of the proviso to Section 244(1)(b) of the said Act the plaintiffs were required to apply before the NCLT for waiving such requirement and only if the NCLT did not entertain the application of the plaintiffs, the suit could have been instituted before this Court if the same was permissible in law.
After considering the rival contentions and materials on record, I find that the submissions made by the applicants cannot be accepted for the following reasons :- (a) As a member of the defendant no.1, a company under the provisions of Section 8 of the 2013 Act the plaintiffs can challenge the affairs of the said company (defendant no.1) under the provisions of Sections 213 and 241 of the said Act. In a case falling under Section 213 the members like the plaintiffs can approach the Tribunal if not less than 1/5th of the members/persons in the companies register of members in the case of a company having no share capital join together 7 and applies before the Tribunal i.e. NCLT. In the instant case the plaintiffs do not constitute 1/5th of the persons on the companies register of members. The defendant no.1 being a company having no share capital, the provisions of Section 213A(ii) regarding the qualifying number of members apply. The plaintiffs, therefore, could not have gone before the Tribunal to seek investigation into the affairs of the defendant no.1. The applicants are correct in saying that in a case coming under the provisions of Section 241 the members of a company having no share capital who intends to challenge the affairs of the company have to approach the Tribunal (NCLT). However, in such a case also the plaintiffs are required to satisfy the provisions of Section 244 (1)(b) to apply before the NCLT under the provisions of Section 241. The restriction that 1/5 th of the members have to join to file and maintain the application before NCLT is also there under Section 244(1)(b) of the 2013 Act. Thus, in both the cases the plaintiffs could not have approached the Tribunal for being unable to fulfil the requisite membership qualification. This takes out the case of the plaintiffs from the rigours of Section 430 of the said Act. The argument of the applicants in this regard is also not tenable in view of the ratio laid down in the judgment reported in 2005 (10) SCC 760 [Church of North India V. Lavajibhai Ratanjibhai & Ors.] in respect of ouster of Civil Courts jurisdiction. This ratio has been followed in 2014 (5) SCC 530 [Jaipur Shahar Hindu Vikas Samiti V. State of Rajasthan & Ors.] and 2019 (11) SCC 718 [Vijay Pullarwar & Ors. V. Shri Hanuman Deostan, A Public Trust].
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(b) There is no complete ouster of the jurisdiction of this Court in the instant case and the legislative intent is clear that a member who is dis-satisfied with the management and affairs of the company on being unable to gather the requisite membership support can approach a civil court for the remedies against such management so that such a person is not left remediless. In this regard it can be gainfully referred to the judgment reported in 1993 Supp (2) SCC 433 [M. V. Elisabeth v. Harwan Investment and Trading (P) Ltd.] which says -
"where statutes are silent and remedy has to be sought by recourse to basic principles, it is the duty of the court to devise procedural rules by analogy and expediency. Where substantive law demands justice for the party aggrieved, and the statute has not provided the remedy, it is the duty of the court to devise procedure by drawing analogy from other systems of law and practice".
( c) The argument made by the applicants relying on the proviso to Section 241(1)(b) that the plaintiffs are required to exhaust the remedies before NCLT before approaching this Court is also not tenable. It is correct that the Tribunal (NCLT) if approached by members who do not fulfil the 1/5th criteria under Section 244(1)(b) has the authority to waive the conditions and entertain an application by such members, but the same is not an absolute proposition that the NCLT if approached has to permit an application with no membership qualification and does not take away the jurisdiction of the civil court applying the provisions of Section 430 of the said Act. That apart and in any event a considerable period will elapse for NCLT to first decide whether to allow an applicant to maintain an 9 application without requisite membership qualification. This delay will defeat the purpose of urgent relief if situation so demands. The Civil Court in a case where the requisite members qualification is not fulfilled is empowered to receive, try and determine a suit in connection with the management of the affairs of a company. It is also needless to mention that the defendant no.1 being a company incorporated under the provisions of Section 8 of the Companies Act, 2013 enjoys all the privileges of the limited company.
(d) With regard to the suppression alleged by the applicants it is not possible for this Court to come to a definite conclusion at this stage taking into account the assertion, denial and counter assertion on this score made in application and opposition on the same being treated as affidavit evidence. One has to then deviate from the settled principle of law to consider the defence of the defendant at the Order VII Rule 11 stage without accepting the statement in the plaint to be true and correct particularly when the plaint on a meaningful or formal reading discloses cause of action. The plaintiffs as appears from the pleading cannot be also said to have no cause of action following the ratio laid down in 2004 (3) SCC 137 [Sopan Sukhdeo Sable And Others Vs. Assistant Charity Commissioner And Others] subsequently followed in 2020 (13) SCC 143 [ Canara Bank Vs. P. Selathal And Others] and 2020 (16) SCC 601 [Raghwendra Sharan Singh Vs. Ram Prasanna Singh]. On the additional ground taken by the applicants it is submitted by the plaintiffs that the Election Tribunal under the Election Conduct Rules of the defendant no.1 was never constituted and notified. In absence of specific 10 pleading backed with supporting materials this contention of the applicants cannot also be accepted at this stage.
(e) The fact as to whether the plaintiff no.2 has been impleaded in the application before the NCLT in an unauthorized manner cannot be also gone into unless some evidence is laid in this regard.
In the aforesaid facts and circumstances, the application by the applicants for rejection of plaint and/or dismissal of the suit fails and stands dismissed without, however, any order as to costs.
(ARINDAM MUKHERJEE, J.) pa/snn