Madras High Court
Vazhapadi Textiles (P) Ltd., (Formerly ... vs Durai And 5 Ors. on 1 October, 1997
Equivalent citations: 1997(2)CTC500
ORDER Jagadeesan, J.
1. Both the counsel insisted for the early disposal of the appeal, as the question involved is the jurisdiction of the civil court. Hence the appeal itself is taken up for final disposal.
2. Respondents 1 to 3 filed the suit O.S.No. 450 of 1993 for declaration that the document dated 10.10.91 purported to have been executed by the second plaintiff is illegal and void and not binding on the plaintiffs and for other consequential reliefs.
3. It is the contention of the plaintiffs that pursuant to the disputed document, several alterations have been made in the company records relating to the constitution of Board of Directors and the name of the company. The disputed letter is said to have been executed by the second plaintiff in the suit, whereunder he had handed over the possession and management of the first plaintiff mill to the second appellant herein. The execution of this letter is under dispute now. Hence the plaintiffs filed the suit.
4. The second appellant and the respondents 1 to 6 herein are the defendants in the suit. An objection has been taken by the defendants in the suit with regard to the maintainability of the suit on the ground that the dispute is with regard to the administration of the company and hence only the Company Law Board is having the exclusive jurisdiction under the Companies Act. The civil court has no jurisdiction. Apart from this, the defendants have also taken other pleas.
5. The trial court has framed as many as 13 issues and took up the issue with regard to the maintainability of the suit as a preliminary issue. Ultimately by judgment dated 17.11.93 the trial court dismissed the suit on the ground that the civil court has no jurisdiction to try the suit.
6. As against this, the respondents 1 to 3 herein and Durai Modern Spinning Mills (P) Ltd., the first plaintiff in the suit have filed an appeal in C.M.A.No. 31 of 1994 on the file of the District Court, Salem. The District Judge had allowed the appeal on the ground that the suit is maintainable and the civil court has jurisdiction and remanded the suit for fresh disposal on the other issues. The present appeal has been filed by the first defendant as well as the first plaintiff, giving a different cause title.
7. At the outset the appeal can be dismissed on the short ground the first plaintiff and the first defendant cannot jointly file the appeal. The first plaintiff cannot be said to be an aggrieved person against the finding of the lower appellate court. The first plaintiff has filed the suit and contended before the trial court along with the other plaintiffs that the civil court has jurisdiction. It is not clear as to how the first plaintiff has been included as the appellant in this appeal.
8. The only issue involved in the appeal is whether the suit is maintainable or not?
9. The contention of the counsel for the appellant is that the dispute is with regard to the administration of the company i.e., the spinning mill. It is the case of the first defendant that the second plaintiff one Mr. Durai has executed the letter dated 10.10.91 as follows:-
It is very clear from the recitals of the letter that the second plaintiff has admitted the mismanagement of the spinning mill and has handed over the management to the first defendant and the first defendant took over the management. The genuineness of this letter is now being challenged in the suit.
10. Mr. Sampathkumar, the learned counsel for the appellants has merely read the order of this Court in Application Nos. 925, 6888, 7106, 7145 and 7146 of 1993 in C.S.1532 of 1993 filed by the Indian Bank against the plaintiffs herein and contended that certain findings given by this Court is binding on the parties and on the basis of the finding, it is not open to the plaintiff herein to maintain the suit. The remedy is only before the Company Law Board.
11. On the contrary, the counsel for the respondents contended that the dispute involved in the suit is of common civil nature and it has nothing to do with the administration of the company. The relief sought for by the plaintiffs herein is to declare the document as illegal and not binding on the plaintiffs on the ground that the document had not been executed by the second plaintiff. In view of the nature of the dispute, only the civil court has jurisdiction.
12. By way of reply Mr. Kasthurirangan, on behalf of Mr.Sampathkumar referred to three judgments reported in (1) Hirendra Bhadra v. Titwn Eng. Co., 80 C.W.N.242; (2) V.N. Patil v. Maharashtra State Seeds Corporation Ltd., 68 C.C 608; and (3) Nizamabad Corporation Products (P) Ltd., v. Vasudev Dalia, 1992 (3) ALT 303 and contended that only the Company Law Board has jurisdiction. Further he contended that when once the plaintiffs have approached the company Law Board by way of representation, the suit is not maintainable and the plaintiffs have to pursue the remedy before the Company Law Board.
13. The counsel for the respondents further contended that the plaintiffs have not approached the Company Law Board for any relief. By merely sending a petition to the Company Law Board, bringing to their notice about the illegal action of the first defendant in the suit could not deprive the plaintiffs from maintaining the suit.
14. The maintainability of the suit has to be decided on the basis of the plea raised in the plaint and the nature of relief that is claimed in the suit. I shall take up the judgments referred to by the counsel for the appellants in the reply. In the judgment reported in Hirendra Bhadra v. Titwn Eng. Co, 80 Cal.W.N 242 the suit has been filed for declaration that the resolution, resolving that the Director vacated the office for contravention of Section 299 of the Companies Act is binding on the defendant and he was no longer a Director. In that case, the court has held that the suit is not maintainable, because the dispute with regard to the removal of the Director of the company.
15. The next case referred to by the counsel for the appellant is reported in V.N. Patil v. Maharashtra State Seeds Corporation Ltd, 68 C.C 608. This case also relates to the removal of Director and this is also of no help for the appellant.
16. The other case referred to by the counsel for the appellant is reported in Nizamabad Corporation Products (P) Ltd., v. Vasudev Dalia, 1992 (3) ALT 303. In that case also a suit has been filed for declaration that the resolution passed in the Annual General Meeting and Board of Directors Meeting, removing a Director of the company are illegal and void. Hence this case also relating to the removal of the Director.
17. The counsel for the respondents has referred to the judgment reported in Raja Ramkumar v. Union of India, wherein it has been held as follows:-
"Generally speaking, the broad guiding considerations are that wherever a right, not pre-existing in common law, is created by a statute and that statute itself provided a machinery for the enforcement of the right, both the right and the remedy having been created unqflatu and a finality is intended to the result of the statutory proceedings, then, even in the absence of an exclusionary provision the civil courts' jurisdiction is impliedly barred. If, however, a right pre-existing in common law is recognised by the statute and a new statutory remedy for its enforcement provided, without expressly excluding the civil courts' jurisdiction, then both the common-law and the statutory remedies might become concurrent remedies leaving open and element of election to the persons of inherence. To what extent, and on what areas and under what circumstances and conditions the civil courts' jurisdiction is preserved even where there is an express clause excluding their jurisdiction, are considered in Dhulabhai's case."
In fact the Supreme Court has referred to various earlier judgments and held that where the right is pre-existing in common law, the suit is maintainable and if the right is created only under the statute, then the remedy provided under the statute would prevail.
18. The other case cited by the counsel for the respondent is reported in Rajasthan S.R.T. Corporation v. Krishna Kant, . This matter arises under the Industrial Disputes Act. After referring to various decisions and after elaborate discussion, the Supreme Court has summarised various principles in paragraphs 32 of the judgment at page 1725. It is not necessary to extract all the principles. It is suffice to extract only one, which reads as follows:-
"We may now summarise the principles flowing from the above discussion:
(1) Where the dispute arises from general law of contract, i.e., where reliefs are claimed on the basis of the general law of contract, a suit in civil court cannot be said to be not maintainable, even though such a dispute may also constitute an 'Industrial Dispute'within the meaning of Section 2(k) or Section 2-A of the Industrial Disputes Act, 1947."
19. Similarly a Division Bench of this Court while dealing with the provision of Wakf Act in the judgment reported in Tamil Nadu Wakf Board rep. by its Secretary v. S.A. Syed Masood, 1995 (2) L.W.308 has held as follows:-
"It is on the above settled principles of law, this Court has to decide whether the suit filed by the appellant was maintainable. Section 36-B of the Wakf Act was duly incorporated in the Wakf Act in 1964. There is no provision in the enactment which bars the jurisdiction of civil court from entertaining a civil suit. Again, Section 36-B of the Wakf Act gives only a option to the Board to make a requisition to the Collector for getting possession. It is not compulsory that the Board should exercise the option for getting the possession. The right to recover the property, either trespassed or unauthorisedly alienated, is common-law right. That right is not conferred for the first time or taken away by any of the provisions of the statute. In this connection, Section 15(2)(h) and (i) of the Wakf Act is also relevant. The Board is given the power to take measures to recover lost properties and also to institute and defend suits and proceedings in a court of law relating to wakfs. The preamble of the Act also is only to provide better management and supervision of the Wakfs. In matters regarding administration and supervision, filing of suit is also one of the powers to be exercised, which is specifically provided under the Act. In this connection, it is also worthwhile to note that Section 59 of the Act enables the Board to appear and plead in a suit filed by another person regarding wakf property. If in a suit by a stranger, the Wakf Board can appear and plead as a party to the suit, there is no reasons why the same right cannot be exercised by the Board itself in a civil suit filed by itself. The right to recover property is not for the first time created by the statute. It is a common-law right. Section 36-B of the Wakf Act is only a summary procedure. Complicated questions of law and fact cannot be agitated before the Collector, the exhaustive remedy through a Civil Court is not taken away by virtue of Section 36-B of the Wakf Act."
The learned Judges took so much of pain to refer number of judgments and after elaborately discussing in detail, they have laid down the principles as stated above. This is in conformity with the judgment of the Supreme Court, reported in Raja Ramkumar v. Union of India, .
20. From the above referred judgments, the question to be considered is whether the right claimed in the suit is one created under the statute or it is a common law right. If it is a common law right, the suit is maintainable. If the relief claimed is only a right created under the statute, then the suit is not maintainable and the aggrieved person has to go before the authority constituted under the Statute.
21. The relief sought for in this suit is for declaration that the document dated 10.10.91 purported to have been executed by the plaintiff is illegal and void. The document had been extracted above. The recitals in the document is to the effect that the second plaintiff had admitted the mismanagement with regard to the management of the company and on expressing his inability to continue the management, thereafter surrendering the management as well as possession of the properties of the company to the second defendant. The relief claimed by the plaintiff in the suit is only a common law remedy, as there is no provision in the Companies Act to seek for such relief before the Company Law Board.
22. So far as the further action of the first defendant pursuant to the disputed document is concerned, it can be said that the relief can be claimed before the Company Law Board. But when basically the document under which the first defendant alleged to have obtained certain right itself is under question, then the further validity and the legality of the further action of the first defendant would depend upon the validity of the disputed document dated 10.10.91.
23. In view of this, I am of the view that the lower appellate court has rightly held that the suit is maintainable. Since the trial court has not taken up the other issues for trial, the suit has been remanded. I see no ground to interfere with the finding given by the lower appellate court. Accordingly the same is confirmed. The appeal is dismissed.