Andhra HC (Pre-Telangana)
Pandian Graphites (India) Ltd. vs Lovvuri Lakshmi And Anr. on 14 December, 1995
Equivalent citations: 1996(1)ALT423, [1996]87COMPCAS323(AP)
Author: Ramesh Madhav Bapat
Bench: R.M. Bapat
JUDGMENT Ramesh Madhav Bapat, J.
1. This civil revision petition is filed by the petitioner herein under article 227 of the Constitution of India.
2. The petitioner herein is the first defendant in O.S. No. 63 of 1995, filed by the plaintiff first respondent herein in the court of the Subordinate Judge, Ramachandrapuram. The original plaintiff also filed I.A. No. 1011 of 1995, in the same proceedings.
3. The plaintiff first respondent herein had filed the suit against the petitioner herein claiming various reliefs. It is stated by the plaintiff in her plaint in nutshell that she is entitled for different types of shares, compensation, etc. The prayer made by the plaintiff in the suit reads as follows :
"(a) declaring that the plaintiff is entitled to 3,500 shares of Rs. 10 each, out of 5,000 shares issued in lieu of 500 shares of Rs. 100 each by the first defendant;
(b) to grant a consequential mandatory injunction directing defendants Nos. 1 to 5 and 7 to issue 3,500 shares of Rs. 10 each to the plaintiff which are lying with them;
(c) declaring that the plaintiff is entitled to 7,812 shares of Rs. 10 each under the promoters quota while the public issue was made by the first defendant in the years, 1994;
(d) to grant a consequential mandatory injunction directing defendants Nos. 1 to 4 and 7 to issue 7,812 shares of Rs. 10 each to par to the plaintiff with all the consequential benefits;
(e) for recovery of Rs. 20,000 from defendants Nos. 1 to 4 and being the dividends payable by the first defendant to the plaintiff on her shares of 7,812;
(f) for recovery of Rs. 4,55,000 from defendants Nos. 1 to 4 and 7 as damages for their inaction and delay in sending the split shares in time when demanded by the plaintiff; and
(g) to grant a mandatory injunction directing to issue to the plaintiff future rights, bonus issues and dividends as and when declared by the first defendants."
4. During the pendency of the suit, she had also filed an application for appointment of an Advocate-Commissioner with a prayer that the Advocate-Commissioner should visit the registered office of the first defendant-company, check all the account books, share certificates, etc., for the purposes of filing a report in the court so that the first defendant-company may not tamper with the evidence which is likely to come before the court during the trial. Being aggrieved by the appointment of the Advocate-Commissioner, the present civil revision petition is filed by the first defendant-company under article 227 of the Constitution of India.
5. It is also contended by the first defendant-petitioner herein that the court at Ramachandrapuram has no jurisdiction to try the suit.
6. The original plaintiff, i.e., the first respondent herein, had filed the suit for getting reliefs with the following averments; that she had invested a sum of Rs. 50,000 towards 500 shares of Rs. 100 each with the first defendant-company. It is further stated by her that the defendant No. 1 made a public issue of equity shares of Rs. 10 each at par. While making the public issue, the first defendant reserved 7,81,250 shares at Rs. 10 each for the promoters which she was not given though she is a promoter of the first defendant-company. It is the further case of the plaintiff that she is entitled for rights issue, which was not given to her by the first defendant-company. For all these reasons, she had filed the suit against defendant No. 1 and others with the prayers as stated in the earlier paragraphs of my order.
7. Learned counsel for the petitioner first defendant submitted at the Bar that the civil court at Ramachandrapuram has no jurisdiction to entertain the suit. Learned counsel for the petitioner herein invited my attention to section 10 of the Companies Act, which reads as follows :
"Jurisdiction of courts. - (1) The court having jurisdiction under this Act shall be -
(a) the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate to that High Court in pursuance of sub-section (2); and
(b) where jurisdiction has been so conferred, the District Court in regard to matters falling within the scope of the jurisdiction conferred, in respect of companies having their registered offices in the district.
(2) The Central Government may, by notification in the Official Gazette and subject to such restrictions, limitations and conditions as it thinks fit, empower any District Court to exercise all or any of the jurisdiction conferred by this Act upon the court, not being the jurisdiction conferred -
(a) in respect of companies generally, by sections 237, 391, 394, 395 and 397 to 407, both inclusive;
(b) in respect of companies with a paid-up share capital of not less than one lakh of rupees by Part VII (sections 425 to 560) and the other provisions of this Act relating to the winding up of companies.
(3) For the purposes of jurisdiction to wind up companies, the expression 'registered office' means the place which has longest been the registered office of the company during the six months immediately preceding the presentation of the petition for winding up."
8. Learned counsel also submitted that the registered office of the first defendant-company is situated at Madras and, therefore, the court of the Subordinate Judge at Ramachandrapuram, East Godavari District in the State of Andhra Pradesh has no jurisdiction to try the suit. It was also contended by learned counsel for the petitioner herein that the main claim of the plaintiff as per the prayer is that she is entitled for 3,500 shares of Rs. 10 each out of 5,000 shares issued in lieu of 500 shares of Rs. 100 each by the first defendant company. When her prayer was very limited in extent, it was not necessary for the plaintiff first respondent herein to file an Interlocutory Application No. 1011 of 1995, seeking the order of appointment of an Advocate-Commissioner. It was also submitted that as per the prayer of the plaintiff first respondent herein, the first defendant petitioner herein is prepared to keep reserved 3,500 shares if she is able to prove that she is entitled to claim those shares.
9. The main point, which is to be decided in this revision petition, is as to whether the learned Subordinate Judge, Ramachandrapuram, has passed the order without jurisdiction.
10. As stated earlier, learned counsel for the petitioner herein had invited my attention to section 10 of the Companies Act, which specifically lays down that the High Court having jurisdiction in relation to the place at which the registered office of the company is situated, except to the extent to which the jurisdiction has been conferred on any District Court or District Courts subordinate to the High Court in pursuance of sub-section (2) of the said Act has jurisdiction to entertain the suit of the present nature. It was emphatically stated by learned counsel for the petitioner herein that it is admitted by the plaintiff first respondent herein that the registered office of the first defendant company is situated at Madras and, therefore, the Court of the Subordinate Judge, Ramachandrapuram, has no jurisdiction to entertain the suit of the plaintiff.
11. While rebutting the arguments of learned counsel for the petitioner herein, learned counsel for the plaintiff first respondent herein submitted at the Bar that while deciding the jurisdiction of any court, section 9 read with section 20 of the Civil Procedure Code, 1908, has to be taken into consideration. Section 9 of the Civil Procedure Code, 1908, reads as follows :
"The courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognisance is either expressly or impliedly barred.
Explanation I. - A suit in which the right to property or to an office is contested is a suit of a civil nature, notwithstanding that such right may depend entirely on the decision of questions a to religious rites or ceremonies.
Explanation II. - For the purposes of this section, it is immaterial whether or not any fees are attached to the office referred to in Explanation I or whether or not such office is attached to a particular place."
12. With this provision on record, learned counsel for the respondent No. 1 herein submitted that it must be shown that the jurisdiction of the civil court is specifically barred by special enactment failing which it must be held that every civil nature. Learned counsel also relied upon section 20 of the Civil Procedure Code, 1908. Section 20 of the Civil Procedure Code, reads as follows :
"Subject to the limitations aforesaid, every suit shall be instituted in a court within the local limits of whose jurisdiction -
(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises."
With this provision of law, it was submitted by learned counsel for the first respondent herein that the civil court at Ramachandrapuram, has jurisdiction to try the suit.
13. Considering the contentions and rival contentions, the only point, which is to be adjudicated is as to whether the civil court at Ramachandrapuram, has jurisdiction to entertain the suit of the present nature ?
14. While appreciating the point of jurisdiction of the civil court, one has to bear in mind that the civil court will have jurisdiction with three different aspects. Firstly, the civil court must have jurisdiction regarding the subject-matter; secondly, the civil court must have pecuniary jurisdiction and thirdly the civil court must have territorial jurisdiction to entertain the suit. In the present case, this court has to consider whether the civil court at Ramachandrapuram, has territorial jurisdiction or other wise ? The Companies Act is admittedly a special enactment. With reference to the special enactment, the jurisdiction of the court has to be decided. As stated earlier, the location of the registered office has to be taken into consideration. The first defendant company has a registered office at Madras. Then the High Court of Madras has jurisdiction to entertain certain matters relating to the Companies Act. The matters, which are not entertained by the High Court, can be entertained by the civil court. There is no much dispute over this point. With specific subject-matter of this suit is concerned, the civil court has jurisdiction but the only controversy in this revision as to whether the court of the Subordinate Judge at Ramachandrapuram, has territorial jurisdiction or otherwise ?
15. Section 10(a) of the Companies Act lays down that all the District Courts have no jurisdiction but the jurisdiction has to be conferred on the District-Court or Subordinate Courts which is subordinate to the High Court in pursuance of sub-section (2) of section 10. The Central Government has an authority to confer the jurisdiction by issuing a notification in the Official Gazette empowering the District Court to exercise all or any of the jurisdiction conferred by this Act upon the court. By reading sub-section (2) of section 10 of the Companies Act, it is evident that while conferring the jurisdiction on any particular court, the Central Government is bound to confer the jurisdiction on a District Court which is subordinate to the High Court and the second fact which the Central Government has to take into account is that such District Court is housed or located in a place over which the High Court exercises the territorial jurisdiction. To put it in plain words, the Central Government will confer the jurisdiction to any of the District Court, which is subordinate to the High Court at Madras, because of the fact that the registered office of the first defendant company is situated at Madras and no other court will have jurisdiction to entertain the suit or proceedings or petition, which are not entertained by the High Court of Judicature at Madras.
16. Learned counsel for the plaintiff first respondent herein gave emphasis only on the point that the civil court has jurisdiction. This court has no hesitation in holding that the civil court has jurisdiction to entertain the suit of the present nature but which civil court is the point to be considered in the present case. As stated earlier, with reference to section 10 of the Companies Act, the civil court or the District Court, which is subordinate to the High Court of Madras, will have jurisdiction to entertain the suit of the present nature as the first defendant company's registered office is situated at Madras.
17. Learned counsel for the plaintiff first respondent herein relied upon a ruling reported in Avanthi Explosives (P.) Ltd. v. Principal Subordinate Judge, Tirupathi [1987] 62 Comp Cas 301 (AP). In this case the point arose whether the civil court has jurisdiction or otherwise ? I have gone through the judgment and I hold that this case as cited above is not applicable in the present set of facts. The head office of the company in the above case was situated in Andhra Pradesh. The point which was discussed by the learned judge was whether the remedy sought in the above referred suit can be entertained by the civil court in Andhra Pradesh and the above said point was answered in the affirmative. The learned single judge had no occasion in the aforesaid proceedings to decide as to whether the civil court at Andhra Pradesh had jurisdiction to entertain the suit or other proceedings if the registered office is situated in some other State. As stated earlier, this court has no hesitation in holding that in matters which are not entertained by the High Court under the Companies Act, the civil court or the District Court had jurisdiction to entertain the suit other than those which are exclusively tried by the High Court.
18. Learned counsel for the plaintiff-first respondent herein also placed reliance upon a ruling reported in K.K. Maheshwari v. Rockhard Building Materials Ltd. , having its registered office at Hyderabad, represented by its managing director Mr. S.A.H. Naqvi and others. It is a judgment of this court decided by a single judge. I have gone through the judgment and I hold that the learned judge had no occasion to decide the issue as to whether the civil court had jurisdiction to entertain any proceedings or suit in respect of the company which is situated outside the State. But the learned judge held in the aforesaid ruling that the subjects which are not specifically dealt with by the High Court, the civil court had jurisdiction to entertain those subjects. The facts in the above case are totally different from the facts involved in the present case.
19. Learned counsel for the plaintiff first respondent herein tried to take the help of section 20 of the Civil Procedure Code, and submitted that the court of the Subordinate Judge at Ramachandrapuram has got jurisdiction to entertain the suit as per clause (c) of section 20 of the Civil Procedure Code. According to the submissions made by him the cause of action arose within the jurisdiction of the court of the Subordinate Judge at Ramachandrapuram and, therefore, the court of the Subordinate Judge at Ramachandrapuram has jurisdiction to try the suit of present nature. I proceed to scrutinise the submissions made by learned counsel for the plaintiff first respondent herein as to whether the cause of action arose for the plaintiff first respondent herein within the territorial jurisdiction of the court of the Subordinate Judge at Ramachandrapuram.
20. It is settled law that the jurisdiction on the court has to be decided by reading the plaint and not by reading the written statement. By reading the plaint as filed in the Sub-Court, Ramachandrapuram, it can be seen that according to the averments made by the plaintiff first respondent herein she had deposited money for buying shares in a bank at Ramachandrapuram and according to her averments the money was deposited in a bank and she was not given the shares as demanded by her, the plaintiff gets the cause of action within the jurisdiction of Ramachandrapuram court. I am not in agreement with the submission made by learned counsel for the plaintiff first respondent herein. When a public notice was issue by the company for floating shares and when the company makes arrangements to issue application forms all over India, this action of the company has to be treated as an invitation to offer, then the persons, who are interested in buying the shares, have to give the offer either by post or any other method. The offer is always received by the company at its registered office and the decision regarding the offer taken by the plaintiff first respondent herein to be accepted or rejected is always taken at the registered office. If the offer is rejected in the registered office at the most it can be said any member of the public gets a jurisdiction to file a suit in the civil court where the offer is rejected. In the present case, the offer is rejected at Madras which is given by the plaintiff first respondent herein. Even in that court, the plaintiff first respondent herein does not get the cause of action at Ramachandrapuram. Moreover, the offer unless it is accepted by the company does not become a contract. In such circumstances, even the offer is rejected, the plaintiff first respondent herein has no cause of action and, therefore, applying the aforesaid legal proposition to the present set of facts, it must be held that the plaintiff first respondent herein does not get any cause of action at Ramachandrapuram. When the contract is not complete, then the question of any loss caused will not arise. Even for the sake of arguments, it is held that the plaintiff first respondent herein has some cause of action then it must be held that the plaintiff first respondent herein got the cause of action only at the place where the registered office of the company is situated. In the present case, as stated earlier, the registered office of the company is situated at Madras.
21. Now, we go back to section 10 of the Companies Act. Especially sub-section (2) of section 10 of the said Act which specifically lays down that the Central Government has to confer the jurisdiction to the District Court or District Courts by issuing a notification in the Official Gazette. But in the whole pleadings, the plaintiff first respondent herein has never stated that the court at Ramachandrapuram was conferred with such power by the Central Government by issuing a notification in the Official Gazette. On that count also the civil court at Ramachandrapuram has no jurisdiction to entertain the suit of the present nature.
22. Considering the facts and the law, which is discussed above, this court holds that the Sub-Court at Ramachandrapuram has no jurisdiction to entertain the suit of the present nature. Therefore, this court by invoking the jurisdiction under article 227 of the Constitution of India holds that it is a case of error of jurisdiction by the Sub-Court at Ramachandrapuram and, therefore, this court sets aside the order of appointment of Advocate-Commissioner. This court further directs the court of the Subordinate Judge at Ramachandrapuram to return the plaint to the plaintiff first respondent herein for filing the same in the proper court having jurisdiction.
23. With these directions, this revision petition stands allowed. No costs.