Karnataka High Court
Sri Pranav Kumar Tiwary vs Mr. Mohammed Haris on 20 February, 2014
Author: Ashok B.Hinchigeri
Bench: Ashok B. Hinchigeri
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 20TH DAY OF FEBRUARY 2014
BEFORE
THE HON'BLE MR. JUSTICE ASHOK B. HINCHIGERI
R.F.A.No.1802 OF 2013 (DEC/INJ)
BETWEEN:
Sri Pranav Kumar Tiwary,
S/o.Shribhagwan Tiwary,
Aged about 35 years,
Managing Director of
M/s.Stewart Pinned Products
Pvt. Ltd., 235 'L' Bommasandra
Industrial Area,
Bangalore - 560 099.
Also at Flat 205 A,
Floriana Estate Apartment,
Koramangala 3rd Block,
Opp.Krupa Nidhi College,
Beside Toshiba Office,
Bangalore - 560 034. ... Appellant
(By Sri Vishnu Hegde, Advocate)
AND:
1. Mr.Mohammed Haris,
Aged about 35 years,
S/o.Chemmala Hamza,
M/s.Stewart Pinned Products
Pvt. Ltd., 235 'L' Bommasandra
Industrial Area, Bangalore - 560 099.
2
2. J&D Wilkie Limited,
Marywell Works, Kirremuir
Angus, Scotland, DD8 4BJ
Represented by its POA holder
Mr.Mohammed Haris.
3. Mr.Robert William Low
S/o.Peter Souter Low,
Aged about 56 years,
Dunlarach, Gray Den, Liff,
Scotland, UK, DD2 5 LT
Also having address at:
M/s.Stewart Pinned Products
Pvt. Ltd., 235 'L' Bommasandra
Industrial Area,
Bangalore - 560 099.
4.Mr.Michael David White,
S/o.Colin David White,
Aged about 43 years,
26A Queen Street,
Carnoustie, Angus,
Scotland DD77BB.
Also having address at:
M/s.Stewart Pinned Products
Pvt. Ltd., 235 'L' Bommasandra
Industrial Area,
Bangalore - 560 099.
5. Mr.Hamish David Rowan,
S/o.Robert Michael Rowan,
Aged about 35 years,
Red Braes, Airlie, Kirriemuir,
Angus, Scotland - DD85NP
3
Also having address at:
M/s.Stewart Pinned Products
Pvt. Ltd., 235 'L' Bommasandra
Industrial Area,
Bangalore - 560 099.
6. M/s.Stewart Pinned Products Pvt. Ltd.
235 'L' Bommasandra
Industrial Area,
Bangalore - 560 099.
7. Robert Michael Rowan,
S/o.not known to the plaintiff
Aged about 60 years.
M/s.Stewart Pinned Products Pvt. Ltd.
235 'L' Bommasandra
Industrial Area,
Bangalore - 560 099. ... Respondents
(By Sri Pradeep Nayak for Smt.Gayathri Balu, Advocates for
M/s.Khaitan & Co.)
This RFA is filed under Section 96 CPC, against the
judgment and decree dated 24.9.2013 passed in
OS.No.3/2013 on the file of the II Addl. Sessions & Special
Judge, Bangalore Rural District, Bangalore rejecting the
plaint filed for declaration and permanent injunction.
This RFA, coming on for admission, this day, the Court
delivered the following:
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JUDGMENT
The appellant - plaintiff has raised the challenge to the order, dated 24.09.2013 passed by the Court of the II Additional District & Sessions Judge, Bangalore Rural District, Bangalore on I.A.Nos. 1 to 3 in O.S. No.3/2013.
2. The appellant filed the suit seeking the following reliefs:
"(a) Declaration that the notice dated 1.7.2013 calling the disputed EGM on 9.7.2013 by the 2nd defendant is unlawful and void;
(b) Declaration that the disputed resolution dated 9.7.2013 passed by the defendants in the alleged EGM, dated 9.7.2013 about the appointment of the directors i.e., defendant Nos. 1, 4 and 5 to the 6th defendant company as well as removal of the director i.e., the plaintiff from the board of directors of the 6th defendant is null and void in-abinitio and set-aside the said disputed resolution, dated 9.7.2013;
(c) Declaration that the plaintiff is the founder director of the 6th defendant company and continued to be the director of the said company with full status and powers as on 8.7.2013 alongwith all benefits, salaries 5 and allowances etc. till restoration of his earlier position;
(d) Permanent injunction restraining the defendant Nos. 1 to 5 & 7 from interfering in discharging his rights and duties in the 6th defendant company till his lawful subsistence of his founder directorship; &
(e) Cost and such other reliefs."
3. In the said suit proceedings, the appellant filed I.A.No. 1 for ad-interim order of temporary injunction. The respondent - defendants filed I.A.No.2 for vacating the temporary injunction order. They also filed I.A.No.3 for the return of the plaint invoking Order VII Rule 10 of the C.P.C. The Trial Court dismissed the I.A.No.1 and allowed I.A.No.2. It allowed I.A.No.3 but by rejecting the application in exercise of the power conferred by Order VII Rule 11(d) of C.P.C.
4. Aggrieved by the aforesaid order, this appeal is filed.
5. Sri Vishnu Hegde, the learned counsel for the appellant submits that under Section 10 of the Companies Act, 1956 the District Court is clothed with the power to 6 entertain the disputes pertaining to the companies. He relies on this Court's decision in the case of PRAKASH ROADLINES LIMITED vs. VIJAYAKUMAR NARANG reported in ILR 1994 Kar. 408. He read out Head Note (B), which is extracted hereinbelow:
"(B) Civil Procedure Code, 1908 (Central Act No.5 OF 1908) - Section 9 - Enforcement of individual rights of shareholder of Company including inherent right to elect or remove director, by invoking civil jurisdiction of Courts; suit maintainable."
6. Sri Pradeep Nayak, the learned counsel for the respondents submits that the appellant has filed the suit before the District Court on receiving the caveat petition filed by the respondents in the Courts of the Civil Judge (Jr.Dn.) and the Civil Judge (Sr.Dn.). Only with the motive to get an ex-parte temporary injunction order, the appellant has approached the District Court. He submits that the appellant has filed O.S.No.353/2013 in the Court of the Civil Judge (Jr.Dn.), Anekal. As he has failed to persuade the said Court to grant the ex-parte order, he has filed O.S.No.3/2013 before 7 the District Court. He submits that the appellant's conduct disentitles him to any relief at the hands of this Court.
7. Sri Pradeep Nayak submits that the appellant's grievance, if any, are to be ventilated by initiating the appropriate proceedings before the Company Law Board invoking Sections 397 and 398 of the Companies Act. He submits that the appellant is a minority shareholder with 0.59% shareholding. He submits that the appellant has no vested right to prevent the other shareholders from convening the Extraordinary General Meeting or Annual General Meeting. The learned counsel submits that the Trial Court has rejected the plaint in exercise of its suo-motu power conferred by Order VII Rule 11(d) of C.P.C. In support of his submissions, he relies on the Division Bench decision of Delhi High Court in the case of RAVINDRA KISHORE SINHA vs. SMT.MANJULA BHUSHAN reported in (2010) 166 DLT 121. H read out paragraphs 17, 18 and 19 from the said judgment, which are extracted herein below:
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"17. Rigmarole of a trial is not to be routinely undertaken. At every stage of the suit, Judge have to be vigilant to see as to whether cause of action to further proceed with the suit survives or not. At any stage of the suit, if the court finds that the cause of action no longer survives, then it ought not to await a formal application under Order VII Rule 11 of CPC and can "suo moto" exercise its inherent powers under Section 151 of CPC in the interest of justice, to do complete justice between the parties. We, therefore, do not find any substance in the contention of learned senior counsel for the Appellant of impugned order short- circuiting the trial.
18. Courts have to play proactive role as they are faced with overflowing dockets and the learned Single Judge has shown the way by proceeding to examine as to whether Appellant's claim discloses the cause of action to proceed to a trial. Although the impugned order discloses that the issue of maintainability of a suit has been dealt with, but in fact, learned Single Judge has by detailed order, invoked clause (a) of Rule 11 of Order 7 of the Code of Civil Procedure, which provides for rejection of plaint if it is found to be lacking cause of action. It is really immaterial that in the impugned order, suit of the Appellant's has been held to be not maintainable. Without concentrating on the phraseology, true import of the order has to be seen. In 9 fact, the purport of the impugned order is of rejection of the Appellant's plaint as it has been found in the impugned order that no part of the contract survives which could be specifically enforced. Infact, learned Single Judge has correctly found that there was no cause of action with Appellant to proceed with his suit.
19. On the plain reading of the pleadings of the parties, Agreement of Sale (Annexure A-2) and the Written Communication between the parties (Annexure A-4 to Annexure A-7), we find no illegality or infirmity in the impugned order and consequently no merit in this appeal. Accordingly, this appeal and pending application are dismissed while leaving the parties to bear their own costs."
8. The submissions of the learned counsel have received my thoughtful consideration.
9. My perusal of the Trial Court's order reveals that it is insupportable and unsustainable for more than one reason.
(i) While considering the respondents' I.A.No.3, the Trial Court has looked into the defence taken by the parties in their written statement. This is absolutely impermissible.
The plaint can be rejected in exercise of the power under 10 Order VII Rule 11(d) of C.P.C. only where the suit appears from the statements in the plaint to be barred by any law. As held by the Division Bench of the Delhi High Court in the case of INSPIRATION CLOTHES AND U vs. C.I. reported in 2001 AIHC 1733 when an application is filed for the rejection of the plaint, the Court should look only at the plaint and its accompanying documents. The defence of the defendant should not be examined at this stage. As held by the Bombay High Court reported in DODSAL PRIVATE LTD.
AND ANOTHER vs. NARMADA SEAWAYS LTD. AND OTHERS reported in AIR 1989 Bom.96 whether there is cause of action or not is to be determined on the assumption that every allegation in the plaint is true.
The Bombay High Court in the case of M/s. ZUARI INDUSTRIES LTD. CO. v. COMMUNIDADE OF SANCOALE AND OTHERS reported in AIR 2007 (NOC) 97 (Bom), has held that while considering the application under Order VII Rule 11 of C.P.C., the Court has to ascertain whether the plaint discloses the cause of action or not and not to 11 ascertain whether the plaintiff would be entitled to get the relief asked for in the facts and circumstances disclosed in the plaint.
It is also profitable to refer to the Bombay High Court decision in the case of SHIVRUDRA SHIVLING PAILWAN v. PRAKASH MAHARUDHRA PAILWAN reported in 2002 (6) BomCR 546. It has this to say in paragraph No.8 of the said decision:
8. Indeed, the point of non-maintainability of the suit is sought to be raised by referring to the terms of the compromise decree and not by referring to the pleadings in the plaint. Such an exercise is not permissible while dealing with the matter under Order 7, Rule 11(d) of Civil Procedure Code. A plaint can be rejected under the said provision of law only if the plaint of the face of it discloses the same to be barred by any law in force, and not by referring to the materials which are sought to be placed on record by the defendant in answer to the plaint. In case the defendant requires to refer to any material other than the plaint, certainly such an exercise is permissible by way of leading evidence after framing issues and satisfying the Court about non-maintainability of the suit.
But the same exercise cannot be done under Order VII, 12 Rule 11(d). On account of any material being available with the defendant to prove that the suit being not maintainable, the same cannot be a ground to non-suit the plaintiff by exercise of power under Order VII, Rule 11(d) of Civil Procedure Code. In order to get the necessary relief on the basis of such materials, the defendant will have to lead necessary evidence by producing such materials on record in accordance with the provisions of law and only thereupon the Court can take appropriate decision as regards the objection sought to be raised by the respondent regarding non- maintainability of the suit.
(ii) When the I.A. for rejection or return of the plaint is taken up for consideration, it is to be disposed of first. But the Trial Court has taken up the I.A.No.1 for ad-interim temporary injunction, I.A.No.2 for vacating it and I.A.No.3 for the return of the plaint together. If the Trial Court passes the order for the return or rejection of the plaint, then the question of continuing or vacating the temporary injunction would not arise.
(iii) If the Trial Court forms the considered view that the suit is not maintainable, it can always reject or return the 13 plaint suo-motu also. But in the instant case, the Trial Court passed the order for the rejection of the plaint based on the defendants I.A.No.3 for the return of the plaint and also based on their written statement.
(iv) The parties are also to be given an opportunity of advancing their submissions as to before which court the suit has to be filed. Thereafter, the court has to arrive at the judicious conclusions. If the District Court comes to the conclusion that such a suit can only be filed before a particular court, it has to return the plaint for being re- presented to that court. Order VII Rule 10(2) of C.P.C. dealing with the procedure on returning a plaint states that on returning the plaint, the Judge shall endorse thereon the date of its presentation and return, the name of the party presenting it, and a brief statement of the reasons for returning it. Further, under Rule 10A the Court has to intimate its decision to the plaintiff. On receiving such intimation, the plaintiff may make an application to the Court 14
(a) specifying the Court in which he proposes to present the plaint after its return, (b) praying that the Court may fix a date for the appearance of the parties in the said Court and
(c) requesting that the notice of the date so fixed may be given to him and to the defendant.
10. For all the aforesaid reasons, I set aside the order under appeal. The matter has to go back to the Trial Court for fresh hearing on I.A.No.3. The parties shall appear before the Trial Court on 03.03.2014 without waiting for any notice from the Trial Court. After hearing the parties, the Trial Court shall pass the fresh order in accordance with law. The decision on the maintainability of the suit shall be taken within an outer limit of three weeks from 3.3.2014. The advocates are directed to co-operate with the Trial Court in the speedy deciding of the issue of maintainability.
11. Liberty is reserved to the respondent - defendants to make the I.A. for the rejection of the plaint. Liberty is also reserved to the appellant to make the I.A. for the return of the 15 plaint and of its accompanying papers for being re-presented to the proper court. All the contentions are left open to be urged before the Trial Court.
12. It is made clear that the setting aside of the order under appeal does not have the effect of reviving the ex-parte temporary injunction order. On deciding I.A.No.3 or any other I.A. for the return/rejection of the plaint, if filed, the question of considering the I.A.Nos.1 and 2 would arise.
13. The appeal is accordingly allowed. No order as to costs.
Sd/-
JUDGE Cm/-