Document Fragment View
Fragment Information
Showing contexts for: Forum Shopping in Shri A.P. Jain vs Faridabad Metal Udyog on 4 July, 2005Matching Fragments
iii) Withdrawal of the petition from the High Court and filing the petition on the same ground in the CLB also amounted to forum shopping.
iv) The petition was time barred and in any case there was abnormal delay of six years in bringing the matter before the CLB.
5. By impugned order dated 27th July 1998 the CLB though rejected first two submissions, it accepted the other two preliminary objections and, therefore, dismissed the petition. The reasons in support are contained in paras 17 and 18, which are reproduced below:-
"17. Shri Dhawan gave us a comparative statement of the allegations in both th petitions, from which it is seen that practically all the allegations in the present petition are similar to the ones in the earlier petitions, save for some changes in the language and figures. Thus, taking into consideration the contents of this petition, comparing the same with the contents of the petition before the High Court where the matter was pending for over six years, and that by withdrawing the same and in filing the present petition, we are of the firm view that the petitioner has definitely indulged in forum shopping/jurisdiction shopping. We also note that the High Court had even appointed an Arbitrator with a view to get the disputes sorted out but the Arbitrator had, for some reasons withdrawn from the assignment. In other words, the petition in the High Court was actively pursued. Under these circumstances, the reason adduced by Shri Chowdhary for withdrawal of petition from the High Court and filing of this petition before the CLB that in the CLB, quick disposal is possible does not seem to be an acceptable plea. Further, we are unable to convince ourselves on this reasoning, especially when the jurisdiction was transferred to the CLB as early as in 1991 the matter was pursued in the High Court for over five years afterwards. Thus, we concur with Shri Dhawan that the petitioner is indulging in forum shopping and this petition is an abuse of process of law.
6. Mr. Chaudhary, learned senior counsel appearing for the appellant, contended that both the ground for dismissing the petition as not maintainable were erroneous and the findings of the CLB perverse. His submission was that the appellant did not indulge in any forum shopping. He explained that when the appellant's petition being CP No. 174/90 was pending before the High Court, at that time parties had moved joint application (CA No. 807/92) and in that application, consent order dated 20th October 1992 was passed appointing Mr. Justice Rajinder Sachhar (Retd.) as the Referee. Parties had also agreed that the decision of Justice Sachhar would be final and binding on them and the same shall not be challenged by either parties in any manner. Matter was heard by the learned Referee. However, before him the respondent used dilatory tactics and sought adjournments on one ground or the other. On several occasions the learned Referee granted the adjournments. However, when he was about to pass final order, the respondent filed an application stating that they had lost confidence in him and the matter be referred back to the High Court. In these circumstances, vide order dated July 22, 1995, Mr. Justice Sachhar referred the matter back to this Court and did not pass any order. In the process the respondent wasted more than three years. By that time jurisdiction under Section 397/398 had been transferred to the CLB as per the Companies (Amendment) Act, 1988, which was enforced with effect from 31st May 1991. The petitioner, in these circumstances, moved the application for withdrawal of the proceedings with liberty to file fresh proceedings before the CLB for expeditious disposal as procedure adopted by the CLB is of summary nature. This permission was granted by this Court vide order dated September 10, 1996, while allowing the appellant to withdraw the petition. At that time, no objection was raised by the respondents and no appeal was also filed by the appellant against order dated September 10, 1996. Immediately thereafter CP No. 5/97 was filed before the CLB. Learned counsel, therefore, argued that it would not amount to forum shopping inasmuch as the appellant moved the CLB with due permission of the High Court. He also argued that the acts on oppression and mismanagement are always factual and cannot undergo a change on account of change in the forum. However, whatever new allegations were available, they were also incorporated in the fresh petition such as not giving the notice for the meeting of the Board of Directors and shareholders during the intervening period. Hence, the ground of forum shopping was completely erroneous for the dismissal of the petition.
Both the C.A. and C.P. are disposed of in the above terms with no order as to costs."
13. It is clear from the aforesaid order that appellants wanted to move the CLB in view of subsequent amendment in the Companies Act. This request was allowed as the counsel for the respondent did not oppose the prayer of the appellants to withdraw the petition. However, at the same time the respondents reserved their right to contest the petition, when filed before the CLB, by raising any plea that may be available to them under law. Therefore, while on the one hand this Court allowed the appellant to file the petition before the CLB and therefore, appellants were entitled to file such a petition before the CLB, it was also open for the respondents to contest the same on whatever grounds available to them under law. The observations of the CLB in the impugned order, therefore, to the extent that it was not a petition transferred from the High Court to the CLB but was a fresh petition before the CLB which was maintainable in view of the provisions of Section 68 of the Amendment Act is correct. Once his position is accepted, I am afraid that the findings of the CLB that the appellants indulged in forum shopping would not be a proper finding. The appellant, while seeking permission to withdraw the petition filed in this Court, had specifically expressed his intention to approach the CLB and on this ground the appellant wanted to withdraw the petition filed in the High Court. The petition was dismissed as withdrawn giving specific liberty to the appellants to move the CLB. The respondents had no objection also for withdrawal of the petition. If, in these circumstances, petition is filed before the CLB, same could not be dubbed as "forum shopping". No doubt, on filing such a petition the respondents were within their rights to contest the same by raising any plea that was available to them under law. Therefore, they could have taken up the plea of limitation, non-maintainability of the petition on the ground that such a petition is not maintainable on the same cause of action after its withdrawal etc. However, by no stretch of imagination it could be dismissed on the ground that move of the appellant amounted to "forum shopping." The CLB as, it seems, totally misunderstood the phrase "forum shopping/jurisdiction shopping."