JUDGMENT
A.K. Ganguly, J.
1. This appeal arises out of an Order dated 20.06.03 passed by the learned Judge, 9th Bench, City Civil Court at Calcutta holding therein that the plaintiff/appellant has chosen a wrong forum in filing the plaint before the Civil Court at Calcutta and the learned Judge directed that the plaint along with all documents be returned to the plaintiff/ appellant in view of the provisions of Order 7 Rule 10 of the Civil Procedure Code, 1908 for being presented before the appropriate forum.
2. The material facts of the instant case, which led to the said order, are as follows :
A suit, being Title Suit No. 213 of 2002, for declaration and injunction was filed by the plaintiff/appellant in the City Civil Court at Calcutta alleging therein various mis-management in the affairs of the Company, namely Northern Properties Private Ltd., (hereinafter referred to as the ‘said Company). It is not in dispute that the said Company was incorporated under the Companies Act, 1956 on or about 12.6.1972 and its registered Office is at 47, Pathuriaghata Street, P.S.-Jorabagan, Calcutta-700 006. These facts have been stated in the plaint itself. The substance of the allegations in the plaint were that some of the Directors taking advantage of close relationship with the family of the plaintiff/ appellant indulged in several acts of mis-management and deceit, which ultimately led to improper allotment of shares. It is also alleged that all these acts have been done by the defendants by flouting the Company Law and other statutory provisions and many of the assets of the said Company have, thus been wasted and mis-appropriated. It has also been stated that the shares of the said Company have been sold without offering it to the existing shareholders for achieving the said purpose and the statutory records of the said Company have been falsified and forged documents have been filed with the Registrar of the Companies and it was stated that all these things have been done to deprive the plaintiff/ appellant of his right under the Company Law. In fact, serious mismanagement in the affairs of the said Company has been alleged by the plaintiff/appellant against the defendants. It has also alleged that the plaintiff is a major shareholder and his right as a shareholder has been infringed and affected and the affairs of the said Company have also been thoroughly mis-managed and on the basis of those allegations, a plaint was filed with several prayers. Some of the prayers in the plaint are set out below :-
“b) Declaration on the basis of the defendant Company’s shareholding, the plaintiff is still the majority shareholder of the said defendant Company and the defendant No. 1 to 3 have no right and/or authority to create any new issue of shares without the preferential right to plaintiff to acquire the same.
c) Declaration that the plaintiff is a director of M/s. Northern Properties (P) Limited at 47, Pathuriaghata Street, Calcutta ~ 700 006 and is entitled to discharge all power and functions as a director of the said Company in accordance with the provisions of the Companies.
d) Declaration that the defendant Company was/is entitled to entire 50% of the floor area ratio of premises as 11/2, Sarat Bose Road, Calcutta leaving aside 50% receivable or money received by the Promoters and Asit Kumar Ghose (since deceased) have no right, title and interest in the said Property above and except as a lesser under the provisions of the Transfer of Property Act.
e) Declaration that the defendant Nos. 1 and 3 and other persons have no right to function as a director and to take any decision and/or transact any business of the defendant-Company and only the Plaintiff can discharge his functions and participation in the management of the defendant-Company as a Director.”
3. After the plaint was filed and the defendants entered appearance, an application for rejection of the plaint was filed on behalf of the said Company, defendant No.4. It was stated by the defendant No.4 that at no point of time under the City Civil Court Act, 1953 (hereinafter referred to as the said Act) the City Civil Court can entertain or determine any suit which calls for a trial relating to internal management and functioning of a Corporation, In this connection, reliance was placed on Entry No. 10 of the First Schedule of the said Act. According to the objection, the provisions of the said Act read with the Schedule bar the jurisdiction of the City Civil Court to entertain the suit. In the said application, which was filed by the said Company, a prayer was made as under :-
“b) Declaration that the learned City Civil Court has no jurisdiction to entertain and/or determine the Title Suit No. 213 of 2002 and the plaint be returned with cost.”
4. The learned Judge of the first Court heard both the parties on the said application and considered the materials-on-record and, ultimately, came to the finding that there is a specific embargo on the jurisdiction of the City Civil Court in the matter of entertaining the suit in view of section 5(4) read with Item No. 10 of First Schedule of the said Act.
5. While considering the prayer for rejection of the plaint made by the said Company, the learned Judge came to the finding that the plaintiff/ appellant may be entitled to the relief as prayed for in the plaint but not from the City Civil Court at Calcutta, but, from the competent forum and also came to the finding that the claim of the plaintiff/ appellant may not be barred by law, if made to the proper forum. So the learned Judge held that the plaintiff/appellant came to a wrong forum and, as such, did not reject the plaint, but, decided to return the plaint to the plaintiff/appellant for pursuing his case before the appropriate forum. In doing so, the learned Judge chose to follow the decision of this Hon’ble Court in the case of Mining, Geological, Metallurgical Institute of India and Others v. Shyamalesh Nath Bhaduri, reported in 1978 (1) CLJ 563.
6. The learned counsel appearing in support of the appeal sought to assail the judgment of the learned Judge of the First Court on various grounds. The learned counsel first urged that the jurisdiction of the City Civil Court cannot be barred unless it is specifically provided for in the Statute or unless the bar is clear from necessary implications. The learned counsel, by referring to the provision of section 5(4) of the said Act, submits that there is no such clear bar in the facts and circumstances of this case. The relevant provision of sub-section (4) of section 5 of the said Act on which the learned counsel for both the parties relied upon is set out below :-
“5. Jurisdiction :-
(4) The City Civil Court shall not have the jurisdiction to try suits and proceedings of the description specified in the 1st Schedule.”
Under the said 1st Schedule, Entry No. 10, which is relevant in this Case, runs as under :-
“10. Suits and proceedings –
(i) under the Indian Companies Act, 1913, or the Banking Companies Act, 1949, or
(ii) relating to or arising out, of the Constitution, incorporation, management or winding up of Corporations.”
7. The learned counsel for the appellant submitted that since the suits and proceedings under the Indian Companies Act, 1913 have been barred, the said bar cannot apply in the present case in as such as said Company has been incorporated admittedly under the Companies Act, 1956. The learned Counsel submitted that unless suits and proceedings under the Indian Companies Act, 1956 are barred, the said bar cannot be made applicable to the present case. In support of such contention, the learned Counsel for the appellant cited the following decisions :-
i) Dhulabhai v. The State of Madhya Pradesh, .
ii) Secretary of State v. Mask and Co., reported in 44 CWN 709 as also in 67 Indian Appeal 222.
iii) All India Allahabad Bank Officers’ Association v. Surya Kumar Ghosh, reported in 1996(1) CLJ 1.
iv) M/s. Inter Sales v. Reliance Industries Ltd. and Ors., reported in 1998(1) CLJ 531.
v) Ram Swarup and Othersv. Shikar Chand and Another, .
vi) Mining, Geological Metallurgical Institute of India and Othersv, Shyamalesh Nath Bhaduri, reported in 1978(1) CLJ 563.
8. The learned counsel also submitted that the prayer, which was made in the petition filed by the said Company, was for rejection of the plaint, but, the learned Judge of the First Court in the order under appeal did not reject the plaint but directed return of the plaint. According to the learned counsel, this is not permissible by the Court and the Court by passing the said order acted erroneously and on this ground alone, the order under appeal should be set aside.
9. The learned counsel for the said Company on the other hand, by referring to the case made out in the plaint and the relief, submitted that it is clear from the subject matter of the suit that the same cannot be entertained by the City Civil Court in view of the bar contained under the said Act against entertaining any suit arising out of the Constitution, incorporation, management or winding up of Corporation. The learned Counsel also submitted that there is no substance in the case of the appellant that just because Companies Act, 1956 is not mentioned in the Schedule to the said Act, suits or proceedings under the Indian Companies Act, 1956 is not barred. The learned counsel submitted that in any event, under clause 10(ii) of the First Schedule, the suit is clearly barred inasmuch as the same is about alleged mis-management of the Company, which is certainly a Corporation. The learned counsel also relied on the objects and reasons of the said Act and also relied on the decision in the case of Mining, Geological, Metallurgical Institute of India and Others(supra) and another decision of the Supreme Court in the case of Salembhai and Ors. v. The State of Maharastra and Ors., . The learned counsel sought to distinguish the various judgments cited by the learned counsel for the appellant. These are rival contentions of the parties.
10. It is not possible for this Court to accept the contentions urged on behalf of the appellant for the reasons, which are indicated below.
11. In the case of Dhulabhai (supra) the principles regarding exclusion of jurisdiction of the Civil Court were summarized in paragraphs 32 and 33 of the report. The Constitution Bench of the Supreme Court speaking through Chief Justice, Hidayatullah indicated those principles. In Dhulabhai, the question was whether suits were competent in view of the provisions of section 17 of the Madhya Bharat Sales-tax Act. The suits were entertained by the learned trial Judge, inter alia, on the ground that in the plaint, there is a prayer for a decision that the provisions of law relating to the assessments were ultra vires and a demand was made for return of the amount which were illegally collected. On appeal, the High Court reversed the decision. However, it was conceded before the High Court and also before the Supreme Court that the tax could not be imposed in view of the bar under Article 301 of the Constitution. In view of this legal position, the Supreme Court held that the imposition of tax would ex facie offend Article 304 of the Constitution and, in such circumstances, the Supreme Court reversed the judgment of the High Court and decreed the suits. In doing so, the Supreme Court laid down the principles in paragraphs 32 and 35 of the judgment. In the instant case, there is no challenge to the provisions of section 5(4) of the said Act or the provisions of the First Schedule or Item No. 10 thereof. In this case, there is an express bar by the Statute. In view of such express bar and since the law imposing the said bar has not been challenged, this Court cannot appreciate how the principles rendered in Dhulabhai can have any application in the facts of the case. It is nobody’s case that in view of the said bar, the plaintiff/appellant has no other remedy. The only bar is that the instant suit cannot be entertained by the City Civil Court.
12. Similarly, the ratio in the case of Mask and Co. (supra), is also not relevant to the facts of the case. The decision, in the case of Mask and Co., was also considered by the Supreme Court in Dhulabhai.
13. In Mask and Co., the sole question was whether the Civil Court has jurisdiction to entertain a suit to recover the excess amount of custom duties collected from Mask and Co.. In that case, a suit was filed after an appeal was made to the Collector and then a revision to the Government of India under the Land Customs Act was dismissed. The suit was dismissed by the learned trial Judge on the preliminary ground that the Court had no jurisdiction. But, on appeal, Mask and Co. succeeded and the High Court remitted the matter. Then followed an appeal to the Judicial Committee of the Privy Council and the provisions of sections 188 and 191 of the Sea Customs Act, 1924 were relied upon to hold that the provisions of the said Act constitute a complete Code in itself.
14. Commenting on those provisions, the Privy Council came to the conclusion that the jurisdiction of the Civil Court is barred in view of the detailed provisions under the Act, which according to the learned Judges of the Privy Council, comprise a self-contained Code with finality clauses in the Statute, and Privy Council reversed the decision of the High Court and affirmed the decision of the learned trial Judge. In the instant case, the question is not of any finality clauses provided in the self-contained provisions of a Statute. Therefore, the decision in the case of Mask and Co. is not even remotely relevant to the present question.
15. The other decision cited on this point was rendered in Ram Swarup (supra). That was concerned with the question of exclusion of the Civil Court’s jurisdiction and, in the judgment, it has been accepted that such jurisdiction can be excluded by the legislature by enacting special provisions. But, the Court said that such bar cannot operate in areas where plea raised before the Civil Court goes to the root of the matter and would lead to a conclusion that the impugned order is a nullity.
16. In Ram Swarup, the bar was created under section 3(1) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 and the said bar was that no suit, without the permission of the District Magistrate, can be filed against a tenant for his eviction from any accommodation except on certain grounds. In the plaint, it was urged that the landlords applied for permission and the said permission has been refused by the District Magistrate whereupon the landlords moved the Commissioner in the revisional jurisdiction and the Commissioner gave them the permission to file a suit. In the background of these statutory provisions, the question of the Court’s jurisdiction came up for consideration. The learned trial Judge decreed the suit. On appeal also, the District Judge, confirmed the decree that the matter was taken up in Second Appeal before the High Court at Allahabad and the High Court held that the permission granted by the Commissioner was invalid in law and the High Court also came to the finding that the suit was incompetent. Thereafter, a Letters Patent appeal was filed before a larger Bench of three learned Judges and in that appeal, two learned Judges held that the permission was invalid, while the third learned Judge held that the permission was valid and, as such, the appeal was dismissed. Then the matter went before the Supreme Court by way of a certificate granted by the Letters Patent Bench of the High Court.
17. In the back-ground of those provisions and the facts stated above the Supreme Court held that the judgment of the Letters Patent Bench of the Allahabad High Court is erroneous and was set aside and the judgment of the District Judge was upheld. It is clear from what has been stated above that both the factual and legal controversy in Ram Swarup was totally different from those with which we are concerned in this case.
18. In the present case, the bar of the City Civil Court to entertain a suit like the present one is total and absolute. It is not a question of filing a suit with anybody’s permission. It is not disputed that the appellant raised the issue of internal management of the Company, which is a Corporation and there is a statutory bar on the City Civil Court in entertaining such a suit. Therefore, the decision in Ram Swarup has no application.
19. Now coming to consider the decision of the Division Bench of the Calcutta High Court cited by the learned counsel for the appellant, this Court finds that the judgment of the Division Bench of Calcutta High Court in All India Allahabad Bank Officers’ Association was dealing with the case of a registered Trade Union. In that case, the City Civil Court held it had no jurisdiction to entertain the suit. The learned Judges of the Division Bench in the case of All India Allahabad Bank Officer’s case came to the conclusion that the finding of the learned trial Judge about the Association, being a registered Trade Union, lacks material on which such finding is based and particularly when the fact of registration of the union is in dispute. Therefore, the learned Judges held that the fact that the plaintiff was a Corporation was not clear from the records. The learned Judges also found that assuming the said Association is a Corporation in all suits filed by Corporation, the Civil Court’s jurisdiction is not barred. Those suits are barred which raise disputes that falls within the prohibited category mentioned in Item No. 10 of the First Schedule. The learned Judges of the Division Bench found that there is nothing to show that suit as within the prohibited category. In view of these grounds, the learned Judges of the Division Bench distinguished the decision of the Calcutta High Court in the case of Mining, Geological and Metallurgical Institute of India (supra) and allowed the appeal and the matter was remanded to the Court for re-hearing of the same and the learned trial Judge was given liberty to frame a particular issue about the maintainability of the suit. Therefore, the said decision in All India Allahabad Officer’s Association is confined to the facts of that case.
20. In the case, there is no dispute in respect of the facts on which the case was remanded by the Division Bench in the case of All India Allahabad Officer’s Association. Here it is admittedly clear from the plaint itself that the plaintiff, a Company incorporated under the Companies Act, 1956, is a Corporation and, the disputes raised in the plaint admittedly relate to the internal management of the said Company. These aspects of the matter have not been disputed even by the learned counsel for the appellant.
21. The other Division Bench decision in the case of M/s. Inter Sales (supra) is also factually distinguishable. The dispute in that case relates to the loss of equity shares and the consequential reliefs, which were asked for in view of the provisions of section 84 of the Companies Act, 1956. In that case, the plaintiff prayed for issuance of the duplicate share certificates in his name in view of the loss of the shares, which were registered and transferred in his name. The Court held that no machinery was provided under the Companies Act, 1956 for adjudication of a dispute with respect to issue of duplicate shares and, as such, the Court held that City Civil Court has the jurisdiction to decide the said question and its jurisdiction is not barred under the City Civil Court Act, 1953. The question of jurisdiction in the said case was decided in view of the aforesaid factual position.
22. The controversy in this case is covered by the decision in the case of Mining, Geological, Metallurgical Institute. In that case it was held that two questions fell for the decision of this Court. The first question is whether the institute is a Corporation with the meaning of entry No. 10(II) of the first schedule of the said Act. The second question was whether the suit in that case relates to or arises out of management of a Corporation (see para 4). In this case also both the aforesaid two questions are involved and answer to those questions are not in dispute.
23. It has not been disputed ever by the learned counsel of the appellant that the said company being incorporated under the Companies Act, 1956, is a Corporation. In fact it can hardly by disputed and the legal position on this aspect has been made clear in para 7 of the judgment in the case of the institute. This Court is in respectful agreement with the principle laid down in para 7.
24. So far as the subject matter of dispute in the instant suit is concerned it has not even been contended by the learned counsel for the appellant that the suit does not fell within the excluded category of suits mentioned in clause (II) of item (D) of the first Schedule of the said Act.
25. That is perhaps the reason why the learned counsel for the appellant relied on clause (I) item 10 of the first Schedule and raised the contentions noted above.
26. In fact there is no merit in the said contention. The said Act was made in 1953 and the Companies Act of 1956 could not be in existence In 1953. Therefore clause (I) of item 10 of the first Schedule (see para 16 of the decision in Institute’s case).
27. The last submission of the learned counsel for the appellant that the learned Judge of the first Court erred in law by directing the return of this plaint when the prayer made by the said Company is for its rejection is also not sustainable. The Court always retains the inherent jurisdiction to pass a lesser order than the one that has been prayed for.
28. In fact a prayer for return of the plaint has also been made which has been set out above. Apart from that in the case of the institute, this Court directed return of the plaint against the prayer for rejection of the plaint made by the defendant (see para 8). Therefore the learned Judge of the First Court by passing a similar order has not erred at all.
For the reasons aforesaid this appeal fails. The order of the learned Judge of the First Court is affirmed. All interim orders are vacated.
There will be, however, no order as to costs.
Later
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