I.A.No.1 to 3 filed U/O. XXXIX Rule 1 and 2 R/W Sec. 151 of CPC by the plaintiffs are allowed.
The ad-interim temporary injunction granted by this court dated 5.8.2014 restraining the defendants from obstructing with the operations of the plaintiff No.1 company at schedule premises, and restraining the defendants from illegally trespassing into the schedule premises of plaintiff No.1 company's branch office in Bangalore and restraining the defendants from representing themselves as directors of the plaintiff No.1 company, is confirmed and continued from 17.8.2014 pending disposal of this suit.
Under the circumstances, no costs. It is this order which is called in question on various grounds as set out in the appeal memo.
10. Mr.M.S.Shyamsundar, learned counsel appearing for the appellants has vehemently argued that the very suit of the plaintiffs is not maintainable either in law or on facts and that the civil court has no jurisdiction to consider the grievance of the plaintiffs and that it is only the Company Law Board (hereinafter referred to as the Board, for brevity) which is competent to consider their grievance. Reliance has been placed upon Section 430 of the Companies Act, 2013 which debars the jurisdiction of the civil court.
11. Heard the learned counsel for the appellants in regard to admission. Perused records.
12. Section 430 of the Companies Act, 2013, reads as follows:
'430. Civil court not to have jurisdiction: No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force an no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal.'
13. What is argued before this court by the learned counsel for the appellants is that the civil court does not have any jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or Appellate Tribunal is empowered to determine by or under this Act. A copy of the order passed by the Board at New Delhi in C.P.No.93/ND/14 is produced by the learned counsel for the appellants. It is dated 30.9.2014. While discussing the facts of the case, the learned judge has made an observation that if the defendants are aggrieved about the manner in which the general body meeting has been held and the manner in which they were removed as directors, they could approach the appropriate authorities under the relevant Act. In fact the defendants had requested the Board to take up their grievance in regard to the alleged meeting purportedly held on 31.5.2013 and the resolution passed on that day.
14. Parties had been represented before the Board and ultimately the judicial member of the Board has held that the civil court at Bengaluru is seized of the matter and that the matter urged before the Tribunal is directly and substantially in issue before the civil court and that the civil court has already passed an order of restraint. With this observation, the learned judicial member has decided not to proceed to pass any orders on the grievance of the defendants. Paragraph 5 of the said order is relevant and the same is as follows:
'On hearing the submission of either side and seeing the proceedings pending before the learned civil judge at Bangalore, it is apparent on record that the subject matter in this company petition is directly and substantially the issue in the civil suit pending before the learned civil judge at Bangalore and there being a restraint order against these petitioners not to interfere with the affairs of the company and not to act as directors of the company until next date of hearing, I am of the opinion that this Bench shall not proceed to pass any orders as the subject matter in this C.P. is directly and substantially the issue in a previously instituted suit between the same parties. Either the cause of action for filing civil suit and for filing this company petition being the same, it is not right in law or equity to pass any orders now. '
15. On a plain reading of Section 430 of the Companies Act, it is clear that the civil court's jurisdiction is not ousted insofar as the relief of injunction against persons from interfering with the smooth management of the company and its affairs by the directors of the said company is concerned. The defendants have already been removed in the meeting. The very grievance aired by the defendants before the Board has not been taken into consideration, and it is held that the civil court is seized of the matter. Thus a simple suit for injunction seeking the equitable relief of permanent injunction about the day-to-day management of the company and its affairs is maintainable.
16. The learned judge of the trial court has specifically held that a majority of the shareholders of the plaintiff company have removed the defendants from directorship and plaintiffs 3 and 4 have been elected as new directors. Learned judge has come to the conclusion that apparently defendants are no more directors of the company. As per the document, the 1st defendant holds 36,300 shares and the 2nd defendant holds 36,334 shares of the value of Rs.10/- each in the 1st plaintiff company. Admittedly they are shareholders of the company.
17. The notice dated 1.7.2014 was given to the board of directors to attend the extra general body meeting to be held on 28.7.2014. As per document nos.3 to 5, defendants 1 and 2 were removed and in their place, plaintiffs 3 and 4 have been appointed as directors. E-mail communications sent to defendants 1 and 2 also indicate their removal from the post of directors.
18. Admittedly a majority of the shareholders attended the meeting and endorsed the removal of the defendants as directors. Once defendants 1 and 2 have been removed from directorship, they cannot interfere with the day-to-day affairs of the company and its working units. The learned judge has considered all the materials placed on record to come to the conclusion about the existence of prima facie case and the balance of convenience being in favour of the plaintiffs and comparative hardship that would be caused to the plaintiffs in the event of non-granting of injunction order.
19. The learned judge has framed relevant points for consideration as found in paragraph 5 of the impugned order and they are as follows:
1. Whether the plaintiffs have made out a prima facie case for continuation of the exparte ad-interim temporary injunction passed on 5.8.2014?
2. Whether the defendants made out a ground to vacate the order or temporary injunction?
3. In whose favour balance of convenience lies?
4. Whether the plaintiff will be put to irreparable loss and hardship if any order of an-interim injunctions are vacated?
20. The learned judge has adopted right approach to the real state of affairs. Even if this court were to come to a different conclusion from the one arrived at by the trial court, the same cannot be substituted unless it suffers from absurdity or perversity. It is not as though the learned judge has ignored certain documents having a bearing on the applications filed. He has not misapplied the law into the facts of the case. The learned judge has adopted right approach to the real state of affairs by considering all the materials placed on record in the light of the respective pleadings. No infirmity or absurdity is found in the impugned order. Accordingly the appeals will have to be dismissed as unfit for admission.
21. The appeals are dismissed.
Parties to bear their own costs.
Sd/-
JUDGE vgh*