1. Shyamalesh Nath Bhaduri claiming to be a member of the Mining, Geological and Metallurgical Institute of India (hereinafter called the Institute) has filed a suit in the City Civil Court at Calcutta against the said Institute, its President, its Hony. Secretary, Hony. Treasurer and two others inter alia for the following reliefs:—

(a) for declaration that the appointment of defendant No. 4 as the Convener, Board of Scrutinisers in terms of the meeting held on 14.10.1977 is invalid, illegal and not in accordance with law as it contravenes the article 38(a) of the Institute;

(b) for a declaration that the seeking of election of the defendant No. 3 is illegal, invalid and not in accordance with law as he is already a Council Member of the defendant No. 1;

(c) for a declaration that the seeking of election of the defendant Nos. 5 & 6 is illegal, invalid and not in accordance with law as it contravenes Article 34;

(d) for a declaration that the notice dated 19th October, 1977 is issued by the defendant No. 4 is illegal, inoperative, unenforceable and null and void.

(e) for a declaration that the covering notice dated 12th December, 1977 as well as the circulation of ballot papers are illegal, arbitrary, invalid, inoperative, unenforceable and not in accordance with law;

(f) Re-election of the defendant No. 1 in accordance with the articles of the Institute;

(g) Receiver-cum-Administrator;

(h) Injunction restraining the defendant Nos. 1 to 4 from holding the Annual General Meeting fixed on 20th January, 1978 and declaring or publishing the result of election of the Council of Members of the defendant No. 1 for the year 1977-1978, 1978-1979 and 1979-1980.

On the application of the plaintiff-opposite party No. 1, the learned Judge, 4th Bench, City Civil Court at Calcutta has granted an adinterim injunction restraining the defendant Nos. 1 to 4 from publishing the results of the election held at the Annual General Meeting of the Institute dated 20th January, 1978. The defendant No. 1, the Institute, and also the defendant-opposite party No. 3 had filed an application before the learned Judge, 4th Bench, City Civil Court, Calcutta under Order 7 Rule 11 of the Code of Civil Procudure, inter alia, praying for the rejection of the plaint and for vacating the above interim order. They pleaded that the instant suit came within the purview of Item No. 10(ii) of the 1st Schedule of the City Civil Court Act, 1953 and therefore, the City Civil Court had no jurisdiction to entertain and try the said suit. The Institute claimed that it was a company incorporated under the Companies Act.

2. The learned Judge, 4th Bench, City Civil Court Calcutta by his Order No. 9 dated 16th February, 1978 rejected the aforesaid application under Order 7 Rule 11(d) of the Civil Procedure Code. The learned Judge of the court below observed that it would be very difficult at the present stage to call the defendant No. 1 the Institute, a company within the literal meaning of the Companies Act, 1956 or under the Indian Companies Act, 1913. The learned Judge of the court below further observed that moreover the plaint of the suit showed that the suit had been brought for declaration that the appointment of one of the defendants as the Convener of the Board of Scrutineers was invalid, illegal and that seeking of the election by the defendants 3, 5, and 6 was also illegal and invalid. Such prayers cannot be strictly and legally said to relate to or arise out of the constitution, incorporation, management and winding up of the defendant No. 1. Therefore, the learned Judge of the court below while over-ruling the defendants' objection to the jurisdiction of the said court entertaining the suit at the same time left the said point open to be thrashed out again at the time of the final hearing.

3. The defendant No. 1, the Institute, and some other defendants obtained this Rule against the above order dated 16th February, 1978 passed by the learned Judge, 4th Bench, Calcutta City Civil Court. Mr. Mukherjee, learned advocate for the petitioners, has submitted that the aforesaid suit brought by the plaintiff-opposite party No. 1 relates to and arises out of the management of a Corporation within the meaning of Entry No. 10(ii) of the 1st Schedule of the City Civil Court Act, 1973. Therefore under sub-s.(4) of S. 5 of the said Act, the City Civil Court has no jurisdiction to try the suit. Mr. De, learned advocate for the opposite party No. 1, on the other hand, has submitted that the Institute, the defendant No. 1 in the suit is not a Corporation and the suit does not relate to or arise of the management of Corporation. The opposite party No. 1 has instituted the suit for enforcement of his individual rights. The suit has been valued at Rs. 100/-. Therefore, it is the City Civil Court and not the High Court at Calcutta which has jurisdiction to try the suit.

4. Two questions arise for decision. In the first place, whether the Institute is a Corporation within the meaning of the Entry No. 10(ii) of 1st Schedule of the City Civil Court Act. Secondly, whether the suit relates to or arise out of the management of a Corporation.

5. Admittedly, the Mining, Geological and Metallurgical Institute of India, the defendant No. 1, was originally registered with limited liability under the Indian Companies Act, 1882. Mr. De appearing on behalf of the plaintiff-opposite party No. 1 has not disputed that the Institute was a comnyap within the meaning of the Indian Companies Act, 1913 and the Companies Act, 1956. A corporation has been defined as a body of persons (in the case of a corporation aggregate) or an office (in the case of a corporation sole) which is recognised by the law as having a personality of its own which is distinct and separate from the personalities of the members of the body or the personality of the individual holder for the time being, of the office in question (See paragraph 1201 of Halsbury's Laws of England, Vol. 9). We may leave aside from our consideration the concept of the corporation sole which is incorporated series of successive persons, e.g the Crown. A ‘corporation aggregate’ according to Salmond on Jurisprudence, 12th Election, page 308, is an incorporated group of persons like a registered company, consisting of all the shareholders and a municipal corporation, consisting of the inhabitants of a borough etc. There are various types of corporations. They may be divided into a number of groups according to their nature and purposes. Corporations may be also classified according to the methods of their creation. Corporations formed for the profit of its members are generally incorporated under the Companies Act or other statutes authorising creation of corporate status by registration. A corporation may also be incorporated by a charter. A number of corporations has been also incorporated by special Acts of the Legislature (vide Halsbury's Laws of England, 4th Edition, Vol-9, paragraph 1203). Thus, distinction has been made between a company incorporated under the Companies Act which is not created by the Companies Act but comes into the existence in accordance with the provisions of the said Act, and a statutory corporation which is created by a special statute (See Sukhdeb Singh v. Bhagatram AIR 1975 SC 1331 at page 1339).

6. It is well-settled that a corporation aggregate which is formed by collection of individuals has a legal entity distinct from its members and its fundamental attributes is its incorporated personality. This attribute of incorporateness is possessed by Companies registered under the Companies Act and also by the Institutes created by or registered under a statute (See Gower on Principles of Modern Company Law, 3rd Edition, page 68). Registered friendly societies may have some of the attributes of a corporation like suing or being sued in their names, the power to hold property etc., but such societies have no separate corporate personality apart from their members. In this connection reference may also be made to the majority decision of the Supreme Court in Board of Trustees, Ayurvedic and Unani Tibia College, Delhi v. State of Delhi, AIR 1962 SC 458, which upheld the validity of the Tibbia College Act enacted by the Delhi State Legislature. The majority view was that on registration under the Societies Registration Act, the old Board of Trustees of the said college did not become a corporation in the sense of being incorporated within the meaning of Entry 44 of List I of the 7th Schedule of the Constitution of India. Therefore, the impugned Act fell within Entry 32 of List II the 7th Schedule of the Constitution. The Supreme Court held that the essence of a corporation consists of (i) lawful authority of incorporation, (ii) persons to be incorporated, (iii) a name by which persons are to be incorporated, (iv) a place, and (v) words sufficient in law to show incorporation.

7. According to S. 2(7) of the Companies Act, 1956 “body corporate” or “corporation” includes a company incorporated outside India but does not include:—

(a) a corporation sole;

(b) a co-operative society registered under any law relating to co-operative societies; and

(c) any other body corporate (not being a company as defined in this Act)……………………….”.

8. Thus, the above definitions of “body corporate” and “corporation” in the Companies Act, 1956 are not exhaustive but inclusive ones. They include companies incorporated outside India and also companies formed and registered under the Companies Act, 1956 or an existing company which was formed and registered under any of the previous company law (vide S. 3(1)(i) and 3(1)(ii) of the Companies Act, 1956).

9. In view of the foregoing legal provisions, the Institute, the defendant No. 1, which is an incorporated company must be considered as a corporation aggregate. There is no indication in Clause (ii) of item No. 10 of Schedule I or elsewhere in the City Civil Court Act that the expression “corporation” should be confined only to statutory corporations and that the entry would not include those companies which are created by registration under any of the Companies Acts.

10. The next question is whether the instant suit relates to or arises out of the management of the institute, the defendant No. 1. I have already set out the prayers of the plaint filed by the plaintiff opposite party No. 1 in the City Civil Court at Calcutta.

11. The expression ‘management’ in item No. 10(ii) of Schedule I of the City Civil Court Act has been interpreted in two decisions of this Court. Chatterjee J. in Sham Sher Ali Khan v. Calcutta Dock Labour Board, FMA No. 26 of 1965, held that the management of the corporation means the management of the internal affairs of the corporation. The learned Judge made a distinction between the matters relating to the functions of the Dock Labour Board and those relating to the Board itself, i.e the machinery by which the functions are to be discharged. Chatterjee J. held that the statute bars the City Civil Court's jurisdiction only such suits which referred to the management of the affairs of the business of the Board and not all types of suits by or against the Board. P.N Mookerjee and A.N Chakravarti, JJ. in Rabindra Nath Ganguly v. Calcutta Dock Labour Board, 74 CWN 313, agreed with the above view of Chatterjee, J. The learned Judges in Rabindra Nath Ganguly v. Calcutta Dock Labour Board (supra), held that management was a very broad term. In a sense all administrative acts of the Board would be acts of management. But management within the meaning of Item No. 10(ii) has reference to its organisational set up and includes acts, relating to such matters, for example, calling of the meetings of the Board, observance of rules regarding quorum, disposal of business at the Board's meetings, preparation of statement of accounts and balance sheet etc. It refers to administration or management of the Board itself as distinguished from its functions under S. 5B of the Dock Workers (Regulation and Employment) Act. Therefore, their Lordships held that the City Civil Court had jurisdiction to try the suits against the Dock Labour Board challenging the legality and validity of the orders of disposal of the plaintiffs and for incidental reliefs. Above decisions are binding upon me and I respectfully follow the same. Thus, the management means the conduct of a business, i.e, control or direction. According to Gower's Principles of Modern Company Law, 3rd Edition, pages 15-16, that whether the company be statutory, chartered or registered, its regulations will almost certainly be contained in two separate documents. Its basic constitution will be set out in its statute, charter or memorandum of association respectively, and it is to this document that it owes its existence as a corporate entity, and upon this document, construed in the light of the common law and general statute law, will depend its powers and duties as a legal person. Memorandum of Association has been characterised as the basic constitution and the articles of association as a document dealing with internal administration. Special formalities are generally needed to change the memorandum whereas articles of association may be added or amended by special resolution of the company itself.

12. The expressions ‘relating to’ and ‘arising out of’ have been judicially interpreted as phrases of comprehensiveness. Banerjee and Niyogi JJ. in Nitai Chandra Bagchi v. Suresh Chandra Paul, 66 CWN 767, held that the said expression in Item No. 7 of the 1st Schedule read with S. 5(4) of the City Civil Court Act ousted the City Civil Court's jurisdiction even in respect of a suit for declaration that a mortgage decree passed by the High Court in its Ordinary Original Civil Jurisdiction was void and not binding. The learned Judges referred to a number of reported decisions regarding the interpretation of the expressions ‘relating’ to and ‘arising out of’ and came to the conclusion that the suits either directly or indirectly relate to or arise out of mortgages, fell within the jurisdiction of Item No. 7 of the 1st Schedule of the City Civil Court Act, 1953. It may be noted that the said Item No. 7 has been omitted from the 1st Schedule by the West Bengal Act XXXV of 1969. The same expressions ‘relating to’ and ‘arising out of’ appearing in Item No. 10(ii) of the 1st Schedule should be interpreted in a comprehensive manner. Therefore, the City Civil Court shall have no jurisdiction to try suits in which directly or indirectly the organisational set up is in dispute. Such a suit relating to the internal affairs of a Corporation will not be entertainable by the City Civil Court.

13. We may now proceed to examine the nature of the instant suit. The plaintiff has claimed to be a full member of the Institute, the defendant No. 1. He has set out the different Articles of Association of the defendant No. 1, Institute, in the plaint. According to the plaintiff as per Article 29, the administration of the Institute shall be entrusted to a Council and the eligibility of becoming council member, duration of such office are being governed by the Articles 34 and 35. Article 37 deals with the office of the Hony. Secretary of the defendant No. 1. The plaintiff in paragraph 14 of the plaint has alleged that the appointment of the defendant No. 4 as a Convener of the Board of Scrutineers was not valid. Seeking of the election of the defendant No. 3 as a Council Member was irregular and illegal. The defendants 5 and 6 were seeking election as council members of the Institute without earning eligibility. According to the plaintiff such gross irregularities will vitiate the entire election of the Council of the Institute. Therefore, in substance the subject-matter of challenge in the instant suit is the election of the Council at the Annual General Meeting of the Institute to be held in pursuance of the notice dated 19th October, 1977. It may be noted that in view of the interim order granted by the trial court although the said Annual General Meeting has been since held, the results of the election have not been published.

14. Mr. De, learned advocate for the plaintiff-opposite party No. 1, has submitted that the instant suit is for enforcement of individual rights of the plaintiff and the suit does not relate to the management. In this connection, Mr. De relied upon the decision in NVR Nagappa Chettiar v. The Madras Race Club, AIR 1951 Madras 831 : (1949) 1 MLJ 662; AIR 1959 Kerala 254; 1964 Company Cases 947 etc.

15. The Courts are generally reluctant to interfere with the domestic affairs of a company or association. These general propositions are commonly called the rule in Foss v. Harbottle (1843) 2 Hare 461; 67 ER 189. The Court of Appeal in Edwards v. Halliwell (1950) 2 All England Reports 1064, explained the scope of this rule and also pointed out the exceptions thereto. The ordinary Civil Court may interfere with the management of a company in the following circumstances:—

(i) when the act complained of is wholly ultra vires of the company or association;

(ii) cases where there is fraud on minority and the wrong-doers are themselves in control of the company;

(iii) an individual member may sue if the matter in respect of which he was suing was one which could be validly sanctioned not by a simple majority of the principles but only by some special majority.

The decisions cited at the bar lay down the above principles (vide N.V.R. Nagappa Chettiar v. Madras Race Club (supra), Ram Kissendas Dhanuka v. Satya Charan Law AIR 1950 P.C 81. The Star Tile Works Ltd. Kallai v. N. Govindan AIR 1959 Kerala 254). Thus, these decisions recognise the scope and the extent of an interference by ordinary civil court with the affairs of a company. In the aforesaid exceptional cases the matter in dispute before the court would be ‘much more’ than internal management of the affairs of a company (vide Ram Kissendas Dhanuka v. Sataya Charan Law (supra) at page 85 paragraph 12). But the extent of the Calcutta City Civil Court's jurisdiction has been defined by S. 5 of the City Civil Court Act, 1953. Sub-section (2) of S. 5 provides that the City Civil Court's jurisdiction to try suits and proceedings of a civil nature not exceeding Rs. 50,000/- in value shall be “subject to the provisions of sub-ss. (3) and (4)”. Therefore, these general provisions relating to the pecuniary jurisdiction is subject to the exclusion of City Civil Court's jurisdiction in respect of the matters covered by sub-ss. (3) and (4). Sub-section (4) of S. 5 provides that the City Civil Court shall not have jurisdiction to try suits and proceedings of the description specified in the 1st Schedule. Therefore the City Civil Court cannot entertain a suit of a civil nature not exceeding Rs. 50,000/- in value when such a suit is of the description specified in the 1st Schedule.

16. Section 10 of the Companies Act, 1956 contains elaborate provisions relating to jurisdiction of courts. Under sub-s. (2) of S. 10 of the Act, 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 jurisdictions conferred by this Act upon the Court, not being the jurisdiction conferred by the provisions in Clauses (a) and (b) of sub-s. (2). Subject to such conferment of powers upon District Courts by a notification under sub-s. (2), the High Court has been given exclusive jurisdiction under she Companies Act, 1956. In exercise of its powers under S. 10(2) of the Companies Act, 1956 and in supersession of all the notifications issued by the Provincial and State Governments under the proviso to sub-s. (1) of S. 3 of the Indian Companies Act, 1913, the Central Government empowered all District Courts in the Union of India, except the District Courts in the State of Jammu and Kashmir, to exercise the jurisdiction conferred by the Companies Act, 1956 upon courts by the different sections specified in the said Notification No. G.S.R 663.

17. The Item No. 10(i) of Schedule-I of the City Civil Court Act has excluded City Civil Court's jurisdiction in respect of suits and proceedings under the Indian Companies Act, 1913 or the Banking Companies Act, 1949. In spite of the elaborate provisions contained in S. 3 of the Indian Companies Act, 1913 and in S. 10 of the Companies Act, 1956 and the general rule of non-interference with the internal management of a company, an individual may maintain a suit in the City Civil Court in respect of the matters mentioned above. But even if the subject-matter of the suit be of a civil nature, the City Civil Court may not be competent to entertain a suit if the suit directly or indirectly relates to the constitution, incorporation, management or winding up of a corporation. Thus, Item No. 10(ii) is really complimentary to Item No. 10(i) of the Schedule-I. The City Civil Court is not a District Court within the meaning of S. 10(2) in view of the exclusion of its jurisdiction under S. 5(4) read with Item No. 10(ii). The legislature has thought it fit to provide that the City Civil Court shall have no jurisdiction also when a suit relates to or arises out of the constitution, incorporation, management, or winding up of corporations. Therefore, the City Civil Courts' jurisdiction in relation to companies both under the Act and de hors the Act have been barred. In one sense, Item No. 10(ii) is wider in so far as the expression ‘corporation’ in the said provision would not only include a company registered under Companies Act but also other corporate bodies and corporations.

18. In my view, the plaint of the suit clearly discloses that it relates to and arises out of the management of a body registered under the Indian Companies Act, 1913 and therefore, the same was a corporation. The plaintiff in the instant suit has directly or indirectly challenged the re-constitution of the Council which according to him manages the Institute. Therefore, the instant suit is not entertainable by the City Civil Court at Calcutta.

19. I, accordingly, make this Rule absolute, set aside the order complained of. I direct the City Civil Court at Calcutta to return the plaint of the suit to be presented to the Court to which the present suit ought to have been instituted. The prayer for rejection of the plaint as made by the defendants under Rule 11 of Order 7 of the Code was, however, misconceived. All points relating to the merits of the case are left open. Let the operation of this order be stayed for one week from date.

There will be no order as to costs.

Rule made absolute. Plaint to be returned for presentation to the proper court.