The Presidency Club v. P.Chander
IN THE HIGH COURT OF JUDICATURE AT MADRAS
(ORDINARY ORIGINAL CIVIL JURISDICTION) FRIDAY, THE 11TH DAY OF JANUARY 2019 THE HON'BLE MR. JUSTICE K.KALYANASUNDARAM A.Nos.9205 and 9568 of 2018 in C.S.No.713 of 2018 1.P.Chander S/o.Pasupathy S The Presidency Club Member 14, Neelakanda Metha Street T.Nagar, Chennai 600 017.
2.Eswaran Annamalai S/o.A.Annamalai The Presidency Club Member 14, Habibullah Road T.Nagar, Chennai 600 017.
...Plaintiffs -Vs1.The Presidency Club Rep.by its Hony Secretary No.51, EthirajSalai Egmore, Chennai 600 008.
2.M/s.P.Sriram & Associates Company Secretaries Rep.by its Partner Mr.P.Sriram No.10/17, Anandan Colony South Canal Bank Road Chennai - 600 028.
3.M/s.NSDL Limited 6A, 6th Floor, Kences Towers 1 Ramkrishna Street North Usman Road T.Nagar, Chennai - 600 017.
4.Integrated Registry Management Services Pvt.Ltd 2nd Floor, Kences Towers 1 Ramakrishna Street
North Usman Road T.Nagar, Chennai - 600 017.
5.Mr.Viji Joseph F4, Parkland Apartments 8 Nathan Street Chetpet, Chennai - 600 031 6.Mr.Tarun Kumar Bagga Old No.151, New No.48 Kodambakkam High Road Chennai 600 034.
7.Mr.K.Gopal 1-A, Aaja Apartment 5, First Main Road Mandavellipakkam Chennai 600 028.
8. Mr.T.K.Srinivasan 42, M.G.R.Road Kalakshetra Colony Besant Nagar, Chennai 600 090 9.Mr.Sankaraiah 45, Lake View Road West Mambalam Chennai 600 033 10.Mr.Chirag Batavia B166, DLF Apartments 46 Commander Court Ethiraj Salai, Chennai 600 008 11.Mr.Chari Ramesh F-3, Subiksha Apartment 27/10, Venkatachalam Street West Mambalam Chennai 600 033.
12.Sanjai Shankar Horizon China AL 210, 14th Main Road Anna Nagar East Chennai 600 040 13.Dr.S.Ramachandran ShamRock 88-B, Santhome High Road
Chennai 600 028.
14.Mr.Ramesh Jagtiani 38, Pantheon Apartments 6th Floor, Pantheon Road Egmore, Chennai 600 008.
...Defendants A.No.9205 of 2018:
1.The Presidency Club Rep.by its Hony Secretary No.51, EthirajSalai Egmore, Chennai 600 008.
...Applicant/1st Defendant -Vs1.P.Chander S/o.Pasupathy S The Presidency Club Member 14, Neelakanda Metha Street T.Nagar, Chennai 600 017.
2.Eswaran Annamalai S/o.A.Annamalai The Presidency Club Member 14, Habibullah Road T.Nagar, Chennai 600 017.
...Respondents/Plaintiffs
3.M/s.P.Sriram & Associates Company Secretaries Rep.by its Partner Mr.P.Sriram No.10/17, Anandan Colony South Canal Bank Road Chennai - 600 028.
4.M/s.NSDL Limited 6A, 6th Floor, Kences Towers 1 Ramkrishna Street North Usman Road T.Nagar, Chennai - 600 017.
5.Integrated Registry Management Services Pvt.Ltd 2nd Floor, Kences Towers 1 Ramakrishna Street North Usman Road T.Nagar, Chennai - 600 017.
6.Mr.Viji Joseph F4, Parkland Apartments 8 Nathan Street Chetpet, Chennai - 600 031 7.Mr.Tarun Kumar Bagga Old No.151, New No.48 Kodambakkam High Road Chennai 600 034.
8.Mr.K.Gopal 1-A, Aaja Apartment 5, First Main Road Mandavellipakkam Chennai 600 028.
9. Mr.T.K.Srinivasan 42, M.G.R.Road Kalakshetra Colony Besant Nagar, Chennai 600 090 10.Mr.Sankaraiah 45, Lake View Road West Mambalam Chennai 600 033 11.Mr.Chirag Batavia B166, DLF Apartments 46 Commander Court Ethiraj Salai, Chennai 600 008 12.Mr.Chari Ramesh F-3, Subiksha Apartment 27/10, Venkatachalam Street West Mambalam Chennai 600 033.
13.Sanjai Shankar Horizon China AL 210, 14th Main Road Anna Nagar East Chennai 600 040
14.Dr.S.Ramachandran ShamRock 88-B, Santhome High Road Chennai 600 028.
15.Mr.Ramesh Jagtiani 38, Pantheon Apartments 6th Floor, Pantheon Road Egmore, Chennai 600 008.
...Respondents/Defendants 2-14
Application praying that this Hon'ble Court be pleased to reject the plaint in C.S.No.713/2018 as the plaint filed is barred by introduction of the provisions in companies Act, 2013 for the time being in force. A.No.9568 of 2018:
1.Mr.Viji Joseph F4, Parkland Apartments 8 Nathan Street Chetpet, Chennai - 600 031 ...Applicant/5th Defendant -Vs1.P.Chander S/o.Pasupathy S The Presidency Club Member 14, Neelakanda Metha Street T.Nagar, Chennai 600 017.
2.Eswaran Annamalai S/o.A.Annamalai The Presidency Club Member 14, Habibullah Road T.Nagar, Chennai 600 017.
...Respondents/Plaintiffs
3.The Presidency Club Rep.by its Hony Secretary No.51, EthirajSalai Egmore, Chennai 600 008.
4.M/s.P.Sriram & Associates Company Secretaries Rep.by its Partner Mr.P.Sriram No.10/17, Anandan Colony South Canal Bank Road Chennai - 600 028.
5.M/s.NSDL Limited 6A, 6th Floor, Kences Towers 1 Ramkrishna Street North Usman Road T.Nagar, Chennai - 600 017.
6.Integrated Registry Management Services Pvt.Ltd 2nd Floor, Kences Towers 1 Ramakrishna Street North Usman Road T.Nagar, Chennai - 600 017.
7.Mr.Tarun Kumar Bagga Old No.151, New No.48 Kodambakkam High Road Chennai 600 034.
8.Mr.K.Gopal 1-A, Aaja Apartment 5, First Main Road Mandavellipakkam Chennai 600 028.
9. Mr.T.K.Srinivasan 42, M.G.R.Road Kalakshetra Colony Besant Nagar, Chennai 600 090 10.Mr.Sankaraiah 45, Lake View Road West Mambalam Chennai 600 033 11.Mr.Chirag Batavia B166, DLF Apartments
46 Commander Court Ethiraj Salai, Chennai 600 008 12.Mr.Chari Ramesh F-3, Subiksha Apartment 27/10, Venkatachalam Street West Mambalam Chennai 600 033.
13.Sanjai Shankar Horizon China AL 210, 14th Main Road Anna Nagar East Chennai 600 040 14.Dr.S.Ramachandran ShamRock 88-B, Santhome High Road Chennai 600 028.
15.Mr.Ramesh Jagtiani 38, Pantheon Apartments 6th Floor, Pantheon Road Egmore, Chennai 600 008.
...Respondents/Defendants
Application praying that this Hon'ble Court be pleased to reject the plaint in C.S.No.713/2018 filed by the Respondents/Plaintiffs.
This application coming on this day before this court for hearing the court made the following order:- Application Nos.9205 and 9568 of 2018 have been filed by the defendants 1 and 5 respectively to reject the plaint in C.S.No.713 of 2018.
2. Facts in brief:- The respondents 1 and 2 as plaintiffs instituted the suit for declaration, declaring that the impugned
consolidated report of the second defendant dated 16.09.2018 regarding the election results of the election of the first defendant for the term 2018-20 held through evoting between 11.09.2018 and upto 5 p.m of 14.09.2018 and manual voting from 6.30 p.m. to 9 p.m. on 15.09.2018 in the 88th Annual General Body of the first defendant, as illegal, fraudulent, manipulated, void and unenforceable and for mandatory injunction, directing the first defendant to conduct the electoral process of the first defendant club for the posts of (1) President (2) Vice-President (3) Hony. Secretary (4) Hony. treasurer and (5) five managing committee members of the first defendant for the term 201820 under the supervision of a former Judge of this Court or Advocate Commissioner by strictly following the Articles of Association and the Rules, viz., Companies (Management & Administration) Rules 2015.
3. According to the plaintiffs in the election conducted for the term 2016-18, they were elected as Vice President and Hony. Secretary of the first defendant-Club and they served as such. For the term 2018-20, a notice for AGM was issued on 06.08.2018 for conduct of election for the first defendant-Club, adopting audit balance sheet and appointment of statutory auditor.
4. The plaintiffs would state that in view of the recent amendment of the Companies (Management & Administration) Rules 2015, the first defendant-Club appointed the second defendant firm as a scrutinizer for conducting and completing the task of e-voting as well as manual voting for the first defendant-club. The defendants 3 and 4 were appointed as service providers for conduct of e-voting. The second defendant informed that e-voting would be conducted in a fair, transparent and honest manner. As per the schedule, e-voting was commenced on 11.09.2018 at 9 p.m. and completed at 5 p.m. on 14.09.2018. Thereafter, the AGM was conducted on 15.09.2018 at 5.30 p.m. and the manual voting commenced at 6.30 p.m. on 15.09.2018.
5. The case of the plaintiffs is that on 14.09.2018, an associate of the second defendant, viz., Ms.Nithya Pasuupathy sent an email to the first defendant on 14.09.2018 at 20.40 hours, giving list of 588 members who have cast their vote through e-voting. Subsequently, on 15.09.2018, it is stated that Mr.P.Sriram, a representative of the second defendant addressed the gathering that only 580 members had voted through e-voting. The further case of the plaintiffs is that the list of the members, who have cast their vote through e-voting was verified by the second
defendant and the members who have not cast their vote through e-voting are only entitled to vote manually. At the end of the manual voting, a total of 345 members were found to have voted in the manual voting, which was declared by the said P.Sriram, after completing of manual voting at 9.p.m on 15.09.2018. On 16.09.2018, at 10 a.m., the election result was announced in the presence of the plaintiffs and the members of the first defendant-Club and the report of the second defendant. According to the report of the second defendant, 757 e-votes have been polled for the post of President, 748 e-votes have been polled for the post of Vice President, 755 e-votes have been polled for the post of Hony. Secretary and 746 e-votes have been polled for the post of Hony. Treasurer, which is contrary to the facts and records.
6. According to the plaintiffs, there is huge variation about 177 votes in the electronic voting. Hence, the members of the first defendant-Club had opposed the self contradictory report of the second defendant in the AGM on 16.09.2018 and after realizing the incorrect report produced by the second respondent, the Chairman of the meeting, the 14th defendant herein, promised to appoint a second independent scrutiniser and a written communication to that effect was sent on 17.09.2018. However, the second
scrutiniser expressed his inability to complete the task and hence, the result was announced based on the report of the second defendant. The plaintiffs would allege that the second defendant colluding with the defendants 4 to 14 had committed fraud and manipulation of electronic records and in this regard, a police complaint dated 18.09.2018 was given to the Commissioner of Police and the Commissioner has ordered investigation by Cyber Crime of Central Crime Branch.
7. The applicants / defendants 1 and 5 have filed these applications on the sole ground that in view of Section 430 of the Companies Act, the present suit is not maintainable.
8. A counter affidavit has been filed by the first respondent stating that the Tribunal or the Appellate Tribunal constituted under the Companies Act, 2013 are empowered to decide the matters set out in Section 242 of the Companies Act. The prayer sought for in the suit and the serious allegations of manipulation of records and the fraud committed by the second defendant, requires elaborate trial and the Company Law Tribunal has no jurisdiction to try such serious dispute raised by the plaintiffs and hence, the suit is maintainable.
9. The learned counsel for the applicants by placing
reliance on the decisions of the Apex Court reported in (i) AIR 1966 SC 1738 [State of Kerala v. N.Ramaswami Iyer & Sons], (ii) 2002 (2) CTC 106 [Union of India v. Delhi High Court Bar Association], (iii) 1997 (5) SCC 460 [Vankamamidi Venkata Subba Rao v. Chatlapalli Seetharamaratna Ranganayakamma], and decision of this Court reported in (iv) 2017 (6) CTC 568 [Chiranjeevi Rathnam v. Ramesh] would vehemently contend that since Section 430 of the Companies Act bars the jurisdiction of the High Court to entertain the suit, the remedy of the plaintiffs is before the Tribunal constituted under the Companies Act. It is further contended that even in the case of allegation of fraud and mismanagement, the Company Law Tribunal has power and mechanism to try the issues by following the procedure contemplated under the Code of Civil Procedure and prays to strike off the plaint.
9.1. In the first decision cited supra, the Hon'ble Supreme Court while considering the Section 23-A of the Travancore-Cochin General Sales Tax Act, held that in view of the express bar of the Civil Court to entertain the suit, set aside the decree passed by the Civil Court. 9.2. In the second decision, the Hon'ble Apex Court has upheld the constitutional validity of recovery of debts due to Banks and Financial Institution Act, 1993.
9.3. In the third decision, while considering the Andhra Pradesh Estates (Abolition and Conversion into Ryotwari) Act, 1948, which confers jurisdiction on Tribunals in the matters relating to new rights created by it, providing hierarchy of appeals / revisions and giving finality to the orders passed thereunder, the Hon'ble Supreme Court has observed that jurisdiction of Civil Court stands excluded.
9.4. In 2017 6 CTC 568 (supra), the learned Single Judge of this Court, while considering the case where dispute arose between three families to run a Private Limited Company and a suit instituted for declaration, declaring the appointment of co-option of defendants 2 to 8 as Directors of the first defendant Company, held that jurisdiction of Civil Court has been expressly excluded in Section 430 of the Companies Act.
10. Per contra, it is contended by the learned counsel for the respondents 1 and 2 / plaintiffs 1 and 2 that Chapter 9 of the Companies Act deals with power of the Tribunal, but the first defendant-Club is a non-profit making company, no Managing Director or Directors have been appointed in the first defendant-Club and there are no shareholders in the club. Further, the second defendant is not an employee of the first defendant-Club and therefore,
the applicants have no legal right to approach the Tribunal for redressal of their grievance. Moreover, serious allegations have been made against the second defendant with regard to manipulation of voters list. Since summary procedures have been followed in the Tribunal, in the light of serious allegations, it would not be appropriate to direct the plaintiffs to file a case before the Tribunal and the suit filed before the Civil Court is maintainable in view of the following decisions:- (i) (2016) 1 SCC 423 [Jai Mahal Hotels (P) Ltd. v. Devraj Singh], the Hon'ble Supreme Court in Paragraphs 16 and 17 has held as follows:-
16. In Ammonia [(1998) 7 SCC 105] , the scope of jurisdiction of the Company Court to deal with an issue of rectification in the Register of Members maintained by the Company was considered. Following Public Passenger Service Ltd. v. M.A. Khadar [AIR 1966 SC 489] , it was held that jurisdiction under Section 155 was summary in nature. If for reasons of complexity or otherwise, the matter could be more conveniently decided in a suit, the Court may relegate the parties to such remedy. Subject to the said limitation, jurisdiction to deal with such matter is exclusively with the Company Court. It was observed: (Ammonia case [(1998) 7 SCC 105] , SCC p. 122, para 31)"
"31. ... It cannot be doubted that in spite of exclusiveness to decide all matters pertaining to the rectification it has to act within the said four corners and adjudication of such matters cannot be doubted to be summary in nature. So, whenever a question is raised the court has to adjudicate on the facts and circumstances of each case. If it truly is rectification, all matters raised in that connection should be decided by the court under Section 155 [Ed.: Corresponding to Section 111 of the present Act, before its amendment by Act 31 of 1988.] and if it finds adjudication of any matter not falling under it, it may direct a party to get his right adjudicated by a civil court. Unless jurisdiction is expressly or implicitly barred under a statute, for violation or redress of any such right the civil court would have jurisdiction."
17. Thus, there is a thin line in appreciating the scope of jurisdiction of the Company Court/Company Law Board. The jurisdiction is exclusive if the matter truly relates to rectification but if the issue is alien to rectification, such matter may not be within the exclusive jurisdiction of the Company Court/Company Law Board.
(ii) 2016 (198) Company Cases 481 [K.Ravinder Reddy vs. Alliance Business School], the Division Bench of Karnataka High Court has observed as follows:- "38. We may record that, by now it is well settled that the jurisdiction of the CLB is summary in nature more particularly when by express omission of the power which it possessed
as per earlier provision of Section 111(7) of the Act of 1956. Further, the CLB has no jurisdiction to examine the genuineness of the documents more particularly when in the criminal case, the charge sheet is filed on the premise that the documents are not genuine and are forged documents it cannot be said that the jurisdiction of the Civil Court is barred since the Civil Court would possess the jurisdiction for deciding the inter se dispute between the parties unless the jurisdiction is impliedly or expressly barred by any statute. Further, it is only in the Civil Court proceedings there will be sufficient opportunity to the appellant to prove that the documents of transfer are genuine by examination of his witnesses and the cross-examination of the witnesses of the respondents 2 and 3.
As such, in a matter where, in the criminal complaint after investigation, it is found that the documents are forged and not genuine, it would be more appropriate to relegate the party to the Civil Court for proving the genuineness of the document including by proving the signature because the Civil Court will have the competence to make appropriate declaration in this regard irrespective of the investigation made by the Police or the Criminal case.
to direct the Company to transfer the share in favour of the appellant but until such declaration is granted by the Civil Court, CLB may not be in a position to issue direction to the Company to transfer the share for the simple reason that unless the documents are found to be genuine including the signature thereof, the question of effecting transfer of shares or issuance of directions for transfer of shares may not arise. Under these circumstances, we do not find that CLB has committed any error in exercise of discretion in relegating the appellant to approach before the Civil Court for getting appropriate declaration about the genuineness of the documents for transfer of the shares in their favour."
(iii) In C.R.P.(PD)No.670 of 2017, the learned Single Judge, while following the decisions referred supra confirmed the order of the dismissal of rejection of the plaint application, held as follows:- "28.From the provisions of the Companies Act, 2013 and1956, it is clear that the Tribunal or Board as the case may be can decide only the rectification of register of members with regard to shares and connected incidental issues. In the present suit, a reading of the averments in the plaint as well as the relief sought for by the first respondent shows that to decide the issue raised by the first respondent, the title to the shares in question has to be considered. The
first respondent has not only prayed for rectification of register of members by substituting his name in the place of the petitioner and issue share certificates to him, but also prayed for permanent injunction restraining the petitioner from claiming any title over the shares in question. Whether the first respondent is entitled to relief of permanent injunction and also payment of dividends and bonus in respect of the shares can be decided only when the title to the shares are decided.
Only if the first respondent proves by acceptable evidence that he is the owner of the shares in question and that the petitioner fraudulently in collusion with the officials of the second respondent got transferred the shares in his name due to estranged relationship between the petitioner and his wife, mother of the first respondent, the first respondent cannot succeed in the claim of the rectification of register of members of the second respondent. The petitioner has not stated that first respondent is not the owner of shares at any point of time and that there was no fraudulent transfer in collusion with the officials of the second respondent. In this circumstance, the issue on title of shares is the main issue to be decided in the suit filed by the first respondent."
(iv) The Delhi High Court in 2012 CJ Delhi 2675 [Satish Chandra Sanwalka & Ors. Vs. Tinplate Dealers
Association Pvt. Ltd. & Ors.], in paragraph No.5 has held as follows:- "5. While dealing with the provision of Section 155, the Supreme Court in the case of Claude-Lila Parulekar (Smt) Vs. Sakal Papers (P) Ltd. and Ors. (2005) 11 SCC 73 had held that the jurisdiction of the Company Court under Section 155 of the Act and of the Civil Court under Section 9 of CPC is concurrent. I may also refer to the judgment of the Supreme Court in the case of Ammonia Supplies Corporation (P) Ltd. Vs. Modern Plastic Containers Pvt. Ltd. and Ors. (1998) 7 SCC 105 which holds that highly disputed questions of fact in fact ought to be decided by the Civil Court and not by the Company Law Board. Thus, looking at the issue from any angle i.e.
whether of the fact that jurisdiction of the Civil Court is concurrent with the Company Law Board or the fact that it is preferable that highly disputed questions of fact such as those in the present case, ought to be decided by the Civil Court, the impugned judgment, therefore, dismissing the suit of the appellants/plaintiffs was not correct and is accordingly set aside."
11. Heard both sides and perused the materials available on record.
12. The relevant Sections of Companies Act, 2013 are extracted hereunder:-
(i) Section-241. Application to Tribunal for relief in cases of oppression, etc.
- "(1)Any member of a company, who complains that- (a)the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or (b)the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members may apply apply to the Tribunal, provided such member has a right to apply under Section 244, for an order under this Chapter.
(2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this chapter."
(ii) Section-242. Powers of Tribunal:- "(1) If, on any application made under section 241, the Tribunal is of the opinion- (a) that the company affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company; and (b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up, the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit.
(2) Without prejudice to the generality of the powers under sub-section (1), an order under that sub-section may provide for - (a) the regulation of conduct of affairs of the company in future;
(b) the purchase of shares or interests of any members of the company by other members thereof or by the company;
(c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital;
(d) restrictions on the transfer or allotment of the shares of the company;
(e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case;
(f) the termination, setting aside or modification of any agreement between the company and any person other than those referred to in clause (e):
Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned;
(g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference;
(h) removal of the managing director, manager or any of the directors of the company; (i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims;
(j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause (h);
(k) appointment of such number of persons as directors, who may be required by the Tribunal to report to the Tribunal on such matters as the Tribunal may direct;
(l) imposition of costs as may be deemed fit by the Tribunal;
(m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made.
(3) A certified copy of the order of the Tribunal under sub-section (1) shall be filed by the company with the Registrar within thirty days of the order of the Tribunal.
(4) The Tribunal may, on the application of any party to the proceeding, make any interim order which it thinks fit for regulating the conduct of the companys affairs upon such terms and conditions as appear to it to be just and equitable.
(5) Where an order of the Tribunal under sub-section (1) makes any alteration in the memorandum or articles of a company, then,
notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any, permitted in the order, to make, without the leave of the Tribunal, any alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles.
(6) Subject to the provisions of sub-section (1), the alterations made by the order in the memorandum or articles of a company shall, in all respects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act and the said provisions shall apply accordingly to the memorandum or articles so altered.
(7) A certified copy of every order altering, or giving leave to alter, a companys memorandum or articles, shall within thirty days after the making thereof, be filed by the company with the Registrar who shall register the same.
(8) If a company contravenes the provisions of sub-section (5), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twentyfive lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both."
(iii) Section-244. Right to apply under Section 241:- "1. The following members of a company shall have the right to apply under section 241, namely:- a. in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one tenth of the issued share capital of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares; b. in the case of a company not having a share capital, not less than one-fifth of the total number of its members:
Provided that the Tribunal may, on an application made to it in this behalf, waive all or any of the requirements specified in clause (a) or clause (b) so as to enable the members to apply under section 241.
2. Where any members of a company are entitled to make an application under subsection (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them."
13. Chapter XIV of the Companies Act, 2013 deals with oppression and mismanagement. Section 241 prescribes procedure for filing an application. Section 242 stipulates
the powers of the Tribunal. Section 244 of the Act clarifies the rights of the members, who can apply the Tribunal seeking relief in cases of oppression.
14. A combined reading of the above provisions make abundantly clear that if the affairs of the Company are conducted in a manner prejudicial either to the interest of the public or the Company, any member of the Company can apply to the Tribunal and the Tribunal in appropriate cases pass such orders enumerated in Sub Section 2 of Section
242. However, the grievance of the applicants are entirely different. Allegations in this case are not with regard to oppression or mismanagement of the Company, but with regard to conduct of election of office bearers of the first respondent-Club and more than the first defendant, serious allegations have been levelled against the second defendant, who is admittedly not a Director or a Member of the first defendant-Club. Further, in the case on hand, as rightly pointed out by the learned counsel for the respondents 1 and 2/ plaintiffs 1 and 2 that the first defendant-Club is a non-profit making Company and has no shareholders as on date.
15. In the decisions relied on by the learned counsel for the respondents 1 and 2, it has been consistently held that the proceedings before the Company Law Board (now
Tribunal) are summary in nature and complex issues, which require elaborate adjudication, the parties shall be relegated to the Civil Suit, where they can be given sufficient opportunity. Considering the prayer sought for in the suit and the averments made in the plaint, in my considered view, the principles laid down in the decisions relied on by the learned counsel for the respondents 1 and 2 / plaintiffs 1 and 2 would squarely apply to the facts of this case. Hence, the Tribunal constituted under the Companies Act has no jurisdiction to entertain and decide the controversy involved in the suit. So, the decisions cited by the learned counsel for the applicants have no application to the case on hand.
16. For the foregoing reasons, I find no merit in these applications. In fine, both the applications are dismissed.
Sd/.M.K.K.S.J.
11.01.2019 //Certified to be a true copy// Dated this the day of 2019.
DL/18.01.2019 COURT OFFICER From 25.09.2008 the Registry is issuing certified copies of the Order/Judgment Decree in this format.