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2007 DIGILAW 67 (CAL)

MANOHAR BAWARI v. SANTOSH KUMAR SINGHANIA

2007-02-07

TAPAN KUMAR DUTT

body2007
( 1 ) SOME of the defendants/ petitioners have filed the present application under Article 227 of the Constitution of India challenging the impugned order whereby the learned Trial Court has rejected their application under Order 7 rule 11 of the Code of Civil Procedure. ( 2 ) ON perusal of the plaint of the suit, it appears that the plaintiffs/opposite parties have prayed for, inter alia, a declaration that the transfer of the shares in favour of the defendant Nos. 1 and 2 is vitiated by fraud and the same is liable to be delivered up and cancelled and also certain prayers for perpetual injunction have been made by the plaintiff/opposite parties. ( 3 ) AS it appears from the submissions made by the learned Advocates for the respective parties and the allegations made in the plaint, that the dispute between the parties is with regard to an agreement between the plaintiffs on the one hand and the defendant/petitioners on the other hand in connection with the development of a certain property and selling of shares of certain companies. ( 4 ) THE grievances of the plaintiffs/opposite parties is that the defendant/ petitioners have committed fraud on the plaintiffs/opposite parties and fraudulently induced the plaintiffs/opposite parties to sell the shares to the defendant/petitioners at their face value and thereafter the defendant/ petitioners did not perform their part of the agreement but started indulging in various illegal activities. ( 5 ) THIS is basically the grievance of the plaintiffs/opposite parties in the plaint and with such grievance, the prayers have been made in the plaint for declaration and injunction. The learned Trial Court found that there is no merit in the application under Order 7 Rule 11 of the Code of Civil Procedure. ( 6 ) THE learned Senior Advocate for the defendant/petitioners submitted that the dispute between the parties involves transfers of shares and therefore this is a dispute which falls under the Companies Act and, therefore, the Civil Court does not have any jurisdiction. ( 7 ) THE next submission of the learned Senior Advocate for the defendant/ petitioners was that even if the suit had to be filed before the Civil Court it should have been filed before the learned District Judge. ( 7 ) THE next submission of the learned Senior Advocate for the defendant/ petitioners was that even if the suit had to be filed before the Civil Court it should have been filed before the learned District Judge. ( 8 ) WITH regard to the first contention of the learned Senior Advocate for the petitioners, this Court is unable to accept such submissions for the reason that if the allegations made in the plaint are read as a whole, it will appear that the dispute between the parties does not fall within the domain of the Companies act and such a dispute comes within the purview of the general law, taking into consideration the provisions of Specific Relief Act. The question raised in the plaint is whether there is any fraudulent act on the part of the defendant/ petitioners in inducing the plaintiffs/opposite parties to sell the shares at the face value and thereafter the defendant/petitioners indulging in certain illegal activities. This is not a dispute with regard to the modality of transfer of shares. It cannot be said that the present dispute is under the Companies Act. ( 9 ) THE next contention of the learned Advocate for the defendant/petitioners is also not acceptable to this Court since the suit is a suit for declaration and injunction, and under section 15 of the Code of Civil Procedure, if the suit will have to be instituted in the Court of the lowest grade competent to try it. ( 10 ) LEARNED Senior Advocate for the petitioners referred to section 10 of the companies Act, in support of his contention that the suit should have been filed before the learned District Judge, since the learned Trial Court can not exercise jurisdiction under the Companies Act. The question of applying section 10 to the facts and circumstances of the instant case does not arise. The dispute involved as alleged in the plaint, also 'does not come under the Companies Act and therefore the question of applying section 10 of the Companies Act in the facts and circumstances of the present case does not arise. ( 11 ) IT appears that the learned Trial Court has relied upon a decision reported in AIR 2003 SC 2696 (Dwarka Prosad Agarwal and Anr. vs. Ramesh Chandra agarwal and Ors. ). ( 11 ) IT appears that the learned Trial Court has relied upon a decision reported in AIR 2003 SC 2696 (Dwarka Prosad Agarwal and Anr. vs. Ramesh Chandra agarwal and Ors. ). In the said reported case, the Hon'ble Supreme Court was pleased to observe that the dispute between the parties in the said case was eminently a civil dispute and not a dispute under the provisions of the companies Act. The Hon'ble Supreme Court was further pleased to observe that section 9 of the Code of Civil Procedure confers jurisdiction upon the Civil court to determine all disputes of civil nature unless the same is barred under the statute either expressly or by necessary implication. Bar of jurisdiction of civil Court is not to be readily inferred and a provision seeking to bar jurisdiction of Civil Court requires strict interpretation. The Hon'ble Supreme Court was also pleased to observe that it is well-settled that the Court would normally lean in favour of construction which would uphold retention of jurisdiction of the Civil Court. ( 12 ) LEARNED senior Advocate for the defendant/petitioners could not show any law under which the suit is barred, excepting the fact that the said learned senior Advocate referred to section 10 of the Companies Act, which, this Court is of the view, is not applicable to the facts and circumstances of the present case. Section 10 of the Companies Act indicates which Court will have the jurisdiction under the Companies Act. Since the present dispute does not come within the provisions of the Companies Act, the question of applying section 10 to the facts and circumstances of the instant case does not arise. ( 13 ) IN view of the discussions made above, this Court is of the view that there is no merit in the present application under Article 227 of the Constitution of India and the same is accordingly dismissed. There will be no order as to costs. Appeal dismissed.