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2014 DIGILAW 3722 (MAD)

Kwality Mills Private v. M. Chockalingam Chettiar

2014-10-09

V.M.VELUMANI

body2014
Judgment : 1. This civil revision petition has been filed against the fair and decretal order, dated 18.4.2013 passed in I.A.No.294 of 2009 in O.S.No.34 of 2009 on the file of District Court, Sivagangai. 2. The petitioners are the defendants 3 and 4, whereas the respondent is the plaintiff in O.S.No.34 of 2009 on the file of District Court, Sivagangai. The respondent filed the suit for a preliminary decree declaring that respondent is entitled to 1/10th share in suit scheduled property and to appoint an Advocate Commissioner for dividing the suit property by metes and bounds as per the final decree based on the report of the Advocate Commissioner. 3. The sixth defendant in the suit filed written statement. The petitioners filed I.A.No.294 of 2009 for rejection of plaint under Order 7 Rule 11 C.P.C on the ground that the said suit is barred by limitation as per the provisions of Companies Act. According to the petitioners, all the properties belong to the private limited companies which are separate legal entity. Without winding up of the company, a person is not entitled to claim share in the properties. Secondly, the petitioners contended that alternatively the respondent can claim partition in the Company Law Board. 4. The respondent in his counter stated that all the properties standing in the names of Private Limited Companies were purchased by the grand father and all the properties belong to joint families. The grandfather floated the companies and the properties retained the character of joint family properties. The respondent is not claiming any right under the provisions of Companies Act. The claim of respondent is civil right and O.S.No. 34 of 2009 filed by the respondent is a civil proceedings. Hence, the suit is maintainable and not barred by provisions of Companies Act. 5. The learned Judge considered the pleadings and Judgments relied on by the learned counsel for respondent herein and arguments advanced by the learned counsel for petitioners and respondent and dismissed the application. Against the said order of dismissal dated 18.4.2013, the petitioners are before this Court by way of present Civil Revision Petition. 6. Heard the learned counsel for the petitioners and the learned counsel for the respondent. 7. The learned counsel for petitioners argued that the companies are separate legal entities and therefore, the properties cannot be construed to be a joint family properties. 6. Heard the learned counsel for the petitioners and the learned counsel for the respondent. 7. The learned counsel for petitioners argued that the companies are separate legal entities and therefore, the properties cannot be construed to be a joint family properties. The joint family cannot own a company registered under the Companies Act. The joint family may have a share in the company but, can never own a company under the provisions of the Act. The learned Judge erred in holding that suit for partition of properties belonging to the company is maintainable. He also further contended that the learned Judge erred in applying doctrine of lifting the corporate veil under the companies Act and the same is not the subject matter of application. According to the learned counsel for petitioners, the learned Judge ought to have held that the properties owned by the companies can be dealt with only as per the provisions of Companies Act. 8. Per contra, the learned counsel for respondent argued that the claim of the respondent is not as per the provisions of Companies Act. The suit is for the partition of joint family properties. Only the members of the joint family are share holders of the company. No outsider is a shareholder in the company. The petitioners have not denied the fact that only the joint family members are shareholders of company. There is no bar under the Companies Act for initiating civil proceedings. The learned counsel for the respondent relied on the judgment reported in 2003 (3) CTC 184 [Dwarka Prasad Agarwal (D) by LRs. and another vs. Ramesh Chandra Agarwala and Others]. In the said judgment, the Apex Court held that dispute between parties is essentially civil dispute and not one which will fall under the provisions of Companies Act. The provisions seeking bar of jurisdiction of civil court requires strict interpretation. Therefore, he prayed for dismissal of the Civil Revision Petition. The learned counsel for the respondent also relied on the Judgments reported in AIR 1995 SC 2001 [Most. Rev. P.M.A. Metropolitan and others Vs. Moran Mar Marthoma and another] and 2009 (2) CTC 210 [Shanita Holdings SDN. BHD., Malaysia and another Vs. Shanita Hotel Trichy Pvt. Ltd., and another]. 9. Therefore, he prayed for dismissal of the Civil Revision Petition. The learned counsel for the respondent also relied on the Judgments reported in AIR 1995 SC 2001 [Most. Rev. P.M.A. Metropolitan and others Vs. Moran Mar Marthoma and another] and 2009 (2) CTC 210 [Shanita Holdings SDN. BHD., Malaysia and another Vs. Shanita Hotel Trichy Pvt. Ltd., and another]. 9. I have considered the materials on record, the impugned order of the learned Judge and the Judgment relied on by learned counsel for the respondent and the arguments of the learned counsel for the petitioners and the respondent. 10. With regard to the jurisdiction of civil Court, Section of 9 of CPC is the relevant Section. Section 9 of CPC reads as follows: "9. Courts to try all civil suits unless barred. The Courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. Explanation I: A suit in which the right to property or to an office is contested is a suit of a civil nature, notwithstanding that such right may depend entirely on the decision of questions as to religious rites or ceremonies. Explanation II: For the purposes of this section, it is immaterial whether or not any fees are attached to the office referred to in Explanation I or whether or not such office is attached to a particular place." 11. A reading of the section clearly shows that the Courts have jurisdiction to try all the suits of civil nature excepting suits which are either expressly or implied barred. This issue was considered by the Apex Court in the judgment reported in AIR 1995 SUPREME COURT 2001 (P.M.A METROPOLITAN and others Vs. MORAN MAR MARTHOMA and another). 12. In the said Judgment, the Apex Court considered the meaning of 'civil nature' incorporated in Section 9 of CPC. In paragraph 28, it has been held as follows: " 28. Each word and expression casts an obligation on the court to exercise jurisdiction for enforcement of right. The word 'shall' makes it mandatory. No court can refuse to entertain a suit if it is of description mentioned in the Section. That is amplified by use of 'expression, 'all suits of civil nature'. The word 'civil' according to dictionary means, 'relating to the citizen as an individual; civil rights'. The word 'shall' makes it mandatory. No court can refuse to entertain a suit if it is of description mentioned in the Section. That is amplified by use of 'expression, 'all suits of civil nature'. The word 'civil' according to dictionary means, 'relating to the citizen as an individual; civil rights'. In Black's Legal Dictionary it is defined as, 'relating to provide rights and remedies sought by civil actions as contrasted with criminal proceedings'." 13. In the judgment reported in 2009 (2) CTC 210 (SHANITA HOLDINGS SDN. BHD. and another Vs. SHANITA HOTEL TRICHY PRIVATE LIMITED and another) referred to by the learned counsel for the respondent before the learned Judge, this Court held as follows: It is to be borne in mind that the term ''Fraud'' is not employed in technical sense under Company Law. It specifies in such conduct of affairs as constituting a discrimination of the shareholders much less the minority shareholders for the purposes by this extent, indiscriminatory conduct is a fraudulent conduct. As a matter of fact, when no specific remedy is provided under the Companies Act, the proper remedy is a Suit which is to be filed in an appropriate Court, which may be a Court Subordinate to High Court. Indeed, unless a particular matter is specified in the act to be dealt with by Company Court, it cannot exercise its jurisdiction merely because it is also a matter which relates to the Company. It is an axiomatic fact that the exclusion of jurisdiction of the Civil Court is not to be readily inferred and such exclusion must either by explicitly expressed or clearly implied, as per principles of Statutory Interpretation. Generally speaking, presumption is in favour of existence of the jurisdiction rather than exclusion of jurisdiction of Civil Courts. Normally, the Civil Court's jurisdiction has three dimensions (a) It must have jurisdiction regarding the Subject matter (b) Civil Court should have pecuniary jurisdiction 8 Civil Court must have territorial jurisdiction to entertain the suit.'' 14. Considering the pleadings, the relief sought for and the judgments referred to above, I am of the view that the claim of the respondent is only of civil nature. It is not specifically barred by provisions of Companies Act. Therefore, I hold that the order of the learned Judge does not suffer from any material irregularity or illegality. Considering the pleadings, the relief sought for and the judgments referred to above, I am of the view that the claim of the respondent is only of civil nature. It is not specifically barred by provisions of Companies Act. Therefore, I hold that the order of the learned Judge does not suffer from any material irregularity or illegality. There is no infirmity in the said order warranting interference by this Court. 15. In the result, Civil Revision Petition is dismissed. No costs. Consequently, connected miscellaneous petition is closed.