IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOMAS P.JOSEPH THURSDAY, THE 25TH AUGUST 2011 / 3RD BHADRA 1933 OP(C).No. 2804 of 2011(O) ------------------------- OS.370/2011 of MUNSIFF COURT,MUVATTUPUZHA .................... PETITIONERS (S): ------------------------------- 1. SATHYAVAN, AGED 72 YEARS, S/O.GOVINDAN, MARIYIL HOUSE, ARAKUZHA VILLAGE, MUVATTUPUZHA TALUK. 2. RAJAN, AGED 30 YEARS, S/O.DAMODARAN, CHEREDIYIL HOUSE, NAGAPPUZHA, KALLOORKKADU VILLAGE, MUVATTUPUZHA TALUK. BY ADV. SRI.P.GOPALAKRISHNAN (MVA) SRI.A.R.EASWAR LAL RESPONDENT(S): --------------- M/S.NADUKKARA AGRO PROCESSING CO.LTD., (NAPC LTD.), NADUKKARA, MUVATTUPUZHA VILLAGE, MUVATTUPUZHA TALUK, REPRESENTED BY ITS MANAGING DIRECTOR, PIN – 686 661. BY SENIOR ADV. SHRI S.V.BALAKRISHNA IYYER SHRI P.FAZIL THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 25/08/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP(C) NO.2804/2011 APPENDIX PETITIONERS' EXHIBITS: EXT.P1 TRUE COPY OF THE SHARE CERTIFICATE ISSUED BY THE COMPANY TO THE FIRST PETITIONER EXT.P2 -DO- TO THE SECOND PETITIONER EXT.P3 TRUE COPY OF CERTIFICATE OF INCORPORATION OF THE DEFENDANT COMPANY EXT.P4 TRUE COPY OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY EXT.P5 TRUE COPY OF THE PLAINT ALONG WITH AN IA IN O.S.NO.370/2011 BEFORE THE MUNSIFF COURT, MUVATTUPUZHA EXT.P6 CERTIFIED COPY OF THE ORDER DATED 11.8.2011 IN OS NO.370/2011 OF THE MUNSIFF COURT, MUVATTUPUZHA EXT.P6 TRUE COPY OF THE ORDER DATED 11.8.2011 IN OS NO.370/2011 OF THE MUNSIFF COURT,MUVATTUPUZHA. //TRUE COPY// THOMAS P. JOSEPH, J. -------------------------------------- O.P.(C) No.2804 of 2011 -------------------------------------- Dated this the 25th day of August, 2011. JUDGMENT Respondent appears through Adv. Shri P.Fazil. 2. Ext.P6, order passed by the learned Munsiff, Muvattupuzha on August 11, 2011 in O.S.No.370 of 2011 is under challenge in this Original Petition. Petitioners filed the suit for a decree for prohibitory injunction to restrain respondent from allotting new shares to third parties (as the learned Senior Advocate, Sri. S.V.Balakrishna Iyyer who argued the matter as instructed by counsel for respondent submits, “the registered target farmers”) without considering the preferential claim of petitioners and, without complying with Sec.81 of the Companies Act (for short, “the Act”). It would appear that though summons was not ordered to the respondent, there was appearance on behalf of respondent in the trial court. Learned counsel who appeared for the respondent challenged maintainability of the suit in view of the provisions of the Act. Thereon learned Munsiff heard counsel on both sides and passed Ext.P6, order observing that on going through the pleadings and hearing counsel on both sides learned Munsiff was of the view that the question raised in the suit comes under the Act, the civil court has no jurisdiction to entertain the matters coming under the Act and hence the suit is not maintainable. Accordingly the suit was dismissed. OP(C) No.2804/2011 2 3. Learned counsel for petitioners contend that the order is ex facie illegal in that, it is not clear whether it is a rejection of plaint under Rule 11(d) of Order 7 of the Code of Civil Procedure (for short, “the Code”) or, it is a dismissal under Rule 2 of Order 14 of the said Code. It is submitted by learned counsel that assuming that the authority prescribed under the Act has jurisdiction to decide the issue involved, learned Munsiff did not go into that question whether the civil court could exercise the jurisdiction even on the face of an express ouster of its jurisdiction when it is alleged that the respondent is attempting to violate the provisions in the Act and the Articles of Association. It is also contended by learned counsel that in view of Sec.81A of the Act and Article 4 of Ext.P4, Articles of Association of respondent, the latter could not sell shares to third parties (as learned Senior Advocate puts it, 'the registered target farmers') without considering preferential claim of petitioners. According to the learned counsel, in such a situation when the respondent attempted to violate the provisions of the Act it was well within the power of the civil court to entertain the suit, the question whether petitioners are entitled to the ultimate relief as prayed for being an entirely different matter which did not affect the maintainability of the suit. In that situation, it is submitted that learned Munsiff could not have rejected the plaint under Rule 11(d) of Order 7 of the Code if at all that was the provision intended by the learned Munsiff. It is also argued that the trial court is not required to go deep into questions of law when deciding whether plaint is liable to be rejected under the said provision. The further contention is that if it is a OP(C) No.2804/2011 3 dismissal under Rule 2 of Order 14 of the Code it could have done only after respondent filed written statement and issues were framed and the issue regarding jurisdiction could be decided without reference to any disputed question of fact. 4. In response it is argued by learned Senior Advocate for respondent that in the nature of the order passed, it could be presumed to be one under Rule 11 (d) of Order 7 of the Code though it is not so expressly stated. It is also argued that in view of the decision in Sangramsinh P. Gaekwad (dead) through Lrs. and others v. Shantadevi P. Gaekwad (dead) through Lrs. and others [(2005) 11 SCC 314 – in particular, the observations in paragraphs 186 to 188] the Company Law Board alone had jurisdiction to decide the dispute. 5. Having heard learned counsel for petitioners and the learned Senior Advocate for respondent it appears to me that it is not necessary for me to go into the question whether the suit is maintainable or not in this proceeding. For, I find from the order under challenge that learned Munsiff has not given serious consideration to the averments in the plaint though it is stated that learned Munsiff has gone through the pleadings. It is also seen that the order does not say under which provision of law in the Act and how, the suit is not OP(C) No.2804/2011 4 maintainable, not so say, there is no mention whether it is a case of dismissal of the suit as mentioned in the impugned order or, it is a rejection of plaint under Rule 11(d) of Order 7 of the Code as the learned Senior Advocate would now canvass. Order passed by learned Munsiff must reflect application of mind to the relevant facts and law involved and the provision of law under which the suit is found to be not maintainable. Learned Munsiff has not considered the question whether, even on the face of an express ouster of jurisdiction of the civil court, it could entertain the suit if the allegation is that respondent is attempting to sell shares in violation of the provisions in the Act and Articles of Association. It is not as if without referring to the relevant provisions of law and considering all relevant aspects learned Munsiff could simply say that in view of the Act, the civil court has no jurisdiction to entertain the matters coming under the Act and hence the suit is not maintainable and accordingly dismiss the suit. The order is illegal and is liable to be set aside. I do so. However I make it clear that I have not expressed any opinion regarding the maintainability of the suit which learned Munsiff has to decide in accordance with the provisions of law and having regard to the facts and circumstances. Resultantly this Original Petition is allowed. Ext.P6, order is set aside. O.S.No.370 of 2011 is remitted to the court of learned Munsiff, Muvattupuzha for fresh decision. It is made clear that if the circumstances warranted it is open to the learned Munsiff to consider whether the provisions of Rule 11(d) of Order 7 OP(C) No.2804/2011 5 of the Code would apply or, after permitting the respondent to file written statement, learned Munsiff should consider maintainability of the suit as provided under Rule 2 of Order 14 of the Code if that provision applied on the factual situation. Petitioners shall appear before the learned Munsiff on 02.09.2011. THOMAS P.JOSEPH, Judge. cks