George John & Divakaran K. v. NADUKKARA AGRO PROCESSING CO.LTD.

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE THOMAS P.JOSEPH** **FRIDAY, THE 4TH NOVEMBER 2011 / 13TH KARTHIKA 1933** **OP(C).No. 3607 of 2011()** **---------------------------------OS.180/2011 of SUB COURT, MUVATTUPUZHA ....................** **PETITIONERS** **--------------------** **1. GEORGE JOHN, AGED 50 YEARS, S/O.M.T.JOH, MONIPPALLY HOUSE, ANICKADU, AVOLI P.O., MUVATTUPUZHA-686 677.** **2. DIVAKARAN K., AGED 65 YEARS, S/O.KUNJAN, MARIPUTHANPURAYIL, KALAMPOOR, ERAMALLOOR P.O., MUVATTUPUZHA.** **BY ADVS. SRI.JOY GEORGE SMT.PRAICY JOSEPH** **RESPONDENT(S):** **-------------------------** **NADUKKARA AGRO PROCESSING CO.LTD., VI/169, NADUKKARA, AVOLI P.O.,MUVATTUPUZHA-686 677.** **THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 04/11/2011 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **RKM** **OPC NO.3607/2011** ## **APPENDIX** ## **PETITIONER'S EXIHIBITS :** **P1 : COPY OF THE PLAINT AND THE INTERLOCUTORY APPLICATION NOS.1310 AND 1311 OF 2011 BEFORE THE SUB COURT MUVATTUPUZHA DTD.24.09.2011 P2 : COPY OF THE COUNTER AFFIDAVIT FILED BY THE RESPONDENT DTD.27.09.2011 P3 : TRUE COPY OF THE JUDGEMENT DATED 30.09.2011** **RESPONDENT'S EXIHIBITS : NIL** **/TRUE COPY/ PA TO JUDGE** ## **RKM** ## **THOMAS P.JOSEPH, J.** **==================================== O.P(C) No.3607 of 2011 ==================================== Dated this the 04[th] day of November, 2011** ## **J U D G M E N T** Shri S.V. Balakrishna Iyer, learned Senior Advocate appears for the respondent. 2. Challenge in this petition is to Ext.P3, judgment of the court of learned Sub Judge, Muvattupuzha in O.S. No.180 of 2011 holding that the suit is not maintainable in view of Secs.10GB, 397 and 398 of the Companies Act (for short, “the Act”), there is an ouster of jurisdiction of the civil court and the said provisions attract a bar to the suit. Learned Sub Judge held that the plaint in the circumstances is liable to be rejected under Rule 11(d) of Order VII of the Code of Civil Procedure (for short, “the Code”). 3. A preliminary objection is raised regarding maintainability of the Original Petition as the judgment passed under Rule 11 of Order VII rejecting the plaint is a 'decree' as defined in Sec.2(2) of the Code and hence the said judgment/order is appealable. But when the order is found to be prima facie illegal, notwithstanding the statutory remedy of appeal it is within the power of this Court to exercise the **O.P(C) No.3607 of 2011** -: 2 :- supervisory jurisdiction under Article 227 of the Constitution. The reasons for holding so will be stated while I discuss the correctness of the order. 4. Petitioners filed O.S. No.180 of 2011 claiming that they are shareholders of respondent Company which is incorporated under the provisions of the Act, as per the Articles of Association the shares can be allotted only to registered target farmers of the respondent and to the Government of Kerala. The shares which could be allotted to the Government of Kerala is only upto 30% of the paid up capital. It is further alleged that in the 11[th] Annual General Body Meeting of the respondent was to be convened on 30.09.2011 regarding which notice dated 05.09.2011 was given to the shareholders but without mentioning about two Directors retiring by rotation though eligible for reappointment, those persons have offered for such reappointment. Petitioners also contended that there was no representation or proposal before the General Body to reappoint the two persons or to appoint anybody else and that the equity shares have been allotted illegally and in violation of the Act and the said allotment does not confer any right or interest on any person. Based on the said allegations reliefs are prayed for in the ## **O.P(C) No.3607 of 2011** ## -: 3 :- suit. 5. Learned counsel for petitioners submitted that along with the suit petitioners filed I.A. Nos.1310 and 1311 of 2011 for temporary injunction, those applications were posted on 27.09.2011 and heard on the said day. But on 30.09.2011 learned Sub Judge came with Ext.P3, judgment holding that the suit is not maintainable and hence the plaint is rejected under Rule 11(d) of Order VII of the Code. Learned counsel points out from the extract of the A diary given in the Original Petition that the suit was filed on 24.09.2011 on which day learned Sub Judge passed the following order: “R/s 27.10.2011. I.A. No.1308 of 2011 allowed. I.A. No.1310 and 1311/11 defendant entered appearance, Vakalath filed, for counter and Hg to 27/9 I.A. No.1809/11 call on 27/10”. On the strength of the above entries it is contended that what was heard on 27.09.2011 was I.A. Nod.1310 and 1311 of 2011 and that petitioners did not have the occasion to address **O.P(C) No.3607 of 2011** ## -: 4 :- arguments on the maintainability of the suit. Learned counsel contends that Sec.10GB of the Act has not come into force since the National Company Law Tribunal (NCLT) has not so far been established. Learned counsel invited my attention to the Press Note No.2/2003 dated 04.04.2003 issued by the Chairman of the Company (No.1/2003/CLV). In the said Press Note it is stated that the Companies (Second Amendment) Act, 2002 (11 of 2003) received the assent of the President of India on 13.01.2003, the Government have decided to bring into force provisions of Sec.2 and 6 of the Companies (Second Amendment Act, 2002 (11 of 2003) with effect from 01.04.2003, notification has been published in the Official Gazette dated 31.03.2003 as S.O.344(E) and that the above has been notified to enable the Government to initiate necessary steps for establishing the NCLT and make it operative. Paragraph 2 of the Press Note states that for the sake of clarity it stated that the notification bringing in the second Amendment Act 2002 (11 of 2003) will only set in motion all preliminary steps required for establishment of NCLT and upon establishment of the same a separate Notification regarding constitution of the NCLT will be issued. Till such time jurisdiction of the Company Law Board will continue to remain unchanged. **O.P(C) No.3607 of 2011** -: 5 :- 6. It is argued by learned counsel that the above amendment was made and NCLT was constituted to transfer jurisdiction of civil court and High Court in the matter to the NCLT and the National Appellate Tribunal. It is further contended that so far as the NCLT is not constituted, the civil court and High Court will continue to have its jurisdiction as before. According to the learned counsel mere Notification to constitute NCLT is not sufficient to take away the jurisdiction of the civil court and High Court. But the NCLT and the National Appellate Tribunal ought to be constituted and necessary Officers appointed, to make the provision effective taking way jurisdiction of the civil court and High Court. So far as Secs.397 and 398 of the Act is concerned learned counsel argued that learned Sub Judge did not hear the arguments of petitioners in that regard and at any rate did not refer to the various allegations in the plaint to decide whether, notwithstanding Secs.397 and 398 of the Act, learned Sub Judge had jurisdiction to proceed with the suit. It is contended that respondent had not filed written statement and no issue also has been raised regarding maintainability of the suit. 7. Learned Senior Advocate for respondent contended that a reading of the judgment would show that parties were ## **O.P(C) No.3607 of 2011** ## -: 6 :- heard on maintainability of the suit and hence at this stage it is idle to contend that petitioners were not heard on the maintainability of the suit. Learned Senior Advocate has placed ## reliance on the decision in **Sangramsinh P.Gaekwad (dead) through Lrs. and Others v. Shantadevi P.Gaekwad (dead) through Lrs. and Others** ([2005] 11 SCC 314) to contend that on the allegations made in the plaint, Company Law Board has jurisdiction to deal with the matter and thus there is a bar for the civil court to entertain the suit. In that view of the matter learned Sub Judge was correct in rejecting the plaint under Rule 11(d) of Order VII of the Code, it is argued. 8. Going by the relevant extract in the A diary given by petitioners it would appear that the suit was not posted on 27.09.2011. On the other hand on 24.09.2011 learned Sub Judge posted the suit on 27.10.2011 for return of the summons. It is not disputed that learned Sub Judge heard arguments of parties on 27.09.2011 on which day only I.A. Nos.1310 and 1311 of 2011 were posted. Therefore there is some weight in the contention of petitioners that they did not have occasion to address arguments regarding maintainability of the suit. 9. It appears from the judgment under challenge that ## **O.P(C) No.3607 of 2011** ## -: 7 :- learned Sub Judge has not gone into the question whether Sec.10GB of the Act is actually brought into force in the sense that the NCLT or National Appellate Tribunal has not been formed so that jurisdiction of the civil court if at all it be so, would stand ousted. I also take into account the argument advanced by learned counsel for petitioners that they did not have the occasion to address arguments on maintainability of the suit. It would also appear that in the judgment under challenge learned Sub Judge has not referred to various averments in the plaint and seen whether notwithstanding Secs.397 and 398 of the Act learned Sub Judge has jurisdiction to entertain the suit having regard to the allegations made therein. These are matters which learned Sub Judge has to decide afresh after hearing both sides. But for the purpose of hearing maintainability of the suit and deciding whether the plaint is to be rejected under Rule 11(d) of Order VII of the Code or not, it is not necessary that an issue has to be framed. That question has to be decided on the averments in the plaint and the relevant provisions of law. Original petition is allowed. Impugned judgment is set aside and the matter is remitted to the learned Sub Judge for fresh decision. I make it clear that it is open to the learned Sub ## **O.P(C) No.3607 of 2011** **==> picture [41 x 10] intentionally omitted <==** Judge to decide maintainability of the suit under Rule 11(d) of Order VII of the Code after hearing both sides. Parties shall appear in the court of learned Sub Judge on 30.11.2011. ## **THOMAS P. JOSEPH, JUDGE.** vsv