MARIKAR MOTORS LTD. Vs. RAVI KUMAR

JUDGEMENT

(1.) DEFENDANTS (1)and(2)in O.S.No.40/79 of the Subordinate Judge's Court of Trivandrum are the revision petitioners.The first petitioner is a company and the second is its Managing Director.The plaintiffs in the suit are four shareholders.And what is challenged is an order disposing of issues(1)and(21)to(24)as preliminary issues.I will assume that the revision is maintainable.

(2.) THE plaint allegations were these.The 37th annual general meeting of the company was held after a lapse of 22 months from the date of the previous general meeting,in violation of S.166 of the Companies Act.In October,1978 the company had only one director,namely,the 2nd defendant.He coopted defendants(3)to(6)as additional directors;this was beyond his competence.The Board so constituted called the 38th annual general meeting in December,1978.The Board was not competent to approve the Balance Sheet and Profit and Loss Accounts or to call the meeting.No proper notice was given to many members.Defendants(2)to(6)were indulging in fraudulent practices detrimental to the interests of the company.Part of the company's business was transferred to another company of which the 2nd defendant's wife was Managing Director.Funds were diverted to still another company of which the 2nd defendant himself was Managing Director.Manipulations were made in transferring agency business.Recoverable debts were written -off as bad debts.Assets of the company were transferred away unauthorisedly and illegally.Defendants(2)to(6)were mismanaging the affairs of the company and oppressing the minority.The main reliefs claimed on the above allegations were: - "( i)Declare the cooption of defendants(3)to(6)as illegal and void; ( ii)Remove defendants(2)to(6)from the Board of Directors as unfit for holding office,by reason of mismanagement,oppression and fraud; (iii)Appoint an administrator till a legally constituted Board is appointed;and(iv)Declare the 37th and 38th annual general meetings,and the decisions taken thereat as illegal and void." It appears that leave was obtained for suing in a representative capacity under O.1 R.8,CPC.It also appears that no evidence,oral or documentary,was adduced during the trial of the preliminary issues,and that the main point raised at the hearing was about the maintainability of the suit.At any rate,that is the only point pressed before me.

(3.) MR .Vyasan Poti for the revision petitioners contends that the court below should have dismissed the suit as not maintainable,on three alternate grounds: - "( i)The Companies Act is a complete and self contained code,and only the company court,in proceedings under the Act,could resolve disputes between a company and its members.The Act excludes the jurisdiction of the ordinary courts in all such matters; ( ii)The rule in Foss v.Harbottle [1843(2)Hare 461] prevents court from interfering with the internal management of a company; and(iii)In view of Chap.6 of the Companies Act,any complaint against oppression and mismanagement at least could only be voiced before the Company Court or the Central Government,and not before the civil court.'' I am dealing with these three contentions only from the point of view of maintainability of the suit in question;and I shall not be understood as holding that the powers of the ordinary courts are co -extensive with those of the Company Court or the Central Government under S.402 and 408 of the Companies Act,in the matter of granting relief.