OM PRAKASH Vs. KAILASH GARG

JUDGEMENT

(1.) The plaintiff-appellant has preferred this civil second appeal under Section 100 of the Code of Civil Procedure against the judgment and decree dated 10.3.2010 passed by the Additional District Judge (Fast Track) No. 5, Jaipur City, Jaipur in Civil Regular Appeal No. 19/2009 whereby the learned appellate Court has upheld and affirmed the judgment and decree dated 26.9.2007 passed by the trial Court i.e. Additional Civil Judge (Junior Division) No. 2, Jaipur City, Jaipur in Civil Suit No. 402/2007 whereby the learned trial Court by allowing an application under Order 7 Rule 11 CPC filed by the defendant-respondents rejected the plaint on the ground that the Civil Court does not have jurisdiction to entertain the suit filed by the plaintiff-appellant. Brief relevant facts for the disposal of this appeal are that the appellant filed a suit for declaration and permanent injunction with the averments that the appellant is one of the Promoter-Director and 50% shareholder of a Private Limited Company namely M/s Garg Hospital & Research Institute Pvt. Ltd. whereas the other Promoter-Director and Holder of remaining 50% shares was his natural father Late Shri Sualal Garg. It was further averred that the land referred to in the plaint was in the possession of the appellant as Director of the said company. It was also submitted that the respondents in order to grab the properties of the company in collusion with Late Shri Sualal Garg on the basis of forged documents applied in the office of Registrar of Companies that the appellant has resigned from the company whereas the true fact is that the appellant is still a Director of the company and he has never left the company. It was further submitted that the respondents without any right on the basis of forged documents claimed to be Directors of the said company and they by further colluding with Late Shri Sualal Garg falsely increased the number of shares and without informing the appellant and without his consent illegally allotted shares of the company in their favour. It was also submitted that the acts of increase of capital of the company, issue of additional shares and appointment of new Directors were done so as to remove the appellant from the company and to bring the shares of the appellant to minority which is against the provisions of the Companies Act. In the plaint various other facts were also mentioned and in the end it was prayed that the respondents may be restrained by way of permanent injunction not to interfere in the possession of the appellant of the property owned by the company and also in the shares hold by the appellant. It was also prayed that it may be declared that the act of increasing the number of shares, removal of appellant from the directorship of the company and appointment of respondents as directors of the company is illegal and void against the rights of the appellant. It was also prayed that the transfer of shares in the name of respondent-Dr. Kailash Garg may also be declared illegal and void. Various other reliefs were also sought by the appellant. Respondents No. 1 and 3 filed an application under Order 7 Rule 11 CPC on 22.5.2007 stating therein that the reliefs sought by the appellant in the light of the provisions of the Companies Act are beyond the jurisdiction of a Civil Court and the same can be granted by a Company Law Board only. It was also averred that the plaint filed by the appellant does not disclose cause of action and it is liable to be rejected under the provisions of Order 7 Rule 11 CPC. Reply to the application was filed by the appellant with the averment that in the light of the provisions of Section 9 CPC, the reliefs sought by the appellant can be granted by a Civil Court only and, therefore, the trial Court has jurisdiction to entertain the suit filed by the appellant. It was averred that the appellant has not challenged any entries but he has sought various declarations which cannot be granted by Company Law Board. The learned trial Court after hearing both the parties vide order dated 26.9.2007 allowed the application filed by the respondents and rejected the plaint filed by the appellant on the ground that the suit is not entertainable by a Civil Court. Feeling aggrieved, the appellant filed appeal under Section 96 CPC before the learned appellate Court and the same was dismissed vide impugned judgment dated 10.3.2010. Still dissatisfied, the plaintiff-appellant is before this Court by way of this Civil Second Appeal.

(2.) After hearing both the parties, the appeal was admitted vide order dated 7.2.2011 on the following substantial questions of law:-

(3.) Assailing the judgment passed by the Courts below, learned counsel for the appellant submitted that for deciding an application under Order 7 Rule 11 CPC only the averments made in the plaint are relevant and they are taken to be entirely correct and at this stage of the proceedings the defence taken or proposed to be taken by the defendant cannot be considered. It was further submitted that it has been averred by the appellant in the plaint that he is a 50% shareholder and promoter-director of the company whereas the other shareholder and promoter-director was his natural father Shri Sualal Garg and in his life time Shri Sualal Garg only was looking after the affairs of the company whereas the respondents on the basis of fabricated and forged documents falsely prepared resignation letter of the appellant and he was also removed from the post of Director of the Company. It was also submitted that after the death of Shri Sualal Garg a return was filed before the Registrar of Companies on 12.12.2007 fasely showing therein that on in an annual general meeting held on 22.9.1997 a decision was taken and respondents Dr. Sanjay Mittal and Dr. Vibha Garg were added as directors of the company with effect from 22.9.1997. It was also submitted that according to the plaint averments all these acts were done on the basis of forged and fabricated documents as Dr. Sanjay Mittal and Dr. Vibha Garg were never appointed as directors of the company as no such meeting was ever held and decision was taken. It was also submitted that plaint averments also show that in the return so filed, an additional sheet of paper was inserted to show that the appellant resigned on 3.8.1998 and he was removed from the post of director with effect from 20.8.1998 and Dr. Sanjay Garg, Dr. Vibha Garg and Dr. Kailash Garg were appointed as directors with effect from 22.9.1998 whereas the said return does not bear the signature of the appellant. It was also submitted that the respondents without any right allotted shares to themselves between 2002 to 2004 and also increased share capital from Rs. 5 lacs to Rs. 25 lacs with effect from 10.3.1997. According to learned counsel for the appellant, the appellant by means of the present suit has sought declaration in respect of documents dated 22.8.1998, 10.9.1998 and 30.9.1998 to be declared as forged, illegal, void and ineffective against the appellant and he has also sought a declaration to the effect that the appellant still has 50% shareholding in the company. It was also submitted that permanent injunction has also been sought to the effect that the respondents may be restrained from interfering in the possession of the appellant on the land mentioned in the plaint and functioning as director of the company. Attracting attention of the Court towards various provisions of the Indian Companies Act (hereinafter to be referred as "the Act") and decisions relied upon by him, it was also submitted that the jurisdiction of a Civil Court should not easily held to be barred by law unless the special statute expressly or impliedly bars the same. It was further submitted that the grievances made and the reliefs sought by the appellant in the present case are of such a nature which relate to general law of the land and not arising for the first time under the provisions of the Act and, therefore, it could not be said that the jurisdiction of Civil Court is expressly or impliedly barred but the learned Courts below without considering the matter in a right perspective has wrongly held that the Civil Court has no jurisdiction to entertain the present suit. It was also submitted that the present suit is in regard to indiviaual rights of the appellant and, therefore, it is maintainable in the Civil Court. So far as the plea that the plaint does not disclose cause of action is concerned, it was submitted that in law the cause of action is a bundle of facts which is to be examined on the basis of averments made in the plaint and for which the whole plaint is to be read. Attracting attention towards various paras of the plaint, it was submitted that it is evident that the plaint discloses the cause of action whereas the first appellate Court has rejected the plaint on this ground also without referring and discussing the averments made in the plaint. It was further submitted that a member of a company has a right to apply under Sections 397 and 398 of the Act before the Company Law Board only when he has a right to apply under Section 399 of the Act whereas in the present case the appellant has no right to make an application under these provisions and, therefore, he has no alternate except to file a suit before a Civil Court. In support of his submissions, learned counsel for the appellant relied upon several decisions.