Case Law Details
Relevant Extract
Originally the ancestor of the plaintiffs and the defendants, namely, B had started a proprietary concern. His son constituted six private limited companies and registered them under the Companies Act, 1956, and all the shareholders of these companies being the heirs of the late B, the companies were family concerns. The Defendants Nos. 2 to 6 started defendants Nos. 7 to 12 companies out of the funds of the original concern.
In a suit for partition and rendition of accounts the plaintiffs claimed that the companies were started from the assets of the common ancestor, that they had rights in the properties of their common ancestor and that the defendants were keeping the profits and assets of the companies to themselves depriving the plaintiffs of their share. The defendants opposed the claim on the ground that the plaintiffs had not shown any document of proof of inheritance regarding their one-eighth share each and the allegation could not be decided in a suit for partition and rendition of accounts as the remedy was available before the Company Law Board or the Company Court .
The Court observed that except in cases where the Companies Act, 1956, confers jurisdiction on the company court or some other authority like the Central Government or the Company Law Board, either expressly or by implication all other disputes pertaining to a company are to be resolved through the forum of the civil courts.
The Court, therefore, held that sections 397 to 407 of the Act did not specifically bar the suit of the plaintiff. In the absence of words expressly or clearly barring the jurisdiction of the civil court, it would not be appropriate to hold that the jurisdiction of the civil court was barred u/ss. 397 to 407 of the Act. The plaintiffs not being the shareholders were seeking partition of the properties of the companies and rendition of accounts which would involve determination of the fact whether those properties were the properties acquired form the common properties of the common ancestor or of defendants Nos. 1 to 6 which could not be adjudicated by a company court under the provisions of the Act. Whether the shares had been inherited by the plaintiffs or not and to what extent the shares had been inherited was to be determined by a civil court. Whether some of the properties of the companies had been misappropriated and transferred by defendants Nos. 1 to 6 for their personal use and could not be transferred were disputes which could not be determined by the company court under the provisions of the Act. For partitioning of the assets of defendants Nos. 7 to 12 companies after determining that they were started from the assets of the common ancestor and the share of the plaintiff, if dissolution of the companies was required the invocation of the company court jurisdiction may be required and the civil suit for partition would not be completely barred. Therefore, it could not be inferred that the suit of the plaintiffs was barred u/ss. 397 to 407 of the Act.
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