Telangana High CourtM/S. Crystal Dwellings Private Limited vs Surat Singh Malhotra on 4 August, 2022Bench:P Naveen Rao,G.Radha RaniIN THE HIGH COURT FOR THE STATE OF TELANGANA\n\n                             ********\n\n        CIVIL MISCELLANEOUS APPEAL NOs.274, 281 OF 2022\n\n                 and Cross Objections No. 24 of 2022\n\nBetween:\nM/s. Crystal Dwellings Private Limited,\nrep.by its Managing Director, Mahesh Kedia,\ns/o.Damodarlal, Aged 51 years, occu:Business,\nRegd.Office at 14-2-420, Sukhji Lane,\nGoshamahal, Near DVS Floor Concepts,\nChaknawadi, Hyderabad.\n                                                              ....Appellant\n      And\nSurat Singh Malhotra s/o.late Jagdish Singh Malhotra,\nAged 65 years, occu: Business, H.No.8-2-608/1/3,\nNamdhari Towers, 3rd Floor, Road No.10, Banjara Hills,\nHyderabad others.\n\n                                                         ...Respondents\n\nJUDGMENT PRONOUNCED ON                   : 04-08-2022\n\n\n                   HON'BLE SRI JUSTICE P.NAVEEN RAO\n                                   &\n                   HON'BLE DR. JUSTICE G.RADHA RANI\n\n1.     Whether Reporters of Local Newspapers may     :   YES\n       be allowed to see the Judgments ?             :\n\n2.     Whether the copies of judgment may be marked :    YES\n       to Law Reporters/Journals                    :\n\n3.     Whether Their Ladyship/Lordship wish to       :   No\n       see fair Copy of the Judgment ?               :\n                                                                     PNR,J & Dr.GRR,J\n                                                           CMA Nos.274 & 281 of 2022\n                                      2\n                    * HON'BLE SRI JUSTICE P.NAVEEN RAO\n                                   &\n                    HON'BLE DR. JUSTICE G.RADHA RANI\n\n      + CIVIL MISCELLANEOUS APPEAL NOs.274, 281 OF 2022\n\n                     and Cross Objections No. 24 of 2022\n\n\n%04-07-2022\n\n# M/s. Crystal Dwellings Private Limited,\nrep.by its Managing Director, Mahesh Kedia,\ns/o.Damodarlal, Aged 51 years, occu:Business,\nRegd.Office at 14-2-420, Sukhji Lane,\nGoshamahal, Near DVS Floor Concepts,\nChaknawadi, Hyderabad.\n                                                                  ....Appellant\n              Vs.\n$ Surat Singh Malhotra s/o.late Jagdish Singh Malhotra,\nAged 65 years, occu: Business, H.No.8-2-608/1/3,\nNamdhari Towers, 3rd Floor, Road No.10, Banjara Hills,\nHyderabad others.\n\n                                                              ...Respondents\n\n!Counsel for the petitioner : Sri A Venkatesh\n\nCounsel for the Respondents: Sri S Ravi,\n                             Senior counsel for M/s. R.S.Associates\n\n\n<Gist :\n\n>Head Note:\n\n? Cases referred:\n(2006) 5 SCC 353\nMANU/SCOR/46567/2020\n1985 SCC Online AP 55\n(2002) 108 Company Cases 516 AP\n2018 SCC Online J&K 249\n(2019) 18 SCC 569\n                                                                   PNR,J & Dr.GRR,J\n                                                         CMA Nos.274 & 281 of 2022\n                                   3\n\n\n\n             HONOURABLE SRI JUSTICE P.NAVEEN RAO\n                              &\n             HONOURABLE DR. JUSTICE G.RADHA RANI\n\n\n       CIVIL MISCELLANEOUS APPEAL NOs.274, 281 OF 2022\n\n                  and Cross Objections No. 24 of 2022\n\n                           Date : 04.08.2022\n\n\nCMA No.274 of 2022:\n\nBetween:\n\nM/s. Crystal Dwellings Private Limited,\nrep.by its Managing Director, Mahesh Kedia,\ns/o.Damodarlal, Aged 51 years, occu:Business,\nRegd.Office at 14-2-420, Sukhji Lane,\nGoshamahal, Near DVS Floor Concepts,\nChaknawadi, Hyderabad.\n                                                .... Appellant/petitioner/\n                                                                Plaintiff\n\n            Vs.\n\nSurat Singh Malhotra s/o.late Jagdish Singh Malhotra,\nAged 65 years, occu: Business, H.No.8-2-608/1/3,\nNamdhari Towers, 3rd Floor, Road No.10, Banjara Hills,\nHyderabad others.\n\n                                           ....Respondents/respondents/\n                                                           Defendants\n\n\n\n\nThis Court made the following :\n                                                                   PNR,J & Dr.GRR,J\n                                                         CMA Nos.274 & 281 of 2022\n                                     4\n             HONOURABLE SRI JUSTICE P.NAVEEN RAO\n                              &\n             HONOURABLE DR. JUSTICE G.RADHA RANI\n\n       CIVIL MISCELLANEOUS APPEAL NOs.274, 281 OF 2022\n\n                 and Cross Objections No. 24 of 2022\n\n\nCOMMON JUDGMENT:(Per Hon'ble Sri Justice P.Naveen Rao)\n\n\n      Heard Mr. A.Venkatesh learned counsel for the appellant and Sri\n\nS.Ravi learned senior counsel for the respondents.2.    The appellant is the company, registered under the provisions ofThe Indian Companies Act, 2013, represented by Sri Mahesh Kedia,\n\nManaging Director of the company.        The first respondent was initially\n\nappointed as Managing Director of the petitioner company on 02.05.2015\n\nand subsequently, his term was extended for a period of five years with\n\neffect from 02.05.2019 to 01.05.2024.3.    Appellant alleges that during his tenure, the first respondent has\n\ncommitted several illegalities, played fraud and acted against the interest\n\nof the appellant company, misappropriated crores of rupees belonging to\n\nthe appellant by withdrawing them or depositing them into his own\n\naccount or to his family members' accounts, increased his shareholding\n\nfrom 1,25,000 shares to 19,65,000 shares illegally. The first respondent\n\nmisused his capacity as Managing Director of the company and had\n\ntransferred lands belonging to the appellant company illegally in his\n                                                                         PNR,J & Dr.GRR,J\n                                                               CMA Nos.274 & 281 of 20225favour and in favour of his family members, who are the respondents 2 to\n\n6 herein.4.      It is further case of the appellant that the first respondent had\n\nexecuted 49 sale deeds in his favour in his personal capacity and\n\nexecuted one sale deed in favour of the second respondent, who is his\n\nwife, four sale deeds in favour of respondent no.3, one sale deed in favour\n\nof respondent no.4, four sale deeds in favour of respondent no.5 and five\n\nsale deeds in favour of respondent no.6. The respondents 2 to 6 are his\n\nwife,   sons   and   daughter-in-law.       The   respondent    no.1     was      also\n\ninstrumental in executing the sale deeds in favour of respondent nos.15\n\nto 21, who are other employees of the petitioner company, wife of the\n\nChartered Accountant and Company Secretary of the company. It\n\namounts to personal gain and unjust enrichment and thereby depriving\n\nthe company of its legitimate assets and money. It is further contended\n\nthat all the transfers affected by the respondent no.1 are illegal, without\n\nany authorization of the Board and as such they are liable to be cancelled.5.      It is further alleged that the first respondent had created Board\n\nResolutions dated 22.04.2021 and 16.06.2021, where under authorized\n\none J.Ramaswamy Sastry, employee of the company to execute sale deeds\n\nin favour of the respondent nos.15, 17 to 21. It is further alleged that the\n\nrespondent no.1 failed to handover the records and documents belonging\n\nto the company.PNR,J & Dr.GRR,J\n                                                         CMA Nos.274 & 281 of 202266.    Having come to know of the misdeeds by first respondent, in the\n\nBoard Meeting conducted on 14.07.2021, the first respondent was\n\nremoved from the Office of the Managing Director of the appellant\n\ncompany and in his place, Sri Mahesh Kedia was appointed as Managing\n\nDirector. The appellant company issued legal notice dated 16.07.2021\n\ncalling upon the first respondent to return all the records and documents\n\nof the company, but there is no response from the first respondent. The\n\nappellant company has initiated proceedings underSection 452of the\n\nIndian Companies Act for not returning the records and documents of the\n\ncompany.7.    The appellant instituted O.S.No.119 of 2021 in the Court of\n\nPrincipal District and Sessions Judge at Sanga Reddy praying to grant\n\ndecree to cancel all the sale deeds where under properties of the appellant\n\ncompany were sold and to grant mandatory injunction in favour of the\n\nplaintiff and against the defendants directing defendants 1 to 6 and 15 to\n\n21 to return the original link documents pertaining to the properties\n\nmentioned in the schedule to the plaint.8.    I.A.No.771 of 2021 is filed by the appellant/plaintiff under Order\n\nXXXIX Rules 1 and 2 read withSection 151of Code of Civil Procedure,\n\n1908, (for short, 'CPC') to grant ex parte ad-interim injunction restraining\n\nthe respondents 1 to 6 and 15 to 21, their agents, workmen from\n\nchanging the nature of the suit schedule properties.PNR,J & Dr.GRR,J\n                                                         CMA Nos.274 & 281 of 202279.      I.A.No.772 of 2021 is filed by the appellant/plaintiff under Order\n\nXXXIX Rules 1 and 2 read withSection 151of CPC to grant temporary\n\ninjunction restraining the respondents 1 to 6 and 15 to 21, from\n\nalienating the suit schedule properties in favour of the third parties, till\n\nfurther orders.10.     By common order dated 25.02.2022 the trial Court dismissed both\n\nI.As.    Challenging the decision of the trial Court these two Civil\n\nMiscellaneous Appeals are preferred.11.     During the course of hearing these two I.As., the first respondent\n\nraised the plea of maintainability of a suit in the civil Court and\n\nconsequently the two I.As.     It was contended thatSection 430of the\n\nCompanies Act bars the jurisdiction of civil Court in disputes relating to\n\ncompanies and the aggrieved party has to invoke the jurisdiction of the\n\nNational Company Law Tribunal.12.     This plea of respondents on maintainability of the suit in a civil\n\nCourt is negatived and the trial Court held suit is maintainable.13.     The respondents 1 to 6 filed cross-objections raising the plea of\n\nmaintainability of the suit and the CMAs arising out of interlocutory\n\norders of the trial Court.PNR,J & Dr.GRR,J\n                                                         CMA Nos.274 & 281 of 2022814.1.   Learned counsel for appellant contended that large extent of land\n\nbelonging to the company was illegally knocked away by the first\n\nrespondent and his family members. With trust and confidence, the first\n\nrespondent was appointed as Managing Director.       But, he misused his\n\nposition and transferred the land of the company to his name and in the\n\nname of his family members.        He has misused his position in the\n\ncompany to commit several other illegalities. In order to recover the land\n\nof the company, the company was compelled to file civil suit.\n\n\n14.2.   He would submit that 71 sale deeds were executed in his name or\n\nin the name of his family members and sale proceeds are not accounted\n\nin the company accounts. That shows there are fraudulent transactions\n\nto knock away the properties of the company.14.3.   He would contend that the Managing Director has fiduciary\n\nrelationship with the company, but he misused his official position,\n\nplayed fraud and caused huge loss to the company.14.4.   He would submit that the trial Court grossly erred in not granting\n\ninjunction.   There is every possibility of the respondents creating third\n\nparty interest and changing the physical features of the land and in such\n\nan event grave prejudice would be caused to the appellant.PNR,J & Dr.GRR,J\n                                                             CMA Nos.274 & 281 of 2022915.1.   Per   contra,   learned   senior   counsel   for   respondents       raised\n\npreliminary objection on maintainability of the suit in the civil Court and\n\nthese appeals arising there from.      According to learned senior counsel\n\nwhat is urged in the suits are company disputes and such disputes have\n\nto be urged only before the National Company Law Tribunal (NCLT) and\n\ncivil suit is not maintainable.    He placed reliance onSections 430,241and242of the Companies Act.15.2.   He would further submit that first respondent as Managing\n\nDirector was authorized to represent the company in all aspects. He was\n\ncompetent to execute sale deeds on behalf of the company. The company\n\nsold the land. All sale transactions reflect receiving full sale consideration\n\nand there was no illegality in executing the sale deeds. The sale deeds are\n\nin compliance of law.15.3.   He would submit that as sale transactions were in compliance of\n\nlaw, balance of convenience is not in favour of the appellant. The trial\n\nCourt has assigned reasons in rejecting the applications to grant\n\ninjunctions. There is no illegality committed by the trial Court in rejecting\n\nthe injunction applications.PNR,J & Dr.GRR,J\n                                                             CMA Nos.274 & 281 of 20221015.4.     Learned senior counsel placed reliance on the decision of the\n\nHon'ble Supreme Court inPrem Singh and others vs. Birbaland others1\n\n(paragraph-27).16.      In reply, learned counsel for appellant contended that what is\n\nprayed in the suit is not barred bySection 430of the Companies Act and\n\nthe suit is maintainable.     He placed reliance on the decision of Hon'ble\n\nSupreme Court inDarshan Anilkumar Patel vs. Pravinkumar Jinabhai Pateland others2.      He would submit thatSection 241only deals with a\n\nmember/shareholder of the company and does not envisage remedy\n\nbefore the Tribunal by the company.           Therefore, to declare the sale\n\ntransactions as void only civil Court has jurisdiction.17.     Issues for consideration:(i) Whether the suit of the appellant is maintainable in the civil\n\nCourt ?(ii) Whether the appellant is entitled to injunctions prayed for ?Issue (i):18.Section 430of the Companies Act takes away jurisdiction of the\n\ncivil Court to entertain any suit or proceeding in respect of any matter\n\nwhich the NCLT or the National Company Appellate Tribunal is\n\nempowered to determine by or under the Act or any other law for the time\n\n1   (2006) 5 SCC 353\n2   MANU/SCOR/46567/2020\n                                                                                              PNR,J & Dr.GRR,J\n                                                                                    CMA Nos.274 & 281 of 202211being in force. It also restrains civil Courts to issue injunction orders on\n\nsuch matters. Insofar as these cases are concerned,Sections 241and242of the Act are relevant.Section 241(1)3of the Act enables a member\n\nof a company to apply to the Tribunal complaining on various aspects\n\nenlisted in clauses (a) and (b). According toSection 242, in any\n\napplication filed underSection 241, if the Tribunal opines the affairs of\n\nthe company have been or are being conducted in a manner prejudicial\n\nor oppressive to any member or members or prejudicial to public interest\n\nor in a manner prejudicial to the interest of the company; and opines to\n\nwind up the company would unfairly prejudice such member or members,\n\nbut otherwise the facts would justify the making of a winding-up order,\n\nthe Tribunal may, with a view to bringing to an end the matters\n\ncomplained of, make such order as it thinks fit.19.Section 241makes it clear that a member of a company or Central\n\nGovernment can only file a complaint setting in motion appropriate action\n\nby the Tribunal underSection 242, which can even result in initiation of\n\n\n\n3S.241.Application to Tribunal for relief in cases of oppression, etc. --(1) Any member of a company who complains that -(a) the affairs of the company have been or are being conducted in a manner prejudicial to public\ninterest or in a manner prejudicial or oppressive to him or any other member or members or in a manner\nprejudicial to the interests of the company; or(b) the material change, not being a change brought about by, or in the interests of, any creditors,\nincluding debenture holders or any class of shareholders of the company, has taken place in the management\nor control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership\nof the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever,\nand that by reason of such change, it is likely that the affairs of the company will be conducted in a manner\nprejudicial to its interests or its members or any class of members,\n      may apply to the Tribunal, provided such member has a right to apply underSection 244, for an order\nunder this Chapter.PNR,J & Dr.GRR,J\n                                                                                       CMA Nos.274 & 281 of 202212winding-up proceedings. An order passed undersection 242(1)4can also\n\nprovide for setting aside any transfer, delivery of goods, payment,\n\nexecution or other act relating to property made or done by or against the\n\ncompany within three months before the date of application or recovery of\n\nundue gains made by the Managing Director or Manager or Director\n\nduring the period of their appointment.20.         A combined reading ofSections 241and242make it clear that on\n\ncomplaint given by the member of the company, the Tribunal can go into\n\nthe functioning of the company and take appropriate action as warranted\n\nincluding winding-up and taking action underSection 242 (2) (g)& (i)5 of\n\nthe Act. From the reading of clause (g) of sub-section (2), it is manifest\n\nthat to take action to set aside any transfer, delivery of goods, payment,\n\nexecution or other act relating to property that action ought to have been\n\nmade or done by or against the company within three months before the\n\ndate of filing application underSection 241.4S.242. Powers of Tribunal. --- (1) If, on any application made underSection 241, the Tribunal is of the\nopinion--(a) that the company's affairs have been or are being conducted in a manner prejudicial or oppressive to\nany member or members or prejudicial to public interest or in a manner prejudicial to the interests of the\ncompany; and(b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the\nfacts would justify the making of a winding-up order on the ground that it was just and equitable that the\ncompany should be wound up,\n       the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks\nfit.5S.242. Powers of Tribunal.(2)Without prejudice to the generality of the powers under sub-section (1), an order under that sub-section\nmay provide for-- (g) the setting aside of any transfer, delivery of goods, payment, execution or other act\nrelating to property made or done by or against the company within three months before the date of the\napplication under this section, which would, if made or done by or against an individual, be deemed in his\ninsolvency to be a fraudulent preference; (i) recovery of undue gains made by any managing director, manager\nor director during the period of his appointment as such and the manner of utilization of the recovery including\ntransfer to Investor Education and Protection Fund or repayment to identifiable victims;PNR,J & Dr.GRR,J\n                                                                                       CMA Nos.274 & 281 of 20221321.      In the case on hand, the complaint is not by the individual member\n\nof the company, but by the company itself seeking to cancel the sale\n\ndeeds       executed         by     the     then       Managing          Director/first          respondent\n\nrepresenting the company in his own name or in the name of his family\n\nmembers, a total of 79 transactions and sale transactions were made\n\nmuch prior to three months from the date of filing of the civil suit.\n\nTherefore, even if course suggested bySection 242is to be followed, no\n\nsuch action can be taken underSection 242 (2)(g). Therefore, perforce,\n\nprovisions inSections 241and242are not attracted to the cases on\n\nhand.22.Section 96of the CPC vests jurisdiction in a civil Court to try all\n\nsuits of a civil nature excepting suits of which their cognizance is either\n\nexpressly or impliedly barred.                      Disputes concerning execution of sale\n\ndeeds affecting immovable property are a civil dispute.Section 430of the\n\nCompanies Act bars jurisdiction of the civil Court only when a matter\n\nwhich the Tribunal or the appellate Tribunal is empowered to determine\n\n\n\n\n                                                             .6S.9of CPC. Courts to try all civil suits unless barred The Courts shall (subject to the provisions herein\ncontained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either\nexpressly or impliedly barred.[Explanation I].--A suit in which the right to property or to an office is contested is a suit of a civil nature,\nnotwithstanding that such right may depend entirely on the decision of questions as to religious rites or\nceremonies\n[Explanation II].--For the purposes of this section, it is immaterial whether or not any fees are attached to the\noffice referred to in Explanation I or whether or not such office is attached to a particular place.]\n                                                                      PNR,J & Dr.GRR,J\n                                                            CMA Nos.274 & 281 of 202214by or under the Act.     What is required to be seen is whether there is\n\nexpress or implied bar of jurisdiction of civil Court.23.   In the facts of these cases, onlySection 241is applicable and\n\nwhereasSection 241is not attracted as the dispute is raised by the\n\ncompany against its former Managing Director.            Therefore, the issue\n\nraised in the civil Court is not barred expressly ousting the jurisdiction of\n\nthe civil Court. From the reading ofSection 430read withSections 241and242, it cannot be said that impliedly also the jurisdiction of civil\n\nCourt is ousted. The scheme ofSection 241can be understood by looking\n\ninto provision inSection 59. According to this section, if the name of any\n\nperson is entered in the register of members or omitted from the register\n\nor if a default is made or unnecessary delay takes place in entering in the\n\nregister, the person aggrieved or any member of the company or the\n\ncompany itself may apply in such form as may be prescribed to the\n\nTribunal. In such a case, it is deemed that the jurisdiction of the civil\n\nCourt is ousted.24.   JuxtaposingSection 59withSection 241, it is apparent that while\n\nunderSection 59a company can also file complaint or application before\n\nthe Tribunal, underSection 241only a member can file such a complaint.\n\nA company has no remedy before the Tribunal.             Further, the course\n\nsuggested bySection 242 (2)(g)can be adopted when the Tribunal is\n                                                                       PNR,J & Dr.GRR,J\n                                                             CMA Nos.274 & 281 of 202215satisfied that winding-up process be set in motion. Therefore, it cannot\n\nbe assumed that jurisdiction of the civil Court is ousted.\n\n\n25.1.InAvanti Explosives Private Limited vs. The Principal Subordinate\n\nJudge, Tirupathi, Chittoordistrict and another7, the jurisdiction of civil\n\nCourt vis-à-vis theCompanies Actwas considered by the learned single\n\nJudge of this Court, as he then was. Briefly the facts to the extent\n\nrelevant are, a proposal to shift the Registered Office of the petitioner\n\ncompany from Secunderabad to Tirupathi was accepted by the Board of\n\nDirectors. At Tirupathi, the company was to be located in a premises as a\n\nlessee of another firm by name Avanthi Enterprises, which in turn was\n\nthe principal lessee from the owners of the building.    The 2nd respondent-\n\nplaintiff was a partner of Avanthi Enterprises with whom the petitioner-\n\ncompany entered into the sub-lease. It was alleged that 2nd respondent\n\ndid not specifically disclose the fact of his being a partner of Avanthi\n\nEnterprises to the company as required bySection 293read withSection\n\n299of the Indian Companies Act, 1956. On that ground, the other\n\nDirectors are said to have passed a resolution holding that the plaintiff\n\nhas become disqualified from being a Director with retrospective effect\n\nfrom 13.06.1980. Second respondent filed the civil suit contending that\n\nhe was present at the meeting which took place on 13.02.1984 and no\n\nsuch resolution disqualifying him was passed.           He claimed that 2nd\n\n\n7   1985 SCC Online AP 55\n                                                                              PNR,J & Dr.GRR,J\n                                                                    CMA Nos.274 & 281 of 202216respondent-plaintiff continues to be the Managing Director of the 1st\n\ndefendant (petitioner-company) and for further declaration that any Board\n\nmeeting held by the petitioner subsequent to 13.02.1984 is null and void\n\nand also for further declaration that any change effected in the\n\ncomposition of the Board of the petitioner subsequent to 13.02.1984 is\n\nillegal.    He   also   sought   for   permanent     injunction       restraining       the\n\ndefendants therein from interfering with the office of the 2nd respondent-\n\nplaintiff as Managing Director in the day-to-day affairs of the petitioner-\n\ncompany.25.2.      At that stage, instant Writ Petition was filed contending the\n\ndisqualification specified inSection 283 (1)(i)and299of the Act relates to\n\ncertain rights unknown to the common law and those rights as well as the\n\nremedies in that regard are those specially created by theCompanies Actand the 2nd respondent ought to have approached the Company Court\n\nand not the civil Court for adjudication of disputes relating to his\n\ndisqualification.25.3.      Having regard to the objection raised on maintainability of the civil\n\nsuit, the question considered by the Court was "whether the civil Court\n\nhas     jurisdiction    to   decide    the    question   relating    to    the     alleged\n\ndisqualification of the 2nd respondent". The learned single Judge held as\n\nunder:PNR,J & Dr.GRR,J\n                                                                       CMA Nos.274 & 281 of 202217"11. It will be noted that there is no express provision ousting the jurisdiction of\nthe Civil Court in any particular respect. All thatSection 10does is to state that\n"the Court" having jurisdiction under the Act shall be the High Court in whose\njurisdiction, the registered office of the Company is situate, except to the extent\nto which the jurisdiction has been conferred on any District Court under sub-section (2) by notification issued by the Central Government. The Central\nGovernment can empower a District to exercise all or any jurisdiction conferred\nby this Act "upon the Court" except the jurisdiction conferred bySection 237,391,394,395and397to407(both inclusive) and not being the jurisdiction\nconferred in respect of Companies with paid-up share capital of not less than Rs.\none lakh by Part-VII and the provisions of the Act relating to winding up of\ncompanies.xx13. In my viewsection 10of the Act only proceeds to enumerate or specify "the\ncourt having jurisdiction under this Act", wherever such jurisdiction is conferred\non "the Court, by the other provisions of the Act. Powers are conferred by the Act\nnot only on Courts but also on other authorities like the Central Government, the\nCompany Law Board and the Registrar and where a power is vested in a Court\nthat Court has to be specified Beyond so specifying the Court competent to deal\nwith a matter arising under the Act,Section 10does not purport to invest the\nCompany Court with jurisdiction over every matter arising under the Act. It may\nbe that, in view of the elaborate provisions contained in the 1956 Act in regard to\nthe Managing and the conduct of a Company's affairs including important\ninternal matters of administration, the Court's interference by Civil Court has\nbecome more limited, but the power has not at all been taken away. Every suit\nfor redress of individual wrongs cannot be considered as merely concerned with\nmatters of internal management. (M.P. Menon, J. in P. Prakasam v. Sri Narayana\nDharma Paripalan Yogam (1) 1980 (50) Company Cases page 611.\nxx23.In our High Court inBhagwandas v. Canara Bank Ltd.(16) (1978) 1 An. W.R.\n504 Chennakesav Reddi, J. (as he then was) held that a suit for recovery of\nmoney against the Canara Bank in respect of the deposit amount payable by the\nplaintiff in respect of twelve shares was maintainable, observing:--"Section 10of the Companies Act also confers exclusive jurisdiction on the High\nCourt only in respect of matters covered bySections 237,391,394,395and397to407(both inclusive) and in respect of matters covered by part VII of the\nCompanies Act with a paid up capital of one lakh of rupees and over in respect of\nother provisions relating to winding up of the companies. Except in respect of\nthese matters, the ordinary jurisdiction of the civil courts to decide the rights of\nparties is not excluded.".xx25. Following the aforesaid rulings, with which I respectfully agree, I hold that\nthe present case deals with an individual, right of the 2nd respondent and that\nthe suit filed by him is maintainable.xx32. I, therefore, hold that the general law of contracts is the basis of the rights of\nparties and that the companies Act, 1956 merely regulates these rights and does\nnot create any new rights or remedies. Unless as stated in Wolverhampton's\ncase (22) there is an exclusion of the jurisdiction of the civil court, by words\n                                                                                       PNR,J & Dr.GRR,J\n                                                                             CMA Nos.274 & 281 of 202218express or implied, the suit is maintainable, and no such exclusion has been\n         held existing by the courts in respect of individual rights."26.      The Division Bench of High Court inTej Prakash S.Dangi and others\n\nvs. Coramandal Pharmaceuticals Limited8, affirmed the decision of learned\n\nsingle Judge and held the contrary view taken inNizamabad Corn Products\n\n(P) Limited vs. Vasudev Waliais overruled. Paragraph-8 reads as under:"8. Pressing for the opposite view, Mr.Sastry has placed reliance on a decision\n         of a Single Judge of this court inNizamabad Corn Products (P) Ltd. V. Vasudev\n         Walia. The courtin that casewas considering the maintainability of a suit in the\n         civil court to declare a resolution passed in the annual general meeting and the\n         meeting of the Board of Directors removing a Director of a Company as illegal\n         and void and for permanent injunction. The learned Judge held that the view\n         that the civil court's jurisdiction has not been taken away merely becauseSection\n         10confers jurisdiction on the High Court, cannot be correct in view of the\n         specific direction contained inSection 10(1)(a), viz., 'except to the extent to\n         which jurisdiction has been conferred on any District Court, in pursuance of\n         Sub-section (3)'. The learned Judge proceeded on the footing that the civil court\n         has jurisdiction only in matters in respect of which specific jurisdiction has been\n         conferred upon it and that otherwise, the High Court has the exclusive\n         jurisdiction in all matters. Since the learned Judge was deciding contrary to the\n         view taken in the earlier decision of the court in Avanthi Explosives P.Ltd. v.\n         Principal Subordinate Judge (1997) 5 Com LJ 345 (AP) - it was necessary to have\n         referred the case to a larger Bench. A judgment of a co-ordinate Bench is\n         binding unless it is overruled by a larger Bench. Besides, the view was also not\n         legally correct. The civil court would have jurisdiction in all matters unless its\n         jurisdiction is either expressly or by implication ousted. We hence overrule the\n         decision."27.InBakshi Faiz Ahmad v. Bakshi Farooq Ahmadand another9, it was\n\ncontended that the suit instituted by the respondent no.1 for declaration,\n\npartition, possession with mandatory and permanent injunction against\n\nappellant and second respondent was not maintainable. Elaborately\n\nconsidering the various provisions of theCompanies Act, learned single\n\nJudge of J&K High Court held as under:8   (2002) 108 Company Cases 516 AP\n9   2018 SCC Online J&K 249\n                                                                                         PNR,J & Dr.GRR,J\n                                                                               CMA Nos.274 & 281 of 202219"35. Qua applicability of provisions ofCompanies Act, 2013, it is well settled law\n          that a serious question of fraud and collusion cannot be decided by the Tribunal\n          in a summary proceeding. Given the relief solicited for by respondent no. 1 in the\n          Suit for Declaration, Partition and Injunction, the Tribunal has no power to\n          decide the title of the shares in summary proceedings.Section 58of the\n          Companies Act, provides that rectification of register of members has to be\n          decided by Tribunal and as perSection 430, the Civil Court has no jurisdiction.At the same time, it is also a trite law that Tribunal has a power only to decide\n          the issue of rectification of register of members and has no power to decide the\n          issue of title. It is apt to mention here that as perSection 111Aof the Companies\n          Act, 1956, the Company Law Board was empowered to decide the issue of title\n          also. The word 'title' has not been included inSection 58of the Companies Act,\n          2013. Even while consideringSection 111A, it was held by the Supreme Court\n          that a seriously disputed question of title cannot be decided by the Company\n          Court or Company Law Board. This conclusion was arrived at by the Supreme\n          Court by taking into consideration jurisdiction of the Company Law Board being\n          summary in nature. The procedure in National Company Law Tribunal\n          constituted under theCompanies Act, 2013, is also summary in nature.36. From the provisions ofCompanies Act, 2013and 1956, it is clear that\n          Tribunal, or Board as the case may be, can decide only rectification of register\n          concerning shares and connected incidental issues and matters therewith and\n          not disputed questions of title. In the present case, a bare perusal of averments\n          in the plaint as well as the relief sought for by respondent no. 1 shows that to\n          decide the issue raised by him vis-à-vis share(s)/title of the property in question\n          is a disputed question of title, which can be decided by the Civil Court and the\n          Tribunal/Company Law Board has no power to adjudicate the said issue. The\n          Supreme Court inAmmonia Supplies Corporation (PT) Limited v. Modern Plastic\n          Containers (P) Ltd., (1998) 7 SCC 105, the scope of jurisdiction of the Company\n          Court to deal with an issue of rectification in the Register of Members maintained\n          by the Company was considered.Following Public Passenger Service\n          Limited v. M.A. Khadar, AIR 1966 SC 489, it was held that jurisdiction underCompanies Act, was summary in nature. If for reasons of complexity or\n          otherwise, the matter could be more conveniently decided in a suit.InStandard\n          Chartered Bank v. Andhra Bank Financial Services Limited, (2006) 6 SCC 94, it\n          was observed that jurisdiction of Tribunal being summary in nature, a seriously\n          disputed question of title could be left to be decided by the civil court as same\n          being more appropriate remedy for investigation and adjudication of such\n          seriously disputed question of title.InLuxmi Tea Company Limited v. Pradip\n          Kumar Sarkar, 1989 Supp (2) SCC 656, it was observed that a company did not\n          have any discretion in rectifying its register except to require the procedure being\n          followed."28.1. In Shashi Prakash Khemka (dead) through Legal Representatives and\n\nanother vs. NEPC MICON (now NERPC India Limited) and others10, matter\n\nconcerns transfer of shares. On appeal filed against the order of Company\n\n\n\n10   (2019) 18 SCC 569\n                                                                                     PNR,J & Dr.GRR,J\n                                                                           CMA Nos.274 & 281 of 202220Law Board, Madras High Court reversed the decision of the Company Law\n\nBoard and appellants were left to avail a remedy of civil suit.\n\n\n28.2.   The issue raised therein is covered by the provision inSection 59of\n\nthe Act.Section 59vests jurisdiction in the NCLT. In view thereof the civil\n\nsuit remedy completely barred and only National Company Law Tribunal\n\nalone is entitled to adjudicate the dispute raised underSection 59.\n\nParagraph-6 reads as under:"6. It is not in dispute that were a dispute to arise today, the civil suit remedy\n        would be completely barred and the power would be vested with the National\n        Company Law Tribunal (NCLT) underSection 59of the said Act. We are\n        conscious of the fact that in the present case, the cause of action has arisen at\n        a stage prior to this enactment. However, we are of the view that relegating the\n        parties to civil suit now would not be the appropriate remedy, especially\n        considering the manner in whichSection 430of the Act is widely worded."29.1.InDarshan Anilkumar Patel(supra), in a civil suit filed before the\n\ncivil Court, it was contended that defendant no.1-Pravinkumar Jinabhai\n\nPatel was not competent to execute sale deeds on various properties in\n\nfavour of defendants 2 to 19 and agreement to sell in favour of defendant\n\nno.20. By judgment and decree dated 15.04.2013, trial Court dismissed\n\nthe suit.   The trial court held that Sri Anilkumar was not a Director of\n\nKalpita Buildings Pvt. Ltd., and further held that defendant no.1 was the\n\nManaging Director of Kalpita Builders Pvt. Ltd. and that the alienation\n\ndone did not suffer from any infirmity and that there was a mis-joinder of\n\ncauses of action. On this, two appeals were preferred, one by the Company\n\nand another by Sri Anilkumar. It was contended that jurisdiction of civil\n                                                                                       PNR,J & Dr.GRR,J\n                                                                             CMA Nos.274 & 281 of 202221Court is barred in view ofSection 430of the Act. Learned single Judge of\n\nBombay High Court in W.P.No.1139 of 2020 held as under:"9.Section 430is brought into force with efect from 01st June, 2016, vide\n      Notifcation No. SO 1934(E), dated 01.06.2016. The submission of the plaintif,\n      that the jurisdiction of the Civil Court is barred, is on the premise that in view of\n      the coming into force ofSection 430, the jurisdiction of the Civil Court is barred,\n      since the NCLT is empowered to deal with and decide the issues framed by the\n      trial Court. The submission is, that in view of the provisions ofSection 424of the\n      Act, which deals with the procedure regulating the proceedings before the NCLT,\n      the powers vested in the Civil Court underthe CPCare conferred on NCLT. The\n      submission is, that the power of NCLT is indeed broader and wider than the\n      power which can be exercised by the Civil Court, since the NCLT is a specialised\n      Tribunal constituted to ensure speedy and efective regulation of the afairs of the\n      Companies. It is submitted that the NCLT, having been created by amending the\n      law, and having been vested with all the trappings of the Civil Court, in view of\n      the amendments, the bar underSection 430of the Act is triggered."29.2. On appeal, Hon'ble Supreme Court upheld the view taken by the\n\nlearned single Judge of Bombay High Court. Hon'ble Supreme Court in\n\nDarshan Anilkumar Patel - [SLP Civil Diary No.9209/2020], held as under:"2. There is no error in the finding that the suit which was filed for a declaration\n      in regard to the invalidity of the sale deeds was properly instituted before the civil\n      court and there was no occasion to transfer the appeal to the National Company\n      Law Tribunal.Section 430of the Companies Act, 2013 bars the jurisdiction of a\n      civil court to entertain a suit or proceeding in respect of any matter which the\n      tribunal or the appellate tribunal is empowered to determine under the Act or\n      any other law for the time being in force. The jurisdiction to decide the validity of\n      a sale deed would fall within the ambit of the civil court. Hence, we are in\n      agreement with the impugned order of the High Court dated 5 February, 2020."29.3. Learned senior counsel Sri S.Ravi contended thatin that casecause\n\nof action arose prior to 01.06.2016 on which dateSection 430came into\n\neffect and, therefore, the decision rendered by the Bombay High Court,\n\naffirmed by the Hon'ble Supreme Court has no application to the facts of\n\nthese cases.29.4. What is contended by the learned senior counsel may be true, but\n\nHon'ble Supreme Court held that jurisdiction to decide validity of the sale\n                                                                     PNR,J & Dr.GRR,J\n                                                           CMA Nos.274 & 281 of 202222deed would fall within the ambit of the civil Court.      In view of the said\n\nopinion, the Hon'ble Supreme Court upheld the decision of the Bombay\n\nHigh Court.30.   This view of the Hon'ble Supreme Court is in tune with the earlier\n\ndecision of the Hon'ble Supreme Court and the decisions of the learned\n\nsingle Judge and the Division Bench of this Court.31.   Cumulatively, unless, there is specific bar excluding the jurisdiction\n\nof the civil Court on any matter, which is also traceable toCompanies Act,\n\nthe jurisdiction of the civil Court to decide the civil dispute is not ousted.\n\nAt the cost of repetition, it is appropriate to note that the issue raised\n\nbefore the civil Court is regarding the illegality in the transactions\n\nundertaken by the first respondent in executing sale deeds on behalf of the\n\nplaintiff company to himself and to his family members as illegal and to\n\ncancel all the sale deeds and to grant mandatory injunction in favour of\n\nthe plaintiff. Thus, what is urged before the civil Court is a dispute civil in\n\nnature and the civil Court has jurisdiction underSection 9of the CPC and\n\nthe jurisdiction of civil Court is not ousted bySection 241of the\n\nCompanies Act. ExceptSection 241no other provision is brought to our\n\nnotice, which ousted the jurisdiction of the civil Court to adjudicate the\n\ndispute raised by the plaintiff company. The Cross Objection No. 24 of\n\n2022 on maintainability of suit is rejected.PNR,J & Dr.GRR,J\n                                                                  CMA Nos.274 & 281 of 202223Issue (ii):32.      Having cleared the issue (i), we set out to consider issue (ii).33.      The   elementary    principles   to    consider    application      to     grant\n\ninjunction pending trial of a suit are prima facie case, balance of\n\nconvenience and irreparable loss and hardship to the plaintiff.34.      It is not in dispute that all the suit schedule properties belonged to\n\nthe appellant company. The first respondent was the Managing Director\n\nof the appellant company. In the capacity as Managing Director he was\n\nthe custodian of the assets of the company and is required to protect the\n\ninterests of the company at any cost. That being so, the appellant\n\ncompany now alleges that the first respondent siphoned of money and\n\nillegally transferred the assets of the company. It is not in dispute that\n\nlarge extent of land parcels were transferred to himself and his close\n\nfamily     members     and   his   known       persons.    The   proceeds      of    sale\n\ntransactions are not reflected in the company accounts. The appellant\n\nmarked Exs.P96 - bank statement, to show that it does not reflect\n\ndepositing of sale proceeds. Sale deeds may reflect payment of full sale\n\nconsideration, but in 49 sale deeds he represented the company as vendor\n\nand he is the vendee and in 15 other sale deeds his family members are\n\nthe vendees. Therefore, it was only nominal transaction. At any rate, sale\n\nproceeds are not credited to the company account.                 As no money is\n\ncredited to the bank accounts of the company, prima facie, it cannot be\n                                                                   PNR,J & Dr.GRR,J\n                                                         CMA Nos.274 & 281 of 202224said that the sale of land was in the interest of the company. The\n\nallegations leveled by the appellant, if proved, are serious.      It may be\n\npossible that what all was done by the first respondent was justified and\n\nin the interests of the company.    Parties are entitled to lead evidence in\n\nsupport of respective claims. While so, if injunction is not granted,\n\nrespondents/defendants are free to change the physical features of the\n\nland and create third party interests.    If that happens, in the event of\n\nplaintiff succeeding in the suit it would be difficult to enforce the decree\n\nand secure possession of the land and might lead to more litigation.35.   Appellant has made out a prima facie case. In the peculiar facts of\n\nthese cases, balance of convenience is in favour of the appellant and\n\nunless injunction is granted, grave prejudice would be caused to the\n\nappellant which cannot be remedied later.36.   The Civil Miscellaneous Appeals are accordingly allowed and Cross\n\nObjection No. 24 of 2022 is dismissed. It is made clear that there is no\n\nexpression of opinion on merits. Since we have upheld the decision of\n\nCourt below on maintainability of the suit, we leave open all issues to be\n\nurged in the pending suit. Pending Miscellaneous applications, if any,\n\nshall stand closed.______________________\n                                                      P.NAVEEN RAO,J\n                                                                   PNR,J & Dr.GRR,J\n                                                         CMA Nos.274 & 281 of 202225______________________\n                                                  DR.G.RADHA RANI,J\nDate: 04.08.2022\nKKM/tvk\n\n\n\n\n            HONOURABLE SRI JUSTICE P.NAVEEN RAO\n                             &\n            HONOURABLE DR. JUSTICE G.RADHA RANI\n\n\n\n\n      CIVIL MISCELLANEOUS APPEAL NOs.274, 281 OF 2022\n\n                   and Cross Objections No. 24 of 2022\n\n                            Date : 04.08.2022\nKkm/tvk