Supreme Court of India
Jyoti Limited And Others vs Bharat J. Patel & Others on 17 March, 2015Bench: J. Chelameswar, R.K. Agrawal




CIVIL APPEAL NOS. 2935-36 of 2015
(Arising out of Special Leave Petition (C) Nos.6513-6514 of 2015)

Jyoti Limited & Others … Appellants


Bharat J. Patel & Others …Respondents


Chelameswar, J.

1. Leave granted. Heard Mr. Dushyant Dave and Dr. Abhishek
Manu Singhvi, learned senior counsel appearing for the appellants and the
respondents respectively.

2. Aggrieved by an order dated 19.02.2015 of the High Court of Gujarat
in Civil Application No.14367 of 2014 in Appeal From Order No.548 of 2014
and Civil Application No.222 of 2015 in Appeal From Order No. 548 of 2014,
the respondents therein preferred the instant appeals.

3. The respondents herein preferred the above mentioned AFO No.548 of
2014. They were the plaintiffs in Civil Suit No. 652 of 2014. Alongwith
the Civil Suit, they filed an interim application seeking certain interim
reliefs. The prayer in the interim application is as follows:-
“i) restraining defendant Nos.2 to 9 by an order and injunction from
convening and/or holding and/or attending any meeting of the Board of
Directors of the defendant company, and/or from voting threat and/or pass
any resolution by Circulation, so as to frustrate and/or prevent the
holding of EGM requisition by the plaintiffs pursuant to the Notice dated
18th December, 2014 (Ext. H and I hereto).

ii) to order and direct the defendants by themselves, their servant,
agents, officers and subordinates by an order and injunction to take all
steps and do all things necessary and required under the provision of the
Company’s Act, 2013, including for furnishing list of shareholders as
requested by the plaintiffs in their requisition notice dated 18.12.2014,
so as to ensure, effectuate and facilitate the holding of EGM in accordance
with law and as envisaged under the provisions of the Companies Act, 2013
pursuant to the requisition of the plaintiffs dated 18th December, 2014
(Exh. H and I)”

4. From the order dated 29.10.2014 passed by the trial Court on the said
application, it appears that the respondents sought an order restraining
the appellants herein from attending and voting at a meeting of the Board
of Directors scheduled on 13th October, 2014. The trial Court declined to
grant the interim relief as sought for. The operative portion of the order
reads as follows:
“…….. Therefore, above referred judgments are not applicable in my
humble opinion to the present case and therefore, there is no prima-facie
case in favour of the plaintiff hence, there is no prima-facie case there
is no question of balance of convenience and irreparable loss caused to the
plaintiff and hence, further as per law laid down by the Apex Court relied
upon by the defendants Ld. Advocate Dr. N.P. Parmar reported in 2009(0)
GLHEL-SC-47882 in case of Dilipsing v. State of U.P. Considering the facts
that the plaintiff has challenged the issuance of the notice below mark 4/1
and therefore, this suit is itself is premature. Hence, even on this count
also the plaintiff is not entitled for equitable relief and therefore,
Points No.1 to 3 are accordingly answered in to negative and pass following
other for deciding Point No.4.


This application Exh.5 is hereby rejected.”

5. Aggrieved by the same, AFO 548 of 2014 came to be filed by the
respondents herein before the High Court. The appellants herein took a
definite stand both before the trial Court as well as before the High Court
that the suit itself is not maintainable and the remedy, if any, to the
respondents herein is to approach the Company Law Board under Section 186
of the Companies Act, 1956.

6. The High Court recorded a conclusion that the respondents would not
be able to maintain the proceedings before the Company Law Board.
“4.6 On conjoint reading of the above quoted provisions of law and the
objection taken by the respondents, including the one that the voting right
is already suspended by the Company qua the said share holding, asking the
plaintiffs to move the Company Law Board would be meaningless because their
(plaintiffs’) lack of voting right as contended by the respondents would
make the proceedings before the Company Law Board as well, not
maintainable. This is over and above an additional aspect that, the
provision of Section 186 of the Companies Act, prima facie cannot be read
to be meant for the circumstances like the present one, however no final
opinion needs to be expressed with regard to the scope and ambit of the
said section, since that is not the controversy before this Court.”

On the question of the maintainability of the suit, the High Court recorded
as follows:
“Suffice it to hold that, in the facts of this case, considering the
material on record and the chequered history between the contesting
parties, and the chronology of the actions taken by the respondents, as
borne out from record, the suit in question cannot be termed to be not
maintainable. The suit is therefore held to be maintainable. The
contention of the respondents in this regard is rejected. ”

7. The maintainability of a suit is question of law. Though, by virtue
of declaration under Section 9 of the Code of Civil Procedure, 1908, all
suits of civil nature are maintainable unless barred either by an express
provision or by implication of law. In the case on hand, when a specific
stand is taken that in view of the provisions of Companies Act the suit is
not maintainable, “the checkered history between the contesting parties and
the chronology of the actions taken by the respondents”, in our opinion, do
not decide the maintainability of the suit. We find the conclusion
recorded by the High Court to be highly unsatisfactory.

8. On the question whether the plaintiffs have a prima facie case, the
High Court recorded a cryptic conclusion without recording any reasons (at
para 7.2) that they have a strong prima facie case. On the question of the
balance of convenience also, the order of the High Court is very equivocal.
But the High Court went on to issue certain directions:

9. The High Court at para 7.4 held that in view of the fact that from
31.12.2014 orders of status quo existed, the same is directed to be
continued to be considered on the next date of hearing, i.e. 16.03.2015.
In the interregnum, the High Court directed the appellants herein as
“7.2 The respondents/original defendants, more particularly the respondent
Company (original defendant No.1), are directed to consider the requisition
notice in question dated 18.12.2014 given by the plaintiffs, and comply
with the provisions of Rule 17(7) of the Companies (Management and
Administration) Rules, 2014, within a period of one week from today. On
receipt of such list of members as per rules, from the company, it would be
open to the appellants, to take further actions in accordance with law, to
convene the Extraordinary General Meeting of the Company, within the time
stipulated under law. For this purpose, the time taken by the respondents
in supplying the list of the members, as required under law, to the
requisitionists (the plaintiffs), beyond what is permissible under Rule
17(7) of the Rules, shall not count against the plaintiffs.

7.3 It is directed that, any decision that may be taken, or the
resolution that may be passed in the said Extraordinary General Meeting,
shall not be given effect to, without prior permission of this Court, and
further that, any business transacted at the said meeting and/or any
outcome thereof shall be subject to further orders that may be passed by
this Court.”

10. Hence, these appeals by special leave.

11. We are of the opinion that the directions in paras 7.2 and 7.3 are
inconsistent with the directions in para 7.4. Apart from that, the fact
that the orders of status quo were granted by the Chamber Judge during
vacation, which have been continued from time to time without further
consideration regarding the tenability of such orders, is no ground for
continuing such orders. In the circumstances, we deem it appropriate to
set aside the impugned order. Having regard to the various contentions
raised by the parties, it is better that the appeal before the High Court
itself is disposed of on merits expeditiously.

12. Appeals are, accordingly, allowed.
(J. Chelameswar)

(R.K. Agrawal)
New Delhi;
March 17, 2015


Leave a Reply

Sign In


Reset Password

Please enter your username or email address, you will receive a link to create a new password via email.