Law: Companies Act, (VII of 1913)

Section: 3

(a) Civil Procedure Code (V of 1908), S. 9 and Companies Act (VII of 1913), Ss. 3 & 24-Jurisdiction of Civil Court-Ouster not to be readily inferred- Declaratory suit by Managing Director of a Company seeking declaration: (i) that his removal from office of Managing Director was fraudulent; and (ii) that reconstitution and change of name of Company with consequent change in Memorandum and Articles of Association, were illegal-Civil suit under S. 9, C. P. C., in circumstances, held, competent and not hit by any provisions of Companies Act, 1913. J started a company of which he was Managing Director and had absolute power with regard to its administration and manage­ment under the Articles of Association. For sometime thereafter, he was placed under detention under the East Bengal Public Safety Ordinance and during the period of his detention some of the members of the company manufactured a letter purporting to have been written by J and stating that he had resigned from the post of Managing Director. On the basis of this letter they reconstituted the company and changed its name. On his release from detention, J coming to know of the mischief filed a civil suit seeking declaration that (i) his removal from the post of Managing Director was fraudulent; and (ii) that the reconsti­tution and change of name of company was illegal. On the ques­tion whether the reliefs prayed for could not be granted under the Companies Act, 1913 and whether the suit was entertainable and triable by a civil Court under section 9, C. P. C., the Supreme Court held that the civil suit filed by J was in every way compe­tent and not hit by any provisions of the Companies Act, 1913. Their Lordships observed: It is a well-settled rule that the ouster of jurisdiction of a civil Court in respect of a civil suit is not to be readily inferred. Unless that jurisdiction has been either expressly or impliedly taken away by some other law it will continue to vest in the civil Court. There is no provision in the Companies Act under which J could seek the reliefs he claimed in the suit. Section 38 of the Companies Act has clearly no application what­soever, for, that section deals with the…

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