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Judgment
B.S. Patil, J.
In this appeal, appellants are calling in question the order dated 23.03.2015 passed by the court below dismissing their application filed under Order XXXIX Rules 1 and 2 CPC read with Section 9 of the Arbitration and Conciliation Act, 1996 (for short, the Act'').
Appellants are the petitioners before the court below. They have moved the petition under Section 9 of the Act, seeking interim measure contending inter alia that they were minority shareholders in the respondent-Company; they were allotted with 25% shares in the company and in consideration they transferred their entire right, title and interest in the immovable property owned by them; that as per a separate agreement entered into between the appellants, the respondent-company and certain others, an arbitration clause is provided, wherein any dispute arising between the parties is required to be referred for adjudication before an arbitrator; that a dispute has arisen between the appellants and the respondent-company regarding the illegal decision taken by the company to issue debentures in favour of a foreign company and that in that connection, the company has convened the general body meeting of the shareholders on 03.02.2015. By the application filed under Order XXXIX Rules 1 and 2 CPC, the appellants sought for an interim order restraining the respondent-company from conducting the said meeting. An ex-parte interim order had been earlier granted. The respondent-company appeared and resisted the claim.
On consideration of the respective contentions urged by the parties, the Trial Court has vacated the ex-parte temporary injunction and has dismissed the application filed by the petitioners. Aggrieved by this order, the present appeal is filed.
Learned Counsel appearing for the appellants submits that in view of the arbitration clause, the ground urged by the respondent-company and accepted by the court below regarding the ouster of jurisdiction of the Civil Court is unsustainable. He submits that as it was not a suit instituted before the Civil Court and the petition filed was based on a consensual clause in the agreement providing for arbitration, question of ouster of jurisdiction of the Civil Court will not arise. He further points out that in view of the judgment of this Court in PRAKASH ROADLINES LTD. VS. VIJAYAKUMAR NARANG - ILR 1994 KAR 408, wherever individual rights of the shareholder of a company are affected and are sought to be enforced, Civil Court''s jurisdiction is not ousted.
Counsel appearing for the respondent supports the impugned order and submits that the respondent-company cannot be restrained from convening the meetings and transacting its business, as otherwise, it will affect the very management and administration of the company in accordance with law. He further contends that in view of the nature of dispute that the appellants have aired, the impugned order passed does not call for any interference.
Having heard the learned Counsel for both parties, I find that the prima facie conclusion reached by the Court below regarding maintainability of the proceedings before it in view of the provisions of Sections 241 and 430 of the Companies Act, 2013, cannot be characterized as illegal and untenable in law.
Section 241 provides that any member of a company who complains that the affairs of the company have been or being conducted in the manner prejudicial to the public interest or in the manner prejudicial or oppressive to him or any other member or any other member or members or in a manner prejudicial to the interests of the company or if the complaint is with regard to the alleged material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, that has taken place in the management or control of the company, and that by reason of such change, it was likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, then such member of a company may apply to the Tribunal under section 244 for an order under Chapter-16.
Section 430 of the Companies Act, 2013, states that no Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal.
In the light of the aforesaid provisions, the prima facie finding recorded by the court below that there is serous doubt as regards the power and authority of the court below under Section 9 to grant injunction, particularly to restrain the company from convening its meeting cannot be found fault with. The court below has rightly held that the interim measure in the manner sought by the petitioner cannot be granted. No fault can be found with the order passed by the court below.
The judgment on which the learned Counsel for the appellant has placed reliance does not deal with the situation as obtained in the instant case, nor the provisions of Sections 241 or 430 of the Companies Act, 2013, or any analogous provisions fell for consideration in the said judgment.
Hence, this appeal being devoid of merits is dismissed. However, it is made clear that the findings recorded by the court below as affirmed by this court shall not influence the consideration of the matter on merits with regard to the maintainability of the arbitration proceedings.