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Non-Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

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

Jyoti Limited & Others      ... Appellants

Versus

Bharat J. Patel & Others …Respondents

J U D G M E N T  

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

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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

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answered in to negative and pass following other for deciding Point  No.4.

ORDER

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

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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

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appellants herein as follows:

“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.

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12. Appeals are, accordingly, allowed.

…..………………………….J.                                          (J. Chelameswar)

…………………………..….J.                                        (R.K. Agrawal)

New Delhi; March 17, 2015