Madhya Pradesh High Court
M/S Glr Real Estate Private Limited ... vs Shri Akash Jain on 6 May, 2025
NEUTRAL CITATION NO. 2025:MPHC-GWL:10146
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IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE ASHISH SHROTI
ON THE 6 th OF MAY, 2025
CIVIL REVISION No. 1068 of 2024
M/S GLR REAL ESTATE PRIVATE LIMITED THROUGH
AUTHORIZED OFFICER SHRI N.R. SHARADHA
Versus
SHRI AKASH JAIN AND OTHERS
Appearance:
Shri Praveen Surange - learned counsel for the applicant.
Shri Sanjeev Jain- learned counsel for respondent no.1.
Shri Prashant Sharma- learned counsel for respondents no.2 and 3.
ORDER
1. The applicant has filed this civil revision under Section 115 of the Code
of Civil Procedure (hereinafter referred to as "CPC") challenging order dated
04/10/2024 passed by the 14th District and Sessions Judge, Gwalior in
RCSA/627/2024, whereby its application under Order 7 Rule 11 of CPC has been
rejected by the learned Trial Court.
2. For convenience, the parties to this revision are referred as plaintiff and
defendant in this order per their respective status in the civil suit.
3. The plaintiff has filed a suit for declaration and permanent injunction
inter-alia pleading that defendant No.3 is a registered Pvt. Ltd. company and he is
one of the directors of the company having 33.33 % shareholding. It is also
pleaded that defendants no.1 & 2 are also the directors of the company and are
having 16.66% and 16.67% shareholding respectively. He has further pleaded that
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one Smt. Shweta Agrawal is having 33.34% shareholding in the company. The
plaintiff has further pleaded that the company is the owner of the land details of
which are given in paragraph 2 of the plaint. The said land is duly recorded in the
name of company. In para 7 of the plaint, it has been pleaded that on 26/05/2024,
a meeting was called by defendants no.1 & 2 and a resolution was passed
authorizing themselves to sell part of the company's land. The plaintiff has
pleaded that no notice of this meeting was given to him and in fact, he was out of
country on that day alongwith his family. It has further pleaded that it was a
Sunday on 26/05/2024 and, therefore, no meeting could have been legally
convened on the said date. He has also pleaded that on the basis of resolution
dated 26/05/2024, defendants no.1 & 2 have executed sale deed in favour of
defendant no.4 (applicant) on 07/06/2024 whereby company's land bearing
survey no.246 (0.490 hectare) has been sold. It is his case that no prior
information of execution of sale deed was given to him and land has been sold on
a very less consideration of Rs.2.61 Crore in order to cause financial loss to the
company as also to the plaintiff.
4. In para 9 of the plaint, the plaintiff has pleaded that defendant no.4 was
aware about the fact that the plaintiff is one of the directors of the company and is
having major shareholding therein still the land was purchased by defendant no.4
without the consent and permission of the plaintiff in collusion with defendant
no.1 & 2 on the basis of forged and fabricated documents. In paragraph 11, he has
pleaded the cause of action to have arisen on 09/06/2024 when defendant no.4
approached the suit land and started measuring the land and when the guard of
defendant no.3 company informed the plaintiff about the same.
5. Pertinently, in relief clause, the plaintiff has prayed for declaration that
the sale deed executed by defendants no.1 & 2 in favour of defendant no.4 has
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been executed by fraud and on the basis of forged and fabricated documents
which is null and void to the interest of the plaintiff and defendant no.4 does not
get any right over the suit land based on the said sale deed and the sale deed is
null and void also on the ground of under valuation of the land. The plaintiff has
also prayed for a decree for permanent injunction restraining defendant no.4 from
taking possession of the suit land and from raising any construction or developing
any colony and from alienating the same.
6. The Defendant no.4/purchaser of suit land, filed an application under
Order 7 Rule 11 CPC praying for rejection of the plaint on the ground that the
jurisdiction of the Civil Court is barred under Section 430 of the Companies Act,
2013. It is his submission that since the basic grievance of the plaintiff is with
regard to the resolution passed on 26/05/2024, the jurisdiction to adjudicate the
said dispute lies with National Company Law Tribunal (in short "NCLT") under
Section 241 of the Companies Act, 2013. He further submits that, in respect of
dispute relating to Company, the exclusive jurisdiction lies with the NCLT only.
7. The plaintiff opposed the application and submitted that he has prayed
for relief of declaration of sale deed as null and void which can be granted only
by the Civil Court and not by NCLT. The l earned Trial Court vide impugned
order has rejected the application and, therefore, defendant no.4 is before this
Court in the instant revision.
8. The learned counsel for the applicant submitted that by virtue of
provisions of Section 241 read Section 430 of the Companies Act, 2013, since the
dispute raised in the plaint falls within the jurisdiction of NCLT, the jurisdiction
of Civil Court is barred. He submits that relief claimed in the plaint is nothing but
camouflage inasmuch as the actual dispute raised in the plaint is with regard to
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resolution passed on 26/05/2024, therefore, the matter is squarely covered under
Section 241(1)(a) of the Companies Act. He placed reliance upon the judgment
passed by the Apex Court in the case of Rajendra Bajoria and Others Vs. Hemant
Kumar Jalan and Others reported in AIR 2021 SC 4594 . He also relied upon the
judgment of Delhi High Court passed in the case of Dinesh Kumar Vs. Sinecure
Technocity PVT. LTD & Ors. passed in CS(COMM) No.242/2019.
9. On the other hand, learned counsel for the plaintiff supported the
impugned order and submitted that he has prayed for declaring the sale deed,
executed by defendants no.1 & 2 in favour of defendant no.4, as null and void
and the jurisdiction to grant such relief lies only with the Civil Court. It is his
submission that since defendant no.4 is not a member in the company, the relief
claimed against him cannot be granted by NCLT. He thus, prays for dismissal of
this civil revision.
10. The learned counsel for respondent No.2 & 3 supported arguments of
the applicant.
11. Considered the arguments of learned counsel for parties and perused of
the record.
12. The averments made in the plaint have been extensively narrated
herein before. From reading the plaint averments, it is evident that the plaintiff's
basic grievance is with regard to resolution dated 26/05/2024, which is allegedly
passed in the name of Company by defendant no.1 & 2 fraudulently authorizing
themselves to execute the sale deed impugned in the suit. Other allegations made
are also with regard to causing financial loss to the company on account of
undervaluation of the sale consideration.
13. Reading averments made in the plaint, particularly para no.7, 8 & 9, it
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becomes evident that the plaintiff has alleged fraud against defendant no.1 & 2 in
convening the meeting on 26/05/2024 and passing a resolution authorizing
themselves to execute the sale deed in question. Thus, his main grievance is with
regard to the said resolution passed on 26/05/2024. Further in paragraph 8, he has
stated about the financial loss caused to the Company and to himself because of
the acts of defendant no.1 & 2. The relief of declaration of sale deed as null and
void would be a consequential relief, if the resolution, dated 26.05.2024, is
ultimately found fraudulent or illegal. Thus, it is required to be seen as to whether
the aforesaid dispute raised by the plaintiff falls within the jurisdiction of NCLT
by virtue of Section 241 to 244 of the Companies Act, 2013.
14. For ready reference, the provisions of Section 241(1) of the Companies
Act, 2013 is reproduced hereinunder :-
"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 interest or in a manner prejudicial or
oppressive to him or any other member or
members or in a manner prejudicial 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, including debenture holders or any
class of shareholders of the company, has taken
place in the management or control of the
company, whether by an alteration in the Board
of Directors, or manager, or in the ownership of
the company's shares, or if it has no share
capital, in its membership, or in any other
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manner whatsoever, and that by reason of such
change, it is 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, may apply to the Tribunal,
provided such member has a right to apply
under section 244, for an order under this
Chapter."
15. By reading the aforesaid provision, it is clear that Section 241 of the
Companies Act provides for remedy to any member of the company who
complaints that the affairs of the company have been or are being conducted in a
manner prejudicial or oppressive to him or prejudicial to the interest of the
company provided such member has a right to apply under Section 244 of the
Companies Act. Section 244 lays down the qualification of not less than one tenth
of the issued share capital of the company. As per his own claim in para 1 of the
plaint, the plaintiff has 33.33% of company's share capital. Thus, the plaintiff
qualifies to approach NCLT under Section 241 of the Companies Act. Thus, the
dispute raised by plaintiff in the plaint comes within the ambit and scope of
Section 241(a) of the Companies Act, 2013.
16. Next issue to be considered is as to whether the jurisdiction of civil
court is barred in the facts of present case. Section 430 of the Companies Act,
2013 bars the jurisdiction of the Civil Court and provides as under:-
"430. Civil court not to have jurisdiction .- 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
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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."
17. Thus, on conjoint reading of Section 241(1) and Section 430 of the
Companies Act, it comes out that if a dispute falls within Section 241, the
jurisdiction lies exclusively with NCLT and the jurisdiction of Civil Court would
be barred.
18. In the case of Rajendra Bajoriya (supra) , the Apex Court considered the
similar issue and held in paragraph 17 as under :-
"17. It could thus be seen that the court has to find out as to
whether in the background of the facts, the relief, as
claimed in the plaint, can be granted to the plaintiff. It has
been held that if the court finds that none of the reliefs
sought in the plaint can be granted to the plaintiff under the
law, the question then arises is as to whether such a suit is
to be allowed to continue and go for trial. This Court
answered the said question by holding that such a suit
should be thrown out at the threshold. This Court,
therefore, upheld the order passed by the Trial Court of
rejecting the suit and that of the appellate court, thereby
affirming the decision of the Trial Court. This Court set
aside the order passed by the High Court, wherein the High
Court had set aside the concurrent orders of the trial court
and the appellate court and had restored and remanded the
suit for trial to the Trial Court.
19. Similar legal position is laid down by the Apex Court in the case of
Pearlite Liners (P) LTD. Vs. Manorama Sirsi reported (2004) 3 SCC 172 wherein
the Apex Court held in para 10 as under :-
"10.The question arises as to whether in the
background of the facts already stated, such
reliefs can be granted to the plaintiff. Unless
there is a term to the contrary in the contract of
service, a transfer order is a normal incidence of
service. Further, it is to be considered that if the
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plaintiff does not comply with the transfer order,
it may ultimately lead to termination of service.
Therefore, a declaration that the transfer order is
illegal and void, in fact amounts to imposing the
plaintiff on the defendant in spite of the fact that
the plaintiff allegedly does not obey order of her
superiors in the management of the defendant
Company. Such a relief cannot be granted. Next
relief sought in the plaint is for a declaration
that she continues to be in service of the
defendant Company. Such a declaration again
amounts to enforcing a contract of personal
service which is barred under the law. The third
relief sought by the plaintiff is a permanent
injunction to restrain the defendant from
holding an enquiry against her. If the
management feels that the plaintiff is not
complying with its directions it has a right to
decide to hold an enquiry against her. The
management cannot be restrained from
exercising its discretion in this behalf.
Ultimately, this relief, if granted, would
indirectly mean that the court is assisting the
plaintiff in continuing with her employment
with the defendant Company, which is nothing
but enforcing a contract of personal service.
Thus, none of the reliefs sought in the plaint can
be granted to the plaintiff under the law. The
question then arises as to whether such a suit
should be allowed to continue and go for trial.
The answer in our view is clear, that is, such a
suit should be thrown out at - the threshold.
Why should a suit which is bound to be
dismissed for want of jurisdiction of a court to
grant the reliefs prayed for, be tried at all?
Accordingly, we hold that the trial court was
absolutely right in rejecting the plaint and the
lower appellate court rightly affirmed the
decision of the trial court in this behalf. The
High Court was clearly in error in passing the
impugned judgment whereby the suit was
restored and remanded to the trial court for
being decided on merits. The judgment of the
High Court is hereby set aside and the
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judgments of the courts below, that is, the trial
court and the lower appellate court are restored.
The plaint in the suit stands rejected."
20. Thus, from reading the aforesaid law laid down by the Apex Court, it
becomes evident that where relief claimed in the plaint cannot be granted to the
plaintiff, plaint is liable to be rejected under Order 7 Rule 11 of CPC. Keeping
this legal principle in mind, it is seen that the plaintiff has though asked for a
declaration that the sale deed executed by defendant no.1 & 2 in favour of
defendant no.4 is null and void, however, the said relief cannot be granted to him
unless he succeeds in establishing that the resolution on the strength of which the
sale deed is executed is illegal and/or unenforceable. Thus, the basic issue to be
decided is with regard to the resolution, dated 26.05.2024, which is entirely
between the company and its directors.
21. The contention of the plaintiff's counsel that a relief of declaration of
sale deed null and void can be granted to him only by the civil court, now needs
to be considered. He further submits that since the defendant no.4 is not in the
Company, the NCLT is not competent to adjudicate a dispute concerning
defendant no.4. In this regard, Section 242(2)(f) of Companies Act empowers the
NCLT to terminate, set aside or modify any agreement between the Company and
any person other than those referred to in Section 242(2)(e) of the Act. The said
provision thus empowers NCLT to grant relief as sought by plaintiff of declaring
the sale deed executed in favour of defendant no.4 as null and void.
22. In view of the discussion made above, this court is of the considered
view that the dispute raised by plaintiff in the civil suit is covered under Section
241 of Companies Act and the jurisdiction of civil court is barred by virtue of
provisions of Section 430 of Companies Act. Accordingly, the impugned order,
dated 04.10.2024, passed by learned Trial Court is set aside. The application filed
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by defendant no.4 under Order 7 Rule 11 CPC is allowed. The plaint filed by
plaintiff is rejected with liberty to him to avail the remedy available to him under
the provisions of Companies Act, 2013 as discussed above.
23. The Civil Revision is, accordingly, allowed and disposed off.
(ASHISH SHROTI)
JUDGE
rahul
