High Court Division :
(Civil Appellate Jurisdiction)
Nozrul Islam Chowdhury J
KM Kamrul Kader J
AHM Kamruzzaman Khan………….Plaintiff-Appellant
vs
Registrar, Joint Stock Companies & Firms Judgment and other. .. Defendant Respondents
Judgment
March 19th, 2012.
Specific Relief Act (1 of 1877)
Section 42
The nature of the dispute is entirely a civil dispute and it can only be resolved by a competent civil court. There is no provision in the Companies Act to file any declaratory suit under which the plaintiff could seek reliefs he claimed in the suit and these reliefs are only available under section 42 the Act. ………..(24)
Chalna Fibre Company Ltd. Khulna vs Abdul Jabbar, 20 DLR (SC) 335; Md Shamsuzzaman Khan vs MS Islam, 28 DLR 976 and Nurun Nahar Zaman vs Sea Pearl Lines Ltd., 11 BLC 111, ref.
Md Nur Hussain Chowdhury with Nasim Khan, Advocates-For the Appellant.
AKM Badrudduza, Advocates-For the Respondent.
Judgment
KM Kamrul Kader J: This appeal at the instance of the plaintiff is directed against the judgment and decree dated 25-7-2010 passed by the learned Joint District Judge, 5th Court, Dhaka in Title Suit No. 162 of 2009, rejecting the plaint under Order VII Rule 11 of the Code of Civil Procedure filed by the defendant-respondents.
2. The material facts in short are that, the appellant as plaintiff filed Title Suit No. 162 of 2009 before the Court of learned Joint District Judge, 5th Court, Dhaka stating inter alia that R. Zaman & Company Ltd is a Private Ltd. Company, it is incorporated under the Companies Act, 1913, on 8-4-1984 under the defendant No.1 and the plaintiff is the Managing Director of the said Company. Its authorized capital is Taka 1,25,00,000 only (One crore twenty-five lakhs), divided into 1 lac 25 thousand shares, each share worth Taka 100 (one hundred) only and paid up capital was Taka 10 lakhs as per balance sheet dated 30-6-2005, subscribed by the 13 shareholders.
3. The Company has purchased a denationalized and privatized industry namely Kuliarchar Ground Nut Mills Ltd. at a price of Taka 1,00,24,000 only, under an agreement dated 18-6-1987, executed by the Government and the Company. Thereafter, on 4-11-1994 a deed of financing was executed in between the plaintiff and the company for becoming Managing Director of the Company with Payment of Taka 55,00,000 (Fifty-five lakhs) in share subject to the approval of the Ministry of Industries,. which was accorded on 12-1-1995.
4. Next, on 1-4-1995 a meeting of the Board of Directors of the Company was held under the Chairmanship of Defendant No. 2 and in that meeting the plaintiff was appointed as the Managing Director of the Company and the company handed over 400 shares in his name, which was duly approved by defendant No. 10. Thereafter, the plaintiff was re-elected twice as Managing Director of the company for a period of 5(five) years each on 15-9-1999 and 30-102004 respectively. Next, on 30-5-2004, the defendant Nos. 2-6 expressed their intention to sell their 600 shares at a price of Taka 1,20,000,00 only and the plaintiff agreed to purchase their shares and accordingly a deed of agreement was executed and the plaintiff paid an amount of Taka 42,00,000 only to the defendants nos. 2-6. Thereafter, the defendant Nos. 3-5 served a notice on 10-6-2005 demanding payment of the balance amount, after receiving the said notice the Plaintiff gave a reply on 27-6-2005 expressing his willingness to make payment of the rest/balance amount provided that they will execute prescribed instruments to transfer the said shares in the name of the plaintiff, but they did not pay any heed to it.
5. Due to non-payment of the balance amount government charged penal interest, the plaintiff filed a title suit being No.9 of 1999 (renumbered) before Joint District Judge, Dhaka against the defendant No. 10 for a declaration that the excess amount of money demanded by the government is wrong, unlawful and not binding upon the company. After conclusion of trial learned Additional Joint District Judge, Dhaka decreed the suit of the plaintiff. During pendency of the said suit, the defendants removed the plaintiff from the post of Managing Director on 22-3-1997, which was challenged by the.plaintiff by filing a Writ petition being No. 1834 of 1997, before this Honble Court and after hearing the parties, the Rule was made absolute by the judgment and order dated 5-8-2007.
6. The plaintiff filed an application on 23-10-2005 to the defendant No. 10 to make payment of rest of the installment, amounting Taka. 24,01,815.97 only (Taka twenty-four lakhs one thousand eight hundred fifteen and ninety seven paisa) by October, 2005. Subsequently, the plaintiff made payment of rest of the amount on 23-1-2006 and filed Title Suit No. 1449 of 2008 for specific performance of contract against the defendant No. 10.
7. In the meantime, the defendant No.2 received some money from a third party with a condition to sale of shares of the said Company, without any approval from the Board of Directors. Mr Rashiduzzaman and Mr. Khurshid-uzzaman sold their 280 shares to Mr. Shafiqul Islam, Mr. Rafiqul Islam and Mr. Saiful Islam and they were shown as the directors of the company on 30-3-2006. The defendant No.2 in collusion with defendant Nos. 3-6 created some false documents to misappropriate the properties of the Mill. The plaintiffs post as Managing Director was shown vacant under section 110 of the Companies Act and the defendant No, 2 was shown as the Managing Director in a meeting held in the Kuliarchar Ground Nut Mill, wherein, defendant Nos. 2-6 were shown present in that meeting and passed the said resolution, though the defendant Nos. 3-5 were out of Bangladesh at the relevant period. On getting that information the plaintiff filed a General Diary entry on 14-8-2006 to the Kuliarchar Police Station and a copy of the said GD was sent to the defendant No. I, after receiving the same the defendant No.1 passed an order upon the plaintiff and defendant No.2 to settle the matter amicably. Later, the plaintiff filed a Writ Petition No. 9278 of 2006 against the aforesaid order before this Hon’ble Court and after hearing the parties their Lordships was pleased to make the Rule Nisi absolute on 18-8-2008 and declared that the impugned letter dated 8-8-2006 has been issued without lawful authority and directed the Registrar of Joint Stock Companies and Firms to hold an enquiry in respect of the return as submitted by the company M/s R. Zaman & Company through writ petitioner and the counter return, under the authority as availed to him under the provision of Section 193 of the Companies Act. 1994. The plaintiff after obtaining the certified copy of the aforesaid judgment and order sent it to defendant No. 1 on 24-5-2009, unfortunately, he without considering the said judgment and order, passed an order which needs to be declared to have been passed unlawfully and hence not binding upon the plaintiff.
8. The defendant No. 2 in collusion with defendant Nos. 2-6 sold out stock and other articles of the said Mill amounting to over Tk. 2,00,00,000 (Two crore), for depriving of the plaintiff from his due share as major shareholder of the company. The defendant Nos. 2-6 collected rents from the tenants of the Mill, at the rate of Taka 12,000 per month, which is illegal and unauthorized. The plaintiff is the Managing Director of the Company. But the defendant No. 1 most illegally approved the appointment of the defendant No. 2 as Managing Director of the Company, which is illegal and void. Further, the defendant Nos. 2-6 tried to misappropriate the properties of the Company. The cause of action of the suit arose on 24-5-2009. The plaintiff brought this suit for declaration praying for 7 reliefs, which read as follow:
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9. During pendency of the suit the plaintiff filed an application under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure for restraining the defendant No.2 from discharging duties as Managing Director of the Company and after hearing the party, learned Joint District Judge passed an Order of ad-interim injunction on 5-7-2009 and restrained the defendant No.2 to act as Managing Director of the said Company till filing of the written objection.
10. The defendant No.2 made appearance by filing a written objection against the application for temporary injunction. After submission of written objection the plaintiff filed an application along with a prayer not to accept the vokalatnama and the written objection as the same was filed by a fake person and to take necessary step in accordance with law. Thereafter, on 25-8-2009 the plaintiff filed another application along with prayer to submit the passport of the defendant No.2.
11. Next, the defendant No.2 on 2-9-2009 filed an application under Order VII Rule 11 praying for rejection of the plaint. In the meantime, the defendant No. 10 entered appearance upon filing a written statement denying the material allegations made in the plaint. Thereafter, on 3-6-2010, the defendant No. 10 filed an application for rejection of the plaint, under Order VII rule 11(a) and (d) of the Code of Civil Procedure. In both the applications under Order VII Rule 11 of the Code of Criminal Procedure the defendants alleged that the suit is barred by law and civil court has no jurisdiction to try this suit as the relief claimed by the plaintiff attract the provision of the section 3 and 43 of the Companies Act, 1994. The plaintiff on 25-10-2009 filed a written objection contending intern/in that on 18-6-2009 the plaintiff filed an application along with a prayer not to accept the vokalatnama and the written objection as the same was filed by a fake person and to take necessary step in accordance with law and the same is still pending before the Court. It was necessary to resolve this matter first, before considering the application for Rejection of plaint. The learned Joint District Judge 5th Court, Dhaka, kept the application dated 18-6-2009 filed by the plaintiff in abeyance while allowed the application filed by the defendants under Order VII Rule 11 of the Code of Civil Procedure and rejected the plaint by his judgment and order dated 25-7-2010.
12. Challenging the said judgment and order dated 25-7-2010, which amounts to a decree the instant appeal has been preferred by the plaintiff appellant.
13. Mr Md Nur Hussain Chowdhury the learned counsel appearing on behalf of the appellant having taken us through the entire material on record including the impugned order submits that the plaintiff filed a Title Suit No. 162 of 2009 in the court of learned Joint District Judge. 5th Court, Dhaka, under section 42 of the Specific Relief Act, praying for 7 (seven) reliefs, but on misconstruction of law and facts learned Joint District Judge rejected the plaint under order VII, rule ll(a) and (d) of the Code of Civil Procedure and holding that the suit is barred by law and the instant suit is not maintainable according to the provision of section 3 and 43 of the Companies Act, 1994 said finding is erroneous, if the Companies Act, the Rule and Rulings are read together, impugned order is not sustainable in law. He further submits that there is no provision in the Companies Act to file any declaratory suit under which the plaintiff could seek reliefs he claimed in the suit and these reliefs are only available under section 42 of the Specific Relief Act and, as such, the impugned order and decree is not sustainable in law.
14. The learned Counsel for the appellant submits that section 9 of the Civil Procedure Code gives Jurisdiction to the Civil Court to try all civil disputes unless they are expressly or impliedly barred. Sections 3 and 43 of the Companies Act have not barred the jurisdiction of the Civil Court in this matter. He further contended that the relief claimed by the petitioner cannot be grounded on any provision under the Companies Act. To substantiate his submission he placed reliance on the decisions of the cases of Messrs Chalna Fibre Company Ltd. Khulna vs Abdul Jabbar and 9 others reported in 20 DLR (SO) 335 and Md Shamsuzzaman Khan vs MS Islam, 28 DLR 976.
15. The learned Counsel lastly submits that the appellant as plaintiff filed this declaratory Suit before the court of learned Joint District Judge, 5111 Court, Dhaka praying for 7 reliefs, these reliefs are not simple one in nature for adjudication in summary manner and need be adjudicated after taking both oral and documentary evidence and should not be decided in this summary proceeding under section 43 of the Companies Act. Reliance was placed on a decision in the case of Nurun Nahar Zaman vs Sea Pearl Lines Ltd. 11 BLC (2006) 111.
16. Mr AKM Badrudduza, the learned counsel appearing on behalf of the respondents submits that the learned Joint District Judge after carefully considering the plaint, relevant laws and other materials on record rejected the plaint and dismissed the suit of the plaintiffs. The learned Advocate for the respondents argued that the reliefs claimed by the Appellant fall under the jurisdiction of the High Court Division as company matter, under section 43 of the Companies Act, according to the provision of Rule 9 of the Companies Rule 2000. The learned Advocate for the respondents also submits that adequate remedies were provided for settlement of such dispute under the Companies Act.
He has relied in this connection on section 43 of the Companies Act. The learned Counsel for the respondents further submits that the Court of Joint District Judge had no jurisdiction to entertain the suit as the reliefs claimed therein were in substance for reliefs under the provision of section 43 of the Companies Act and these reliefs could only be granted by the High Court Division under Rule 9 of the Companies Rules, 2000, which alone had exclusive jurisdiction in the matter under section 3 of the Companies Act.
The affairs of the Company should be regulated in accordance with the law that has been provided by the Companies Act itself. In the case of any breach the grievances can only be addressed before a Company court according to the provision of the section 3 of the Companies Act. The judgment and decree passed by the learned Joint District Judge is well reasoned in terms of law, facts and the materials on record, there is no reason to interfere with it.
(To be continued)
