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Framroze Rustomji Paymaster and ors. Vs. British Burmah Petroleum Co. Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtMumbai High Court
Decided On
Case NumberSuit No. 862 of 1970
Judge
Reported in(1976)78BOMLR642; [1976]46CompCas587(Bom)
ActsCompanies Act, 1956 - Sections 592, 599 and 602; Code of Civil Procedure (CPC), 1908 - Sections 21; Indian Partnership Act, 1932 - Sections 69; Bombay Court Fees Act, 1970 - Sections 6 and 9
AppellantFramroze Rustomji Paymaster and ors.
RespondentBritish Burmah Petroleum Co. Ltd. and ors.
Appellant AdvocateS.J. Sorabjee, Adv.
Respondent AdvocateF.S. Nariman, Adv.
Excerpt:
jurisdiction - clause xii of the letters patent of the bombay high court--jurisdiction of the bombay high court to entertain and try a suit against a company incorporated and registered in the united kingdom with regard to its affairs or its directors or to the validity of the resolution passed at a meeting of the company held at bombay--companies act (i of 1956), sections 589(2), 592, 599, 602(c)--filing of documents required to be filed before the registrar of companies by foreign companies which establish a place of business within india--whether a company actually carrying on business which it cannot carry on by its constitution can be said to be carrying on business within the meaning of clause xii of the letters patent so a to confer jurisdiction on the high court--principles of.....1. at the hearing of notice of the motion dated 26th december, 1970, the defendants have propped three issues as to jurisdiction to be tried as preliminary issues under section 9a, civil procedure code, as applicable to the state of maharashtra. none of the defendants has filed its or his written statement. i have, however, allowed the defendants to take all their objection as to jurisdiction of this court at this stage. 2. it will be necessary for the appreciation of the contentions taken by the defendants that some facts which are not in dispute be stated. the plaintiffs are some of the shareholders of the 1st defendant, the births burma petroleum co. ltd. (hereinafter for the sake of brevity referred to as 'the company'). the company was incorporated as a limited company in england in.....
Judgment:

1. At the hearing of notice of the motion dated 26th December, 1970, the defendants have propped three issues as to jurisdiction to be tried as preliminary issues under section 9A, Civil Procedure Code, as applicable to the State of Maharashtra. None of the defendants has filed its or his written statement. I have, however, allowed the defendants to take all their objection as to jurisdiction of this court at this stage.

2. It will be necessary for the appreciation of the contentions taken by the defendants that some facts which are not in dispute be stated. The plaintiffs are some of the shareholders of the 1st defendant, the Births Burma Petroleum Co. Ltd. (hereinafter for the sake of brevity referred to as 'the company'). The company was incorporated as a limited company in England in 1910. It has its registered office in London. It has established a place of business in Bombay and has its head office in India in Bombay. The company has delivered to the Registrar of Companies, Bombay, from time to time the necessary returns required to be filed with him by a foreign company under the provisions of the Companies Act, 1 of 1956 (hereinafter referred to as 'the Companies Act'). In the said returns the company has nominated F. S. Panthaki, who is the secretary of the company, as person authorised to accept on behalf of the company service of all processes and any notice or other documents required to be served on the company. The said Panthaki resides and works for the company in Bombay. 95% of the shares of the company are held in India. The company was formed, inter alia, for carrying on business of acquiring, prospecting for, developing, refining and selling mineral oils and to acquire shares in certain existing companies doing similar business in Burma. During the 1939-45 war, when the Japanese conquered Burma, the installations of the company were destroyed by military action taken by retreating British forces. Thereafter, for some time the company tired to recover Compunction for this loss from the British Government. Although the company succeeded in litigation, ultimately an Act of British Parliament was passed and the hopes of the company to recover any compensation came to an end. At a general meeting of the company held in Bombay on 13th December, 1965, it was proposed to wind up the company, but that meeting had to be postponed. In 1970 some of the shareholders of the company filed in this court Company Petition No. 76 of 1970 for widening up the company, inter alia, on the ground :

(a) that the business of the company had come to an end and thereafter the company had been carrying on business of advancing money on the pledge of shares of other companies called badli business and had also been buying shares of other companies in order to acquire control of such other companies. It was alleged in the petition that the said business was ultra vires the objects clause in the memorandum of association of the company; and

(b) that the said business was being carried on by the directors who were illegally elected and were, therefore, no better than meddlers. The said petition was admitted by me by an order dated 30th June, 1971, taking a prima facie view that these allegations were correct. The said petition is now fixed for final hearing. Before the said petition was admitted and during its pendancy the directors of the company who were alleged to have been illegally elected called a general meeting of the company on 8th December, 1970, and amended the objects clause in the memorandum of association of the company so as to provide for other businesses. This was subsequent to the filing of this suit. The plaint in the suit was thereafter amended so as to challenge the validity of the said amendment of the objects clause in the memorandum of association of the company also.

3. The present suit was filed on 30th November, 1970. In the suit the plaintiffs have prayed for a declaration that defendants Nos. 2 to 7 are not entitled to act as directors of the company, that the said directors have illegally drawn remuneration, that accounts be taken of such illegal drawings and that the said directors be directed to return such amount as may be found due on taking such accounts. The plaintiffs have also prayed for a declaration that the resolution passed at the general meeting on 8th December, 1970, amending the objects clause in the memorandum of association was illegal and void. Certain injections and other reliefs have also been prayed for.

4. It must be stated that the plaintiffs and their supporters are minority shareholders. The plaintiffs have filed this suit in a representative capacity representing themselves and other shareholders who take the same view of the matters as the plaintiffs do. The defendants Nos. 2 to 7 have also been sued for themselves and as representing other members who take a view dissenting from the plaintiffs. The defendants Nos. 2 to 7 have majority on their side. These defendants have in their affidavits on this notice of motion denied that they have been illegally acting as directors and have also denied that the resolution dated 8th December, 1970, amending the objects clause in the memorandum of association of the company is void or illegal. The notice of motion dated 26th December, 1970, is for interim reliefs pending the hearing and final disposal of the suit.

5. The preliminary issues as to jurisdiction proposed by the defendants are the following :

'(1) Whether this hon'ble court has jurisdiction to entertain and try the suit for the reliefs claimed therein in respect of the affairs of the 1st defendant company or its directors, the 1st defendant company being incorporated and registered in U.K

(2) Whether this hon'ble court has jurisdiction to entertain and try this suit with regard to the validity of the resolution dated 8th December 1970, and of the meeting held on that date

(3) Whether this hon'ble court has pecuniary jurisdiction to entertain and try the suit

6. In the plaint the plaintiffs have alleged that the business of the company for which it was have illegally seized power are carrying on business which is ultra vires to objects clause in the memorandum of association of the company. They have alleged that the company is carrying on business in speculative badli transactions which are ultra vires the objects of the company and that the persons in control are frittering away the moneys of the company and borrowing moneys to provide for purchase price of shares of other companies and speculating in shares. The defendants do not deny that the company has entered into several badli transactions and has borrowed moneys and also has bought shares in other companies. They, however, contend that this is sound and legitimate business which is intra vires the objects of the company. The fact is that all the meetings at which, according to the plaintiffs, some defendants were illegally elected as directors or at which the impugned resolution dated 8th December, 1970, was passed, were admittedly held in Bombay. With regard to the jurisdiction of this court, paragraph 58 of the plaint recites as under :

'The impugned resolution purporting to convene to convene extraordinary general meeting for 8th December, 1970, has been voted for and/or allegedly passed in Bombay. The notice and circular dated 3rd November, 1970, are issued by defendants Nos. 2, 3, 4 and 5 in Bombay. The extraordinary general (meeting) is propped to be held in Bombay. The defendants Nos. 2, 3, 4 and 5 reside and carry on business in Bombay. The whole cause of action has arisen in Bombay. The first defendant company has its principal place of business in Bombay. This hon'ble court has jurisdiction to try the suit'. (The word 'meeting' in brackets supplied).

7. I shall now deal with preliminary issue No. 1. A plain reading of the issue proposed on behalf of the defendants shows that the entire objection as to jurisdiction is based on the fact that the company is incorporated and registered in England. During the course of arguments, however, the defendants did take points as to jurisdiction based on the company's carrying on business in Bombay, its dwelling in Bombay, and the cause of action or part of it arising in Bombay. As I have heard both sides on all these points, I shall deal with them.

8. The first contention taken by Mr. Nariman on behalf of the defendants is that certain provisions of the Companies Act imply that this court has only a limited jurisdiction over the affairs of a foreign company and that such jurisdiction does not extend to the validity of general meetings and the validity of appointment of its directors. He, inter alia, referred to Part X of the Companies Act relating to winding up of unregistered companies. He conceded that this court would have jurisdiction to wind up the company if it has been carrying on business sin India and ceases to carry on business in India within the manning of section 584 of the Companies Act. He then referred to Part XI which makes certain provisions with regard to companies incorporated outside India. Section 592 provides that if such companies 'establish a place of business within India' within 30 days of the establishment of the place of business, they must deliver to the Registrar for registration certain documents, including the full address of the office of the company in India which is to be deemed its principal place of business in India. He particularly emphasised the provisions of section 599 which provides that failure delivery to the Registrar for registration of certain documents, 'shall not affect the validity of any contract, dealing or transaction entered into by the company or its liability to be sued in respect thereof; but the company shall not be entitled to bring any suit, claim any set-off, make any counter-claim or institute any legal proceeding in respect of any such contract, dealing or transaction, until it has complied with the provisions of this part'. The argument of Mr. Nariman based on this section was that by implication the provisions of this section meant that a foreign company could only be sued in respect of contracts, dealings of transactions entered into by such company and not in respect of anything else. He went further and argued that any relief in respect of the constitution or management of the company was outside the jurisdiction of Indian courts. I am afraid I am unable to accept this contention. In my opinion, section 599 merely create a disability. Section 69 of the Indian Partnership Act, 1932, creates certain disabilities for partnership firms which are not registered under the provisions of the said Act in respect of suits arising from contracts, but does not save such firm from being sued in respect of such contracts. This disability lasts as long as a partnership firm is not registered. Similarly, section 599 of the Companies Act creates certain disabilities in respect of the foreign companies which have not filed returns under section 592 and complied with the other provisions of Part XI until they comply with such provisions. The disability is that such companies shall not be entitled to bring any suit, claim any set-off or make any counter-claim or institute any legal proceeding in respect of contracts, dealings or transactions. The section expressly provides that this shall not affect the validity of such contract, dealing or transaction entered into by such foreign company or the liability of the company to be sued in respect there of. This does not mean that a foreign company cannot be sued in respect of matters which do not arise out of contract, dealings or transactions. In my opinion, a foreign company even if it does not comply with the provisions of Part XI of the Companies Act can be sued in respect of all matters in respect of which courts in India have jurisdiction otherwise. Section 599 does not touch or affect the jurisdiction of courts in India. This section does not create a right to sue a foreign company, nor does it extinguish or limit such right. It only creates partial disability in respect of defaulting foreign companies where they intend to file suits in India.

9. Mr. Nariman also invited my attention to the proviso to section 589(2) of the Companies Act which states that an unregistered company shall not, except in the event of its being wound up, be deemed to be a company under the said Act and then only to the extent provided by Part X of the Companies Act. I am not here concerned with the question as to which parts of the Companies Act are applicable to a foreign company and which are not, nor am I concerned with the question whether at the hearing of the suit with regard to the matters raised by the plaintiffs, the law of England or the law of India will apply. Section 589(2) does not affect the jurisdiction of the courts in India over foreign companies which are otherwise liable to be sued in India.

10. The other contentions taken on behalf of the defendants which do not really arise from the issue No. 1 as framed, but have been argued, are the following. The first contention is that the company did not at the commencement of the suit carry on business in Bombay within the meaning of clause XII of its Letters patent. It is not denied by the defendants that they have delivered to the Registrar of Companies at Bombay documents under section 592 of the Companies Act. Such documents are to be delivered to the Registrar only by foreign companies 'which establish a place of business thirty days of the establishment of the place of business'. By delivering these documents to the Registrar, the defendants have admitted that the company has established a place of business within 30 days after the establishment of the place of business indicates that the place of business was already established in Bombay before the delivery of documents. Under the said section, the name and address of F. S. Panthaki has been furnished as a person resident in India authorised on behalf of the company to accept service of processes and other papers. The said section provides that full address of the company so furnished by the company shall be deemed its principal place of business in India. Section 602(c) provides that the expression 'place of business' includes share transfer or share registration office. It is admitted by the company that its share transfer or share registration office is in Bombay. There is, therefore, no doubt that the company has its place of business in India in Bombay.

11. The contention on behalf of the defendants, however, is that it is not enough that the company should have a registered place of business in Bombay. It is pointed out that Explanation II to section 20, Civil Procedure Code, which provides that a corporation shall be deemed to carry on business at its sole or principal office in India does not apply to clause XII of the Letters Patent and that, therefore, for the purpose of clause XII of the Letters Patent of this court the company should be actually carrying on business in Bombay. It is not in dispute that the badli business of advancing money on pledge of shares and the business of investing money in the shares of other companies has been and is being actually carried on by the company in Bombay. The defendants, however, argue that because the contention of the plaintiffs is that the said business is ultra vires the objects clause in the memorandum of association of the company, it is no business at all for the purposes of clause XII of the Letters patent. Business is a habitual occupation, profession or trade in which a person engages in the hope of making a profit. It cannot be denied by the defendants that what the company has been carrying on is business. It is true that the plaintiffs contend that the said business is ultra vires the company, but they do not contend that such business is either immoral or illegal. On the other hand, the defendants contend in this suit and the company has contended in the winding-up petition that the said business is not only legitimate but is also intra vires the object of the company. The defendants are, therefore, contradicting themselves by contending in the suit and the winding-up petition that the said business is intra vires the company and for the purpose of the preliminary issue that the said business is ultra vires the company. In the order dated 30th June, 1971, admitting the winding-up petition, I have merely taken a prima facie view that the said business is ultra vires the company. This is not a final view of the matter which can only be taken either at the final hearing of the winding-up petition or at the final hearing of this suit. In the meanwhile, what remains are the contentions of the parties with regard to the nature of this business. Even if the said business be ultra vires the objects clause in the memorandum of association of the company, it is neither mala in se nor mala quia prohibita. It is neither wrong in itself, i.e. immoral, nor wrong because it is prohibited by the law of the land, i.e. illegal. It is merely business which the company by its constitution cannot carry on and has none the less been carrying on. In my opinion, carrying on such business will be carrying on business within the meaning of clause XII of the Letters Patent so as to confer jurisdiction on this court.

12. The defendants also contend that a part of the cause of action of this suit has arisen in England and no prior leave of the court to institute this suit having been taken under clause XII of the Letter Patent, this court will have no jurisdiction. If my finding that the company is carrying on business in Bombay is correct, this question may not really arise. But the point has been argued at length and I shall deal with it. According to the defendants the company being a British company it is governed by the law of England. The law of England must in India be proved as a question of fact. Cause of action means every fact which, if traveled, it would be necessary for the plaintiff to prove in order to support his right to the judgment of the court. The defendants contend that the law of England, if statutory, is made by parliament of England and, if common law, is made by judges in England. The law of England being a question of fact must be traversed and proved and is, therefore, a part of the cause of action which has arisen outside India.

13. Section 20 of the Contract Act, IX of 1872, provides that an agreement is void where both parties are under a mistake as to a matter of fact. Section 21 of the said Act provides that a mistake as to foreign law has the same effect as a mistake of fact. This section by itself does not make foreign law a question of fact. It merely makes a mistake as to foreign law a mistake of fact for the purpose of avoiding agreements on the ground of mutual mistake. Section 38 of the Indian Evidence Act, 1872, provides such law contained in law books published under the authority of that country or report of ruling of the courts of such country even privately published is relevant. Section 45 of the said Act further provides that when the court has to form an opinion upon a point of foreign law, the opinion upon such point of persons specially skilled in such foreign law is a relevant fact. In England proof of foreign law by direct reference to books and reports as provided in section 38 of the Indian Evidence Act is not allowed. According to English rule the ordinary method of proving a point of foreign law is by calling witness skilled in the law of that country. Therefore, in England foreign law is regarded as a question of fact. In India a mistake as to foreign law 'has the same effect' as a mistake of fact for the purpose of avoiding a contract under section 20 of the Contract Act. Section 21 does not provide that a question of foreign law is a question of fact or a mistake as to it is a mistake of fact. Foreign law may be proved either by direct reference to books printed or published under the authority of foreign Government or by reference to law reports even privately published or by the evidence of experts specially skilled in such law, In India a question of foreign law is not a question of fact, but at best may be so regarded for certain purposes. In any case foreign law is not a part of the cause of action in a suit which arises in the country where such foreign law prevails. A cause of action may arise under it or because of its violation. It does not accrue specially to a plaintiff, It merely governs certain matters and may be applied inside or outside the country. It is not a part of the cause of action under clause XII of the Letters Patent. It is not contended by the defendants that any other part of the cause of action has arisen outside Bombay.

14. Mr. Sorabjee, on behalf of the plaintiffs, has tried to meet the objections as to jurisdiction by contending that the company also 'dwells' within the jurisdiction of this court within the meaning of clause XII of the or reside at a particular place. On behalf of the defendants it is contended that only a natural person can dwell at a place and not a juristic person like a corporation. There is considerable substance in this contention. In England the residence of a corporation has been considered for the purpose of income-tax law because residence is the basis of liability for income-tax. The question has been discussed in Cheshire's Private international Law, 8th edition, at pages 186 to 190. According to this text, a company is regarded by the law as resident in the country where the centre of control exists, i.e. where the seat and directing power of the affairs of the company are located. The place of incorporation is only one of the evidentiary facts to be considered in the course of ascertaining where the control resides. This test of control was first laid down in England in the case of Cesena Sulphur Co. v. Nicholson. This view was confirmed by the House of Lords in the leading case of De Beers Consolidated Mines v. Hoew. The company in that case was incorporated in South Africa, where the whole of the profits were made from the mining and disposal of diamonds. The directors met both in South Africa and in London, but the majority of them resided and met in London, and it was found as a fact that the chief control of the company's affairs resided in the hands of the London board. The profits, though arising entirely from the raising and sale of diamonds in South Africa, were subject to income-tax. Lord Lowborn in a well-known passage said :

'In applying the conception of residence to a company we ought, I think, to proceed as nearly as we can upon the analogy of an individual. A company cannot eat or sleep but it can keep house and do business. We ought, therefore, to see where it really keeps house and does business ..... The decision of Kelly C.B. and Huddleston B., in the Calcutta Jute Mills Co. v. Nicholson and Cesena Sulphur Co. v. Nicholson now thirty years ago, involved the principle that a company resides, for the purpose of income-tax, where its real business is carried on. Those decisions have been acted upon ever since. I regard that as the true rule, and the real business is carried on where the central management and control actually abides.'

15. It would, therefore, appear that for the purposes of income-tax liability the residence of a corporations is in the country where it is in fact controlled and not necessarily where according to its constitution to ought to be controlled. In the case of the defendant No. 1 company, although its registered office is in London and it is incorporated in England, the company is in fact controlled in Bombay where it has its head office and an established place of business and where the directors reside, where 95% of its shareholding is and where it general meetings and meetings of board ar held. It is also an admitted fact that the company is assessed to income-tax in Bombay. I am, however, unable to take the view that this principle of 'keeping hose' can be equated with 'dwelling' within the meaning of clause XII of the letters patent.

16. Mr. Sorabjee also tried to meet the objection as to jurisdiction on the ground that the company had firstly, by nominating a person to receive service of the process of courts in India and secondly, by pleading on merits although 'without prejudice' in the affidavits in reply to this notice of motion and thirdly, by not raising the objection as to jurisdiction at the hearing of the first notice of motion in this suit dated 30th November, 1970, which was decided in favour of the defendants on 8th December, 1970, submitted to the jurisdiction of this court. He also claimed that the defendants have waived the objection to jurisdiction. In the case of Employers' Liability Assurance corporation Ltd. v. Sedgwick Collins and company Ltd. the House of lord held by a majority judgment of 4 our of 5 Law Lords that the Russian company by putting one the file of the registrar of companies in London the name of person authorised to accept service of process on its behalf agreed to submit to the jurisdiction of the court and that, therefore, it must be assumed that the Russian Government would, according to the company to nations, recognise the judgment as effective. Mr. Sorabjee and did not cite to me the provisions of English law under which the courts in England assume jurisdiction. It would also appear to me that in this case the House of Lords was considering the effect of the judgment of and English court in Russia. This takes us to the realm of private international law. The jurisdiction of courts in India is governed by the municipal law of this country and not by private international law. I am, therefore, unable to drive any help from the above case or the case of The Madrid.

17. In the case of P. S. Anant Narayan v. Massey Ferguson Ltd. (Canada), a single judge of the Madras High court has held that having regard to the private international law and the provisions of section 592 to 596 of the Companies Act and on account of the returns submitted by the 2nd defendant Company to the Registrar, it must be held that the said defendant was present in Madras and had submitted in advance to the jurisdiction of High court; in addition the 2nd defendant having pleaded on merits also, must be held to have submitted to the jurisdiction. The learned judge held that although no part of the cause of action arose in Madras the Madras High Court had jurisdiction under clause XII if the Letters Patent to entertain the suit. I am afraid I am unable to agree with the learned judge. The judgment of the learned judge may be binding on the defendants in Canada by private International Law, but whether it is valid in India must be determined solely by the municipal law of Indian and by clause XII of the letters Patent in the case of Bombay and madras High Courts.

18. With regard to the law in India on the point of submission of a person to jurisdiction of a court, it is only in respect of suites on foreign judgments that the question of submission to the jurisdiction of a court can arise under private International Law. Where a suit is instituted in India on the judgment of a foreign court effect will be given to the judgment though that court has not jurisdiction over the defendant, if the defendant appeared and defended the suit brought against his in that court without making any objection to its jurisdiction, for having taken a chance of a judgment in his favour. So far as suits in Indian which are not filed on foreign judgments, in my opinion, the submission of a person to the jurisdiction of a court in India will not virtue of carrying on business, residence, dwelling or arising of cause of action or part of it. Nominating a person in India to receive processes under section 592 of the Companies Act may amount to advance submission to the jurisdiction of a court if the judgment is being enforced or sued upon abroad. Filing such returns would certainly be evidence of the fact that the company had established a place of business in India but not of the fact that it was actually carrying on business in India. Submission to the jurisdiction of a court is quite apart from the provisions of section 21, Civil Procedure Code, under which a defendant may be prevented from taking an objection was not taken in the court of first revisional court if such objection was not taken in the court of first instance at the earliest possible opportunity. Section 21, Civil Procedure Code is however, not applicable to chartered High Courts and is not applicable to this court. Mr. Sorabjee invited my attention to the judgment of the Supreme Court in the case of Bahrain petroleum Co. Ltd. v. P. J. Pappu. The judgment of court was delivered by Bachawat J. The judgment states :

'But section 21 is a statutory recognition of the principle that the defect as to the place of suing under sections 15 to 20 may be waived. Independently of this section, the defendant may waive the objection and may be subsequently precluded from taking it'

19. In another passage his Lordship states :

'If the defendant allows the trial court to proceed to judgment without raising the objection allows the trial place suing and takes the chance of verdict in his favour, he clearly waives the objection, and will not be subsequently permitted to raise it. It is even possible to say that long and continued participation by the defendant in the proceeding without any protest may, in an appropriate case, amount to a waiver of objection. But in this case we find no conduct of the defendants which amounts to a wavier or which precludes then from raising the objection.'

20. The case before the Supreme Court was one falling strictly under section 21, Civil Procedure Code. Sections 15 to 21, Civil Procedure Code, do not apply to this court. The Supreme Court has undoubtedly held that independently of these section, the defendant may waive the objection. In the case before me the defendants have not even filed their written statement. The suit has not proceeded to judgment. It is true that they did not take objection at the hearing of the first motion. But in my opinion they have taken it early enough. In this case there has been no long or continued participation by the defendants in the proceedings without any protest. In my opinion, there has been no waiver in fact.

21. In the case of Nokar Dibyswari Debi v. Narayan Lin Kumari Debi, on a petition for revocation of leave granted under clause XII, it was held that the defendant had submitted to the jurisdiction of the court. There is considerable difference between raising the plea of submission in answer to an application for revocation of leave and in raising the plea on an issue of jurisdiction where no leave is required. Mr. Sorabjee has also referred to judgment in the case of Ramanlal v. Ramgopal, where under section 21 it was held that participation in proceedings amounted to submission 21, Civil Procedure Code. On issue No. 1, I hold that this Court has jurisdiction to entertain and try the suit.

22. I now come to issue No. 2. This issue does not cover the whole suit, but only that part of it which pertains to the declaration and injunction sought in respect of the resolution dated 8the December, 1970, amending the objects clause in the memorandum of association of the company. The argument is based on section 5 of the English companies Act, 1948, which pertains to the mode in which and the extent to which the objects of a company may be altered. Under section 17 of the Companies Act, 1965, after a company passes a special resolution altering its memorandum with regard to its object it has to seek the confirmation of the court of the said resolution. This was the law in England Companies prior to 1947. The law was changed in 1947 and the changed law was re-enacted in the companies Act, 1948. Under section 5 of the English Companies Act, 1948, the company may be special resolution without the subsequent approval of court alter the object of the company. Under sub-section (2) of section 5, holders of not less in the aggregates than fifteen per cent. In nominal value of the company's issue share capital may file an application to the court for cancellation of the alteration. Such application has to be filled within 21 days Sub-section (4) provides for the purchase of the interest of the dissentients members. Sub-section (7) provides that if not application under sub-section (2) is made, the altered memorandum should be filed with the Registrar of Companies within 15 days. If such an application is made, notice must be given to the Registrar of that fact, and when the order of the court is made it must be filed within 15 days. The period for filing the returns may be extended by the court. But an application to court under sub-section (2) is not the only mode of impugning the alteration. Sub-section (9) provides that the validity of an alteration of the provisions a company's memorandum with respect to the object of the company may be question either under section 5 itself 'or otherwise', before the expiration of 21 days after the date of the resolution in that behalf. Sub-section (9), therefore, obviously contemplates other remedies provided they are taken within 21 days. Sub-section (9) does not create the other remedy. It merely recognises the fact of the existence of other remedies but it limits the time for adopting such remedy to 21 days. The sub-section further provides that if any proceedings are taken otherwise than under further provides that if any proceedings are taken otherwise than under section 5(2), necessary notice and copy of the final order provide for the sub-section (7) shall be filed with the Registrar of Companies. According to Mr. Sorabjee, the present suit falls within the ambit of section 5(2). It has been filed within 21 days and Mr. Sorabjee informs me that necessary notice has been filed with the Registrar of Companies in London.

23. It is contended on behalf of the company by Mr. Nariman that the right of suit is created by section 5(9). I am unable to accept this contention. Sub-section (9) in my opinion merely recognises the fact of existence of another remedy apart from the application under sub-section (2). Based on his first contention, he contended that the courts in England in creating right of action could not have legislated extra-territorial for courts outside the country. The proposition that the British Parliament legislates only for its own country is beyond question. But if the right of action or suit is not created by sub-section (9) the question of the British Parliament enacting by section 5(9) it makes no difference unless the legislation creating the right limits remedy to British courts. If the courts in India by the municipal law of India have jurisdiction to entertain such a suit by virtue of the cause of action having arisen here or by virtue of the company dwelling or residing or carrying on business here, there can be no objection to that jurisdiction. Mr. Nariman contended that the short period of 21 days with our getting an extension of that period from the courts in England. This contention does not appear to me to be correct. Mr. Nariman further argued that if the returns in respect of such proceedings have to be filed in England within the time prescribed by section 5, it follows that the suit must be that the decree if any passed in his suit may have to be filed with the registrar or Companies in London. It is also true that if the return is not fling the same in England. It is also true that if the return is not filed within time the British courts by refusal to extend time may makes the decree of this court nugatory. But I do not think I am concerned with these matters. It may be that in some cases where there is no reciprocal obligation to enforce decrees of Indian courts on the ground that Indian courts had not jurisdiction in private international law to entertain such a suit although according to the municipal law of India they had such jurisdiction. But that does not affect the jurisdiction of the courts in India. Mr. Nariman also raised the bogey that a British Company may have established places of business in courtiers abroad and if questions pertaining to its constitution are raised in ten courts abroad this may result in conflicting decision. In the first instance, I presume that if the law of England is applied by various art the ten different countries. But even if this is not so, I am afraid, it dose not affect the jurisdiction of the courts of such country have jurisdiction to cap law of the country the courts of such country have jurisdiction to entertain an action. In the result, I hold that this courts has jurisdiction to entertain this suit with regard to the validity of the resolution dated 8th December, 1970, and of the meeting held on that day in Bombay.

24. Lastly, I come to issue No. 3. This is concerned with the pecuniary jurisdiction of this court. It is contended by the defendants that the suit of the value of less than Rs. 25,000 and is cognisable by the Bombay City Civil Court and thereof it is exclude form the jurisdiction of this court. In paragraph 59 of the plaint it is state as under :

'The plaintiffs value all the reliefs claimed by several prayers herein including reliefs in prayer 60 (b-1) in the plaint at Rs. 26,000 for the purpose of the court fees and jurisdiction and the plaintiffs pay court fees accordingly.'

25. According to this paragraph the reliefs in all the prayers including the relief with regard to the accounts and decree for amount found due on taking such accounts in prayer (b-1) as well as for the declaration and injections sought are collectively valued at Rs. 26,000 Actually court fee has been paid on Rs. 26,000 in respect of claim for accounts and money decree alone. With regard to six prayers for declarations and injections the suit has been valued at Rs. 300 each in accordance with the Bombay Court fees Act, section 6(iv)(f), as amended by the Bombay Act, 9 of 1970, as reliefs therein are not capable of monetary valuation. Suit for accounts would fall under section 6(iv)(i) of the Bombay Court Fees Act and it would be for the plaintiffs to value such relief. Court fee has actually been paid on Rs. 27,800. But whether the suit is valued at Rs. 26,000 or Rs. 27,800 it would fall outside the jurisdiction of his court. For the purpose of jurisdiction the aggregate of the value of several reliefs has to be taken into consideration. I, therefore, hold that this court has pecuniary jurisdiction to entertain and try this suit.

26. All the three preliminary issues of jurisdiction having been decided against the defendants, they will pay to the plaintiffs the costs of hearing on the preliminary issues.


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