Framroze Rustomji Paymaster Case

Introduction

The Indian judiciary has quoted the old legal principle “Ubi jus Ibi Remedium” which means “Where there is a right, there is a remedy.” To deal with the case, the judicial forum must have jurisdiction. As a result, the Jurisdiction is often based on the location of the crime or the origin of the faction. A court cannot exercise jurisdiction over a matter whether it is explicitly or impliedly prohibited by statute, according to Section 9. Subject-matter, pecuniary, local, and original and appellate jurisdictions are the four facets of this.

The extent of legal power, or how much a courtroom may apply its position over suits, claims, requests, and different procedures, is known as locale. The thinking for consolidating the guideline of purview in law is that a court ought to just have the option to arbitrate on issue with which it has some connection or that fall inside the regional or monetary constraints of its position. A common court, for instance, can’t take perception of a criminal case, since this is proposed by Section 9 of the code, which awards common courts elite ward over common issue. This is an illustration of Subject Matter Jurisdiction. Despite what might be expected, Section 6 of the code, for instance, expressly indicates that a common court is banned from mediating on issue outside its Pecuniary Jurisdiction.

Further, for the purpose of quicker adjudication of case to deal with company law cases the separate tribunals have been for which exerts jurisdictions over such issue. It becomes important for the court to dwell upon the issue of jurisdiction as it shakes the entire validity of the case if it goes unnoticed. In present case as well, the court has dealt with the issue of jurisdiction with comparison to the foreign jurisdiction very elaborately before proceeding with the issues related to the case. What is note worthy is that the issue of jurisdiction or maintainability is given prime importance.

Facts of the Case

The facts of the present case of as follows;

The owners of the first defendant, Births Burma Petroleum Co. Ltd., are the claimants. In England, the company was formed as a limited company in 1910. The company’s registered office is in London. It has a business presence in Bombay and is the headquarters of the company in India. The company has periodically provided to the Registrar of Companies in Bombay the requisite returns that a foreign company is expected to file with him under the Companies Act of 1956.

Pursuant to that in the said returns the company has nominated F. S. Panthaki who is the company’s secretary, as the person authorised to accept service of all procedures, notices, and other documents necessary to be served on the company on behalf of the company. Panthaki is based in Bombay and works for the company. The company’s shares are kept in India to the tune of 95%. The company was founded for the purpose of obtaining, prospecting for, producing, processing, and selling mineral oils, as well as acquiring shares in some existing Burmese companies engaged in similar activities.

The company’s facilities were destroyed by military action taken by withdrawing British forces during the 1939-45 war, when the Japanese invaded Burma. Following that, the company spent some time attempting to recoup Compunction from the British government for this loss. Despite the fact that the company was successful in court, ultimately an Act of British Parliament was passed and the hopes of the company to recover any compensation came to an end.

Hence, it was planned to wind up the company at a general meeting held in Bombay on December 13, 1965, but the meeting had to be postponed. Therefore, the shareholders filed a competition petition stating as follows;

• 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

• 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 pendency 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.

Further, the plaintiffs also asked for a declaration that defendants Nos. 2 to 7 are ineligible to serve as directors of the firm, that the said directors have unlawfully drawn remuneration, that accounts be taken of such illegal drawings, and that the said directors be ordered to return any amount found due after such accounts are taken. Over that the plaintiffs have also prayed for a declaration that the resolution amending the objects clause in the memorandum of association passed at the general meeting on December 8, 1970, was illegal and invalid. The plaintiffs filed this lawsuit on behalf of themselves and other shareholders who share their viewpoint on the issues.

Hence the present petition came for consideration before the Hon’ble Court.

Issues raised in the case

The issues that have arisen for the consideration before the Hon’ble court are as follows;

“(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?

Summary of the Decision of the Court in the case

The Hon’ble court observed that 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. 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. Therefore, the Hon’ble Court observed that the jurisdiction to entertain the present suit is completely valid.

In addition, the Hon’ble Court held that the relief obtained in the accounts and decree for sum due on taking certain accounts in prayer, as well as the declaration and injections sought, are worth a total of Rs. 26,000 in pecuniary jurisdiction. Actually, the court fee for the petition for accounts and money decree alone was Rs. 26,000. Moreover, with regard to 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.

The Hon’ble Court observed that the 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 therefore, observed that this court has pecuniary jurisdiction to entertain and try this suit.

Analysis

In the present case, the Plaintiffs have affirmed that the matter of the organization for which it was have unlawfully held onto power are carrying on business which is ultra vires to objects proviso in the reminder of relationship of the organization. They have claimed that the organization is carrying on business in speculative badli exchanges which are ultra vires the objects of the organization and that the people in charge are squandering the cash of the organization and getting funds to accommodate price tag of portions of different organizations and conjecturing in shares.

Analysing this, it becomes pertinent to note that the defendants don’t reject that the organization has gone into a few badli exchanges and has acquired cash and furthermore has purchased shares in different organizations. They, nonetheless, fight that this is sound and authentic business which is intra vires the objects of the organization. The truth of the matter is that every one of the gatherings at which, as per the offended parties, a few respondents were wrongfully chosen as Director or at which the reprimanded goal dated eighth December, 1970, was passed, were as a matter of fact held in Bombay.

The court was right in observing that in India, an issue of foreign law isn’t viewed as a fact, yet it could be for certain purposes. Regardless, international law isn’t a cause for activity in a suit recorded in the country where the unfamiliar law is in power. In the event that it is penetrated, it can bring about a reason for activity. It doesn’t profit an offended party in any capacity. It just manages a couple of issues and can be utilized both inside and outside the country. It’s anything but a piece of the reason for activity under Letters Patent condition XII. The respondents don’t say that some other piece of the reason for activity emerged outside of Bombay.

When it comes to the laws in India on the subject of submitting an individual to the jurisdiction of a court, the issue of submission to the jurisdiction of a court can only arise in cases involving suits on foreign judgments. At the point when a suit is acquired India dependent on an unfamiliar court’s judgment, despite the fact that that court has no ward over the respondent, the judgment would be allowed impact if the litigant showed up and protected the suit brought against him in that court without protesting its purview, for having taken a risk on an ideal judgment. In this manner, for the subject of locale the Hon’ble court held that the current case falls well inside its purview even with as far as possible.

Conclusion

The word “Civil” refers to a citizen’s private rights and remedies, as opposed to criminal, political, or other issues. Nature is described as “the fundamental qualities of an individual or thing; identity or essential character; form, kind, and character.” As a result, it has a broader scope of content. The term “civil existence” encompasses a broader scope than “civil proceedings.”

Henceforth, a suit is of a legal nature if the main issue in the case is the determination and compliance of a civil right. It is the subject matter of the suit, not the status of the parties, that decides whether the suit is civil or criminal. In the present case, the question jurisdiction required to be first resolved so as to deal with the other questions of law. Therefore, the present case the issues related to whether or not the court has jurisdiction has been answered in affirmative and the respondents were ordered to pay costs to the plaintiffs.

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