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Lets Analyze

May 8, 2013

In the earlier issue, we discussed on Section 5 of the Companies Act, 1956 and in the present issue we shall proceed with Section 10 of the Companies Act, 1956 which deals with the Jurisdiction of Courts.

Query No 1 : Where a Company removed the plaintiff from Board of Directors and subsequently shifted its office from Chennai to Kolkata, which court has the jurisdiction to entertain the plaint? Decided Case Law : Spices Valley Estate Ltd Vs TC Forexpress Ltd Facts of the case :

The Plaintiff filed a suit before civil court Chennai, alleging that he had been fraudulently removed from the Board of the defendant Company in the Annual General Meeting and the defendant Company clandestinely filed Form 32 with the Registrar of Companies, Chennai wherein it had been shown that the plaintiff had resigned even though there had been no letter of resignation furnished by the plaintiff to the defendant company. Further the defendant Company shifted the registered office of the Company from Chennai to Kolkata without the notice to the plaintiff. The defendant Company sought for the rejection of the plaint on the ground that no cause of action arose to institute the suit before the civil court at Chennai.

Clarification :

It was held in the instant case that the jurisdiction of the civil court was not ousted since the pleadings in the plaint would reveal the cause of action had arisen for instituting the suit at Chennai.

Conclusion :

As the cause of action, Form 32 was filed with the Registrar of Companies, Chennai, hence the adjudication lies with Civil Court, Chennai.

Query No 2:

Whether a Jurisdiction conferred by a Statute on a specific court can be altered or substituted by consent of the parties?

Decided Case Law : J.G Finance Ltd Vs Jamna Auto Industries Clarification :

A Jurisdiction conferred by a Statute on a specific court can neither be altered nor substituted by the consent of the parties. The parties can elect the court by mutual agreement only amongst the courts which have jurisdiction to entertain and decide a particular proceeding. Further under Section 10, the winding up petition can only lie in the Court in whose jurisdiction the Registered Office of the Company is located.

Important Point :

It is settled rule of law that parties cannot vest jurisdiction in a court by consent if the court has no jurisdiction to entertain and decide the suit or other proceeding.

Conclusion :

Section 10 has overriding effect in determining the jurisdiction of the courts and no other court may effect the jurisdiction of the same.

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