The Punjab and Haryana High Court recently imposed exemplary costs on the Directors of a Mumbai-based company, who had appeared before it against disqualification order passed against them, only to reap benefits of a precedent set by the High Court, without there being territorial jurisdiction.
The single-Judge bench of Justice Alka Sarin noted that neither the Petitioners were residents of Punjab, Haryana or UT Chandigarh nor the company qua which they were disqualified to act as Directors was registered therein.
It further noted that no cause of action, fully or in part, had arisen within its territorial jurisdiction and the Petitioners had invoked its jurisdiction "only to gain benefit" of an interim order passed by it, which was favorable to them in the facts and circumstances.
Holding that the writ petition was "clearly unsustainable" and that the Petitioners attempt at forum shopping was "an abuse of jurisdiction", the Court proceeded to dismiss the petition with costs of Rs.1,00,000/- to be deposited by the petitioners with the PM-CARES Fund.
The Petitioners were disqualified by the competent authorities from acting as Directors in a Mumbai-based company. While the entire matter occurred within the limits of Mumbai city, the Petitioners had approached the Punjab and Haryana High Court stating that the Respondents' actions were opposed to the observations made by the High Court in Gurdeep Singh & Ors. Vs. Union of India & Anr.
In the said case, vide an interim order dated November 8, 2017, the High Court had directed to activate/ restore the DIN of directors of a company. It noted that law provides penalties for failure to file financial statements or annual returns with the Company Registrar within stipulated time. However, there is no provision for de-activation of the DIN.
The Respondents in the present case had informed the Court that the matter was beyond its jurisdiction and the Registrar of Companies, Punjab and Chandigarh had been impleaded as a party by the Petitioners, only to surreptitiously create jurisdiction in Punjab.
The Court observed that the petitioners had been unable to show as to "what part of the cause of action arose within the territorial jurisdiction of this Court. There is also no averment in the present writ petition as to how any part of the cause of action had arisen within the territorial jurisdiction of this Court."
"Article 226 of the Constitution of India, in clear terms, empowers the High Court to entertain a writ petition if the cause of action to file such a writ petition against the respondents of the said writ petition has arisen wholly or in part within the territorial jurisdiction of the High Court."
Finding in the facts and circumstances that "there is no ground whatsoever made out" for invoking its jurisdiction, the bench said,
"The present writ petition seems to have been filed only to gain benefit of the interim order (Annexure P-7) passed by this Court in CWP. No.24977 of 2017 'Gurdeep Singh & Ors. Vs. Union of India & Anr.' and other similar cases though the initiation of the writ proceedings before this High Court was clearly unsustainable and an abuse of jurisdiction. The filing of the present writ petition before this High Court was not bonafide.
In view of the above, the present writ petition deserves to be dismissed with exemplary costs. Dismissed with costs of Rs.1,00,000/- to be deposited by the petitioners with the PM-CARES Fund."
Reliance was placed on ONGC v. Utpal Kumar Basu, (1994) 4 SCC 711, where the Supreme Court cautioned that exceeding of its jurisdiction by any Court, lowers the dignity of the institution.
"It must be remembered that the image and prestige of a court depends on how the members of that institution conduct themselves. If an impression gains ground that even in cases which fall outside the territorial jurisdiction of the court, certain members of the court would be willing to exercise jurisdiction on the plea that some event, however trivial and unconnected with the cause of action had occurred within the jurisdiction of the said court, litigants would seek to abuse the process by carrying the cause before such members giving rise to avoidable suspicion. That would lower the dignity of the institution and put the entire system to ridicule," it had held.
Case Title: Vijay Goverdhandas Kalantri & Anr. v. Union of India & Ors.
Case No.: CWP No. 11209/2020 (O&M)
Quorum: Justice Alka Sarin
Appearance: Advocate Mukul Goyal (for Petitioner); Standing Counsel Bhuwan Vats (for Union of India)
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