Decide over jurisdiction first: HC asks trial court on KCCI

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Jammu and Kashmir High Court has directed the trial court that has restrained office bearers of Kashmir Chamber of Commerce and Industry (KCCI) from taking decisions to decide first whether it has jurisdiction to entertain a civil suit against a company.

A bench of Justice Ali Muhammad Magrey while deciding an appeal against the trial court order said: “This Court is of the view that it would be appropriate to require the trial court to frame an issue with regard to the jurisdiction of the court, treat it as a preliminary issue and proceed to hear and determine the same in accordance with law.”

The Bench asked the trial court to consider subsequently the final disposal of the application for interim relief and application for appointment of receiver filed by the plaintiffs.

The Court disposed of the appeal against interim order of the trial court wherein it had restrained office bearers of KCCI from taking decisions.

The Court set aside the trial court order which was under challenge before it to certain extent. “Till trial court frames the requisite issue, determines the same and passes fresh orders on the application for grant of interim relief, the orders of interim stay passed by the trial court on 20.06.2020 and 25.06.2020 shall continue to be in operation,” the Court said. The Court directed the parties to appear before the trial court on October 8.

The KCCI office bearers had contended before the trial court that civil court has no jurisdiction to deal with the issues raised in the plaint under the Companies Act.

“Instead of framing an issue – whether preliminary or regular in nature – in the main suit and hearing the parties in that regard to determine such issue, as is provided by law in this behalf, the trial court has proceeded to return a finding on this score while deciding the application for interim relief,” the Court said.

“This Court is of the view that this was not the proper procedure adopted by the trial court,” the court said, referring to Civil Procedure Code (CPC).

“Once an averment was taken about the lack of jurisdiction of the trial court and bar created by the Companies Act, it was incumbent upon the trial court to frame an issue in relation thereto as a preliminary issue and return a finding thereon, instead of returning a finding on such objection/averment while deciding the application for interim relief,” the court said.

The KCCI office bearers (plaintiffs) had petitioned the court of 4th Additional District Judge Srinagar seeking a direction for appointment of Election Committee for holding fresh elections of the office bearers of KCCI.

They had also sought a direction for declaring the decision taken on September 19, 2019 by KCCI office bearers granting extension in the term of their posts as “illegal” along with all its decisions taken from expiry of one year term on 29.09.2019.

In an interim relief the trial court had restrained the office bearers of KCCI from taking its decisions and operating bank accounts. The KCCI office bearers had challenged the order before the High Court in an appeal.