Case Note & Summary
The petitioner, Shankar Assana Gaddam, claiming to be a director of Achanak Associates Realtors Pvt. Ltd., filed a civil suit challenging a board resolution dated 2nd February 2014 and a sale deed dated 30th June 2014 executed by respondent Nos. 2 and 3 in favour of respondent No.4, alleging that the sale was unauthorized and without proper board resolution. The petitioner had earlier filed a company petition before the NCLT under Sections 241 and 242 of the Companies Act, 2013, alleging oppression and mismanagement, which was pending. The NCLT had refused interim relief on 12.06.2017. Thereafter, the petitioner filed Special Civil Suit No. 169 of 2017 before the Civil Judge, Senior Division, Solapur, seeking declaration that the board resolution and sale deed were null and void, and for permanent injunction. Respondent No.4 filed an application under Section 9A of the CPC raising an objection to the jurisdiction of the civil court, contending that in view of Section 430 of the Companies Act, 2013, the civil court had no jurisdiction as the matter fell within the exclusive domain of the NCLT. The Trial Court allowed the application and held that it had no jurisdiction. The petitioner challenged this order in the High Court. The High Court analyzed the scope of Section 430 of the Companies Act, which bars civil courts from entertaining any suit or proceeding in respect of any matter which the NCLT is empowered to deal with. The court noted that the NCLT's powers under Sections 241 and 242 are limited to granting relief in cases of oppression and mismanagement, and do not include the power to declare a sale deed void or to grant a permanent injunction against a third party. The reliefs sought in the civil suit were not within the exclusive domain of the NCLT. The High Court held that the civil court has jurisdiction to entertain the suit, and the bar under Section 430 does not apply. The impugned order was set aside, and the Trial Court was directed to proceed with the suit in accordance with law.
Headnote
A) Civil Procedure - Jurisdiction - Ouster of Civil Court's Jurisdiction - Section 9A CPC, Section 430 Companies Act, 2013 - The Trial Court held that the civil suit was barred by Section 430 of the Companies Act, 2013, as the NCLT has jurisdiction over matters of oppression and mismanagement under Sections 241 and 242. However, the High Court held that the reliefs sought in the civil suit (declaration that board resolution and sale deed are null and void, and injunction) are not within the exclusive domain of the NCLT, and the civil court has jurisdiction to entertain the suit. The bar under Section 430 applies only to matters which the NCLT is empowered to deal with, and not to all matters relating to a company. (Paras 1-12) B) Company Law - Oppression and Mismanagement - Jurisdiction of NCLT - Sections 241, 242 Companies Act, 2013 - The NCLT has jurisdiction to grant relief in cases of oppression and mismanagement, but it does not have the power to declare a sale deed as null and void or to grant a permanent injunction against third parties. Such reliefs are within the domain of the civil court. The pendency of a company petition before the NCLT does not oust the jurisdiction of the civil court to entertain a suit for such reliefs. (Paras 8-12) C) Civil Procedure - Preliminary Issue of Jurisdiction - Section 9A CPC - The Trial Court erred in allowing the application under Section 9A CPC without considering whether the reliefs sought in the suit could be granted by the NCLT. The High Court set aside the impugned order and directed the Trial Court to proceed with the suit. (Paras 1-12)
Issue of Consideration
Whether the Civil Court has jurisdiction to entertain a suit challenging a board resolution and sale deed of company property, in view of Section 430 of the Companies Act, 2013, which bars civil courts from entertaining matters which the NCLT is empowered to deal with.
Final Decision
The High Court allowed the writ petition, set aside the impugned order dated 04.04.2018 passed by the Civil Judge, Senior Division, Solapur, and directed the Trial Court to proceed with the suit in accordance with law. Rule made absolute.
Law Points
- Jurisdiction of civil court
- ouster of jurisdiction
- Section 9A CPC
- Section 430 Companies Act
- 2013
- Section 241/242 Companies Act
- NCLT jurisdiction
- civil suit maintainability
