2020 (10) TMI 1134 - HC - Companies Law

Jurisdiction of the Civil Court under Section 9A of the Code of Civil Procedure, 1908 - case in the plaint is that on account of absence of the mandatory notice under S. 286 of the Companies Act, 1956, being served on the petitioner / plaintiff, the meeting convened by the Board of Directors and the so called board resolution dated 2nd February, 2014 is void - Time Limitation. HELD THAT - Although the respondents herein had raised a ground of limitation in respect of the challenge to the sale-deed of the year 2014 on the basis of S. 242 (2) (g) of the Companies Act, 2013, at this stage it does not appear that the said ground has been accepted by the NCLT. Quite to the contrary, the company petition is admitted, and as noticed earlier the NCLT has also held that if ultimately the transaction is held to be ultra vires, consequential reliefs can be granted. Jurisdiction of the civil court - HELD THAT - It is a settled position of law that under S. 9 of the Civil Procedure Code, 1908, the civil court can entertain and try all suits of a civil nature, except any suits of which, the cognizance is either expressly or impliedly barred. It is now well settled that the exclusion of the jurisdiction of the civil court cannot be lightly inferred in view of the plenary jurisdiction conferred on the civil court under S. 9 of the CPC and any plea, seeking exclusion of such jurisdiction, has to be jealously guarded. However, at the same time a legal provision creating a bar of jurisdiction of the civil court, are required to be strictly interpreted and given effect to. In other words, although the exclusion of jurisdiction, cannot be lightly inferred, wherever there is a provision excluding such jurisdiction, either expressly or by necessary implication, the same has to be given effect to in its letter and spirit. The writ petition is without any merits and is dismissed.

Summary

Issues Involved:
1. Jurisdiction of the Civil Court under Section 9A of CPC.
2. Applicability of Section 430 of the Companies Act, 2013.
3. Reliefs sought by the Petitioner.
4. Interim reliefs refused by NCLT.
5. Legal precedents cited by both parties.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Civil Court under Section 9A of CPC:
The primary issue is the jurisdiction of the Civil Court to entertain the suit filed by the Petitioner. The Respondent No. 4 filed an application under Section 9A of CPC, objecting to the Civil Court's jurisdiction based on Section 430 of the Companies Act, 2013. The Trial Court upheld this objection, determining that it lacked jurisdiction due to the provisions of Section 430, which bars Civil Courts from entertaining matters that the NCLT or NCLAT is empowered to determine.

2. Applicability of Section 430 of the Companies Act, 2013:
Section 430 explicitly bars Civil Courts from entertaining suits or proceedings in matters that fall within the purview of the NCLT or NCLAT. The Petitioner argued that the Civil Court should have jurisdiction as the NCLT could not grant all the reliefs sought, particularly the challenge to the sale-deed dated 30th June 2014. However, the court found that the challenge to the sale-deed was intrinsically linked to the challenge to the Board resolution dated 2nd February 2014, which falls under the NCLT's jurisdiction. Thus, the Civil Court's jurisdiction was barred.

3. Reliefs Sought by the Petitioner:
The Petitioner sought to set aside the sale-deed dated 30th June 2014 and declare the Board resolution dated 2nd February 2014 void. Additionally, the Petitioner sought to restrain Respondent No. 4 from dealing with the property in question. The court noted that the challenge to the sale-deed was consequential to the challenge to the Board resolution, which is within the NCLT's purview. Therefore, the Civil Court could not entertain these reliefs.

4. Interim Reliefs Refused by NCLT:
The NCLT had refused interim reliefs sought by the Petitioner, including restraining Respondent Nos. 2 and 3 from acting as Directors and dealing with the property. The NCLT reasoned that the transaction was concluded in 2014, and an injunction could not undo a past event. The Petitioner contended that this refusal left them remedy-less, but the court observed that the refusal was not due to lack of jurisdiction and that the Petitioner could seek appropriate steps against the refusal of interim reliefs.

5. Legal Precedents Cited by Both Parties:
The Petitioner relied on the case of Candolim Developers Pvt. Ltd. vs. Pravin Grover, arguing that the Civil Court had jurisdiction. However, the court found this case distinguishable due to the nature of reliefs sought and the application of different sections of the Companies Act. The Respondents cited several cases, including Shashi Prakash Khemka vs. NEPC India Ltd., to support their argument that the NCLT had jurisdiction over the matter. The court agreed with the Respondents, emphasizing the clear legal position that the NCLT had jurisdiction over the issues raised by the Petitioner.

Conclusion:
The court dismissed the writ petition, upholding the Trial Court's order that the Civil Court lacked jurisdiction under Section 9A of CPC due to the bar imposed by Section 430 of the Companies Act, 2013. The Petitioner was advised to pursue appropriate remedies within the framework of the NCLT proceedings. The court did not express any opinion on the merits of the challenge in the company petition.