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TMI Blog2019 (9) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... by the defendant no. 1, two have been sold and only four blocks remain; (iii) it has always been the understanding amongst the plaintiff and the defendants no.2 to 6, that each shareholder / director shall have one apartment block to his share and in the event of dissolution by sale of the entire business undertaking of the defendant no.1, each shareholder / director shall receive the return of his contribution in the form of apartment blocks in proportion to his shareholding in the defendant no.1; from this perspective, the plaintiff would be entitled to 20% of the entire asset base of defendant no.1; one of the apartment blocks has been earmarked for the benefit of the plaintiff; (iv) earlier, the plaintiff, his father and his brother were the only directors of the defendant no.1; in the year 2010, the defendants no.2 to 6, being acquaintances of the plaintiff's family, requested for being inducted as shareholders in the defendant no.1 company; plaintiff's father and plaintiff's brother agreed to resign as directors of defendant no.1 and to transfer their shareholdings of defendant no.1 in the name of defendants no.2 to 6 as well as their relatives and family members; (v) now the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and shareholders holding 20% of the total net worth of the defendant no.1; (xi) it is necessary to restrain the defendants no.2 to 4 from transferring the properties of the defendant no.1; (xii) the plaintiff is entitled to declaration that the sale of one of the apartment blocks already effected in favour of Dandona Infrastructure Pvt. Ltd. is ultra vires. 2. The suit is thus filed, for (A) declaration that the defendants no.2 to 6 have no right individually or collectively to sell, transfer, dispose of or create third party interest in the undertaking of the defendant no.1 i.e. property No.9, Birla House, Arya Samaj Road, Karol Bagh, New Delhi; (B) declaration that the registered sale deed dated 8th September, 2017 executed by defendant no.2, purportedly on behalf of defendant no.1, in favour of Dandona Infrastructure Pvt. Ltd. is null and void and of no effect; (C) alternatively, mandatory injunction directing the defendants no.2 to 6 to deposit entire sale consideration of Rs. 2.25 crores received from Dandona Infrastructure Pvt. Ltd. under the registered sale deed dated 8th September, 2017 along with interest; and, (D) permanent injunction restraining the defendants no.2 to 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issues raised in the present suit; (iii) Section 430 excludes the jurisdiction of the Civil Court only over matters in respect of which NCLT has been empowered; the powers of NCLT in relation to adjudication of complaints of oppression and mismanagement have been set out in Sections 241 to 244; none of the said provisions cover the situation and the reliefs claimed in the suit; thus the jurisdiction of this Court as the Civil Court to entertain disputes regarding immovable properties of the defendant no.1 is not barred; (iv) Section 180 of the Companies Act prohibits the directors from selling the undertaking of the company without the consent of the shareholders in general meeting; no such consent has been taken; (v) the Companies Act does not provide for any mechanism or consequences to deal with the breach by the directors of the company of the provisions of Section 180 of the Act; (vi) the Companies Act in Section 450 provides for punishment of such act for which no specific penalty is provided; (vii) ouster of jurisdiction of Civil Court is to be strictly construed; (viii) NCLT does not have any jurisdiction to pass any declaratory or prohibitory order as sought in this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng up order on the ground that it was just and equitable that the company should be wound up, to, with a view to bring to an end the matters complained of, make such order as it thinks fit. Sections 242(2) and 242(4) are as under: "242. Powers of Tribunal. - (1) ... (2) Without prejudice to the generality of the powers under sub-section (1), an order under that sub-section may provide for- (a) the regulation of conduct of affairs of the company in future; (b) the purchase of shares or interests of any members of the company by other members thereof or by the company; (c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital; (d) restrictions on the transfer or allotment of the shares of the company; (e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case; (f) the termination, setting aside or modification of any agreement between the company and any person other than tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal." 12. There can be no dispute, nor has any been urged, that the averments of the plaintiff in the plaint are of the affairs of the defendant no.1 company having been and being conducted in a manner prejudicial to the interest of the plaintiff and the defendant no.1 and oppressive to the plaintiff. The remedy of approaching the NCLT under Section 241 of the Act is thus available to the plaintiff. 13. The question for consideration is, whether the NCLT has jurisdiction to determine, what the plaintiff has approached this Court as the Civil Court for determination of. 14. The plaintiff, besides seeking to restrain the defendants no.2 to 6 from selling the immovable properties, comprising of four apartment blocks aforesaid, of the defendant no.1, is only seeking setting aside of the sale deed admittedly executed by defendant no.1 acting thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ropriate forum of NCLT, is choosing this Court, when this Court even if were to be said to have jurisdiction, is incapable of, save with the consent of the parties, directing a resolution of the disputes. The Court cannot under its aegis run the affairs of the company and can only pronounce on a particular transaction, even if were to have jurisdiction therefor and which will leave the parties to continue to fight with each other relating to the affairs of the defendant no.1 company. 18. Once it is found that NCLT has jurisdiction, the jurisdiction of the Civil Court to determine the matter which the NCLT is empowered to determine would stand excluded under Section 430 of the Act. A coordinate bench recently in Sas Hospitality Pvt. Ltd. Vs. Surya Constructions Pvt. Ltd. 2018 SCC OnLine Del 11909 has also held that, (a) NCLT is a Tribunal which has been constituted to have exclusive jurisdiction in the conduct of affairs of companies; (b) it has been vested with powers to pass such order as it may deem fit, to review and also to punish for contempt; (c) NCLT is empowered to oversee and supervise the working of the company and also appoint such persons as may be deemed necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and in these circumstances, it was held that determination of the said question also requires evidence. However here, the question is whether on the plea of the plaintiff in the plaint itself, the jurisdiction of this Court is barred. (iv) Himangni Enterprises supra was concerned with arbitrability of a claim of the landlord for eviction of a tenant and also has no application. In any case, the view taken therein has been doubted in Vidya Drolia Vs. Durga Trading Corporation 2019 SCC OnLine SC 358 and the matter referred to the larger bench. (v) N. Radhakrishnan supra is also about arbitrability of a complicated matter and not concerned with the jurisdiction of the Civil Court. (vi) Sahara Fabrics Pvt. Ltd. supra holds a suit for declaration of respective shareholding in a company and of illegality of the acts of the purported directors of the company to be maintainable. The question for consideration was, whether remedy of rectification of share register under Section 111 of the Companies Act, 1956 was the appropriate remedy. It was reasoned, that even the CLB when approached for rectification of share register was empowered to relegate the parties to the Civil Court and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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