Mere Forgery Claims Do Not Oust NCLT's Jurisdiction To Examine Disputed Company Records: Delhi High Court

The Delhi High Court has recently held that mere allegations of fraud or forgery cannot be used to oust the jurisdiction of the National Company Law Tribunal (NCLT). The court ruled that civil courts cannot entertain parallel suits when the same issues are already before the NCLT in an oppression and mismanagement case.

A single bench of Justice Amit Mahajan, subsequently, set aside a trial court order that had refused to reject a civil suit filed by the founders of a defence-tech startup, and reiterated that the Companies Act bars civil courts from hearing matters that fall within the scope of the NCLT.

It said, "Mere plea of forgery or fraud is not sufficient, by itself, to overcome the bar under Section 430 of the Companies Act, 2013 and the jurisdiction of the tribunal can only be ousted when the issue involved is not “within the peripheral field of rectification” and pertains to extensively complex questions."

The court stressed that the NCLT has “the widest possible amplitude as far as company matters are concerned,” including the authority to examine allegedly forged documents and even order forensic tests.

The case arose from a dispute between Karyan Global LLP and the founders of a defence-technology startup that builds unmanned aerial vehicles for the armed forces. The founders had borrowed Rs 12.70 crore from the firm in 2020 by pledging 26% of their shares, and repaid the loan in full in 2024.

They later discovered that Karyan Global had moved the NCLT in Allahabad, accusing them of oppression and mismanagement. The allegedly relied on documents the founders said were forged including a 2020 shareholders' agreement, share transfer forms and board resolutions.

The founders then approached a civil court seeking a declaration that these documents were forged and should be treated as void, and asked for an injunction preventing the firm from using them. Karyan Global responded by seeking rejection of the suit, arguing that Section 430 of the Companies Act bars civil courts from hearing matters that fall within the NCLT's domain.

The high court agreed, noting that the NCLT is fully empowered to examine disputed documents, even ordering forensic tests under its own rules. It rejected the argument that civil courts must handle forgery-related disputes, observing that simply raising allegations of fraud does not remove a case from the NCLT's purview.

The court stressed that the bar on civil courts applies to “any matter” the NCLT can examine, not only to the specific orders it can eventually grant. Since the authenticity of the documents was central to the oppression and mismanagement case already pending before the NCLT, the High Court said both matters should not run in parallel.

Allowing a civil suit on the same questions of fact, the court warned, would create “multiplicity of proceedings” and risk conflicting findings. It would also permit parties to use fraud allegations to simply cause ouster of NCLT's jurisdiction, which the court said cannot be allowed.

The court, therefore, allowed Karyan Global's plea and ruled that the founders must raise all their objections before the NCLT, where the company law dispute is already underway.