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NCLT Has Exclusive Jurisdiction To Try All Company Matters Including Contentious & Complex Ones : NCLAT [Read Judgment]

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29 May 2019 12:55 PM GMT
NCLT Has Exclusive Jurisdiction To Try All Company Matters Including Contentious & Complex Ones : NCLAT [Read Judgment]
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The National Company Law Appellate Tribunal has held that the National Company Law Tribunal has exclusive jurisdiction to try all matters under Companies Act 2013, including those involving contentious and complex issues.

This is in view of Section 430 of the Companies Act, which bars jurisdiction of civil courts in respect of matters under the Act.

The NCLAT was hearing a challenge brought against the course adopted by NCLT Hyderabad bench in declining to entertain a petition under Section 59 of the Companies Act 2013 for rectification of registry. The petition was filed seeking cancellation of entry of the name of petitioner in the Register of Members of respondent-company showing 906599 equity shares purported to have been credited on the basis of conversion of 906599 Compulsory Convertible Debentures(CCD) standing in the name of the petitioner. 

The Hyderabad bench held that the issues raised were complex or contentious issues which required examination of the Insolvency and Bankruptcy Code (IBC), 2016 as well as the Arbitration Act, 1996. It relied on the 1998 SC judgment in Ammonia Supplies Corporation (P) Ltd. v. Modern Plastic Containers Pvt. Ltd., which held that if the rectification petition raises serious disputes relating to title, matter has to be examined by civil courts.

The appellant in the NCLAT argued that the judgment in Ammonia Supplies case was no longer good law after the 2013 Act, especially in the light of express bar on civil courts under Section 430.

The NCLAT noted that in the case Shashi Prakash Khemka v NEPC Micon and others, the Supreme Court had observed that if a dispute had emerged after the 2013 Act, "the civil suit remedy would be completely barred and the power would be vested with the National Company Law Tribunal (NCLT) under Section 59 of the said Act."

Following Shahsi Prakash Khemka,  NCLAT in the case Smiti Golyan & Ors. Vs. Nulon India Limited & Ors had held that Ammonia Supplies decision was no longer applicable in the context of changed law.

Based on these precedents, the NCLAT bench headed by Justice A I S Cheema held :

"we are of the view that with change of law now under Section 59 of the Act, NCLT can deal with rectification and all questions including incidental and peripheral questions raised with regard to rectification for the purpose of deciding legality of the rectification"

"NCLT which exercises widest possible powers in a matter under Section 241, 242 of the Act; which even otherwise is expected to always keep interest of the Company in forefront, cannot be treated as unequipped only because the Petition is under Section 59 of the Act". 

On the facts of the case, the NCLAT held that there was no complex or contentious issues involved and allowed the rectification as sought by the appellant.

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