Civil Court Has No Jurisdiction In Matters In Respect Of Which Power Has Been Conferred On NCLT: SC [Read Order]

The Supreme Court has observed that the jurisdiction of the civil court is completely barred in matters in respect of which power has been conferred on the National Company Law Tribunal.

In Shashi Prakash Khemka vs. NEPC Micon, the bench comprising Justice L Nageswara Rao and Justice Sanjay Kishan Kaul was considering whether an issue qua the transfer of shares has to be adjudicated by civil court or by the Company Law Board.

In this case, the Madras High Court had held that the Company Law Board would not have jurisdiction in the matter and as there is serious dispute as to title, the matter should be relegated to a civil suit. The appellants submitted before the apex court bench that subsequent legal developments have a direct effect on the present case as the Companies Act, 2013, has been amended which provides for the power of rectification of the Register under Section 59 of the said Act.

"The effect of the aforesaid provision is that in matters in respect of which power has been conferred on the NCLT, the jurisdiction of the civil court is completely barred. It is not in dispute that were a dispute to arise today, the civil suit remedy would be completely barred and the power would be vested with the National Company Law Tribunal (NCLT) under Section 39 of the said Act," the bench said, referring to Section 430 of the Companies Act, 2013.

Relegating the parties to NCLT, the bench said: "We are conscious of the fact that in the present case, the cause of action has arisen at a stage prior to this enactment. However, we are of the view that relegating the parties to civil suit now would not be the appropriate remedy, especially considering the manner in which Section 430 of the Act is widely worded." 

Read the Judgment Here