Sec. 430 Bars Civil Court’s Jurisdiction | NCLT Can Decide Rectificatory Jurisdiction u/s 59 Despite Contested Facts
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- Last Updated on 13 March, 2024
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Case Details: Gireesh Kumar Sanghi v. Sanghi Industries Ltd. - [2024] 160 taxmann.com 281 (NCLAT-Chennai)
Judiciary and Counsel Details
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- Rakesh Kumar Jain, Judicial Member & Shreesha Merla, Technical Member
- Yogesh Jagia & Harshit Ratra, Advocates for the Appellant.
- R. Venkatavaradan & Sriram Venkatavaradan, Advocates for the Respondent.
Facts of the Case
In the instant case, the Company ‘S’/respondent was a private listed company which later decided to convert into a public listed company. Subsequently, the petitioner/director of ‘S’ filed a petition u/s 59 of the Companies Act, 2013 before the National Company Law Tribunal (NCLT) against ‘S’.
The petitioner prayed for directions for the rectification of the register of members of ‘S’ to the extent of equity shares that were transferred by ‘S’ in favour of its other director without receipt of any consideration. These transfers resulted in losses incurred by shareholders of ‘H’.
However, the NCLT vide the impugned order dismissed the said petition. The NCLT held that the rectificatory jurisdiction of the NCLT u/s 59 was summary in nature and the same was not intended to be exercised where there were contested facts and disputed questions.
Subsequently, the appellant filed an appeal before the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.
NCLAT Held
The NCLAT held that, once the legislature had created a complete bar of the jurisdiction of the Civil Court by enacting section 430, no civil court shall have the jurisdiction to entertain any suit or proceedings in respect of any matter which the NCLT or NCLAT is empowered to determine.
Therefore, there was no doubt that jurisdiction to decide rectificatory jurisdiction u/s 59 should be available to be exercised even where there were contested facts and disputed questions.
As a result, the impugned orders were to be set aside and the matter was to be remanded back to the NCLT.
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