In deciding an appeal in the matter of MAIF Investment India PTE Ltd. v/s Ind-Barath Power Infra Limited & Ors., Company Appeal (AT) No. 334 of 2018, NCLAT has reviewed and decided on the issue of exclusive jurisdiction of NCLT in all the company matters and to bar the jurisdiction of civil courts including  complex and contentious one.

The appeal was against the order given by NCLT, Hyderabad, where the NCLT, Hyderabad bench declined to entertain the petition under Section 59 of the Companies Act, 2013 for seeking a rectification in the register of members.

The alleged dispute involved conversion of compulsory convertible debentures without requisite consent and quorum.

NCLT, Hyderabad dismissed the petition stating the reason that issue raised were complex or contentious issue which required the examination of the Arbitration Act, 1996 & Insolvency & Bankruptcy Code, 2016.

While dismissing the petition, NCLT, Hyderabad had relied on Supreme Court's 1998 judgement  in Ammonia Supplies Corporation (P) Ltd. v. Modern Plastic Containers Pvt. Ltd. & Ors., where the Supreme Court has held that- "if the rectification petition raises serious disputes relating to title, matter has to be examined by civil courts."

However, on reviewing the appeal, NCLAT in its order relied on Supreme Court order in case of Shashi Prakash Khemka v. NEPC Micon & Ors., 2014, where the Supreme Court   has held 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."

Further, in an earlier case of Smiti Golyan & Ors. v. Nulon India Limited & Ors., NCLAT has already held that – "Ammonia Supplies decision was no longer applicable in the context of changed law."

In the present matter, while deciding the appeal, NCLAT it was been held by Justice A I S Cheema that-  "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."

The NCLAT allowed the appeal and held that there were no complex or contentious issues involved and allowed the rectification as sought by the appellant.

The said decision of NCLAT has reaffirmed the provision of Section 430 of the Companies Act, 2013 which bars the jurisdiction of civil courts in the matters which are assigned to NCLT or NCLAT.

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Published Date: May 31, 2019

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