High Court denies injunction; stresses NCLT jurisdiction in company matters. Importance of full disclosure reiterated.

The High Court dismissed the application for an ad interim order of injunction due to suppression of material facts and simultaneous seeking of similar reliefs in different forums. The court emphasized the exclusive jurisdiction of the NCLT in company-related matters under the Companies Act, 2013, and the importance of disclosing all relevant facts. The court directed the parties to proceed with the exchange of affidavits and set a timeline for filing opposition and reply affidavits, highlighting the significance of following orders from the High Court's official website.

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Issues Involved:
1. Jurisdiction of the High Court vs. NCLT.
2. Suppression of material facts.
3. Simultaneous reliefs sought in different forums.
4. Fraud and deceit allegations.

Detailed Analysis:

Jurisdiction of the High Court vs. NCLT:
The primary issue revolves around whether the High Court has jurisdiction to entertain the suit when the NCLT is empowered to decide the matter under the Companies Act, 2013. Section 430 of the Companies Act, 2013, explicitly bars civil courts from entertaining suits or proceedings over which the NCLT has jurisdiction. Rule 70 of the NCLT Rules further empowers the NCLT to pass orders, including interim orders, injunctions, and decisions on title and rectification of the register of members. The court observed that the Companies Act, 2013, intends to consolidate all company-related matters under the NCLT, thereby ousting the jurisdiction of civil courts in such matters. The court concluded that it does not have jurisdiction in the matter, as the NCLT is fully empowered to decide on the issues raised, including the enforcement of oral agreements related to share transfers.

Suppression of Material Facts:
The court found that the plaintiffs had suppressed material facts by not disclosing the filing of a similar application before the NCLT. The application for injunction did not mention that another application had been filed before the NCLT on February 15, 2019, three days before the present suit was instituted in the High Court. The court noted that the plaintiffs' failure to disclose this fact amounted to suppression of material facts, which is against the spirit of the law. Citing the Supreme Court's observation in S.P. Chengalvaraya Naidu (Dead) by Lrs. –v- Jagannath (dead) by LRs. And Ors., the court emphasized that a litigant must come to the court with clean hands and disclose all relevant facts.

Simultaneous Reliefs Sought in Different Forums:
The court addressed the issue of the plaintiffs seeking similar reliefs simultaneously before the High Court and the NCLT. The court found that the interim relief sought in both forums was the same, which could lead to contradictory orders. The court held that a litigant cannot seek similar reliefs in different forums at the same time, as it could result in a dichotomous situation. The court noted that the core issues in both the suit and the NCLT application were identical, and allowing parallel proceedings could lead to conflicting decisions.

Fraud and Deceit Allegations:
The plaintiffs alleged that the defendants committed fraud by increasing the authorized share capital and issuing bonus shares without informing the plaintiffs, thereby breaching an oral agreement. The court noted that the plaintiffs had claimed that the defendants owed them a significant sum of money and had pledged their shareholding as security. However, the court did not delve deeply into the fraud allegations, as the primary focus was on the jurisdictional issue and the suppression of material facts.

Conclusion:
The court dismissed the application for an ad interim order of injunction on two grounds: suppression of material facts and the simultaneous seeking of similar reliefs in different forums. The court directed that the matter be decided upon the exchange of affidavits and set a timeline for filing the opposition and reply affidavits. The court emphasized the importance of acting on the basis of the order downloaded from the High Court's official website.

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