2021 (10) TMI 248 - HC - Companies Law

Court dismisses writ petitions due to lack of authorization and exclusive NCLT jurisdiction

Utkal Chamber of Commerce and Industries Ltd., Jyoti Prakash Das & Anr. Versus Sanjeev Mahapatra & Ors.

The court dismissed both writ petitions, finding W.P.(C) No. 23128 of 2021 not maintainable due to lack of authorization, and that the issues in W.P.(C) ... Maintainability of Company Proceeding - issues raised in the Company Act proceeding is pending consideration of the suit bearing - HELD THAT:- From the provision at Section 241 of the Act, 2013, this Court finds, this provision of the Act, 2013 authorizes any member of the company to complain under the provision of oppression & mismanagement. Similarly section 242 of the Act, 2013 gives power to the “NCLT” to opine that the company affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members and also on other aspect, which are of course not relevant here. Section 242(2) particularly deals with the matter involving regulation of conduct of affairs of the Company in future apart from also several other aspects included therein. This Court not only finds, both the proceedings are aimed with different directions, but keeping here in view the prohibition U/s.430 of the Act, 2013, this Court finds, subject involving the proceeding vide C.P.11/CTB/2021 cannot be undertaken by a Civil Court as the NCLT has the authority and competency to decide such aspect. The issues involving the C.P. proceeding are clearly barred for being undertaken in exercise of a suit before the Civil Court. This Court since finds, same are to be left for consideration of the NCLT dependent on the claim and counter of both the parties involved, touching these aspects at this stage of the matter will be amounting to encroaching upon the jurisdiction of the NCLT. In the circumstance, this Court is not inclined to enter into any other area and leaves all these open to the parties to agitate and get adjudicated by the NCLT concerned - Petition dismissed. Issues Involved:1. Maintainability of the writ petitions.2. Jurisdiction of the Civil Court vis-à-vis NCLT.3. Allegations of suppression of material facts and unclean hands.4. Applicability of Sections 241 and 242 of the Companies Act, 2013.5. Prohibition under Section 430 of the Companies Act, 2013.Detailed Analysis:1. Maintainability of the Writ Petitions:The court first addressed the maintainability of W.P.(C) No. 23128 of 2021, filed by one Sri Brahmananda Mishra claiming to be the president of Utkal Chamber of Commerce & Industries Ltd. The court found that there was no authorization or resolution from the Board of Directors of the company authorizing him to initiate litigation. Citing precedents from the Supreme Court (State Bank of Travancore v. Kingston Computers India Pvt. Ltd.) and the High Court (Eimco Elecon (India) Ltd. v. Mahanadi Coal Fields Ltd.), the court held that the writ petition was not maintainable and dismissed it.For W.P.(C) No. 12645 of 2021, filed by elected Executive Members in their personal capacity, the court found it maintainable and proceeded to consider its merits.2. Jurisdiction of the Civil Court vis-à-vis NCLT:The court examined whether the issues raised in the Company Petition (C.P. No. 11/CB/2021) pending before the NCLT could be entertained by a Civil Court. It noted that Sections 241 and 242 of the Companies Act, 2013, empower the NCLT to address complaints of oppression and mismanagement. The court highlighted that the disputes in the civil suit and the Company Petition were aimed at different outcomes and that Section 430 of the Companies Act, 2013, prohibits civil courts from entertaining matters that fall within the jurisdiction of the NCLT.3. Allegations of Suppression of Material Facts and Unclean Hands:The court considered the submissions that the petitioners had allegedly suppressed material facts and approached the court with unclean hands. The respondents argued that the petitioners had twisted facts and concealed material information. However, the court did not delve deeply into these allegations, focusing instead on the jurisdictional issues and the applicability of the Companies Act provisions.4. Applicability of Sections 241 and 242 of the Companies Act, 2013:The court analyzed the applicability of Sections 241 and 242, which deal with complaints of oppression and mismanagement. It found that the Company Petition included allegations that fell within the scope of these sections, such as the conduct of affairs in a manner prejudicial to members and the company, and issues related to the Articles of Association and the election process. The court concluded that these matters were within the competency of the NCLT to adjudicate.5. Prohibition under Section 430 of the Companies Act, 2013:The court emphasized that Section 430 bars civil courts from entertaining suits or proceedings in respect of matters that the NCLT or the Appellate Tribunal is empowered to determine. It cited the Supreme Court's decision in Shashi Prakash Khemka (Dead) through Legal Representatives v. NEPC MICON, which reinforced that civil courts have no jurisdiction over matters within the NCLT's purview. Consequently, the court held that the issues raised in the Company Petition could not be addressed by a civil court.Conclusion:The court dismissed both writ petitions, finding that W.P.(C) No. 23128 of 2021 was not maintainable due to lack of authorization, and that the issues in W.P.(C) No. 12645 of 2021 fell within the exclusive jurisdiction of the NCLT under Sections 241 and 242 of the Companies Act, 2013, and were barred from civil court jurisdiction by Section 430 of the same Act. The court left all other issues open for adjudication by the NCLT.