Companies Act, 2013 Applies: Suit Not Barred. Appeal Allowed, Trial Court Order Set Aside.

The court held that the suit was not barred under Section 430 of the Companies Act, 2013, as the Companies Act, 2013 applied to the case. The court emphasized the inherent right to bring a civil suit unless expressly barred and set aside the trial court's order, restoring the suit to the file. The court allowed the appeal with no order as to costs and disposed of pending applications.

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Issues Involved:
1. Applicability of the Companies Act, 1956 or the Companies Act, 2013.
2. Bar on the jurisdiction of civil courts under Section 430 of the Companies Act, 2013.
3. Impact of the liquidation of Tirupati Ceramics Limited (TCL) on the jurisdiction of civil courts.

Issue-Wise Detailed Analysis:

Issue I: Applicability of the Companies Act, 1956 or the Companies Act, 2013

24. Learned senior counsel for the plaintiff companies argued that the trial court erred in applying the Companies Act, 2013, as the facts of the case pertain to a period before the Act was notified. The trial court rejected this argument, noting that the Companies Act, 2013 came into force in August 2013, and the suit was filed in 2015. The court emphasized that the previous Act (Companies Act, 1956) was repealed by Section 465 of the Companies Act, 2013.

25. The court agreed with the trial court's findings, highlighting that the bulk of the relevant provisions of the Companies Act, 2013 were notified on 30th August 2018, and Section 46 dealing with 'Certificate of Shares' was notified on 1st April 2014. The court also referred to the Supreme Court judgment in Shashi Prakash Khemkha (D) Through LRs vs. NEPC Micon, which supported the applicability of the Companies Act, 2013. Therefore, the court concluded that the present case would be governed by the Companies Act, 2013, not the Companies Act, 1956.

Issue II: Bar on the jurisdiction of civil courts under Section 430 of the Companies Act, 2013

29. Section 9 of the Code of Civil Procedure (CPC) allows civil courts to try all suits of a civil nature unless expressly or impliedly barred. The court noted that the exclusion of civil court jurisdiction is not readily inferred, and any presumption must favor the existence of jurisdiction. The court referred to several Supreme Court judgments, including State of Andhra Pradesh vs. Manjeti Laxmi Kantha Rao and Ganga Bai vs. Vijay Kumar, which emphasized the inherent right to bring a civil suit unless explicitly barred by statute.

36. The court examined the scheme of the Companies Act, 2013, including Sections 39, 46, 59, 179, 241, 242, 243, and 244, which outline the powers and jurisdiction of the National Company Law Tribunal (NCLT). The court noted that Section 430 of the Act explicitly bars civil court jurisdiction in matters that the NCLT is empowered to determine. The court also referred to the Supreme Court judgment in Shashi Prakash Khemkha (D) Through LRs vs. NEPC Micon, which held that the jurisdiction of civil courts is completely barred in matters within the NCLT's purview.

Issue III: Impact of the liquidation of Tirupati Ceramics Limited (TCL) on the jurisdiction of civil courts

42. The court acknowledged that the bulk of the dispute pertained to the ownership of 50.21% shareholding in TCL and the validity of a board meeting held on 27th August 2013. The court noted that TCL had been dissolved by the NCLT, rendering it non-existent. The court emphasized that the fundamental principle behind barring civil court jurisdiction is to ensure that parties are not rendered remediless. The court referred to Section 250 of the Companies Act, 2013, which states that a dissolved company ceases to operate except for specific purposes such as realizing dues and discharging liabilities.

44. The court referred to the NCLT's order dated 24th November 2020, which dissolved TCL. The court concluded that the liquidation of TCL meant there was no corporate entity to be governed by the Companies Act, 2013, and thus, the civil suit was not barred under Section 430 of the Act.

Conclusion:

46. The court held that there is an inherent right under Section 9 of the CPC to bring a civil suit unless expressly barred. The court found that the trial court erred in rejecting the plaint under Order VII Rule 11(d) of the CPC, as the suit was not barred under Section 430 of the Companies Act, 2013.

47. The court allowed the appeal, set aside the trial court's order dated 21st March 2022, and restored the suit to the file. There was no order as to costs.

48. Pending applications, if any, were also disposed of.

49. The judgment was ordered to be uploaded on the website forthwith.

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