Civil suit challenging CIRP initiation over disputed debt, assignment and forged documents barred; plaint rejected under O.VII R.11 CPC.

The dominant issue was whether a civil suit challenging initiation of CIRP on grounds of absence of legally enforceable debt, invalid assignment, and forged/fabricated documents was barred by the IBC's jurisdictional ouster. The HC held that allegations of fraud, forgery, malicious initiation, and veracity of documents can be examined by the NCLT under ss. 65 and 75, and as incidental/ancillary questions under s. 60(5)(c) read with the NCLT Rules; the inability of the NCLT to decide such matters at the admission stage under s. 7 does not permit parallel civil adjudication, and ss. 63 and 231 bar collateral civil attacks. Consequently, the plaint was rejected under O.VII R.11 CPC.

---

---

1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the civil suit, seeking declarations negating the existence of debt, challenging the assignment instrument and alleging forgery/fraud in documents relied upon for initiating insolvency proceedings, is barred by the ouster provisions of the insolvency statute, warranting rejection of plaint under Order VII Rule 11(d) CPC.

(ii) Whether allegations of fraudulent/malicious initiation of insolvency proceedings, falsity of material information in the initiation application, and the validity/veracity of documents forming the basis of the claimed debt (including an assignment instrument) fall within the adjudicatory jurisdiction and procedural competence of the specialised tribunal under Sections 65, 75 and 60(5)(c) read with the relevant tribunal rules, thereby attracting the statutory bar on civil court jurisdiction.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Bar of civil court jurisdiction and rejection of plaint

Legal framework: The Court examined the ouster clauses which bar civil court jurisdiction "in respect of any matter" over which the specialised tribunal/appellate tribunal is empowered under the insolvency statute, and the further bar on injunctions against actions taken or to be taken pursuant to orders under the statute. The Court treated these as classic ouster provisions whose operation depends upon the breadth of matters the specialised tribunal is empowered to determine under the statute.

Interpretation and reasoning: The Court held that, for Order VII Rule 11 analysis, plaint averments must be assumed true on demurrer, and the decisive question is legal-whether the subject-matter is one which the specialised tribunal has jurisdiction to decide. The Court emphasised that the bar is not contingent upon the "stage" of proceedings before the tribunal; what matters is whether the tribunal ultimately has jurisdiction to adjudicate the questions raised. A party cannot circumvent the specialised statutory scheme by seeking civil declarations that would effectively pre-empt or stall proceedings before the tribunal.

Conclusions: On a holistic reading of the prayers and pleadings, the Court found the suit to be a collateral attack on the insolvency process and, in substance, an attempt at an anti-tribunal injunction dressed as declaratory relief. Since the core questions raised are within the tribunal's jurisdiction under the insolvency statute, the civil suit is barred and the plaint is liable to rejection under Order VII Rule 11(d) CPC.

Issue (ii): Tribunal's jurisdiction over fraud/forgery/false information and document validity relating to initiation of insolvency

Legal framework: The Court examined (a) Section 65 (fraudulent or malicious initiation of insolvency proceedings), (b) Section 75 (punishment for false information furnished in a Section 7 application), and (c) Section 60(5)(c) (tribunal's jurisdiction over questions of law or fact arising out of or in relation to insolvency proceedings), along with relevant tribunal procedural rules enabling evidence by affidavit, cross-examination, discovery/production of documents, summoning of witnesses, and recording of evidence.

Interpretation and reasoning: The Court concluded that Section 65 expressly empowers the tribunal to inquire into fraudulent or malicious initiation, which necessarily entails fact-finding and adjudication on disputed questions such as fraud, forgery, fabrication, collusion, and the authenticity of documents relied upon to invoke insolvency. Section 75, by its language, authorises inquiry into whether information furnished in the initiation application is false in material particulars or omits material facts, which requires examining the veracity and materiality of statements and documents. Section 60(5)(c) provides a broad, residuary jurisdiction for questions of law and fact "arising out of or in relation to" insolvency proceedings; the Court treated it as enabling incidental and ancillary adjudication necessary to give effect to Sections 65 and 75, including scrutiny of the validity/veracity of documents on which debt is sought to be established (such as an assignment instrument). The Court further held that the tribunal rules demonstrate institutional and procedural capacity for full fact-finding, including cross-examination and document production, when required.

Conclusions: The Court held that the specialised tribunal is empowered and equipped to adjudicate: (a) whether insolvency initiation is fraudulent/malicious, (b) whether material information/documents relied upon for initiation are false, and (c) consequentially, issues concerning the genuineness/validity of the document asserted as the basis of the financial creditor's claim to the debt (including the assignment instrument), as well as connected allegations of collusion. Because these issues lie within the tribunal's jurisdiction under Sections 65, 75, and 60(5)(c) read with the tribunal rules, the civil court's jurisdiction is barred in respect of those matters.

Application to the pleadings and reliefs sought: The Court identified the plaintiff's primary relief as a declaration that the loan stood fully discharged and that no enforceable debt existed, with other prayers (challenging the assignment instrument and letters as forged/non-est, seeking accounts/reconciliation, and restraining enforcement) flowing from that core assertion. The Court held that determining whether the financial creditor holds a debt (including by virtue of an assignment instrument) and whether the documents relied upon are fraudulent/forged are matters the tribunal can determine within the insolvency statutory framework, and therefore the suit is barred by the ouster provisions. Consequently, the plaint was rejected; the interim injunction application became infructuous; and costs were imposed, with an express clarification that nothing stated would be construed as an opinion on merits of the parties' claims regarding the debt.

---