TaxTMI 
TaxTMI 
2026 (6) TMI 1155
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.... respondent herein had filed Company Petition No.23 of 2021 before the National Company Law Tribunal, Kochi Bench ['NCLT' for short] for initiating action against respondents 2 to 4 in the said petition, for acts of oppression and mismanagement under Section 232 of the Companies Act, 2013, for removal of the above said persons as Directors of the 1st respondent Company, to order recovery of undue gain made by them, to disqualify and debar the said respondents for the fraudulent practice administered by them, etc. Interim reliefs were sought for in the Company Petition to prevent further diversion of funds of the 1st respondent Company and to restrain the Directors from creating any third party rights or mortgaging or alienating immovable assets partly or fully owned, apart from other reliefs. 2. Petitioners 1 to 3 in the revision petition are defendants 1 to 3 in the suit and the 4th petitioner is the 5th defendant in the suit. The 2nd respondent in the revision petition is the 4th defendant in the suit. Along with the suit, the 1st respondent (plaintiff) had filed IA No.2 of 2021, praying for an ad interim injunction restraining the defendants 1 to 4 from illegally and ....
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....ct which is intended to cover up an oppression also has to be dealt with by the NCLT. It is submitted that the allegations in the injunction application are only regarding actions which aid the oppression and mismanagement. It is hence submitted that the Civil Court did not have jurisdiction. It is further contended that when there is an exclusive forum created for deciding such disputes, all powers have to be conceded to the forum to adjudicate the lis. Reference is made to Sections 213, 241, 242, 280, 424, 430, 432 and 433 of the Companies Act and Rule 11 of the NCLT Rules. 4. Reliance is placed on the judgment of a Division Bench of this Court in C.M.Z. Musliar v. Aboobacker [1998 (1) KLT 136], the decisions of the Hon'ble Supreme Court in Ammonia Supplies Corporation (P) Ltd. v. Modern Plastic Containers Pvt. Ltd. & Ors. [(1998) 7 SCC 105], Shashi Prakash Khemka & Ors. v. NEPC Micon Ltd. & Ors. [(2019) 18 SCC 569], Nusli Neville Wadia v. Ivory Properties & Ors. [(2020) 6 SCC 557], Greater Noida Industrial Development Authority v. Prabhjit Singh Soni [2024 (1) KLT 1195 (SC)] and the decision of the Bombay High Court in CDS Financial Services (Mauritius) Ltd. v. BPL Commun....
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....d mismanagement, and hence the issue has to be dealt with by NCLT and not by a civil court. The contention of the respondents on the other hand is that the prayers in the suit are more in the nature of a common law remedy, not expressly barred by the provisions of the Companies Act, and hence the suit is maintainable. 8. Section 430 of the Companies Act, 2013 says that no civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under the Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal. There is no ambiguity in the wordings of the Section which excludes jurisdiction of the civil court. The only question to be considered is whether the issue involved in the suit is a matter which the Tribunal is empowered to determine under the Act or any other law for the time being in force. Section 213 of the Act empowers the ....
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....ting aside or modification of any agreement between the company and any person other than those referred to in clause (e): Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned; (g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (h) removal of the managing director, manager or any of the directors of the company; (i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims; (j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under ....
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....of the company who is in default shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees." 10. Section 242(4) empowers the Tribunal to make any interim order which it thinks fit for regulating the conduct of the Company's affairs. Section 242(2)(m) empowers the Tribunal to pass an order providing for any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made. A reading of the statutory provision would make it clear that an equitable relief like an order of injunction can be granted by the Tribunal in an application which has been filed alleging oppression and mismanagement if the injunction sought for relates to actions of the persons against whom oppression and mismanagement is alleged and relates to the affairs of the company. 11. Rule 11 of the NCLT Rules, 2016 framed under Section 469 of the Act, is in pari materia with Section 151 of the Code of Civil Procedure and reserves the inherent power of the Tribunal in the following terms; "11. Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Tri....
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....s Court, while considering the power of the Registrar under Section 4 of the Societies Registration Act, held that it is a well accepted proposition that the conferment of statutory powers must be construed as impliedly authorising everything which could fairly and reasonably be regarded as incidental or consequential to the power itself. In Shashi Prakash Khemka (supra), the Hon'ble Supreme Court considered the scope of Section 430 of the Act and held that in matters in respect of which power has been conferred on the NCLT, the jurisdiction of the Civil Court is completely barred. In Greater Noida Industrial Development Authority (supra), the Hon'ble Supreme Court was considering the maintainability of a recall application under the Insolvency and Bankruptcy Code, 2016. The Court considered the effect of Rule 11 of the NCLT Rules and Section 151 of the Code of Civil Procedure and after referring to several judgments on the issue held that the Tribunal is invested with such ancillary or incidental powers as may be necessary to discharge its functions effectively for the purpose of doing justice between the parties and in the absence of a statutory prohibition, in an appropr....
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....tion was related to the oppression or mismanagement of the Company and a relief which could have been prayed for before the Tribunal, in the light of the provisions mentioned above. Referring to the allegations in the application filed by the 1st respondent that the Company Secretary was involved in committing illegal and unauthorised access to the accounts and files of the Company and making illegal corrections and alterations with intention to tamper evidence, the court has concluded that remedy against such illegal acts is completely outside the purview of the adjudication by the National Company Law Tribunal. The above conclusion cannot be legally sustained in view of the specific provisions available under the Companies Act, which provide for seeking relief before the Tribunal for such actions also. The order of the trial court could not have been reversed on the above reasoning. It can be seen that there are no other prayers in the suit. The relief has necessarily to be granted by the NCLT in the application filed against oppression and mismanagement. 16. A contention was taken by the counsel for the 1^st respondent that the Tribunal cannot consider the issue which had bee....