JURISDICTION OF CIVIL COURTS IN COMPANY LAW TRIBUNAL

Civil courts are the lowest courts which take cognizance of all the suits of civil nature except few of which the jurisdiction is specifically ousted. In India, the functioning of civil court is guided by the Code of Civil Procedure, 1908. Section 9 of CPC brings out the jurisdiction of Civil Courts which reads as under,

  • Courts to try all civil suits unless barred:- the courts shall (subject to the provisions herein) have jurisdiction to try all suits of a civil nature excepting suits of which the cognizance is either expressly or impliedly barred.

Explanation– A suit in which the right to property or to an office is contested is a suit of a civil nature, notwithstanding that such right may depend entirely on the decisions of questions as to religious rites or ceremonies.  

It can be inferred from the above that the civil courts can adjudicate upon all the suits of civil nature except those where the jurisdiction has been expressly or impliedly barred. The expression ‘expressly or impliedly barred’ has been discussed by courts in several cases and now it is settled principle that, the jurisdiction can be barred either through an express provision under any statute or by the legislative intent which is clearly implied from the statute.

In the landmark decision of Secretary of State v. Mask & Co, the Privy Council observed that:

“it is settled law that the exclusion of the jurisdiction of the civil court is not to be readily inferred, but that such exclusion must either be expressed or clearly implied.”     

From the observance of the Privy Council it is clear that the position in relation to the jurisdiction of civil court was made clear in very beginning. The Supreme Court of India discussed the matter much later in the year 1963 in the case of

Radha Kishan v. Ludhiana Municipality wherein it was held that:

“Under Section 9 of the civil procedure code the court shall have jurisdiction to try all suits of civil nature excepting suits of which cognizance is either expressly or impliedly barred. A statute, therefore, expressly or by necessary implication can bar the jurisdiction of civil court in respect of a particular matter.

JURISDICTION OF COMPANY LAW BOARD

Companies Act, 2013 introduced the National Company Law Tribunal (NCLT) to replace the existing Company Law Board. The intention behind establishing a new tribunal is to relieve the courts of the unnecessary burden and all the matters pending before the Company Law Board are to be transferred to the NCLT as per the Company Act, 2013. But the tribunal is yet not established and the Company Law Board is presiding over all the pending and fresh matters in relation to the company law.

Company law Board was established vide Notification No. 364 dated 31st May, 1991. The procedures for filling the applications/petitions before the Company Law Board have been laid down under the “Company Law Board Regulations, 1991”. The powers and functions of Company Law Board are enumerated under Section 10E of the Company Act, 1956, wherein sub-section (4C) and (4D) lays down several matters upon which it enjoys the powers vested in a Court under the Code of Civil Procedure, 1908 and sub-section (5) states that powers and functions shall be guided by the principles of natural justice and on the board’s discretion.           

CIVIL COURT’S JURISDICTION IN RELATION TO COMPANY LAW MATTERS

The jurisdiction of civil court over the company law matters has always been a debatable issue. The main contention put forth against the civil court’s jurisdiction is that the position of Company Law Board has been kept at par with that of Civil Court because of which the appeal against any decision or order of company law board is to be filed before High Court. It is always debated that, since a special body has been established to adjudicate over the matters related to company law it automatically ousts the jurisdiction of civil court.

Maharaja Exports and Another v. Apparels Exports Promotional Council, the Delhi High Court held,

“Under Section 9 of the CPC, 1908, Civil Court have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is expressly or impliedly barred. Unlike some statutes, the Company Act does not contain any express provision barring the jurisdiction of the ordinary civil courts in matters covered by the provisions of the Act. In certain cases like winding up of companies, the jurisdiction of civil courts is impliedly barred.”

  • Dwarka Prasad Agarwal v. Ramesh Chandra Agarwal in this case it was held that

“the ouster of jurisdiction shall not be readily inferred. If the matter is of civil nature and if ouster of the jurisdiction is not implied or expressed then the jurisdiction of civil court cannot be questioned.”

ZEE V. INVESCO

While it could be argued that the Bombay HC’s view on Section 430 was only limited to the specific context of the Zee-invesco dispute, relying on the INVESCO Judgment, litigants may now (at the very least) question the NCLT’s jurisdiction to adjudicate matters arising out of Section 100 of the Act, and would approach the civil courts for an injunction restraining an eligible shareholder from calling for an EGM and/or initiating proceedings before the NCLT under Section 98 of the Act.

A more worrisome development would be litigants insisting that the civil courts have ‘residuary jurisdiction’ to adjudicate any dispute arising out of or in connection with those provisions of the Act, that are not explicitly mentioned in the schedule of fees provided in the NCLT Rules.

CONCLUSION

From the above it can be inferred that there is no express provision under the Company Act, 1956, which bars the jurisdiction of civil court over the company matters. It is very clear from several judgments that whenever a civil dispute arises, even if under Company Law, the Civil Court’s jurisdiction can never be ousted.

It is also clear from the judgments that express or implied condition barring the jurisdiction is very important. The jurisdiction of Civil Court can be barred only under those situations where it has been expressly excluded under the provisions of the act. Section 9 of the CPC states that Civil Courts have jurisdiction to try all the suits of a civil nature excepting suits of which their cognizance is expressly or impliedly barred. Best example for this is that the jurisdiction of Civil Court is barred under the Securitization Law and Civil Court’s very rarely get into the matter related to it.

BIBLIOGRAPHY

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