JURISDICTION OF CIVIL COURTS IN COMPANY LAW MATTERS

INTRODUCTION

The power granted by law to a court to hear cases and provide judgments on legal issues pertaining to a specific geographic area and/or specific categories of legal proceedings. It is crucial to establish which court has jurisdiction before a case is filed. Courts at various levels have jurisdiction over litigation involving various sums of money, while state courts have jurisdiction over matters that occur within that state. For instance, Superior Courts (also known as District or County Courts in some states) typically have exclusive jurisdiction over litigation involving significant financial stakes, domestic disputes (divorces), the administration of decedents’ estates, guardianships, conservatorships, and felony trials.

JURISDICTION OF CIVIL COURT

According to section 9 of Civil Procedure Procedure Code , the courts are having jurisdiction to try all suits which are of civil nature except suits in which the cognizance is expressly or impliedly barred.

In the dispute between Shankar Narayanan Potti v. K. Sreedevi.According to the Supreme Court’s ruling in the above case “Civil Court has primary jurisdiction in all types of civil matters pursuant to Section 9 of CPC unless the action is expressly or impliedly barred.” This means that the legislature has the power to override the civil court’s jurisdiction by including a provision or clause in any Act. In the case of Shri Panch Nagar Park v. Purushottam Das, it was decided that in the absence of any stated language in a statute, the court must consider the Act’s design, plan, and applicable sections in order to determine whether a civil court’s jurisdiction has been impliedly dismissed.

There are two conditions
A civil court has jurisdiction to try a suit if two conditions are fulfilled:

i)The suit must be of a civil nature-In general terms or in layman terms suit of civil nature generally means any suit which is not criminal in nature.The word civil has not been defined in the code specifically but it generally implies to the private rights of the citizens which are different from criminal and political rights.According to one definition, “nature” refers to “the basic characteristics of a person or object; identity or intrinsic character; sort, kind, or character.” Thus, the content is more varied. The phrase “civil nature” has a broader definition than “civil procedure.” As a result, a lawsuit is of a civil nature if its main issue concerns the determination of a civil right and its enforcement. The subject matter of the lawsuit, not the status of the parties, establishes whether or not it is a civil action.The term “suit of a civil nature” refers to a citizen’s private rights and obligations. That term does not touch matters of politics or religion. A lawsuit with caste or religious discrimination as the main issue is not of a civil nature.

ii)The cognizance of such a suit should not have been expressly or impliedly barred-To start with this condition we will first study the meaning of expressly and impliedly barred. Expressly in general terms means in which the offer or acceptance of any matter is made verbally and impliedly means where the offer and acceptance is not made verbally.When a lawsuit is prohibited by any currently in effect law i.e when a lawsuit is prohibited by any enactment for the time being, it is referred to as being “expressly barred.It is referred to as being “expressly barred.”On the basis of public policy, even civil lawsuits are similarly excluded from civil court jurisdiction. When a lawsuit is considered to be disallowed by broad legal principles, it is said to be impliedly barred. A person who needs a remedy in a different form than what is provided by statute is therefore denied when a specific remedy is provided by statute. In Raja Ram Kumar Bhargava v. Union of India, the Supreme Court outlined a number of crucial factors to take into account while determining whether the jurisdiction of the Civil Court is impliedly excluded. As follows:

a) Whether a right that does not already exist under common law has been established by statute. moment).

d) The statutory proceedings are designed to have a finality as their outcome.

b) The legislation itself offered tools for enforcing that right.

c) Rights and remedies were both formed in uno flatu(at the same

NATIONAL COMPANY LAW TRIBUNAL

Under section 408 of companies act a tribunal named National Company Law Tribunal was established by the Central Government. The main purpose behind its formation is to stop multiplicity of litigation before courts and forums regarding corporate issues of civil nature. It is basically a quasi-judicial body which was established to solve disputes between companies in India. It generally deals with the disputes in corporate sector where jurisdiction of civil court id barred. The Hon’ble Supreme Court of India made the case for the creation of a specialised tribunal in the ruling of S.P. Sampath Kumar v. Union of India. In that case, the court upheld the alternative institutional mechanism theory and held that since independence, the nation’s population has been steadily growing, which has led to an increase in the number of cases that must be handled by the courts, placing a burden on them to do so.

Functions of NCLT

There are few functions of NCLT which we will discuss below:-

1)Registration of companies-According to section 7(7) of Companies Act,2013 on an application made to the tribunal and if the tribunal is satisfied that a company has been incorporated with false or fraudulent information then in such a case the tribunal may order as it may thinks fit for changes in the regulation of the company or direct that the liability of the company is unlimited or direct for the removal of the companies name or to pass an order for winding up the company. Thus, the NCLT has the authority to take a number of actions, including the ability to dissolve any corporation and revoke a company’s registration. Due to certain procedural flaws during incorporation and registration, the new Companies Act, 2013, has made it possible to call into doubt the legitimacy of companies.

2)Transfer of shares:- In accordance with sections 58 and 59 of the Act, NCLT is also given the authority to consider complaints from corporations that have had their requests to transfer shares and securities rejected. Initially, the Company Law Board had jurisdiction over these complaints.

3) The authority to inquire- NCLT has the authority to order an investigation if a person who isn’t connected to a corporation can convince NCLT that there are prerequisites for doing so. The NCLT has the authority to order an investigation to be carried out anywhere in the world, including in India. The laws are designed for providing and requesting assistance from foreign courts, investigating agencies, and governments.

4) Converting public limited companies into private limited companies-The conversion of a public limited company into a private limited company is governed by Sections 13–18 of the Companies Act, 2013, read with rules. This conversion requires an earlier NCLT confirmation. Section 459 of the Act gives NCLT the authority to impose particular restrictions or conditions, and it may do so in order to conditionally grant approvals.

5)Section 97 authorizes the tribunal to call annual general meeting and section 98 gives power to the tribunal to call meetings of the members.

JURISDICTION OF CIVIL COURT ON COMPANY LAW MATTERS(CONCLUSION)

According to section 430 of Companies Act,2013,no civil  court is having jurisdiction to entertain any suit  which the Tribunal or Appellate tribunal is having jurisdiction to entertain. Thus any suit which the tribunal is empowered to entertain by this act, the civil court has no jurisdiction to try such suits. According to how section 63 of the IBC currently reads, civil courts are not permitted to hear cases involving issues that are decided by the NCLT and the National Company Law Appellate Tribunal.Civil courts jurisdiction to try company law matters have always been a debatable issue, this issue can also be clarified by understanding a decided case, The Delhi High Court ruled in Maharaja Exports and Another v. Apparels Exports Promotional Council that under Section 9 of the CPC, 1908, civil courts have the authority to hear all civil lawsuits, with the exception of those in which their cognizance is expressly or implausibly precluded. The Company Act, unlike some other acts, does not explicitly forbid the ordinary civil courts from having jurisdiction over situations covered by the Act’s provisions. The jurisdiction of civil courts is impliedly excluded in several circumstances, such as company winding up.

Sources

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