Sathish Kumar Vs Govindankutty (Kerala High Court)
Summary: The Kerala High Court allowed two original petitions challenging orders dated 17 January 2026 of the Commercial Court-II, Thrissur, which had held that two suits concerning the sale of company property were barred by Section 430 of the Companies Act, 2013. The plaintiffs sought a declaration that sale deed No.2706/2014 of SRO, Cherpu, executed in favour of defendants 2 and 3, was not binding on them or the company/shareholders, together with consequential relief retaining the property as a company asset and in its books of account. They alleged that the sale lacked majority shareholder concurrence and that the shareholders’ meeting recited in the deed had never occurred. The plaint also alleged failure to conduct statutory audits and misappropriation of chit funds, in connection with which criminal complaints had been registered. The defendants disputed the allegations, maintained that the deed was properly registered, and argued that the dispute concerned oppression and mismanagement within the NCLT’s jurisdiction.
The plaintiffs contended that Section 430 did not impose an absolute bar and that ordinary civil declaratory relief concerning property remained within civil court jurisdiction. They also pointed out that no maintainability objection had been raised when the suits were earlier transferred to the Commercial Court. The defendants argued that the validity of the shareholders’ meeting fell within Sections 241 and 242 of the Companies Act, 2013 and additionally asserted that the suits were barred by limitation. Examining those provisions alongside Section 430, the High Court held that a statutory tribunal could exercise only the powers conferred upon it and that civil court jurisdiction could not be excluded on assumptions. In the context of the reliefs sought, it held that the NCLT could not declare the registered sale deed void and not binding on the company. The Court applied the reasoning in Saju George v. Saji Varghese, 2026 (5) KHC 188, concerning the limited statutory jurisdiction of the National Green Tribunal and the continued jurisdiction of civil courts over declaratory easement claims.
The High Court set aside the impugned orders and restored CS Nos.31/2023 and 37/2023 to the Commercial Court-II, Thrissur, for trial in accordance with law. It declined to decide limitation in proceedings under Article 227 because the trial court had rejected the suits on jurisdictional grounds and had not considered that issue. The defendants were expressly permitted to raise limitation before the civil court at the appropriate stage. The restoration therefore determines the jurisdictional objection addressed in the judgment, while leaving the merits of the sale-deed challenge and the limitation defence for adjudication.
Cases Discussed
- Saju George v. Saji Varghese, 2026 (5) KHC 188 (Kerala High Court) — Relied upon for the principle that a statutory tribunal possesses only the jurisdiction conferred by its governing statute. Its reasoning preserving civil court jurisdiction over declaratory easement claims despite the National Green Tribunal Act was applied to the declaratory relief sought against the registered sale deed.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
These original petitions impugn orders dated 17.1.2026 (Ext.P8 & Ext.P10, respectively) passed by the Commercial Court-II, Thrissur, upholding the objection of the defendants regarding the maintainability of the suits (CS Nos.31 & 37/2023) on the ground that the same are barred under Section 430 of the Companies Act, 2013, and the remedy of the petitioners/plaintiffs is before the National Company Law Tribunal.
2. Brief facts necessary for the disposal of the original petitions are as follows:
CS Nos.31 and 37 of 2023, on the files of the Commercial Court-II, Thrissur, are two suits filed by the petitioners in OP(C) Nos.926/2026 and 939/2026, respectively, seeking a declaration that the sale of the plaint schedule property in the names of defendant Nos. 2 and 3 registered as per sale deed No.2706 of 2014 of SRO, Cherpu, is not binding upon the plaintiffs and the 8th defendant Company/shareholders. Consequential relief is also sought to retain the A schedule property as the property of the company and the company’s books of account. Other consequential reliefs are also sought. According to the plaintiffs, the plaint schedule property could not have been sold by the 1st defendant to defendants 2 and 3 without the concurrence of the majority shareholders of the 8th defendant Company. According to the plaintiffs, the 8th defendant Company failed to conduct the statutory audit for the past few years. However, the plaint also states that the property was sold without the concurrence of the majority shareholders and that, in the enquiry conducted as per the decision taken in a meeting held on 23.06.2018, it was found that the first defendant had misappropriated the chit funds which were supposed to be received by the 8th defendant company. Therefore, complaints were filed, and the same stood registered as CC Nos.1143 and 1032 of 2020 before the Magistrate’s Court-I, Thrissur. While so, the plaintiffs came to know that a document, numbered as 2706/2014 of the SRO, Cherpu, has been registered and that the said document has no legal sanctity. It is further alleged that, in the said document, it was stated that a meeting of the shareholders was held on 16.08.2014, but no such meeting was convened and, therefore, the entire transaction is fraudulent. The defendants entered appearance and resisted the suits, contending that the suits are vexatious and frivolous and that document No. 2706 of 2014 was properly registered. After filing their written statements, the defendants filed applications to reject the suits as not maintainable, alleging a bar under Section 430 of the Companies Act, 2013. The plaintiffs objected to the applications, arguing that the suits are primarily for a declaration that a particular sale deed is not binding on the company and that the sale deed was executed without the concurrence of the majority shareholders. The Commercial Court-II, Thrissur, however, rejected the objection of the plaintiffs and upheld the objection by the defendants regarding the maintainability of the suits and held that the remedy of the plaintiffs is before the National Company Law Tribunal. Hence, the present original petitions.
3. Heard Sri.Mohamed Jameel P.K., the learned counsel appearing for the petitioners/plaintiffs, and Sri.G.Sreekumar (Chelur), the learned counsel appearing for the respondents 2 and 3/defendants 2 and 3, and Smt.Thushara D.S., the learned Senior Government Pleader.
4. The learned counsel appearing for the petitioners pointed out that the bar under Section 430 of the Companies Act, 2013 is not an absolute bar and is to be qualified by certain conditions. He further pointed out that on an earlier occasion, when the matter was sought to be transferred to the Commercial Court, no objection was raised with regard to its maintainability and that the trial court at that point of time, having found that the suits were maintainable before the Commercial Court, had transferred them to the Commercial Court and numbered them as CS Nos.31 and 37 of 2023. He further pointed out that the National Company Law Tribunal’s jurisdiction is limited to matters governed by Sections 241 and 242 of the Companies Act, 2013, and that the Civil Court’s jurisdiction is ousted only in matters the Tribunal can decide. Therefore, it is pointed out that in an ordinary civil litigation relating to property, where a declaratory relief is sought for, the National Company Law Tribunal is not empowered to grant such relief and that the Civil Court retains the jurisdiction to grant declaratory relief. It is further pointed out that the declaration now sought for in the suits is not one coming within the jurisdiction of the National Company Law Tribunal. In support of his contention, relied on the decision of this Court in Saju George v. Saji Varghese [2026 (5) KHC 188].
5. Per contra, Sri.G.Sreekumar (Chelur), the learned counsel appearing for the respondents 2 and 3, pointed out that, even assuming for argument’s sake that the suits are maintainable, even then the court could not have tried the suits and come to a logical conclusion because the suits are hopelessly barred by limitation. He further pointed out that the question as to whether there was proper convening of the meeting of the shareholders prior to the execution of the sale deed is a matter which would primarily fall within the jurisdiction of the National Company Law Tribunal under Sections 241 and 242 of the Companies Act, 2013. Since the petitioners have a case of oppression and mismanagement of the Company, the Civil Court’s jurisdiction is barred, and the National Company Law Tribunal alone can grant the reliefs.
6. I have considered the rival submissions raised across the bar and perused the impugned orders.
7. The primary question, which this Court requires to be answered, is whether the present suits are hit by Section 430 of the Companies Act, 2013. Before this Court answers that question, it must consider the nature and scope of the National Company Law Tribunal’s powers under the Companies Act, 2013.
8. Sections 241 and 242 of the Companies Act, 2013 deal with the jurisdiction of the National Company Law Tribunal under the Companies Act, 2013. Sections 241 and 242 read as under:
“241. Application to Tribunal for relief in cases of oppression, etc.— (1) Any member of a company who complains that—
(a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or
(b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company‘s shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members,
may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter.
(2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter:
Provided that the applications under this sub-section, in respect of the company or class of companies, as may be prescribed, shall be made before the Principal Bench of the Tribunal which shall be dealt with by such Bench.
(3) Where in the opinion of the Central Government there exist circumstances suggesting that–
(a) any person concerned in the conduct and management of the affairs of a company is or has been in connection therewith guilty of fraud, misfeasance, persistent negligence or default in carrying out his obligations and functions under the law or of breach of trust;
(b) the business of a company is not or has not been conducted and managed by such person in accordance with sound business principles or prudent commercial practices;
(c) a company is or has been conducted and managed by such person in a manner which is likely to cause, or has caused, serious injury or damage to the interest of the trade, industry or business to which such company pertains; or
(d) the business of a company is or has been conducted and managed by such person with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose or in a manner prejudicial to public interest, the Central Government may initiate a case against such person and refer the same to the Tribunal with a request that the Tribunal may inquire into the case and record a decision as to whether or not such person is a fit and proper person to hold the office of director or any other office connected with the conduct and management of any company.
(4) The person against whom a case is referred to the Tribunal under sub-section (3), shall be joined as a respondent to the application.
(5) Every application under sub-section (3)––
(a) shall contain a concise statement of such circumstances and materials as the Central Government may consider necessary for the purposes of the inquiry; and
(b) shall be signed and verified in the manner laid down in the Code of Civil Procedure, 1908 (5 of 1908), for the signature and verification of a plaint in a suit by the Central Government.”
“242. Powers of Tribunal.— (1) If, on any application made under section 241, the Tribunal is of the opinion—
(a) that the company‘s affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company; and
(b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up,
the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit.
(2) Without prejudice to the generality of the powers under sub-section (1), an order under that sub-section may provide for—
(a) the regulation of conduct of affairs of the company in future;
(b) the purchase of shares or interests of any members of the company by other members thereof or by the company;
(c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital;
(d) restrictions on the transfer or allotment of the shares of the company;
(e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case;
(f) the termination, setting 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 clause (h);
(k) appointment of such number of persons as directors, who may be required by the Tribunal to report to the Tribunal on such matters as the Tribunal may direct;
(l) imposition of costs as may be deemed fit by the Tribunal;
(m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made.
(3) A certified copy of the order of the Tribunal under sub-section (1) shall be filed by the company with the Registrar within thirty days of the order of the Tribunal.
(4) The Tribunal may, on the application of any party to the proceeding, make any interim order which it thinks fit for regulating the conduct of the company‘s affairs upon such terms and conditions as appear to it to be just and equitable.
(4-A) At the conclusion of the hearing of the case in respect of sub-section (3) of section 241, the Tribunal shall record its decision stating therein specifically as to whether or not the respondent is a fit and proper person to hold the office of director or any other office connected with the conduct and management of any company.
(5) Where an order of the Tribunal under sub-section (1) makes any alteration in the memorandum or articles of a company, then, notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any, permitted in the order, to make, without the leave of the Tribunal, any alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles.
(6) Subject to the provisions of sub-section (1), the alterations made by the order in the memorandum or articles of a company shall, in all respects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act and the said provisions shall apply accordingly to the memorandum or articles so altered.
(7) A certified copy of every order altering, or giving leave to alter, a company‘s memorandum or articles, shall within thirty days after the making thereof, be filed by the company with the Registrar who shall register the same.
(8) If a company contravenes the provisions of sub-section (5), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.”
9. Section 430 of the Companies Act, 2013 provides that the jurisdiction of the Civil Court is ousted in relation to the matters which the National Company Law Tribunal is empowered to deal with. Section 430 of the Companies Act, 2013 reads as under :
“430. Civil Court not to have jurisdiction.- 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 this 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 this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal.”
On a conjoint reading of Sections 241 and 242 of the Companies Act, 2013, one can safely conclude that the National Company Law Tribunal has jurisdiction only when a dispute touches upon the management of the company and the respective rights of the shareholders.
10. One must remember that the tribunal, being a creation of statute, does not have any inherent power and can only be guided by the source of power conferred upon it by the statute. That being so, it will be difficult to envisage a situation when a sale deed is questioned on the ground that it is executed fraudulently and that a declaration with regard to the document is sought for and its binding nature on a company at the instance of one of the shareholders, and it would be far-fetched to hold that the matter should gain the attention of the National Company Law Tribunal under Sections 241 and 242 of the Companies Act, 2013.
11. The power to grant declaratory decrees/reliefs is always with the Civil Court. When Section 9 of the Code of Civil Procedure is read, the Civil Court’s jurisdiction is absolute unless it is expressly or impliedly ousted. It is not uncommon that a special statute creating a specialised tribunal for adjudicating a dispute takes away the jurisdiction of the Civil Court. But then, it must be remembered that when the ouster of jurisdiction is by a statute, the ouster must be specific. At times, courts may also hold that, by virtue of a statute, there is an implied ouster of the Civil Court’s jurisdiction. But to hold an implied bar on the Civil Court, there must be strong circumstances arising from the statute.
12. When the reliefs sought in the suits are considered alongside the scope of application under Sections 241 and 242 of the Companies Act 2013, it would be difficult to conclude that the National Company Law Tribunal has jurisdiction to declare a registered document void as against the company. Accordingly, the courts should lean towards a purposive interpretation of the statute and should always uphold the jurisdiction of the Civil Court. The ouster of jurisdiction cannot be based on mere assumptions.
13. In Saju George v. Saji Varghese [2026 (5) KHC 188], a similar question arose before this Court as to whether the ouster of jurisdiction of the Civil Court by the promulgation of the National Green Tribunal Act, 2010 is absolute or not. On an examination of the provisions of the National Green Tribunal Act, 2010, this Court found that the National Green Tribunal is conferred only with limited powers as specified under the statute and, therefore, a claim for declaratory right of easement under the provisions of the Indian Easements Act, 1872 would always lie before the Civil Court.
14. The principles laid down by this Court in Saju George (supra) squarely apply to the facts of the present case as well. As stated above, the National Company Law Tribunal’s power is confined to disputes arising under Sections 241 and 242 of the Companies Act, 2013. Under no stretch of imagination could it be held that the tribunal has the power to declare a registered sale deed as void and not binding on the company. Therefore, this Court finds that the defendants’ objection was unsustainable, and the trial court erred egregiously in holding that the jurisdiction to try the disputes vests with the National Company Law Tribunal.
15. Before this Court concludes with the above discussion, it needs to look into the aspect as to whether the objection raised by the defendants with regard to the maintainability of the suits on the ground of limitation should be considered by this Court at this stage. Since the trial court rejected the suits on the ground that jurisdiction vests with the National Company Law Tribunal, the issue of limitation was never before it. Hence, this Court finds that it would be wholly impermissible for this Court, in exercising its powers under Article 227 of the Constitution of India, to hold that, notwithstanding the maintainability of the suits, they are barred by the law of limitation. The question of limitation is a matter that should gain the attention of the trial court at an appropriate stage. Therefore, the defendants will be at liberty to raise the said question before the Civil Court at an appropriate time.
16. Accordingly, these original petitions are allowed by setting aside the orders dated 17.1.2026 in CS No.31/2023 (Ext.P8 in OPC No.926/2026) and CS No.37/2023 (Ext.P10 in OPC No.939/2026). CS Nos. 31 of 2023 and 37 of 2023 stand restored to the file of the Commercial Court-II, Thrissur. The Commercial Court-II, Thrissur is directed to proceed with the trial of the suits in accordance with law, untrammelled by any of the observations made by this Court in this judgment, subject to the exceptions stated above.
Ordered accordingly.
