The High Court of Judicature at Bombay has dismissed an Interim Application seeking the rejection of a plaint under Order VII Rule 11 of the Civil Procedure Code, 1908 (CPC), ruling that the jurisdiction of the Civil Court is not barred under Section 430 read with Section 59 of the Companies Act, 2013, when the core controversy involves complex questions of title and entitlement to a deceased’s estate, rather than simpliciter rectification of the Register of Members.
Justice Farhan P. Dubash observed that while the National Company Law Tribunal (NCLT) has exclusive jurisdiction regarding rectification of the register, it cannot adjudicate complex questions of law and fact regarding inheritance and fraudulent usurpation of shares, which remain the domain of the Civil Court.
Legal Issue and Outcome
The primary legal issue before the Court was whether a Civil Suit seeking a declaration of entitlement to the estate of deceased persons—comprising primarily of shares in various companies—is barred by law under Section 59 read with Section 430 of the Companies Act, 2013. The Applicant (Original Defendant No. 1) contended that the dispute related to the transmission and rectification of shares, falling exclusively within the NCLT’s jurisdiction.
The Court rejected the application, holding that the relief of rectification was merely consequential to the main declaratory reliefs regarding title and entitlement, which the NCLT is not empowered to grant.
Background of the Case
The Plaintiffs, claiming to be the legal heirs of the deceased Everard Symons (“Everard”), instituted the Suit claiming a right in the estate of Everard, and consequently, a share in the estate of the deceased Estelle Symons (“Estelle”). The Plaintiffs alleged that Defendant No. 1, the brother of Everard, had “played a fraud on them by usurping the shares which would otherwise form part of the Everard’s estate.”
The Plaintiffs sought declarations that they are entitled to the estate of Everard and Estelle, along with a permanent injunction restraining Defendant No. 1 from liquidating or transferring shares held jointly. They also sought an injunction against the companies from transmitting the disputed shares.
Defendant No. 1 filed Interim Application No. 6543 of 2025 seeking rejection of the plaint, arguing that the Suit was barred by law and suffered from non-joinder of necessary parties.
Arguments of the Parties
The Applicant/Defendant No. 1’s Submissions: Mr. Sanjay Jain, counsel for Defendant No. 1, argued that the main grievance in the plaint related to the “transmission / transfer / restoration etc. in the Register of Members of various companies.” He submitted that Section 59 of the Companies Act confers exclusive jurisdiction on the NCLT for such matters. Relying on Section 430, he contended that the Civil Court’s jurisdiction was ousted.
Mr. Jain cited the Supreme Court judgments in Shashi Prakash Khemka (Dead) through legal representatives and another Vs. NEPC Micon (2019) and Chalasani Udaya Shankar and Ors Vs. Lexus Technologies Pvt. Ltd. (2024), which held that disputes relating to rectification must be adjudicated by the NCLT. He also relied on the Delhi High Court decision in M/s. Karyan Global LLP Vs. Vivek Kumar Mishra (2025), arguing that “clever drafting or bare allegations of fraud cannot be used to evade a jurisdictional bar” and that even “open and shut case of fraud” involving rectification issues fall within NCLT’s ambit.
The Respondents/Plaintiffs’ Submissions: Mr. Shanay Shah, counsel for the Plaintiffs, argued that the NCLT could never grant the reliefs claimed in the Suit, specifically the declaration of the Plaintiffs’ entitlement as legal heirs. He submitted that rectification and transmission were “only consequential reliefs that would result subject to and post grant of decree.”
Mr. Shah relied on the Supreme Court decision in IFB Agro Industries Ltd. Vs. SICGIL India Ltd. (2023), which held that the NCLT’s power of rectification is summary in nature and it “cannot adjudicate complex questions.” He further cited Shazia Rehman Vs. Anwar Elahi (2023) and Phool Chand Gupta Vs. Mukesh Jaiswal (2024), contending that a challenge to a fraudulent transfer of shares requires establishing title in a Civil Suit before rectification can be sought.
Court’s Analysis and Observations
Justice Dubash, upon reviewing the plaint, disagreed with the Applicant’s characterization of the Suit. The Court noted that the plaint contained “categoric allegations of fraud” wherein Defendant No. 1 was stated to have “illegally and without any authority” usurped shares into his sole name.
The Court observed:
“The Plaintiffs would first have to make out a case entitling them to claim the estate of Everard and then, his share, in the estate of Estelle. Only thereupon, would there be any occasion to transmit / transfer / restore shares in the Register of Members, so as to recognize and give effect to their such entitlement. This is clearly a dispute which the NCLT would not have jurisdiction to adjudicate upon under Section 59 of the said Act.”
Addressing the precedents cited by the Defendant, the Court distinguished the present facts from Shashi Prakash Khemka and Chalasani Udaya Shankar. Regarding the Karyan Global LLP judgment, Justice Dubash stated:
“The core controversy of the dispute raised in the plaint is not one that is covered under Section 59 of the said Act but instead, appears to be the wrongful and illegal usurpation of the estate of Estelle and Everard stated to have been done by Defendant No.1… this is not a case where all the shares that the Plaintiffs seek transmission of, stand in the name of either Estelle and/or Everard but this also involves shares which originally stood in such names and which were thereafter, taken over by Defendant No. 1.”
The Court agreed with the ratio in IFB Agro Industries, reiterating that the NCLT’s rectification power is narrow and does not extend to adjudicating complex questions of title. The Court held:
“Disputed questions of fact cannot be conveniently decided in a summary procedure by the NCLT which is empowered to deal with disputes that relate to a simpliciter rectification of Register of Members and nothing more.”
Regarding the objection of non-joinder of necessary parties (other siblings of the deceased), the Court noted that the plaint expressly stated the Plaintiffs had no knowledge of their whereabouts as they had left the country decades ago. The Court found no merit in this ground for rejection.
Decision
The High Court rejected the Interim Application, holding that it had the jurisdiction to decide the disputes raised in the Suit.
“In the premises, the reliefs sought in the plaint cannot be said to merely seek rectification of the Register of Members, which would eventually be the consequential and/or subsequent step, only after the Plaintiffs make out and establish their entitlement to the shares.”
Case Details
Case Title: Hilaire D’Souza and others Vs. Lascelles Symons and others
Case Number: Interim Application No. 6543 of 2025 in Suit (L) No. 35408 of 2023
Coram: Justice Farhan P. Dubash
Appearances:
- For Plaintiffs: Mr. Shanay Shah i/b Ms. Pooja Yadav a/w Ms. Hetal Jobanputra i/b Jayakar & Partners.
- For Defendant No. 1 (Applicant): Mr. Sanjay Jain a/w Mr. Gurdeep Singh a/w Mr. Praful B. Valvi.
- For Respondent No. 9: Mr. M. S. Bhardwaj.
