On 14th September, a bench of Delhi High Court consisting of Justice Yogesh Khanna while hearing a writ petition under Article 226 of the Constitution, held that Section 430 of Companies Act do not take away the jurisdiction of this Court under Article 226 but it is a trite law in case where the statute provides for an exhaustive mechanism to deal with all matters pertaining to statute and manifest an intention to bar the jurisdiction of all other Courts, such Writs should not be entertained unless there are extreme and/or extraordinary circumstances.

However, the court also held that Companies Act is a complete code hence statutory mechanism under it cannot be bypassed.

Facts of the case:

The writ petition was filed for impugning the letter dated 29.06.2019 and the corrigendum issued on 29.11.2019 by the respondent no.1 directing the respondent no.2 to file complaint against the petitioners for the offences under the Companies Act, 2013 mentioned therein and secondly issuing directions to respondent no.2 to initiate the proceedings under Section 241/242/246 read with Section 339 of the Companies Act, before the NCLT.

Contention of the petitioner:

The following contention has been submitted by the petitioners:

  1. It was submitted the officers of the Central Government were to examine and apply their mind on the report. It is alleged the final report dated 27.06.2019 was filed before the Central Government and it was humanly impossible to examine such report, consisting of lakhs of pages within two days and then pass the impugned order.
  2. Section 212(14A) of the Companies Act came into effect w.e.f. 15.08.2019 wherein for the first time power of disgorgement of properties came into effect but whereas in the present case on dated 29.06.2019 the order for disgorgement was issued, hence it is a premature letter without any power.
  3. Section 241, 242 of Companies Act deals with mismanagement of affairs of the company and it does not provide any power of attachment of property of the company or disgorgement.
  4. The issue of jurisdiction cannot be decided by NCLT as it has no power to review the administrative order(s), hence the only remedy is filing of a Writ Petition.

Order and judgment of the court:

The Hon'ble bench of the court observed the following:

  1. It is a settled law the challenge to the jurisdiction of NCLT ought to have been raised before NCLT itself. Once the proceedings have been initiated before NCLT and if the NCLT is seized with the company petition, all contentions including power of the respondent to initiate such proceedings before NCLT must be raised before such forum and be determined in those proceedings.
  2. Companies Act is a complete code hence statutory mechanism under it cannot be bypassed. Section 430 of the Act provides the jurisdiction of all Civil Courts is barred in respect of the matter which the NCLT or the NCLAT is empowered to determine by or under Act.
  3. Thus there is readily available alternate remedy viz. to raise objection to maintainability of company petition before the NCLT itself and if aggrieved by the decision of the NCLT the petitioner is free to avail appellate remedy before the NCLAT under section 421 and further appeal to the Supreme Court under section 423 of the Act.

However, the court held that it does not have territorial jurisdiction to entertain this Writ Petition as the company petition is filed before the NCLT at Allahabad and in respect of the companies having its registered office in the State of Uttar Pradesh that is beyond the jurisdiction of this Court. The court also held that the Court does not exercise supervisory jurisdiction under Article 227 over NCLT at Allahabad and such jurisdiction vests solely with High Court of Judicature at Allahabad.

Thus the application was dismissed.

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