Court Rejects Application to Dismiss Suit Involving Allegations of Fraud and Estate Usurpation, Emphasizing Limits of NCLT's Jurisdiction
In a significant decision, the Bombay High Court, presided over by Justice Farhan P. Dubash, has dismissed an application seeking to reject a suit that challenges the alleged fraudulent usurpation of an estate and wrongful share transfers. The case, involving the estate of Estelle Symons and her son Everard, pitted plaintiffs Lascelles Symons and others against defendant Hilaire D'souza.
The plaintiffs, claiming to be the legal heirs of Everard Symons, sought declaratory reliefs asserting their entitlement to shares in the estate of Estelle Symons, which largely comprises shares in various companies. The defendants argued that the suit should be dismissed as the National Company Law Tribunal (NCLT) has exclusive jurisdiction over rectification of the Register of Members under Sections 59 and 430 of the Companies Act, 2013.
However, Justice Dubash ruled that the NCLT does not have the jurisdiction to adjudicate complex disputes involving questions of title or fraud. He emphasized that while the NCLT can handle summary rectifications of the Register of Members, it cannot delve into intricate issues of ownership and fraud, which fall under civil court jurisdiction.
The court highlighted that the plaintiffs' claims were not limited to rectification but included serious allegations of fraud against the defendant, who allegedly usurped shares belonging to the estate. Thus, the matter involved complex questions of title and fraud that necessitate civil court adjudication.
The decision draws on precedents that emphasize the limited scope of the NCLT's powers and the necessity for civil courts to handle disputes involving complex legal questions. The court also noted the absence of necessary parties did not merit dismissal of the suit, as the plaintiffs lacked knowledge of other potential heirs who had settled abroad.
This ruling reinforces the jurisdictional boundaries between civil courts and the NCLT, especially in cases involving allegations of fraud and complex questions of inheritance.
Bottom Line:
Suit challenging wrongful usurpation of estate and fraudulent transfer of shares - Reliefs sought not limited to rectification of Register of Members but involve complex questions of title and fraudulent actions - Jurisdiction of NCLT does not extend to adjudicating such disputes under section 59 and 430 of the Companies Act, 2013.
Statutory provision(s): Companies Act, 2013 Sections 59, 430; Civil Procedure Code, 1908 Order VII Rule 11
