Kerala High Court Restores Civil Suits, Rules NCLT Cannot Declare Registered Sale Deed Void
The Kerala High Court has reaffirmed the jurisdiction of civil courts in property-related disputes, holding that their authority cannot be excluded unless expressly or impliedly barred by law. The Court ruled that the National Company Law Tribunal (NCLT) cannot declare a registered sale deed void and not binding on a company under Sections 241 and 242 of the Companies Act, 2013.
Justice Easwaran S. delivered the ruling while allowing two original petitions challenging orders of the Commercial Court-II, Thrissur, which had rejected civil suits on the ground that the disputes fell within the jurisdiction of the NCLT.
The dispute concerned a registered sale deed through which a company’s property was allegedly transferred without obtaining the necessary approval of its majority shareholders. The plaintiffs sought a declaration that the sale deed was not binding on the company and its shareholders.
The plaintiffs alleged that the transaction was fraudulent and that the company’s majority shareholders had not approved the property transfer. They also questioned the authenticity of a shareholders’ meeting reportedly held on August 16, 2014, which was referred to in the sale deed.
The plaintiffs further raised allegations concerning the company’s failure to conduct statutory audits and the alleged misappropriation of chit funds. They contended that the transaction was legally questionable and required examination by a competent civil court.
The defendants opposed the suits, arguing that the allegations primarily concerned oppression and mismanagement of the company, matters falling within the NCLT’s jurisdiction under Sections 241 and 242 of the Companies Act. They relied on Section 430, which restricts civil courts from entertaining matters that the NCLT or National Company Law Appellate Tribunal (NCLAT) is empowered to determine.
The Commercial Court-II, Thrissur, accepted the defendants’ objection and held that the plaintiffs should approach the NCLT instead of pursuing civil litigation. Aggrieved by this decision, the plaintiffs approached the Kerala High Court.
Examining the statutory framework, the High Court observed that Sections 241 and 242 of the Companies Act primarily empower the NCLT to adjudicate disputes involving oppression and mismanagement and issues concerning company management and shareholders’ rights.
The Court emphasised that the NCLT is a statutory tribunal and cannot exercise powers beyond those specifically conferred upon it by the legislation. Its jurisdiction cannot automatically extend to every dispute involving a company merely because allegations of corporate misconduct are raised.
Relying on Section 9 of the Code of Civil Procedure, 1908, the Court reiterated that civil courts have jurisdiction to entertain all suits of a civil nature unless their jurisdiction is expressly or impliedly excluded by law.
The Bench further clarified that an implied exclusion of civil court jurisdiction must be established through strong circumstances arising from the relevant statutory provisions. Such exclusion cannot be presumed merely because a specialised tribunal has been established to adjudicate particular categories of disputes.
The High Court specifically held that the NCLT does not possess jurisdiction under Sections 241 and 242 to declare a registered sale deed void and not binding on a company. Therefore, the jurisdictional objection under Section 430 could not be sustained in the present circumstances.
The Court also referred to its earlier decision in Saju George v. Saji Varghese, involving the jurisdiction of the National Green Tribunal and the availability of civil court remedies concerning declaratory relief. It applied the principle that specialised tribunals can exercise only those powers granted under their respective statutes.
On the question of limitation, the High Court declined to determine whether the suits were time-barred. It observed that the Commercial Court had rejected the proceedings solely on jurisdictional grounds and had not examined the limitation issue. Accordingly, the defendants were permitted to raise their limitation objections before the Commercial Court at the appropriate stage.
Allowing the original petitions, the Kerala High Court set aside the Commercial Court’s orders dated January 17, 2026, and restored both commercial suits to the file of Commercial Court-II, Thrissur, for trial in accordance with law.
The judgment clarifies the distinction between corporate disputes falling within the NCLT’s statutory jurisdiction and ordinary civil disputes seeking declaratory relief concerning the validity and binding nature of registered property documents.
The ruling reinforces that the establishment of specialised tribunals does not automatically eliminate the jurisdiction of ordinary civil courts. The exclusion of civil jurisdiction must be supported by the specific provisions and scope of the governing legislation.
