THE HON’BLE SMT. JUSTICE MOUSHUMI BHATTACHARYA AND THE HON’BLE SRI JUSTICE NAGESH BHEEMAPAKA C.C.C.A. No.57 OF 2023

JUDGMENT:

(Per Hon’ble Smt. Justice Moushumi Bhattacharya)

The appeal arises from an order passed by the learned XI Additional Chief Judge, City Civil Court at Hyderabad, on

09.01.2023, in I.A.No.1099 of 2022 in O.S.No.476 of 2018.

2. The impugned judgment was passed on an application filed by the defendants (respondents in the appeal) under Order VII Rule 11(a) and (d) read with Section 151 of The Code of Civil Procedure, 1908, for rejection of plaint. By the impugned order, the learned Trial Court allowed the application filed by the defendants and directed for return of the plaint for filing before a proper forum.

3. The appellant before us was the plaintiff and the respondents were the defendants in the Trial Court.

4. Learned counsel appearing for the appellant assails the impugned order on the ground that Section 430 read with Sections 58 and 59 of The Companies Act, 2013, would have no application to the facts of the case contrary to what was held by the Trial Court. Counsel submits that the prayer for re-transfer of the shares from the respondents to the appellant (defendants to the plaintiff) is a matter which is entirely within the domain of a Civil Court. Counsel takes the Court through the relevant pleadings in the plaint to submit that the National Company law Tribunal (NCLT)/the National Company Law Appellate Tribunal (NCLAT) would not have jurisdiction to adjudicate on the issues raised in the suit filed by the appellant.

5. Learned counsel appearing for the respondents/ defendants relies on Section 430 read with Sections 58 and 59 of The Companies Act, 2013, to urge that there is a complete bar in the said Act against Civil Courts from entertaining any suit which is within the domain of the NCLT/NCLAT. Counsel further submits that the dispute cannot be referred to arbitration in terms of Clause 8 of the Share Purchase Agreement executed between the parties in 2015 since the appellant is only one of the several ‘Transferors’ in the Share Purchase Agreement.

6. A brief factual background to the present appeal is required to be stated. The appellant/plaintiff was the owner of a substantial number of shares in M/s. Sunbeam Hospitality Private Limited. The appellant, along with other shareholders of Sunbeam Hospitality, entered into a Memorandum of Understanding (MOU), Share Purchase Agreement (SPA) and a Takeover Agreement with the respondents/defendants for transfer of their shares in favour of the respondents. The parties agreed that the respondents would pay Rs.20,04,50,700/- to the appellant. Admittedly, the respondents have paid only a part of this amount i.e., Rs.19,37,50,700/-; the balance of Rs.67,00,000/-

remains outstanding as on date.

7. The appellant says that the respondents fraudulently transferred the shares of the appellant in their names without making payment of the balance consideration and also removed the appellant as Director before taking over the control of the Company. The appellant was therefore constrained to file O.S.No.476 of 2018 in the learned City Civil Court at Hyderabad for mandatory injunction and for re-transfer of 10,197 shares in M/s. Sandhya Hospitality Private Limited (formerly M/s. Sunbeam Hospitality Private Limited). The impugned order rejecting the plaint was passed on the respondents’ application leading to the present appeal filed by the appellant/plaintiff.

8. The only issue which falls for adjudication before this Court is whether the appellant/plaintiff could have been ousted from the domain of the City Civil Court, Hyderabad by reason of Section 430 read with Sections 58 and 59 of The Companies Act, 2013.

9. The sole reason for rejection of the plaint was that Clause 8 of the SPA operates as a bar on the City Civil Court entertaining the suit.

10. Clause 8 of the SPA is set out below:

“In the event of any dispute or difference at any time arising between the Transf