Forgery Allegations Do Not Bar NCLT Jurisdiction: Delhi HC

The Delhi High Court has delivered a significant ruling clarifying the boundaries between civil litigation and the specialized jurisdiction of the National Company Law Tribunal (NCLT). In a dispute involving M/S Karyan Global LLP vs Vivek Kumar Mishra and Ors , the court held that allegations of fraud and forgery in corporate documents do not automatically justify the intervention of a Civil Court, particularly when such issues are integral to ongoing proceedings under the Companies Act, 2013.

The Corporate Conflict

The case arose from a suit filed by respondents (the original plaintiffs) seeking to declare various corporate documents—including a "Shareholders Agreement" and board resolutions—as forged and void. The plaintiffs, founders of a tech startup focused on Unmanned Aerial Vehicles (UAVs), alleged that the defendants had fabricated these documents to mask loan transactions as equity transfers.

The petitioner, M/S Karyan Global LLP, had previously initiated an oppression and mismanagement petition before the NCLT. The core of the legal conflict was whether the plaintiffs could simultaneously pursue a civil suit for declaration of forgery, given the statutory bar under Section 430 of the Companies Act, 2013.

The Legal Tug-of-War

The petitioner argued that the civil suit was an attempt to bypass the NCLT’s jurisdiction, citing Section 430 of the Companies Act, which explicitly bars civil courts from entertaining matters that the Tribunal is empowered to determine. They contended that NCLT has broad powers to adjudicate fraud and fabrication under the NCLT Rules, 2016.

Conversely, the plaintiffs argued that the complexities of fraud and forgery cannot be handled by the NCLT’s summary jurisdiction. They contended that the determination of title and the validity of signatures on specific documents were purely civil matters that required a full-fledged trial, not a summary inquiry before a tribunal.

Judicial Analysis: Substance Over Form

Justice Amit Mahajan, presiding over the case, emphasized that the bar under Section 430 is absolute regarding matters committed to the Tribunal's oversight. The Court noted that "clever drafting or crafty legal strategies must not be allowed to frustrate the process of law before the learned NCLT."

The High Court drew a fine line: if the core controversy is one that the NCLT is empowered to address—such as corporate affairs, share capital, or management contracts—a civil suit is barred, regardless of whether the plaintiff labels the issue as "fraud" or "forgery." The court observed that the NCLT is not a mere forum for ministerial tasks but possesses "wide remedial powers" under Section 242 of the Act to settle matters that are "integral to the complaint."

Key Observations

• On NCLT Powers: "Nothing in the Companies Act, 2013 which estops the NCLT from rendering a finding that the documents in question are forged... questions pertaining to fraud are not alien to the NCLT as a Tribunal."
• On Section 430 Bar: "The words 'any matter' in Section 430 of the Companies Act, 2013 are to be understood in contradistinction of 'any reliefs' which the Tribunal is empowered to grant."
• On Multiplicity of Proceedings: "If the suit is allowed to continue, the same would also lead to multiplicity of proceedings which could lead to conflicting opinions on the same issues of fact and law."
• On Forum Shopping: "Mere plea of forgery or fraud is not sufficient, by itself, to overcome the bar under Section 430... concluding otherwise would result in pleas of fraud being agitated solely to oust the jurisdiction of the NCLT."

The Verdict

Setting aside the trial court’s order, the High Court allowed the petition and rejected the plaint under Order VII Rule 11 of the Code of Civil Procedure (CPC). The decision reinforces the mandate that dedicated corporate forums like the NCLT take precedence in disputes involving company management, ensuring that "standalone" civil suits do not derail specialized regulatory checks. For legal practitioners, this serves as a stern reminder that characterizing a corporate dispute as an issue of forgery will not serve as a "silver bullet" to evade the jurisdictional bar of the NCLT.