Kerala High Court Rules NCLT Cannot Declare Registered Sale Deed Void — Civil Courts Retain Jurisdiction

Background and Context

A significant ruling has emerged from the Kerala High Court addressing a fundamental question of jurisdictional boundaries between civil courts and the National Company Law Tribunal (NCLT) in matters involving company property disputes. The case of Sathish Kumar Vs Govindankutty arose from two civil suits — CS Nos. 31/2023 and 37/2023 — pending before the Commercial Court-II, Thrissur, both of which were dismissed at the threshold stage on maintainability grounds. The Commercial Court had taken the view that these suits were barred by Section 430 of the Companies Act, 2013, directing the plaintiffs to seek redress before the NCLT instead. The High Court's intervention through two original petitions — OP(C) Nos. 926/2026 and 939/2026 — ultimately overturned that position.

Facts of the Case

The petitioners, as plaintiffs in the underlying suits, sought a declaration that sale deed No. 2706/2014 registered at SRO, Cherpu, transferring the scheduled property in favour of defendants 2 and 3, was not legally binding on them or on the eighth defendant company and its shareholders. The reliefs sought also included retention of the property in the company's books of account as a company asset, along with ancillary consequential reliefs.

The core allegation was that the property was transferred without the consent or concurrence of the majority shareholders of the eighth defendant company, rendering the transaction fundamentally defective. The plaintiffs further alleged that a shareholders' meeting purportedly held on 16.08.2014 — referred to within the sale deed itself as the basis for the transaction — never actually took place, making the entire conveyance fraudulent in character.

Additionally, the plaint raised concerns about the company's failure to conduct statutory audits over several years and alleged misappropriation of chit fund collections that were rightfully due to the company. Criminal complaints arising from these allegations had been registered as CC Nos. 1143 and 1032 of 2020 before the Magistrate's Court-I, Thrissur.

The defendants entered appearance, resisted the suits as frivolous and vexatious, and maintained that sale deed No. 2706/2014 was validly registered. Subsequently, they filed applications seeking rejection of the suits on the ground that the subject matter fell within NCLT's exclusive jurisdiction under Section 430 of the Companies Act, 2013. The Commercial Court accepted this objection and rejected the suits, prompting the present petitions before the High Court.

1. Whether Section 430 of the Companies Act, 2013 Constitutes an Absolute Bar

Section 430 of the Companies Act, 2013 reads as under:

"430. Civil Court not to have jurisdiction.- No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal."