The Bombay High Court has clarified that civil courts retain jurisdiction over disputes concerning the inheritance of company shares where allegations of fraud and complex questions of title are central, even when rectification of the Register of Members is sought as a consequential relief. This decision reinforces the limits of the National Company Law Tribunal's exclusive jurisdiction under the Companies Act, 2013, and provides critical guidance for practitioners handling succession-based share disputes.
Background & Facts
The Dispute
The plaintiffs, legal heirs of Everard Symons, seek to establish their entitlement to a 1/6th share in the estate of his mother, Estelle Symons, which includes shares in multiple companies. They allege that Defendant No. 1, Everard’s brother, fraudulently usurped these shares by manipulating transmission procedures and registering them solely in his name, excluding other heirs. The suit seeks a declaration of their rights, a permanent injunction against transfer or liquidation of the shares, and alternatively, monetary compensation.
Procedural History
- 2023: Suit filed in Bombay High Court under Ordinary Original Civil Jurisdiction seeking declaratory and injunctive reliefs.
- 2025: Defendant No. 1 filed Interim Application No. 6543 of 2025 under Order VII Rule 11 CPC, seeking rejection of the plaint on grounds of lack of jurisdiction.
- 2026: The application was heard and reserved on 2nd February 2026, with judgment pronounced on 5th February 2026.
Relief Sought
The plaintiffs seek: (1) a declaration of their entitlement to shares in Estelle’s estate; (2) an injunction restraining Defendant No. 1 from dealing with the shares; (3) an injunction against the companies from effecting transmission; and (4) in the alternative, a decree for monetary compensation.
The Legal Issue
The central question was whether the civil court’s jurisdiction is ousted under Section 430 of the Companies Act, 2013 when a suit seeks declaratory relief on inheritance rights and alleges fraud in the transfer of shares, even if rectification of the Register of Members is a consequential demand.
Arguments Presented
For the Appellant/Petitioner
Mr. Sanjay Jain, counsel for Defendant No. 1, argued that the core dispute pertains to transmission and rectification of shares in the Register of Members, which falls exclusively within the domain of the National Company Law Tribunal under Section 59 of the Companies Act, 2013. He relied on Shashi Prakash Khemka v. NEPC Micon and Chalasani Udaya Shankar v. Lexus Technologies, asserting that Section 430 bars civil courts from entertaining such matters. He further contended that allegations of fraud were merely a device to circumvent the NCLT’s jurisdiction, citing Karyan Global LLP v. Vivek Kumar Mishra to argue that even fraud involving share transmission is within the NCLT’s purview if it is an "open and shut case."
For the Respondent/State
Mr. Shanay Shah, for the plaintiffs, countered that the suit’s primary objective is to establish title and inheritance rights under succession law, which is exclusively within the civil court’s domain. He emphasized that rectification of the Register of Members is a consequential relief, not the core issue. He relied on IFB Agro Industries v. SICGIL India, which limits NCLT’s power to summary rectification without adjudicating complex title disputes. He also cited Shazia Rehman v. Anwar Elahi and Phool Chand Gupta v. Mukesh Jaiswal to argue that jurisdictional ouster must be explicit and that fraud-based challenges to share ownership fall outside the NCLT’s competence.
The Court's Analysis
The Court undertook a detailed examination of the plaint’s allegations and the nature of the reliefs sought. It rejected the defendant’s characterization of the suit as one for rectification under Section 59, noting that the plaint’s foundation lies in the plaintiffs’ claim to inheritance rights under personal law, not in a dispute over the accuracy of the Register of Members.
"This is not a case where all the shares that the Plaintiffs seek transmission of, stand in the name of either Estelle and/or Everard but this also involves shares which originally stood in such names and which were thereafter, taken over by Defendant No. 1 (illegally and without any authority, according the Plaintiffs) who seek rectification in such shares and accordingly, claim their share therein."
The Court emphasized that Section 430 does not oust civil jurisdiction unless the dispute is squarely within the NCLT’s statutory mandate. It distinguished Shashi Prakash Khemka and Chalasani Udaya Shankar, noting those cases involved direct applications for rectification or oppression and mismanagement petitions, not inheritance claims. The Court held that the NCLT’s power under Section 59 is summary and cannot resolve complex factual disputes regarding title, ownership, or fraudulent transfer.
"The power of rectification is a summary power and needs no serious inquiry... NCLT cannot adjudicate complex questions which are raised in the plaint."
The Court further affirmed that allegations of fraud, when intertwined with questions of title and succession, require a full trial and cannot be resolved summarily. It accepted the plaintiffs’ contention that the non-joinder of other heirs was not fatal, as the suit targeted the defendant’s unlawful conduct and sought relief against him specifically.
The Verdict
The plaintiffs prevailed. The Court held that civil courts retain jurisdiction over inheritance disputes involving shares where fraud and title are central issues, and that Section 430 of the Companies Act, 2013 does not oust such jurisdiction when the relief sought is not primarily for rectification of the Register of Members. The interim application under Order VII Rule 11 CPC was dismissed.
What This Means For Similar Cases
Title Disputes Are Beyond NCLT’s Purview
- Practitioners must argue that any suit grounded in inheritance, succession, or ownership of shares under personal law is outside the NCLT’s exclusive jurisdiction.
- Where the plaintiff seeks to establish title before seeking transmission, the civil court remains the proper forum.
- Avoid framing pleadings as "rectification" - focus on breach of fiduciary duty, fraud, or wrongful conversion.
Fraud Allegations Do Not Automatically Trigger NCLT Jurisdiction
- The Court rejected the notion that "open and shut fraud" in share transmission automatically vests jurisdiction in the NCLT.
- If the fraud involves complex factual disputes - such as forged documents, undue influence, or concealment of heirs - the civil court must adjudicate.
- Use IFB Agro Industries and Shazia Rehman to counter jurisdictional objections.
Procedural Strategy for Plaintiffs
- Clearly plead the basis of entitlement (e.g., testamentary or intestate succession).
- Explicitly state that transmission is a consequential relief, not the primary objective.
- Cite Phool Chand Gupta to reinforce that jurisdictional ouster must be express and not inferred.
- Oppose applications under Order VII Rule 11 CPC by demonstrating that the suit raises triable issues requiring evidence.
