Vipan Kumar, PhD

July 06th, 2026

A. Cover Story

In this section, I am underscoring three latest judgements that discuss and clarify the interplay between jurisdictions of a civil court, NCLT, arbitral tribunal and High Court.

[A.1] Civil court jurisdiction is barred even if the suit is for ‘incidental matter’ to the prevention of oppression and mismanagement

The High Court of Kerala in Ralph Lilyan v. T.R. Sanu (May 22nd, 2026) decided a dispute relating to the jurisdiction of a civil court to entertain a suit that involves matters related to allegations of oppression and mismanagement already pending before the National Company Law Tribunal (NCLT).

As per the facts of the case, the first respondent and original plaintiff had previously filed a company petition before the NCLT, Kochi, alleging oppression and mismanagement against respondents 2 to 4 under Sections 241 and 242 of the Companies Act, 2013. The petition sought the removal of respondents as directors and recovery of undue gains, among other interim reliefs to prevent the diversion of funds or alienation of company assets.

Subsequently, the first respondent and original plaintiff filed a civil suit in the Munsiff Court, Ernakulam, seeking a permanent injunction to restrain the defendants (including the respondents 2-4 and the company secretary) from accessing company accounts and from tampering with or destroying accounts and files. Along with the suit, the plaintiff sought an interim injunction to stop the alleged unauthorised access to company files and records by the defendants, which the plaintiff claimed was done to tamper with evidence.

The Munsiff Court dismissed the injunction application, holding that the issues raised were essentially matters of mismanagement under Sections 241 and 242 of the Companies Act, 2013, and therefore fell under the exclusive jurisdiction of the NCLT. The District Court later set aside this order, ruling that the civil court had the jurisdiction to entertain the suit and grant the injunction.

In appeal, the Kerala High Court set aside the District Court’s judgement and restored the Trial Court’s order. It concluded that:

  • The prayers in the civil suit were incidental to the proceedings already pending before the NCLT. The actions complained of in the civil suit were acts that aided the alleged oppression and mismanagement. Under Section 430 of the Companies Act, 2013, the jurisdiction of civil courts is completely barred in matters where the NCLT is empowered to act.
  • The NCLT has the inherent power (under Rule 11 of the NCLT Rules, 2016) and the authority to grant equitable reliefs like injunctions in matters relating to the conduct of a company’s affairs.

[A.2] Arbitral tribunal cannot adjudicate a private dispute resulting in corporate restructuring

The Kerala High Court in Purushothaman Thitta v. Pothan Rajan (June 1st, 2026) ruled that disputes involving the division of assets, restructuring, or shareholding of companies registered under the Companies Act, 2013, are non-arbitrable when they arise from private shareholder agreements where the company is not a signatory.

In this case, the dispute arose from a Memorandum of Understanding (MOU) signed on September 17, 2021, between two individuals (respondents 1 and 2) in their personal capacity. The MOU outlined an agreement to divide assets and liabilities across three companies: Pioneer Cars India Private Limited, Pioneer Motors (Kannur) Private Limited, and Wayanad Vehicles Private Limited. Notably, the companies themselves were not signatories to this MOU, but the agreement contemplated the sale of company assets to third parties.

Following a petition under Section 11 of the Arbitration and Conciliation Act, a sole arbitrator was appointed. The claimant (respondent 1) sought to enforce the MOU, including the division of company assets and shareholding. The petitioner, a minority shareholder, filed an application under Section 16 of the Arbitration Act, arguing that the arbitrator lacked jurisdiction. The petitioner asserted that the subject matter, corporate restructuring and asset division, fell exclusively under the jurisdiction of the National Company Law Tribunal (NCLT). The arbitrator rejected the objection, reasoning that because the case did not involve winding up or dissolution, and since the dispute concerned shareholder ownership, the arbitral tribunal could decide the matter.

The Kerala High Court intervened under Article 227 and set aside the arbitrator’s order, holding that:

  • The restructuring and re-division of company assets are statutory functions that fall under the exclusive domain of the NCLT.
  • Such matters cannot be treated as a subject of a private contract. Even if shareholders enter into an MOU, the structural integrity of a company and the rights of all shareholders/creditors are involved, making the dispute an action in rem rather than a private in personam matter.

Consequently, the Court terminated the arbitral proceedings insofar as they related to the three companies in question, directing that any such disputes must be pursued through appropriate statutory remedies before the NCLT.

[A.3] Section 429 of the Companies Act, 2013, does not bar maintainability of writ for seeking police assistance

Whenever the Tribunal needs to secure a company’s assets or financial records, but faces resistance or non-cooperation from the company’s management, it can exercise powers under s. 429 to seek assistance from police authorities. However, a resolution professional is not barred from approaching the High Court under writ jurisdiction to seek assistance of police authorities even if he has failed to approach the Tribunal under s. 429.

The Bombay High Court has clarified this legal position in Pravin R. Navandar v. State of Maharashtra (April 28th, 2026). In this case, the suspended directors were repeatedly blocking the transfer of a corporate debtor’s property, despite an approved resolution plan and multiple NCLT orders.

When the resolution professional filed a writ petition to seek police assistance, the directors argued that the petitioner should have pursued remedies via a jurisdictional magistrate under Section 429 of the Companies Act. The high court rejected this as a dilatory tactic.

The court held that Section 429 does not bar a writ court from exercising its power to ensure that state authorities comply with tribunal directions when insolvency resolution is being wilfully impeded.

The Court ordered the Juhu Police Station to provide the necessary force, including lady constables, to secure physical possession of the property for the monitoring committee on the same day. Furthermore, the court mandated that this process be fully videographed at the committee’s expense to ensure transparency and accountability.

This decision reinforces the sanctity of approved resolution plans and clarifies that any obstruction by the concerned persons will not be tolerated by the courts. It underscores the willingness of higher courts to bypass procedural hurdles to ensure that the insolvency resolution process, a time-bound legislative objective, reaches its logical and effective conclusion without unnecessary administrative delay.

B. Case Law

[B.1] Supreme Court clarifies disclosure obligations for merger transactions under competition law

The Supreme Court in Amazon.com NV Investment Holdings LLC v. Competition Commission of India (May 27th, 2026) clarified the scope of disclosure obligations in merger control under competition law, the statutory limits of the CCI’s power to reopen approved transactions, and the legality of the consequences imposed under the Act.

In 2019, Amazon notified the CCI of a proposed combination involving a 49% stake acquisition in Future Coupons Private Limited (FCPL), a promoter-group entity of Future Retail Limited (FRL). The notice disclosed the FCPL Shareholders’ Agreement (SHA), the FRL SHA, and several Business Commercial Agreements (BCAs). The CCI approved this transaction on November 28, 2019.

In June 2021, following a complaint from FCPL, the CCI issued a show-cause notice to Amazon, alleging that it had failed to disclose the true scope and strategic intent of the transaction. The CCI alleged that Amazon had characterised the deal merely as an investment while concealing its actual interest in FRL’s retail business, a strategy Amazon allegedly referred to internally as a foot-in-the-door approach.

In December 2021, the CCI ordered that the 2019 approval be kept in abeyance, directed Amazon to file a fresh notice in Form II, and imposed a penalty of approximately INR 202 crore. The National Company Law Appellate Tribunal (NCLAT) largely affirmed these findings in June 2022, though it slightly modified the penalties.

On May 27, 2026, the Supreme Court set aside the NCLAT judgement and the CCI’s 2021 order. The Court’s decision was based on the following key grounds:

  • Disclosure Standards: The court held that Amazon had sufficiently disclosed the transaction structure and its interconnected agreements. It clarified that an obligation to disclose is met when the relevant instruments are placed before the CCI and their linkages are explained; a disagreement over how those agreements were ’labelled’ does not equate to non-disclosure.
  • Jurisdictional Limitation: The Court emphasised the proviso to Section 20(1) of the Competition Act, which bars the CCI from enquiring into a combination after one year from the date it takes effect. Since the show-cause notice was issued more than a year after the combination was implemented, the CCI lacked the jurisdiction to reopen the review or compel a fresh filing.
  • No Power to Suspend: The court ruled that the Competition Act does not grant the CCI the power to keep an already-approved combination in abeyance. It observed that the CCI is a creature of statute and cannot confer powers upon itself that the legislature has not granted.
  • Penal Provisions: The Court held that Sections 44 and 45 (dealing with false statements and omissions) require clear, specific findings of material falsity and intent, which the CCI failed to establish. The internal emails cited by the CCI were viewed as pre-execution documents and did not demonstrate a deliberate suppression of facts that would vitiate the approval.

Ultimately, the Supreme Court allowed Amazon’s appeal, emphasising that merger control must be a predictable, law-governed process that respects the finality of approved transactions.

C. Q&A

[C.1] What are the consequences of failing to file the board’s resolution for borrowings?

Under Section 179(3)(d) of the Companies Act, 2013, the Board of Directors must exercise the power to borrow monies through a resolution passed at a board meeting. Section 117(1) further mandates that a copy of such a resolution must be filed with the Registrar of Companies (ROC) in Form MGT-14 within 30 days of passing it. Failure to do so constitutes a direct violation of these statutory requirements.

The penal consequences for failing to file these resolutions are governed by Section 117(2): (i) The company is liable for a penalty of ₹10,000, and in cases of continuing failure, there is a further penalty of ₹100 for each day the default continues, subject to a maximum of ₹2,00,000. (ii) Every officer who is in default (including the Managing Director, Company Secretary, and CFO) is liable for a penalty of ₹10,000, and in cases of continuing failure, they face an additional penalty of ₹100 per day, subject to a maximum of ₹50,000.

As evidenced in the Hari Machines Limited case (RoC, Cuttack, October 15th, 2026), the ROC can and will impose these penalties on the managing director and key managerial personnel (KMPs) in their personal capacity. The adjudication order explicitly directs that these penalties must be paid from the officers’ personal sources or income, not from company funds. Furthermore, regulatory bodies typically reject pleas that a default was technical, inadvertent, or without mala fide intent.

In summary, non-filing of board resolutions for borrowings is not merely a procedural lapse; it exposes the company’s leadership to personal financial liability and regulatory scrutiny.

[C.2] Should a one-time payment to executive directors upon retirement be approved by shareholders of public companies?

I can trace the answer to this question in an opinion given by Raghunath Ravi, company secretary, in his article published on Taxmann’s website on June 17th, 2026. According to the author, the public companies frequently approve one-time payments or appreciation awards to retiring or resigning whole-time managerial personnel without obtaining mandatory shareholder approval. The public companies erroneously classify them as ex-gratia payments and keep them outside the scope of managerial remuneration in their financial records. Whereas, under the Companies Act, 2013, the term ‘remuneration’ includes any money given for services rendered. Therefore, payments made in recognition of a director’s tenure constitute managerial remuneration. Consequently, these payments must comply with Section 197 limits and require prior approval from the Nomination and Remuneration Committee and shareholders. When boards unilaterally approve these payments, they are deemed to be unauthorised payments. Such unauthorised payments trigger Section 197(9), which obligates the recipient to refund the amount to the company within two years.

Thus, this opinion clearly necessitates that the public companies should conduct rigorous internal audits of compensation policies. The company law practitioners should also avoid unauthorised/excess payments that could lead to penalties, financial restatements, and potential liability for statutory auditors under Section 143.