# In the matter of Phool Chand Gupta & Ors. vs. Mukesh Jaiswal & Ors.

> HC judgment dated 2023-07-04. Citation: TCN-2023-HC-00056. The appeal arises from a judgment and order dated December 5, 2022, concerning an application for…

- **Court:** HC
- **Order date:** 4 Jul 2023
- **Citation:** TCN-2023-HC-00056
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/phool-chand-gupta-ors-vs-mukesh-jaiswal-ors-8247bdaf

## Summary

### Background

The appeal arises from a judgment and order dated December 5, 2022, concerning an application for the rejection of a plaint. The appellant argued that the disputes raised in the plaint fall under the exclusive jurisdiction of the National Company Law Tribunal (NCLT), rendering the suit not maintainable in a civil court. The learned Single Judge decided against the appellant, leading to the current appeal. The plaintiff filed a suit for declaration and injunction, alleging fraud by the auditor (defendant no.1) of defendant no.4 (a private limited company) on Sambhunath and his family members. The plaintiff sought declarations that the shareholdings of defendant nos. 2 and 3 in defendant no.4 were illegal and fraudulent, and perpetual injunctions against defendant nos. 1

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## Facts

Sambhunath Shaw incorporated defendant no.4 as a closely held family company. Defendant no.1, a chartered accountant, was engaged by Sambhunath as an auditor for defendant no.4. The plaintiff, Sambhunath's younger son, became a shareholder in defendant no.4 on March 30, 2002, and later a director on March 12, 2015, but was removed on December 23, 2015. After Sambhunath's death on July 31, 2018, the plaintiff was re-inducted as a director on August 14, 2018. The plaintiff discovered that defendant nos. 2 and 3, with no connection to the Jaiswal family, jointly held approximately 32.69% of defendant no.4's share capital. Defendant no.1 held shares in defendant nos. 2 and 3 through family members, HUF, and PCG Properties Private Limited. Shares in defendant no.4 were

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## Issues and analysis

### Issue 1: Whether the Civil Court has jurisdiction to entertain the suit, considering Section 430 of the …

**Ratio:** Section 430 of the Companies Act, 2013, bars civil courts from entertaining any suit or

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**Reasoning:** The court considered whether the matter fell within the exclusive jurisdiction of the

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**Interpretation:** The court interpreted Section 430 to mean that if the dispute primarily

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**Application:** The court found that the primary relief sought was declaratory, based on

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## Parties

- **Judges:** Soumen…; Uday K…
- **Appellants:** Phool Chand…
- **Respondents:** Mukesh Ja…
- **Other parties:** Kohi…

## Timeline

- **2022-12-05 — Original…**: The application for rejection of the…
- **2020-02-18 — Interim Relie…**: Justice Basak passed an…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 65 — Fraudulent or malicious initiation of proceedings](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-65)

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