SURAJ PRAKASH ARORA & ORS v. ROSHANARA CLUB LIMITED & ORS, Delhi High Court Reiterates NCLT’s Exclusive Forum for Club Mismanagement Disputes

Case Name	Suraj Prakash Arora & Ors v. Roshanara Club Limited & Ors
Citation	CS(OS) 210/20252025 SCC OnLine Del 2961
Court	High Court of Delhi.
Decided On.	15th April 2025
Petitioners	Suraj Prakash Arora
Respondents	Roshanara Club Limited

INTRODUCTION 

A crucial issue of jurisdiction was at the center of a case that a group of seasoned members of the Roshanara Club, a non-profit organization, brought before the Delhi High Court, the members claimed that the departing executive committee engaged in improper management and unapproved transactions while illegally continuing to run the club after their term was over and because they did not meet the requirements to petition the National Company Law Tribunal (NCLT) for oppression and mismanagement under Section 244 of the Companies Act, 2013, the members sought relief from the High Court.

This case clarified the options available to minority members in corporate governance disputes and tested the exclusivity of specialized company law forums.

IMPORTANT PROVISIONS

• Section 430, Companies Act, 2013: this provision bars the jurisdiction of civil courts in respect of matters of the NCLT. 
• Section 241, Companies Act, 2013, provides relief in cases of oppression and mismanagement and enables members to apply to the NCLT alleging that affairs of the company are being conducted prejudicially. 
• Section 242, Companies Act, 2013, provides details and powers of the NCLT to grant relief and regulate the conduct of company affairs in cases. 
• Section 244, Companies Act, 2013: it specifies threshold criteria for members to apply under section 241 and includes a proviso empowering the NCLT to waive such requirements. 

BRIEF FACTS – 

A fierce internal conflict engulfed Roshanara Club Limited (RCL), a prominent Section 8 non-profit organization with thousands of members and in a civil suit, the plaintiffs, who were longtime members of the club, accused some members of RCL’s executive committee and management of gravely abusing their power and illegally remaining in office past their allotted term as stipulated in the club’s Memorandum of Association (“MoA”). 

The plaintiffs contend that the defendants lacked the legal authority to act on behalf of the club after their term as office-bearers ended on September 30, 2023 and however, the disputed group allegedly kept control of the club’s bank accounts and communications, made important financial and management decisions, and made deals with third parties, including a sensitive deal with Delhi Development Authority without proper approval from the general membership. 

The plaintiffs sought a wide range of judicial relief, including declarations that the defendants were no longer legitimate representatives of RCL, the nullification of all decisions and actions made by them after their term ended, the return of club assets and funds that were allegedly mismanaged or withdrawn, compensation for club losses, a forensic audit, and permanent injunctions that would prevent these members from exercising their power in the future.

However, a major preliminary objection was raised by the defendants (who were backed by RCL as an institutional party), the National Company Law Tribunal (NCLT), not the civil court, has jurisdiction over company mismanagement and oppression disputes under Section 430 of the Companies Act, 2013 and they underlined that, in accordance with Sections 241, 242, and 244 of the Companies Act, the actual content of the plaintiffs’ claims oppression, misfeasance, and mismanagement of a company’s affairs were traditional cases for the specialized company law forum.

The plaintiffs argued that although the issue was customarily one for NCLT, their percentage of shares and members was significantly less than the legal minimum required to file a legitimate petition with the tribunal and a minimum group size of 10 percent of members or 100 members is typically required by the Companies Act (section 244) in order to initiate an application under Sections 241-24 and the plaintiffs contended that the civil court should retain jurisdiction because, as minority members, they had no automatic recourse to NCLT and that the uncertain prospects of a discretionary NCLT waiver could not deny them access to justice altogether.

Therefore, the facts highlight a crucial issue in the administration of company law, can minority members, who are denied immediate NCLT relief due to their numerical limitations, use civil court authority for urgent remedies in cases of alleged management overreach, or do they have to go through threshold and waiver procedures before the NCLT, even if doing so puts their application at risk of being rejected outright, The entire adjudication process was framed by this fundamental issue of forum, access to justice, and the true extent of the NCLT’s exclusive powers.

ISSUES INVOLVED – 

1. Whether the civil court has jurisdiction to entertain the suit filed by members of Roshanara Club alleging mismanagement, oppression, and unauthorized conduct by certain office bearers beyond their term, given that the statutory remedy lies with the NCLT under sections 241 and 242 of the Companies Act, 2103. 
2. Whether the provisions of section 430 of the Companies Act 2013, which bars the civil court jurisdiction over matters within the scope of NCLT, apply equally when the plaintiff does not meet the minimum membership threshold prescribed under section 244 of the Act for filing an application before the NCLT? 
3. Whether the inability or failure of plaintiffs to obtain a waiver of the threshold requirements under section 244 from the NCLT can provide a basis for civil court intervention, or if the statutory appellate remedies against NCLT decisions are the sole path for relief? 

ARGUMENTS ADVANCED BY PETITIONERS – 

• According to the counsels representing the petitioners Therefore, the facts raise an important question in the administration of company laws and minority members who are denied immediate NCLT relief because of their numerical limitations have the right to use civil court authority for urgent remedies in cases of alleged management overreach, or do they have to go through threshold and waiver procedures before the NCLT, even if doing so increases the likelihood that their application will be rejected outright, this basic question of forum, access to justice, and the actual scope of the NCLT’s exclusive powers framed the entire adjudication process.
• They accused the club of misappropriating and mismanaging its resources, including failing to hold required annual general meetings, withdrawing large sums of money (more than Rs. 5 crores) without authorization after their term ended, and failing to keep financial accounts transparent. It was argued that these acts were oppressive and harmful to the interests of the membership as a whole.
• The defendants exceeded their mandate and may have caused legal and financial irreparability, the petitioners emphasized, by entering into agreements, including one with the Delhi Development Authority (DDA), without the proper approval or representation of legitimate club authorities.
• The petitioners requested forensic audits of the club’s financial records, damages for losses brought on by the defendants’ poor management, injunctions prohibiting defendants from acting on behalf of the club, and declaratory relief declaring defendants’ authority terminated.
• The petitioners argued that they lacked the necessary group strength required by Section 244 to directly file proceedings before the NCLT in response to the defendants’ preliminary jurisdictional objections, which were based on Section 430 of the Companies Act (which prohibits civil court jurisdiction in matters falling within NCLT jurisdiction) and they maintained that access to the civil courts for immediate and protective relief was necessary due to practical challenges in meeting the threshold or obtaining a waiver.
• The petitioners defended their right to use the civil courts’ jurisdiction on the grounds of extraordinary circumstances resulting from alleged mistreatment and oppression. They also issued a warning against rejecting civil remedies exclusively because of specialized tribunal framework procedural restrictions.

ARGUMENTS ADVANCED BY RESPONDENTS – 

• The counsels for the respondents argued that the civil court lacked jurisdiction to entertain the suit as per the clear mandate of section 430 of the companies act 2013, this provision explicitly bars civil courts from hearing any matters that fall within the exclusive jurisdiction of the NCLT, they contended that since the disputes of alleged oppression and mismanagement squarely fall under section 241 and 242 of the act, the petitioners recourse should be exclusively through the NCLT which has comprehensive powers to adjudicate such issues. 
• The defendants claimed that the petitioners did not meet the statutory threshold required by Section 244 of the Act to invoke the NCLT’s jurisdiction, the defendants noted and the suit was improper because the claimed group of members was a very small percentage of the total membership and they argued that avoiding the NCLT and going to the civil court was not justified by the petitioners’ claim that they were unable to meet the threshold or secure a waiver and in order to prevent forum shopping and multiple proceedings, the court was urged to strictly enforce the statutory requirements and procedural safeguards.
• The defendants stressed that the NCLT was specifically established to offer a prompt and efficient process for settling business conflicts pertaining to oppression, management, and governance, they maintained that the civil court’s intervention is precluded by the NCLT’s extensive and profound powers, which include the ability to grant relief, remove directors, and regulate management and the legislative design would be compromised, and parallel, possibly conflicting forums for the same disputes would be created, if the suit were permitted to proceed in civil court.
• The defendants asked the court to dismiss the suit at the threshold for lack of jurisdiction on its own motion under Order VII Rule 11 CPC and they argued that since the plaint itself showed an incurable jurisdictional bar, waiting for defenses or drawn-out proceedings would be a waste of judicial time and binding precedents supporting the court’s power and obligation to dismiss lawsuits barred by statutes without a full trial were relied upon.
• The defendants refuted the outgoing executive members’ allegations of overreach, arguing that there had been no illegal extension of their term in office or that any extension had been approved by the club’s general membership or its constitutional documents. They contested claims of financial misconduct, calling for convincing evidence and warning against interfering too soon in internal affairs without following the proper procedures.
• The defendants maintained that the proper course for the petitioners was to pursue relief through statutory mechanisms available under the Companies Act, including the use of the NCLT’s powers to waive thresholds and permit access in deserving cases, and the civil courts were not a substitute for statutory tribunals designated to govern company and governance disputes.
• In conclusion, the defendants allege that the petitioners were attempting to circumvent legislative restrictions and procedural hurdles by filing a civil suit, thereby disrupting established dispute resolution mechanisms and undermining the company laws’ structured adjudicatory system.

JUDGEMENT  – 

• The Hon’ble Court started The defendants’ main contention was that the bar imposed by Section 430 of the Companies Act, 2013 prevented the Civil Court from having the authority to consider the suit and the defendants stressed that this clause expressly prohibits civil courts from considering cases that belong to the National Company Law Tribunal’s (NCLT) adjudicatory purview, further they argued that the NCLT was the proper forum for the plaintiffs’ claims because they dealt with oppression, poor management, and governance within the company; they did not have an exception just because they did not meet the required number of plaintiffs to file before the tribunal.
• They emphasized that the petitioners did not meet the strict eligibility requirements set forth in Section 244 of the Act, which establishes the minimum numbers or proportions of members required to file a claim for relief from oppression or poor management and the defendants emphasized that the legislative scheme contemplates such minimum requirements specifically to prevent frivolous or vexatious litigation, and that concerns about not being able to meet the threshold or obtain a waiver could not be used as an excuse to avoid following the established statutory route.
• The defendants argued that the NCLT, which is specifically designed to handle complicated business disputes quickly and efficiently, has exclusive and comprehensive jurisdiction and they contended that the tribunal has extensive authority beyond the purview of civil courts, including the ability to resolve internal governance disputes, issue directives, remove individuals from positions of authority, and regulate business affairs, the statutory framework that envisions the NCLT as the principal adjudicatory authority would be compromised if civil court intervention were permitted.
• The defendants pleaded with the court to take a rigorous stance on procedural requirements, such as submitting appropriate applications to the appropriate forum and using up all available statutory remedies, and they argued that the civil suit was an attempt to circumvent the hierarchical and structured redressal process required by the Companies Act, which gives the NCLAT appellate jurisdiction and the NCLT initial recourse.
• They emphasized worries about the variety of proceedings and the possibility that minority members could abuse civil courts to interfere with club governance, and the defendants argued against parallel proceedings in civil courts, which run the risk of inconsistent and piecemeal adjudication detrimental to the company’s functioning, in order to reinforce the legislative intent behind the strong tribunal mechanism.

CONCLUSION – 

The Delhi High Court’s ruling on the Roshanara Club case affirmed the exclusive jurisdiction of the NCLT for company law disputes, and the Court held that Section 430 of the Companies Act imposes an absolute bar on civil courts from hearing matters related to oppression, mismanagement, and governance issues, as defined under Sections 241 and 242.

The court rejected the plaintiffs’ argument that their inability to meet the NCLT’s eligibility threshold allowed them to file a civil suit, and it clarified that members can apply to the NCLT for a waiver of this threshold, and the potential refusal of such a waiver doesn’t justify bypassing the statutory framework and the judgment underscored that the NCLT’s specialized and comprehensive powers make it the proper forum for such disputes, reinforcing the legislative intent to have corporate matters handled by an expert tribunal.

This article has been written by Mayur Shrestha (Presidency University Bengaluru School of Law).