One of the most common—and most damaging—mistakes in corporate disputes is wrong forum selection. Under the Companies Act, 2013, several matters that were earlier entertained by civil courts now fall within the exclusive or specialised jurisdiction of the National Company Law Tribunal (NCLT).
A claim that may be otherwise meritorious can fail entirely if instituted before the wrong forum. Courts and tribunals in India have repeatedly emphasised that jurisdiction is not a technicality—it goes to the root of the matter.
1. Why Forum Selection Has Become Critical under the Companies Act, 2013
The Companies Act, 2013 introduced a specialised adjudicatory framework for corporate disputes by establishing the NCLT and NCLAT. The legislative intent was clear:
To centralise company law jurisdiction
To reduce parallel proceedings
To ensure speed, consistency, and expertise
As a result, the jurisdiction of civil courts has been expressly or impliedly barred in many company law matters.
2. Jurisdiction of Civil Courts: The General Rule
Civil courts continue to have jurisdiction over disputes of a purely civil nature, unless such jurisdiction is:
Expressly barred by statute, or
Impliedly excluded by a special mechanism
Civil courts may still entertain:
Contractual disputes not arising from company law provisions
Property disputes unconnected with corporate governance
Claims based on general civil law rights
However, the moment a dispute derives its cause of action from the Companies Act, jurisdictional questions arise.
3. Exclusive Jurisdiction of the NCLT
The NCLT has been vested with jurisdiction over a wide range of corporate matters, including:
Oppression and mismanagement
Rectification of register of members
Reduction of share capital
Amalgamation, merger and restructuring
Removal and appointment of directors
Investigation and enforcement-related matters
For such issues, civil courts cannot grant relief, even if the dispute is framed as a civil claim.
👉 Creative drafting cannot confer jurisdiction where none exists.
4. The Consequences of Choosing the Wrong Forum
Wrong forum selection can result in:
Rejection or dismissal of the plaint or petition
Loss of valuable time due to jurisdictional objections
Bar of limitation when re-filing before the correct forum
Adverse cost orders in appropriate cases
In several instances, parties have lost substantive rights without the merits ever being examined, solely due to jurisdictional error.
5. Common Scenarios Where Mistakes Occur
From practice, errors often arise in cases involving:
Shareholder disputes framed as civil suits
Director removal challenges filed before civil courts
Injunction suits interfering with NCLT jurisdiction
Parallel proceedings initiated in civil courts and NCLT
Courts have consistently discouraged such parallelism.
6. Interplay between Civil Courts and NCLT
While the NCLT is a specialised tribunal, it is not a substitute for civil courts in all matters. The correct approach is to examine:
The source of the right asserted
The nature of relief sought
Whether the Companies Act provides a specific remedy
If the statute provides a remedy before the NCLT, civil court jurisdiction is generally excluded.
7. Strategic Forum Selection: A Practical Approach
Before initiating proceedings, stakeholders should consider:
Whether the dispute arises from statutory corporate rights
Whether the relief sought is one that only the NCLT can grant
Whether interim relief from a civil court would conflict with tribunal jurisdiction
Forum selection should be driven by statutory design, not convenience.
8. Role of Pre-Litigation Legal Assessment
Many forum selection errors occur due to:
Urgency-driven filing
Inadequate statutory analysis
Over-reliance on traditional civil remedies
Pre-litigation legal assessment helps in:
Identifying the correct forum
Preserving limitation periods
Avoiding fatal jurisdictional objections
Early legal strategy often determines the survivability of the claim.
Conclusion: Jurisdictional Errors Are Often Irreversible
In corporate disputes, wrong forum selection can be fatal, regardless of the strength of the underlying claim. The Companies Act, 2013 mandates a careful and informed approach to jurisdiction, recognising the primacy of the NCLT in company law matters.
Corporate stakeholders who approach disputes with statutory clarity and strategic foresight are far better placed to protect their rights than those who treat forum selection as a procedural formality.
Practitioner’s Note
A significant number of corporate disputes fail not on merits, but at the threshold stage of jurisdiction. Correct forum selection remains one of the most critical—and most overlooked—strategic decisions in corporate litigation.
Advisory Disclaimer
This article is intended for informational purposes only.
For professional consultation or legal opinion on forum selection in corporate disputes under the Companies Act, 2013, requests may be submitted through the Advisory page.