Case Title:- Anil Kumar Malhotra v. M/s Mahindra & Mahindra Financial Services Ltd
The National Company Law Appellate Tribunal has categorically observed that the territorial jurisdiction of NCLT to decide cases under the Insolvency and Bankruptcy Code, 2016 cannot be taken away by any agreement between the parties.
The Corporate Debtor had filed the instant appeal challenging the NCLT order admitting the section 7 application for initiation of the Corporate Insolvency Resolution Process (CIRP) against him. The challenge is based on the ground that NCLT New Delhi has no jurisdiction to entertain the Section 7 application against the Corporate Debtor because clause 24.12 of the facility agreement between the parties specifically confers the jurisdiction upon the courts of Mumbai in respect of any matter arising out of facility agreement.
During the course of proceedings, relevant provisions of the Code were discussed and that it is by the provision of law u/s 60(1) of the Code the territorial jurisdiction of any National Company Law Tribunal is determined, and no law can be superseded by an agreement clause. It was observed that the provisions of the Insolvency and Bankruptcy Code have to be given overriding effect by virtue of Section 238 of the Code and due to this, the Appellant cannot rely on clause 24.12 to the Facility Agreement which provides jurisdiction to the Mumbai Courts.
Section 238 of the Insolvency & Bankruptcy Courts reads thus:-
“Provisions of this Code to override other laws.
238. The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.”
Since the registered office of the Corporate Debtor is located in New Delhi, as per section 60, the territorial jurisdiction to entertain such an Application is with the NCLT, Principal Bench at New Delhi.