2017 (1) TMI 1630 - Tri - Companies Law

Oppression and mismanagement - Respondent No. 2, during his tenure as the Director of the Petitioner Company No. 1 got sale deeds of various pieces of land parcels executed in favour of respondent No. 1 or his nominees instead of getting it executed directly in favour of the Petitioner No. 1 Company - Held that - One point alone is sufficient to dismiss the present petition on grounds of maintainability. The petitioners not being the shareholders of Respondent No. 1 Company, cannot invoke the provisions of sections 241-242 of the Companies Act 2013. The provisions of the Act make it abundantly clear as to who can initiate such proceedings. The petitioners have candidly admitted that neither petitioner No. 1 nor the other petitioners are shareholders of Respondent No. 1 Company. I therefore find the present petition not maintainable.

Summary

Issues involved:
- Allegations of oppression and mismanagement under Sections 241 & 242 of the Companies Act, 2013
- Maintainability of the petition based on the petitioners' locus as shareholders
- Lack of resolution authorizing the filing of the petition
- Dispute regarding the transmission and transfer of shares

Allegations of oppression and mismanagement under Sections 241 & 242 of the Companies Act, 2013:
The Company Petition involves accusations of oppression and mismanagement against the Respondent Company, invoking Sections 241 & 242 of the Companies Act, 2013. The petitioners seek various reliefs, including setting aside Sale Deeds, declaring agreements void, and transferring interests/shares. The petitioners allege fraudulent acts by the respondents, attributing misfeasance and breach of fiduciary duties to them, leading to a long-standing litigation between the parties.

Maintainability of the petition based on the petitioners' locus as shareholders:
The Respondent No. 1 challenges the maintainability of the petition on three grounds. Firstly, the petitioners are not shareholders of the Respondent Company, failing to meet the threshold requirement of holding 10% equity. Secondly, the absence of a resolution authorizing the petitioners to file the proceedings questions the maintainability. Thirdly, a dispute arises regarding the petitioners' status as shareholders of Petitioner No. 1, with the respondents asserting majority control by Respondent No. 2.

Lack of resolution authorizing the filing of the petition:
The Respondents argue that the absence of a resolution passed by the Petitioner No. 1 Company renders the petition not maintainable. They contend that the company, as a separate entity, cannot be represented through individual petitioners. The lack of authorization to file the petition raises concerns about the validity of the proceedings initiated by the petitioners.

Dispute regarding the transmission and transfer of shares:
A significant dispute arises concerning the transmission and transfer of shares, with the respondents challenging the petitioners' claims based on court orders and admissions. The petitioners seek to establish their rights as shareholders through transmission and transfer of shares, while the respondents contest these assertions, emphasizing the lack of documentation and validity of the transactions.

In the judgment, the Tribunal dismisses the Company Petition as not maintainable due to the petitioners' lack of shareholder status in the Respondent Company, a prerequisite for invoking Sections 241 & 242 of the Companies Act, 2013. The Tribunal highlights the importance of shareholder rights in initiating such proceedings and emphasizes the specific requirements outlined in the Act. Additionally, the Tribunal notes the similarity of allegations with a previous pending case, highlighting the misuse of legal processes by including parties remotely connected to the main dispute. Ultimately, the dismissal is based on the fundamental issue of the petitioners' standing as shareholders, rendering the petition non-maintainable under the provisions of the Companies Act, 2013.