2017 (2) TMI 1414 - AT - Companies Law

Limitation and maintainability of petition - oppression and mismanagement - appellant(s) are neither directors, nor shareholders of the 1st respondent company - appellant(s) have specifically pleaded that the respondents failed to perform statutory filing before the Registrar of Companies and no AGM held since the year 2012 - period of limitation - HELD THAT - While accept that the appeal in so far it relates to allegation made for the period 2003 to 2012, hold that the Company Petition in so far it relates to alleged oppression and mismanagement during the period between 2013, 2014 and 2015 was not barred by Limitation and Tribunal was required to confine the petition for the said period. Form 20B, in which annual return has been filed by company with the Registrar of Companies for the financial year beginning on 31st March 2012 has been enclosed as Annexure-B to this appeal. From the said Form 20B (refer Section 159 of the Companies Act 1956), provides details of shareholders as on 30th September 2012 (Annexure-A to the Form). Therein, against the name of 1st appellant, Esquire Electronic Inc. it has been shown as a foreign company having 429740 equity shares with the 1st respondent company which come to about 9.54% as on the date of filing. In so far as 2nd appellant Esquire Electronics (India) a firm, it is shown that the 2nd appellant have 84680 equity shares of 1st respondent company, which comes to about 1.88% at the time of filing. Appellant(s) have, prima-facie, made out a case that they are the shareholders of the 1st Respondent company, jointly hold 1/10th of the total share holding and thereby they have locus to file the petition alleging oppression and mismanagement. The finding of Tribunal that appellant(s) lack locus standi to file Company Petition as they are not the director (s) or shareholder or member of the 1st respondent company is not based on record. For the reasons and finding as recorded above, we set aside the part of impugned judgement dated 6th October 2016 passed in Company Petition in so far as it relates to maintainability of the petition for the period 2013, 2014 and 2015 onwards and remit the case to National Company Law Tribunal, Principal Bench, New Delhi to take decision on merit, limiting the prayer with regard to alleged oppression and mismanagement , if any, made between the year 2013 onwards.

Summary

Issues:
1. Limitation period for filing the Company Petition.
2. Locus standi of the appellants to file the Company Petition.
3. Allegations of oppression and mismanagement between 2013 and 2015.

Analysis:
1. The judgment involves an appeal by Esquire Electronics Inc. and another against the National Company Law Tribunal's order dismissing their Company Petition under Sections 241 and 242 of the Companies Act 2013 as time-barred, imposing costs on them. The Tribunal found the petition barred by limitation, as it attempted to address issues from 2000 to 2012, ruling the appellants lacked locus standi. The Appellate Tribunal agreed on the limitation aspect but considered continuing causes of action post-2012 valid, not barred by limitation, remitting the case for further consideration.

2. The appellants claimed shareholding in the respondent company, alleging illegal dilution by other respondents. The Tribunal dismissed the petition, questioning the appellants' locus standi as they were neither directors nor shareholders of the respondent company. However, the Appellate Tribunal disagreed, citing evidence of shareholding in the respondent company by the appellants, establishing locus standi to file the petition for alleged oppression and mismanagement, overturning the Tribunal's finding.

3. The appellants alleged inaction by the respondents post-2012, including failure to conduct AGMs and circulate audited balance sheets. The Tribunal found the petition time-barred for issues up to 2012. Still, the Appellate Tribunal recognized continuing causes of action post-2012, not barred by limitation, directing the Tribunal to consider the petition's merit for alleged oppression and mismanagement between 2013 and 2015. The appeal was partly allowed for the period post-2012, remitting the case for further proceedings.