2019 (10) TMI 1318 - Tri - Companies Law

Winding up of company - oppression and mismanagement - time limitation - HELD THAT - Upon perusing section 433 of the Companies Act we are of the considered opinion that the period of 3 (three) years as provided under article 137 of the Limitation Act is applicable in the present case and the present petition being filed on June 12 2018 questioning the past 20 years actions of respondent No. 2 having their knowledge is barred by limitation and accordingly the above issue is decided against the petitioners. The entire averments of the petition clearly disclose that the petitioners have some grievances in respect of allotment of shares owned by their parents in respondent No. 1-company as well as some other companies for which the petitioners have to initiate necessary proceedings for issue of succession certificates in their favour. As seen from the original annual return dated March 31 1995 submitted by the father of the petitioners as rightly contended by the respondents the name of Bagasa Industries P. Ltd. is clearly mentioned as a company holding 1, 000 shares in respondent No. 1-company. Since the annual return as well as the covering letter addressed to the Registrar of Companies Shillong are more than 30 years old documents this Tribunal did not find any reason to reject the above evidence. The above annual return makes it very clear that 1, 000 shares were allotted to Bagasa Industries P. Ltd. even during the life time of the father of the petitioners and the petitioners without knowing the facts nor the affairs of respondent No. 1-company filed the above petition with all suspicion presumptions and assumptions on account of inter se disputes between the parties. The petitioners have not placed any evidence before this Tribunal to prove that they have demanded notice of meetings from respondent No. 1-company and in the absence of any proof this Tribunal has no option except to believe that the respondents have sent notices to the petitioners for meetings as they have submitted the copies of the notices to the statutory authorities while filing the annual returns - this Tribunal is of the considered view that the above company petition for oppression and mismanagement when the company is not carrying on any business does not fall within the domain of sections 241 and 242 of the Companies Act and is liable to be rejected. Petition dismissed - Decided against petitioners.

Summary

Issues Involved:
1. Whether there is any oppression and mismanagement of the affairs of respondent No. 1-company by the respondents.
2. Whether the above company petition is within the period of limitation and whether the petitioners have knowledge about the misdeeds of the respondents.
3. To what relief.

Detailed Analysis:

Issue 1: Oppression and Mismanagement
The petitioners alleged that respondent No. 2 unilaterally allotted shares to his family members and another company, depriving the petitioners of their participation and control in respondent No. 1-company. They contended that the respondents created charges over company assets without the consent of all members, and that no notice of meetings was served to them. The petitioners also claimed that respondent No. 2 issued further shares to himself and his minor sons without offering the same to other members, thus raising his control over the company. The respondents countered that the shares were allotted as per the Articles of Association and that notices were sent to the petitioners annually. The Tribunal found that the petitioners had knowledge of the company’s affairs but did not take timely legal action, and no evidence was provided to prove the non-receipt of meeting notices. The Tribunal concluded that the petition did not fall within the domain of sections 241 and 242 of the Companies Act, as the company was not carrying on any business, and thus, the claim of oppression and mismanagement was not substantiated.

Issue 2: Limitation Period
The Tribunal emphasized the importance of addressing the limitation period first. The petitioners argued that the wrongful acts were continuous, thus not subject to limitation. They cited a National Company Law Tribunal (NCLT) Mumbai Bench order, which the Tribunal found distinguishable and not binding. The respondents cited Supreme Court rulings, asserting that a three-year limitation period under Article 137 of the Limitation Act applied. The Tribunal agreed with the respondents, noting that the petitioners had knowledge of the actions since 1997 and failed to act within the limitation period. Consequently, the Tribunal decided this issue against the petitioners, stating that the petition filed in 2018 was barred by limitation.

Issue 3: Relief
Given the findings on the first two issues, the Tribunal concluded that the company petition was liable to be rejected. However, it directed respondent No. 2 to send notices of meetings to the petitioners via registered post with acknowledgment due, at the expense of respondent No. 1-company, in the future. The petition was dismissed with these directions and observations.