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2020 (1) TMI 1272 - Tri - Companies LawMaintainability of petition - Oppression and mismanagement - petition filed by a non-member of a Section - 8 Company namely Church of South India Trust Association (R1/CSITA) against CSITA and 10 other Respondents - section 241 of the Companies Act, 2013. Whether this CP is maintainable for it has been filed by a non-member of the company - Whether Sec. 241 application is maintainable with regard to the affairs of the Sec. 8 Companies? - HELD THAT - The profit concept not being present, at least to the extent of academic interest of member is concerned actions with regard to the affairs of Section 8 Company; it cannot be called as prejudicial at least to the members. As to prejudice against the company, if such allegation is made, there must be a material specifying each action and the effect thereof. In this case, except general and omni bus allegations, no specific allegations are made indicating x, y and z persons have indulged in specific actions with particulars, and therefore the management of a company elected through a multi layer arrangement with approval of 4.5 million church members or perhaps communicant members cannot be simply reversed - The Petitioner is one of the communicant members, even if 24 Consenters are taken into consideration; they are part of 4.5 Million of the church members. The church members at the parish level elect and send delegates to Dioceses, and Synod members. Synod members will elect members of CSITA. This being the arrangement, there is no scope to assume that this Petitioner or 24 Consentors to this Petitioner or 200 members alleged to have attended the alleged General Meeting on 16.01.2016 can be equated with members of CSITA who have reached to CSITA passing through two layers of election. Therefore this Company Petition is not at all maintainable. Whether a person on his own holds meetings and elections thereafter seek an imprimatur of this Bench to the actions of him? - HELD THAT - In this case, it is not the case of the Petitioner that either he himself or the consenters are the members of R1 company, his case is only that they are Church Members (Parish members) therefore since they have been seeing that the company properties are being alienated for the personal gain by committing fraud, they should be allowed to hold meeting. Another point is, since the election was not being held even after completion of two years, the Petitioner and his consenters gave a notice for holding a meeting. Whenever such notice is given, as per the procedure, even it is not mentioned a notice u/s. 100, it is imperative to construe that notice falls within the ambit of Sec. 100. in this case, these people are not even entitled to give such requisition notice - The Petitioner has gone to the extent of setting up letterhead of the company to prepare a resolution showing as if a committee has been constituted to R1 Company. Basic requirement to interfere with the Indoor Management of any company is that the person shall be either shareholder or member of the company. This Petitioner is neither of them - there are no merit in the argument of the Petitioner saying that the Managing Committee elected by the so called 250 members as valid. Whether any case has been made out u/s. 241 of the Companies Act, 2013 against the Respondents herein? - HELD THAT - If at all any prejudice is caused, ultimately it has to be seen whether such action could be treated as a just and equitable ground for winding up of the company. Even if action is unfair and prejudicial to any of the members, for passing a relief under Sec. 242 of the Companies Act, 2013, second condition in the twin condition to pass reliefs i.e. just and equitable ground for winding up shall be proved. There is not a whisper over this point in the Petition. By filing one or other application, this Petitioner has prolonged this litigation so far - Every action that is falling under Sec. 213 or any unlawful actions falling under any of the companies act cannot be straight away considered as an action attracting the provisions of Sec. 241 of the Companies, Act, 2013. The checklist and the measurement to bring it within the ambit of Sec. 241 are altogether different, here the Petitioner has miserably failed to establish any case u/s. 241 of the Companies Act, 2013. Petition dismissed.
Issues Involved:
1. Whether the Company Petition (CP) is maintainable for it has been filed by a non-member of the company. 2. Whether Section 241 application is maintainable with regard to the affairs of the Section 8 Companies. 3. Whether a person on his own can hold meetings and elections thereafter seek an imprimatur of this Bench to the actions of him. 4. Whether any case has been made out under Section 241 of the Companies Act, 2013 against the Respondents. Issue-wise Detailed Analysis: 1. Maintainability of the Company Petition by a Non-member: The Tribunal examined whether a non-member can file a petition under Section 241 of the Companies Act, 2013. It was noted that the petitioner is not a member of CSITA, which is a Section 8 company. The Tribunal emphasized that the doctrine of Oppression and Mismanagement is intended to protect the interests of members of a company. The petitioner, being a non-member, does not meet the threshold requirement to initiate proceedings under Section 241. The Tribunal highlighted that the statutory requirement of being a member cannot be bypassed, and the petition was found to be non-maintainable on this ground. 2. Applicability of Section 241 to Section 8 Companies: The Tribunal clarified that Section 241 of the Companies Act, 2013, which deals with oppression and mismanagement, applies to all companies, including Section 8 companies. However, the petitioner must be a member of the company to invoke this provision. Since the petitioner is not a member, the application under Section 241 was deemed non-maintainable. The Tribunal reiterated that the jurisdiction to entertain such petitions is contingent upon the petitioner being a member of the company. 3. Legitimacy of Self-convened Meetings and Elections: The petitioner claimed to have conducted a General Body Meeting and elected a new management committee for CSITA. The Tribunal examined the validity of such meetings and elections conducted by non-members. It was noted that the petitioner and the consenters are not members of CSITA, and therefore, they are not entitled to hold meetings or elections. The Tribunal emphasized that any action taken by non-members to convene meetings or elect management committees is illegal and cannot be recognized. The petitioner's actions were found to be in contravention of the provisions of the Companies Act, 2013. 4. Allegations of Mismanagement under Section 241: The petitioner alleged various acts of mismanagement and misappropriation of funds by the existing management of CSITA. The Tribunal scrutinized these allegations and noted that they were sweeping and lacked specific particulars. It was emphasized that to establish a case under Section 241, the petitioner must provide detailed evidence of specific acts of mismanagement and how they are prejudicial to the interests of the company or its members. The Tribunal found that the petitioner failed to provide such evidence and did not establish any case of oppression or mismanagement under Section 241. Conclusion: The Tribunal concluded that the Company Petition and the related applications were misconceived and dismissed them. The petitioner, being a non-member, lacked the requisite standing to file the petition under Section 241. The Tribunal emphasized that the statutory requirements for initiating such proceedings must be strictly adhered to, and non-members cannot be allowed to bypass these requirements. The allegations of mismanagement were found to be vague and unsubstantiated, further reinforcing the dismissal of the petition.
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