2019 (8) TMI 1776 - AT - Companies Law

Oppression and Mismanagement - seeking to supersede the board of directors and reconstitute it and an administrator be appointed to oversee the affairs of the company - seeking to grant perpetual injunction restraining the respondents whether acting by its servants, agents, etc., from altering the share capital of respondent No. 1-company - seeking to grant mandatory injunction restraining the respondents to transfer business, sales, contracts, company resources and funds to the newly incorporated respondent No. 4-company - HELD THAT - The petitioner failed to establish even prima facie case in support of alleged acts of oppression and mismanagement in the affairs of respondent No. 1-company. And respondent No. 1-company is admittedly a profit making company having several employees and conducting its affairs strictly in accordance with law. Learned counsel for the respondent submitted that the petitioner is being paid salary of ₹ 75,000 (rupees seventy five thousand only) per month plus car and free 4 BHK residential accommodation and he has assured on behalf of the company that the same will be continued as long as she is director of respondent No. 1-company. Therefore, the petitioner is not put to any hardship by respondent No. 1-company. The petitioner has failed to make out any case so as to exercise powers conferred on the Tribunal under section 242 of the Companies Act, 2013 - Petition dismissed.

Summary

Issues Involved:
1. Allegations of oppression and mismanagement under Sections 241, 242, and 243 of the Companies Act, 2013.
2. Supersession and reconstitution of the Board of Directors.
3. Injunction against altering share capital and transferring business to a new company.
4. Financial mismanagement and unauthorized withdrawals.
5. Disputes regarding board meetings and financial transparency.
6. Alleged misuse of company resources for personal benefit.
7. Domestic dispute influencing company affairs.
8. Validity of resolutions passed in board meetings.
9. Salary increments and financial decisions.
10. Proposal to increase authorized share capital.

Detailed Analysis:

1. Allegations of Oppression and Mismanagement:
The petitioner, holding 50% of the shares and being a director of the respondent No. 1 company, alleged oppression and mismanagement by respondents Nos. 2 and 3. The petitioner claimed that respondent No. 2, her husband, was taking decisions without her knowledge, transferring large sums of money to personal accounts, and pressurizing her to sell her shares and leave the company.

2. Supersession and Reconstitution of the Board of Directors:
The petitioner sought to supersede the board of directors and reconstitute it, appointing an administrator to oversee the company's affairs. The Tribunal noted that the petitioner was still a director and shareholder, and her directorship and shareholding were not under threat.

3. Injunction Against Altering Share Capital and Transferring Business:
The petitioner requested a perpetual injunction to prevent the respondents from altering the share capital and transferring business to a newly incorporated company, respondent No. 4. The Tribunal observed that the proposal to increase the authorized share capital was just a proposal and that the company was empowered to take such decisions as per law.

4. Financial Mismanagement and Unauthorized Withdrawals:
The petitioner alleged unauthorized withdrawals by respondent No. 2, including a sum of ?2 crores as remuneration and ?80.50 lakhs transferred to his personal account without approval. The Tribunal found that the company was financially sound, with substantial turnover and profits, and that the petitioner had participated in board meetings where financial decisions were discussed.

5. Disputes Regarding Board Meetings and Financial Transparency:
The petitioner claimed that her concerns were not addressed during board meetings and that she was not provided with financial documents. The Tribunal noted that the petitioner had attended board meetings and expressed her views, and that the company had agreed to provide the requested documents.

6. Alleged Misuse of Company Resources for Personal Benefit:
The petitioner alleged that respondent No. 2 was using company profits for personal needs and depriving her of her rights. The Tribunal found that the company was conducting its affairs in accordance with the law and that the petitioner was receiving a salary, car, and residential accommodation.

7. Domestic Dispute Influencing Company Affairs:
The respondents argued that the dispute was domestic and should be addressed by a family court. The Tribunal acknowledged the marital dispute but emphasized the petitioner's rights as a shareholder and director.

8. Validity of Resolutions Passed in Board Meetings:
The Tribunal found that the resolutions passed in board meetings were valid as they were approved by the majority of directors, including the petitioner, who had participated and expressed her views.

9. Salary Increments and Financial Decisions:
The petitioner contested the salary increments for respondent No. 2 and other employees. The Tribunal held that salary decisions were routine company affairs and that the company, being profitable, was entitled to make such decisions.

10. Proposal to Increase Authorized Share Capital:
The petitioner opposed the proposal to increase the authorized share capital, fearing it would dilute her shareholding. The Tribunal noted that it was only a proposal and that the company was empowered to make such decisions.

Conclusion:
The Tribunal dismissed the petition, finding no merit in the allegations of oppression and mismanagement. It directed the company to continue paying the petitioner's salary and providing residential accommodation as long as she remained a director. The Tribunal also instructed the company to issue notices for every meeting, adhering to principles of natural justice.