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2017 (6) TMI 253 - Tri - Companies LawOppression and mismanagement - Whether petitioner is eligible to file CP 15 of 2016? - Held that - CP 15 of 2016 is filed by Viral L. Vaishnav who is holding 5% of the paid up share capital of the first respondent company. According to petitioner, there are only five members in the first respondent company as on the date of filing of the petition and, therefore, he is eligible to file this petition. Even according to the second respondent, there are only five shareholders in the first respondent company. Therefore, petitioner being one among five shareholders in the first respondent company is eligible to file CP 15 of 2016 Whether second respondent in CP 15 of 2016 is eligible to file petition CP 6 of 2016? - Held that - Second respondent in CP 6 of 2016 is claiming reliefs under sections 397 and 398 of the Companies Act, 1956. Admittedly, shareholding of the second respondent in the first respondent company is 9.90 lacs shares which comes to 49.50% of the shareholding of the first respondent company. Moreover, second respondent is one among the five members of the first respondent company. Therefore, second respondent is also eligible to file CP 6 of 2016. Whether petitioner committed acts of oppression and mismanagement as alleged by second respondent? Whether second respondent committed acts of oppression and mismanagement as alleged by petitioner? - Held that - In both the petitions, there are no acts of oppression or mismanagement. However, there appears to be a dispute between the petitioner and second respondent. There appears to be some difficulty in the functioning of the first respondent company because of the conduct and attitude of the petitioner in CP 15 of 2016. Fact remain that the petitioner also invested amount in the first respondent company. It is to be noted that petitioner was also removed from the employment of the first respondent company Thus it may not be possible for the petitioner in CP 15 of 2016 to continue as a member of the first respondent company. Therefore, petitioner in CP 15/16 if he is willing, he can sell his shares to other shareholders in the first respondent company for a fair value as on the date of filing of the petition CP 6/16 determined by mutual agreement or by an independent valuer appointed by the Tribunal. Respondents 2,3,5 & 8 shall purchase the shares of petitioner in CP 15/16 for a fair value fixed by mutual understanding or by an independent valuer appointed by the Tribunal. Therefore, petitioner and second respondent are directed to come to an understanding about the fair value of the shares of the first respondent company as on the date of filing of CP 6 of 2016 within two months from the date of this order. In case the petitioner and second respondent are not able to come to an understanding in respect of the fair value of the shares of the first respondent company, and in case if petitioner in CP 15/16 is willing to sell his shares he may file a petition before this Tribunal for appointment of independent valuer to fix fair value of the shares as on date of fling of CP 6/2016 and to fix mode and manner in which transfer of shares shall take place.
Issues Involved:
- Eligibility to file CP 15 of 2016 - Eligibility to file CP 6 of 2016 - Allegations of oppression and mismanagement by the petitioner - Allegations of oppression and mismanagement by the second respondent - Relief sought by the petitioner Detailed Analysis: 1. Eligibility to File CP 15 of 2016: The petitioner, holding 5% of the paid-up share capital of the first respondent company, is eligible to file CP 15 of 2016. Both parties agree that there are only five shareholders in the company, thus meeting the eligibility criteria under the Companies Act. 2. Eligibility to File CP 6 of 2016: The second respondent, holding 49.50% of the shareholding, is also eligible to file CP 6 of 2016. Being one of the five members of the company, the second respondent meets the necessary requirements to seek relief under sections 397 and 398 of the Companies Act, 1956. 3. Allegations of Oppression and Mismanagement by the Petitioner: The petitioner alleged that the second respondent mismanaged the affairs of the company and engaged in acts of oppression. Key points include: - Unauthorized increase in share capital and allotment of bonus shares without informing the petitioner. - Termination of the petitioner’s employment as Project Manager. - Transfer of 1.00 lac shares from Abhishek Masalawala to the second respondent without proper notice. - Siphoning of ?45.00 lacs from the company’s bank account. - Denial of statutory information and access to company records. - Variations in the minutes of meetings and resolutions filed with the Registrar of Companies. 4. Allegations of Oppression and Mismanagement by the Second Respondent: The second respondent accused the petitioner of acting prejudicially and oppressively towards the company and its members. Key points include: - Spreading false rumors to paralyze the company’s business. - Non-payment for goods and failure to return company property after termination. - Blackmailing and threatening the company and its distributors. - Disruptive behavior during inspections of statutory records. 5. Relief Sought by the Petitioner: The petitioner requested multiple reliefs, including: - Reinstatement as Project Manager. - Cancellation of the transfer of 1.00 lac shares from Abhishek Masalawala to the second respondent. - Cancellation of proceedings and resolutions passed at the EOGM and Board meeting on 25.08.2011. - Transfer of shares to ensure 50% shareholding for the petitioner. - Appointment of the petitioner as a Director of the first respondent company. Tribunal’s Findings: - Eligibility: Both the petitioner and the second respondent are eligible to file their respective petitions. - Bonus Shares: The petitioner was not a member of the company on 25.08.2011, thus has no right to challenge the increase in share capital or the allotment of bonus shares. - Termination of Employment: The Tribunal found that the reasons for the petitioner’s termination are not within its jurisdiction to decide unless it amounts to oppression or mismanagement, which was not established. - Transfer of Shares: The petitioner attended the EOGM on 03.12.2015, and thus the transfer of shares and amendment to the Articles of Association were deemed legal. - Siphoning of Funds: The petitioner failed to provide substantial evidence to support the allegation of siphoning ?45.00 lacs. - Statutory Information: The company provided the petitioner with statutory information and allowed inspection of records, negating the petitioner’s claims of denial. - Discrepancies in Minutes: The discrepancies noted by the petitioner were not material enough to conclude manipulation of resolutions. Conclusion: The Tribunal found no acts of oppression or mismanagement by either party. However, recognizing the ongoing dispute and difficulty in the company’s functioning, the Tribunal suggested that the petitioner could sell his shares to other shareholders at a fair value determined by mutual agreement or an independent valuer appointed by the Tribunal. Both petitions, CP 6 of 2016 and CP 15 of 2016, were disposed of accordingly without any order as to costs.
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