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2017 (9) TMI 1500 - AT - Companies LawOppression it cannot be stated to be a frivolous application. We find that some of the allegations as made by appellants and highlighted by the learned counsel for the 11th respondent as noticed in the preceding paragraphs are of recent year 2016. We are not expressing any opinion with regard to merit of such allegation but have only noticed the allegations. Taking into consideration the aforesaid facts and exceptional circumstances of the case as apparent from plain reading of the (proposed) application and as some of them relate to oppression and mismanagement qua 1st respondent company and its member(s) we are of the view that the appellants have made out a case for waiver to enable them to apply under Section 241. The Tribunal by impugned judgement having failed to notice the aforesaid facts and factors as it decided the application for waiver taking into consideration the prima facie case / merit of the case the said order cannot be upheld. We accordingly set aside the impugned order passed by the Tribunal and grant waiver to appellants to enable them to file application under Section 241. The case is remitted to the Tribunal to register the (proposed) application under Section 241 admit the same and after notice to the parties decide the application on merit uninfluenced by impugned orders preferably within three months.
Issues Involved:
1. Maintainability of the petition under Sections 241 and 242 of the Companies Act, 2013. 2. Waiver of the requirements specified in Section 244(1) of the Companies Act, 2013. Detailed Analysis: 1. Maintainability of the petition under Sections 241 and 242 of the Companies Act, 2013: The appellants, shareholders of Tata Sons Limited, filed a petition alleging 'Oppression & Mismanagement' under Sections 241, 242, and 244 of the Companies Act, 2013. The Tribunal held that the petition was not maintainable as the appellants did not meet the qualification under Section 244, holding less than 1/10th of the 'Issued Share Capital' of the company. The key question was whether the term "issued share capital" in Section 244 includes both equity and preference share capital. The Tribunal and the Appellate Tribunal upheld that "issued share capital" refers to both equity and preference share capital, aligning with the interpretation in "Northern Projects Ltd. v. Blue Coast Hotels and Resorts Ltd." and affirmed by the Supreme Court. Thus, the appellants, holding only 2.17% of the total issued share capital, did not qualify to file the petition. 2. Waiver of the requirements specified in Section 244(1) of the Companies Act, 2013: The appellants sought waiver under the proviso to Section 244(1), which the Tribunal initially dismissed. The Appellate Tribunal held that while deciding an application for waiver, the Tribunal should not delve into the merits of the case but should consider whether the application pertains to 'oppression and mismanagement' and if exceptional circumstances exist. The factors to be considered include: - Whether the applicants are members of the company. - Whether the application pertains to 'oppression and mismanagement.' - Whether similar allegations were previously decided. - Whether there are exceptional circumstances justifying the waiver. The Appellate Tribunal found that: - The appellants, holding significant equity interests, had substantial stakes in the company. - The Articles of Association of Tata Sons Limited provided the company control over other Tata Group companies. - The allegations in the proposed application were related to 'oppression and mismanagement' and were not frivolous. Given these factors, the Appellate Tribunal granted the waiver, allowing the appellants to file the application under Section 241. The Tribunal's decision to deny the waiver was set aside, and the case was remitted to the Tribunal to register and decide the application on merit within three months. Conclusion: The Appellate Tribunal dismissed the appeal regarding the maintainability of the petition but allowed the appeal concerning the waiver, directing the Tribunal to admit and decide the application on merit.
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