2017 (11) TMI 41 - Tri - Companies Law

Oppression and mismanagement - Non-existence of Consent Letters from the members supporting the Petitioner - Held that - The main objection of the Respondent is that the Consent Letters were not in existence when the Petition was filed and they were later on brought into existence. The contention of the learned Counsel for the Petitioner/Applicant is that the consenting shareholders are none other than the family members of the original-Petitioner and therefore the non-existence of Consent Letters as on the date of filing of the Petition does not arise. The controversy, whether the Consent Letters were in existence as on the date of filing of the Petition or they were brought into existence subsequently, is not an issue to be adjudicated in this Application. Petitioner specifically stated in the Petition that shareholders holding 35000 equity shares gave Consent Letters. A perusal of the Consent Letters filed along with this Application show that they do not bear any date. No doubt, they are not notarized. The genuineness or otherwise of the Consent Letters also need not be gone into in this Application. Another aspect raised by the Respondent is that the persons who gave Consent Letters are not there in the List of Shareholders. This is also a matter that need not be probed in this Application at this stage. When there is an averment in the Petition that Consent Letters were filed and when they were not in fact filed, and when it is stated by the Applicant that it was due to oversight, in such circumstances, there is no point in refusing the request of the Petitioner to file Consent Letters. The question whether the filing of the Consent Letters, after the filing of the petition, is sufficient compliance of Section 399 of the Companies Act, 1956 or not, is also a matter that need not be gone into in this Application. The proposed Amendment is not going to cause any prejudice to the contentions of the Respondents. Respondents are at liberty to contend that valid consent is not there and the Consent Letters are not valid, and the contention, that Consent Letters filed subsequently and not filed along with the Petition, cannot be taken into consideration in deciding the eligibility aspect. Coming to the limitation aspect, Section 433 of the Companies Act, 2013 came into force from 1.6.2016. The Company Petition was filed on 5th October, 2015. In the Old Act, there is no provision which says that the provisions of the Limitation Act are applicable. Moreover, it is stated in the Petition that the alleged acts of oppression and mismanagement are continuous acts. Therefore, the issue of limitation may not be a ground for not allowing the proposed Amendment. Thus this Application is allowed

Summary

Issues:
1. Whether Respondents No. 5 and 6 can be added as parties in the main petition.
2. Whether the Consent Letters supporting the Petitioner can be filed and considered.

Analysis:

*Issue 1: Adding Respondents No. 5 and 6*
The Tribunal noted that all Directors of the 1st Respondent Company needed to be included as Respondents in the main petition. Respondents No. 5 and 6 were also Directors of the company, and their presence was deemed necessary for deciding the issues involved. Therefore, the original-Petitioner/Applicant was permitted to add them as Respondent No. 5 and Respondent No. 6 in the main petition.

*Issue 2: Filing and Consideration of Consent Letters*
The Applicant filed Consent Letters supporting the petition after the original filing, citing oversight as the reason for not including them initially. The Respondent raised objections regarding the existence and validity of these Consent Letters. However, the Tribunal held that the controversy over the timing of the Consent Letters' existence was not for adjudication in this Application. The proposed Amendment to file the Consent Letters was allowed as it did not change the cause of action or prejudice the Respondents. The issue of compliance with the Companies Act, 1956, and the question of limitation were also addressed. The Tribunal found that the filing of Consent Letters after the petition did not affect the eligibility aspect and allowed the Applicant to file the Consent Letters as part of Exhibit-4.

In conclusion, the Application was allowed, permitting the addition of Respondents No. 5 and 6 and the filing of Consent Letters as part of the main petition. The Tribunal emphasized that the proposed amendments did not alter the cause of action or prejudice the Respondents, and the issue of limitation did not bar the amendments.