2017 (11) TMI 1338 - Tri - Companies Law

Petitioners eligibility to file Company Petition under section 399 of the Companies Act, 1956 - perentage of share holding - Held that - Section 399 of the Companies Act, 1956 says that petition under section 397 or 398 of the Companies Act, 1956 can be made by not less than one hundred members of the Company or not less than one-tenth of the total members of the company. In the case on hand, admittedly, petitioners are having only 0.001% of shareholding of the first respondent company. As per the register of the first respondent company there are 13 shareholders as on the date of filing of original petition. Therefore, the sole petitioner who filed CP is not at all eligible to file this petition. Whether interveners can be permitted to implead as petitioners? - Held that - It is settled law that petitioner must have the consent of the required members or the members having required percentage of shareholding as on the date of the filing of the petition and it must be there by the date the petition was filed. Subsequent consent by other members or subsequent adding of other members do not fulfil the eligibility criteria laid down in section 399 of the Companies Act, 1956. Therefore, application made by the interveners to implead themselves as petitioners and make the petitioner eligible to file petition under section 397 is nothing but an afterthought. If, really the interveners have got any cause to file a case of oppression and mismanagement, they would have joined hands with the petitioner before filing this petition. Section 399 says that as on the date of filing the petition, criteria prescribed in that section must be fulfilled. Therefore, there are no merits in the intervening application.

Summary

Issues:
1. Eligibility of the original petitioner to file the Company Petition under section 399 of the Companies Act, 1956.
2. Interveners' application to implead as petitioners and its merits.

Issue 1:
The original petitioner, having only one equity share constituting 0.001% of shareholding, challenged the maintainability of the petition under section 399 of the Companies Act, 1956. The petitioner claimed the right to file the petition as a Director of the company under sections 397 and 398. The original respondents contended that the petitioner lacked eligibility as there were 13 shareholders in the company, making the petitioner ineligible under section 399. The original petitioner cited legal precedents to support his eligibility claim. The Tribunal found that the original petitioner did not meet the eligibility criteria as per section 399 and dismissed the petition.

Issue 2:
The intervening petitioners sought to implead as petitioners, alleging fraudulent negotiations, malpractices, non-payment of salary, and lack of notice on important matters by the company. They argued that they should be allowed to join the petition as they, along with the original petitioner, constituted a significant portion of the company's members. The original respondents objected, stating that the interveners were not entitled to file the petition and that their grievances did not relate to oppression and mismanagement. The Tribunal highlighted that the interveners' application was an afterthought to make the original petitioner eligible to file the petition. It was emphasized that the criteria under section 399 must be fulfilled at the time of filing the petition. Relying on legal precedents, the Tribunal dismissed the interveners' application, resulting in the dismissal of the original petition.

In conclusion, the Tribunal found the original petitioner ineligible to file the Company Petition under section 399 of the Companies Act, 1956. The application by the interveners to implead as petitioners was dismissed, ultimately leading to the dismissal of the original petition. The judgment emphasized the importance of meeting the eligibility criteria at the time of filing a petition under the Companies Act.