2019 (3) TMI 882 - AT - Companies Law

Oppression and mismanagement - maintainability of petition - exceptional circumstances for grant of waiver to maintain an application under Section 241-242 - individual eligibility to maintain application under Section 241-242 having more than 10% of the share of the company - HELD THAT - Except two members all the member are individually eligible to maintain application under Section 241-242 having more than 10% of the share of the company. It is not necessary that they will have to join with one or other member to maintain their petition. In Cyrus Investment Pvt. Ltd. & Anr. Versus Tata Sons Ltd. & Ors. 2017 (9) TMI 1500 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI this Appellate Tribunal noticed the shareholding pattern and taking into consideration the fact that majority of the shareholder having less than 10% of the shareholding, except 2 got more than 10% and that the Appellant Cyrus Investment Pvt. Ltd. has invested about ₹ 1,00,000 Crore in Tata Sons Ltd. out of the total investment of ₹ 6,00,000 Crore, held that the Appellant of the said case namely Cyrus Investment Pvt. Ltd. has made out an exceptional case to maintain a petition for waiver under Proviso to Sub-section (1) of Section 244 of the Companies Act, 2013. The present case of the 1st Respondent Ronny George is not only different but a reversal case where majority of the shareholder have more than 10% of shareholding except two who are less than 10% shareholding. Therefore, it cannot be held that the 1st Respondent has made out a case of exceptional circumstances for grant of waiver to maintain an application under Section 241-242 on such ground. This apart, no exceptional circumstance has been shown by the Tribunal to grant waiver. The factors recorded by NCLT in Para 17 of the impugned order are no grounds to treat them as exceptional circumstances keeping in view our Judgment in the matter of Cyrus Investment Pvt. Ltd. & Anr. Versus Tata Sons Ltd. & Ors. (Supra). The impugned order of Tribunal being based on wrong presumptions of fact and law and as the1st Respondent has failed to make out a case for waiver, the said order is set aside. We hold that the petition under Section 241 and 242 preferred by 1st Respondent (Petitioner) before the Tribunal in respect to 2nd Respondent Company Professional International Couriers Private Limited is not maintainable and to be dismissed

Summary

Issues Involved:
1. Granting of waiver under Proviso to Sub-section (1) of Section 244 of the Companies Act, 2013.
2. Allegations of oppression and mismanagement.
3. Shareholding pattern and eligibility to maintain an application under Section 241-242.
4. Exceptional circumstances for granting waiver.

Detailed Analysis:

1. Granting of Waiver under Proviso to Sub-section (1) of Section 244 of the Companies Act, 2013:
The appeal was preferred against the order dated 14th March 2018 by the National Company Law Tribunal (NCLT), Single Bench Chennai, which granted a waiver to the 1st Respondent under Proviso to Sub-section (1) of Section 244 of the Companies Act, 2013. The Appellant contended that the 1st Respondent, a minority shareholder holding 8.99% shares, failed to demonstrate any 'exceptional circumstances' to justify the waiver. The Appellant argued that the impugned order contradicted the decision in 'Cyrus Investment Pvt. Ltd. & Anr. Versus Tata Sons Ltd. & Ors., 2017 SCC OnLine NCLAT 261'.

2. Allegations of Oppression and Mismanagement:
The 1st Respondent's petition alleged oppression and mismanagement within the company. The NCLT initially granted a waiver without considering exceptional circumstances, leading to the remand by the Appellate Tribunal. The Appellate Tribunal emphasized that the merit of the case should not be deliberated while deciding an application for waiver under Section 244.

3. Shareholding Pattern and Eligibility to Maintain an Application under Section 241-242:
The shareholding pattern of the 2nd Respondent Company - 'Professional International Couriers Private Limited' as of 31.03.2018 was scrutinized. The pattern showed that except for two members, all other members held more than 10% shares, making them eligible to maintain an application under Section 241-242 independently. The Appellate Tribunal noted that in 'Cyrus Investment Pvt. Ltd. & Anr. Versus Tata Sons Ltd. & Ors.', the majority of shareholders had less than 10% shares, which justified the waiver. However, in the present case, the majority had more than 10%, negating the need for a waiver.

4. Exceptional Circumstances for Granting Waiver:
The Appellate Tribunal reiterated that the NCLT must record grounds suggesting that the applicants have made out some exceptional case for waiver. In the present case, the 1st Respondent's less than 10% shareholding was not considered an exceptional ground. The Tribunal's factors recorded in Para 17 of the impugned order were deemed insufficient to constitute exceptional circumstances. The Appellate Tribunal concluded that no exceptional circumstances were shown to justify the waiver.

Conclusion:
The impugned order dated 14th March 2018 by the NCLT was set aside as it was based on incorrect presumptions of fact and law. The 1st Respondent failed to make out a case for waiver, rendering the petition under Section 241-242 not maintainable. The appeal was allowed, and the petition was dismissed with no costs.