2019 (7) TMI 1427 - AT - Companies Law

Oppression/ mismanagement Appellants have assailed the impugned order primarily on the ground that the Tribunal erred in passing the impugned order in as much as the Petitioner had been repaid the entire consideration amount paid by him for the purchase of shares and the petition was barred by limitation - HELD THAT - The unrebutted and uncontroverted factual matrix placed before the Tribunal as also forming the bedrock of the matter in issue before this Appellate Tribunal leads to no other conclusion than the one that the factum of transfer of majority shareholding in favour of Petitioner by Respondents 2 to 4 and approval of the transfer of 25,500 equity shares of the Company in favour of the Petitioner for a consideration amount of ₹ 70 Lakhs by the Board of Directors remains undisputed and stands proved. No fault can be found with the finding that Respondents No. 2 to 4 have been conducting the Company s affairs prejudicial to the Petitioner as also to the interests of the Company justifying the directions slapped in terms of the impugned order. Time Limitation - HELD THAT - It is the dictum of law that the issue of limitation should be alive to the mind of the court dealing with the lis and has to be looked into irrespective of the fact that such an issue has not been raised by the Defendant/ Respondent - Appellants (Respondents 2 to 4 in Company Petition) would be within their rights to legitimately raise the issue of limitation notwithstanding the fact that their right to file defense stood forfeited. Unless the lis/ appeal falls within the exceptions enumerated under Sections 4 to 24 of the Limitation Act, 1963, the mandate of law enshrined in Section 3 cited above renders it imperative upon the Court/ Tribunal hearing the suit/ appeal to dismiss the lis filed or preferred after the prescribed period of limitation. Thus, no exception can be taken to such issue being raised by the Appellants (Respondents 2 to 4 in Company Petition). The impugned order does not suffer from any legal infirmity and the Company Petition is not barred by limitation - appeal dismissed.

Summary

Issues Involved:
1. Allegations of oppression and mismanagement.
2. Limitation period for filing the Company Petition.
3. Refund of consideration amount and its implications.
4. Compliance with statutory obligations and proper recording of share transfers.
5. Validity of the Tribunal's directions and orders.

Detailed Analysis:

1. Allegations of Oppression and Mismanagement:
The Petitioner alleged acts of oppression and mismanagement by Respondents No. 2 to 4, including the failure to record the transfer of 25,500 equity shares representing 51% of the Company’s equity shares, despite the payment of ?70 Lakhs. The Petitioner also claimed that he was not made a Director as promised and was kept in the dark about the Company's affairs. The Tribunal found these allegations to be uncontroverted and declared the Respondents guilty of oppression and mismanagement. The Tribunal directed the rectification of the balance sheet, registration of members, and the execution of share transfer forms in favor of the Petitioner.

2. Limitation Period for Filing the Company Petition:
The Appellants contended that the Company Petition was barred by limitation, arguing that the right to sue accrued in February 2013. However, the Petitioner stated that he only discovered the misconduct in February 2016. The Tribunal did not explicitly address the limitation issue, but the Appellate Tribunal found that the petition was within the limitation period, considering the continuous nature of the alleged oppression and the discovery of the misconduct in 2016.

3. Refund of Consideration Amount and Its Implications:
The Appellants claimed that the Petitioner had received back the entire consideration amount, which was not substantiated by the record. The Tribunal rejected this assertion, noting that the refund of consideration after the transfer of shares would not invalidate the transaction. The Appellate Tribunal upheld this view, finding no evidence to support the Appellants' claim.

4. Compliance with Statutory Obligations and Proper Recording of Share Transfers:
The Tribunal found that the Respondents failed to comply with statutory obligations, such as updating the Register of Members and issuing notices for Annual General Meetings. The Petitioner was not reflected as a majority shareholder in the Company's records for the financial years 2012-13 and 2013-14. The Tribunal directed the rectification of these records and the proper execution of share transfers.

5. Validity of the Tribunal's Directions and Orders:
The Tribunal's directions included declaring board meetings held after 4th February 2013 as void, rectifying the balance sheet, and appointing the Petitioner as a Director. The Appellate Tribunal found these directions justified, given the uncontroverted allegations and the Respondents' conduct. The appeal was dismissed, and costs of ?1 Lakh were imposed on the Appellants for filing a frivolous appeal.

Conclusion:
The Appellate Tribunal upheld the Tribunal's findings of oppression and mismanagement by Respondents No. 2 to 4, confirmed the validity of the directions issued, and dismissed the appeal as frivolous. The Company Petition was found to be within the limitation period, and the allegations of refund of consideration were rejected due to lack of evidence.