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2020 (11) TMI 125 - Tri - Companies LawOppression and Mismanagement - prayer to waive the requirements prescribed under Section 244 of the Act to enable the Petitioners to apply under Section 241 seeking the reliefs contemplated thereunder - Whether the 35 consents submitted by the Petitioners are valid? - HELD THAT - Based on paragraphs 5 and 6, it is seen that the number of double counts is 2 thereby the total number of consents is reduced to 66. The place of execution of authorizations provided by the members were outside India and were not authenticated by a notary public of the respective country or by the Indian consulate, hence they are not valid authorizations. This Tribunal therefore, cannot accept the argument advanced by the Petitioners in this regard. Whether the members authorized the Petitioners to file this Company Petition? - HELD THAT - In the instant case none of the members (apart from the three Petitioners) have authorized (which authorization itself is not proper) the Petitioners to file the instant Petition under proviso to Section 244. It is seen that the consents submitted by the Petitioners clearly read as Consent Under Section 241 of the Companies Act, 2013 to make a Petition under Section 241 of the Companies Act, 2013 .Hence, this Tribunal cannot agree with the submissions made by the Petitioners in this regard. Whether (proposed) application under Section 241 pertains to oppression and mismanagement ? - HELD THAT - In my view the allegation made against the Respondent Company in the instant petition will not amount to Oppression and Mismanagement. As shareholders of the respondent company, the petitioners were entitled to highlight the alleged acts. The petitioners have not produced any documents to prove that they raised/highlighted the issues and demanded explanation from the Board. In the letter dated 07.02.2020, the Petitioners have stated that a large number of shareholders have sentiments and apprehension of gross mismanagement of the 1st Respondent Company - this Tribunal cannot agree with the submissions made by the Petitioners in this Company Petition. This Bench found that the Petition filed by the Petitioners is not maintainable under the Companies Act, 2013. Whether there is an exceptional circumstance made out to grant waiver , so as to enable members to file application under Section 241 etc.? - HELD THAT - It is settled law that the Tribunal is not required to decide merit of (proposed) application under Section 241, but required to record grounds to suggest that the applicants have made out some exceptional case for waiver of all or of any of the requirements specified in clauses (a) and (b) of Sub-Section (1) of Section 244 as decided by the Hon ble NCLAT in its judgement in Cyrus Investments Ltd. And Anr. Vs. Tata Sons Ltd. Ors. 2017 (9) TMI 1500 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI - Paragraph 150 of the Judgment in Cyrus (supra) clearly lays down that merits of the case cannot be decided at the stage of waiver. The Hon ble Appellate Tribunal has arrived at this conclusion on the ground that if the merits are decided at this juncture, then the Tribunal would be adjudicating a Petition under Section 241 which is still in the proposed application stage at the juncture of grant of waiver. The petitioners have also agreed in the rejoinder filed by them that the merits of the case cannot be discussed at this juncture, stating that there are no issues to be decided in this Application - The burden of establishing exceptional circumstances is on the Petitioners. However, the Petitioners clearly stated that exceptional circumstances are not a sine qua non to seek waiver under the proviso to Section 244(1). Leaving aside exceptional circumstances, the Petitioners have not cited any fact which entitled them to get the benefit of waiver. As such the answer to the fourth point is also negative. Petition dismissed.
Issues Involved:
1. Validity of the 35 consents submitted by the Petitioners. 2. Authorization of the Petitioners to file the Company Petition. 3. Allegations of oppression and mismanagement. 4. Exceptional circumstances for granting waiver to file the application under Section 241. Detailed Analysis: 1. Validity of the 35 Consents Submitted by the Petitioners: The Tribunal examined the list of shareholders and found discrepancies, such as double entries and improper attestation of consents executed outside India. Specifically, Mr. Abdul Gafoor C was counted twice, and Folio No. 382 was duplicated for different members. Additionally, consents executed abroad lacked proper notary public or Indian consulate authentication. Consequently, the total number of valid consents was reduced to 66, and the Tribunal deemed the consents invalid. 2. Authorization of the Petitioners to File the Company Petition: The Tribunal noted that the consents provided by the members were for filing a petition under Section 241, not for seeking a waiver under Section 244. None of the members, apart from the three Petitioners, authorized the filing of the waiver petition. Therefore, the Tribunal concluded that the Petitioners lacked proper authorization to file the instant petition under Section 244. 3. Allegations of Oppression and Mismanagement: The Tribunal found that the allegations made by the Petitioners did not amount to oppression and mismanagement. The Petitioners, as shareholders, were entitled to raise issues with the Board but failed to produce any documents proving they had done so. The Petitioners' claims of gross mismanagement were deemed unsubstantiated, as they were based on mere apprehensions rather than concrete evidence. Hence, the Tribunal concluded that the Petition was frivolous and not maintainable under the Companies Act, 2013. 4. Exceptional Circumstances for Granting Waiver: The Tribunal referred to the judgment in Cyrus Investments Ltd. And Anr. Vs. Tata Sons Ltd. & Ors. ((2017) SCC OnLine NCLAT 261), which states that the Tribunal must record grounds suggesting an exceptional case for waiver. The Petitioners failed to establish any exceptional circumstances warranting a waiver. The Tribunal emphasized that the burden of proving exceptional circumstances lies with the Petitioners, who did not cite any facts justifying the waiver. Consequently, the Tribunal denied the waiver request. Conclusion: The Tribunal dismissed the Company Petition No.CP/03/KOB/2020, finding no merit in the Petitioners' claims. The Petitioners failed to meet the statutory requirements for filing the petition and did not demonstrate exceptional circumstances to warrant a waiver. The decision was made on October 20, 2020, with each party bearing their costs.
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