2021 (2) TMI 1136 - Tri - Companies Law

Oppression and mismanagement - seeking approval of the scheme for payment/contribution - contention of the Applicants/Respondents that in a Company Petition under Section 241 there can only be one Respondent Company is denied - HELD THAT - It is quite apparent from a bare reading of the aforesaid provision of Section 241 that Mismanagement means the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interest of the company. Further, mismanagement is when a material change has taken place in the ownership of the company s share or if it has no share capital in its membership or in any other manner whatsoever and that by reason of that change it is likely that the affairs of the company will be conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company. In the Company Petition the Petitioner seeks approval of the scheme for payment/contribution and to direct changes in the shareholdings and directorships of the 7 companies based on a MoU dated 15.09.2016 entered between the parties with the aim to put an end to the cross holdings of the Coparceners and 100% ownership will devolve on the persons who are presently managing and in control of the Companies. Such reliefs cannot be granted by this Tribunal under Section 241/242 of the Companies Act, 2013. Thus, filing of the petition under Sections 241 and 242 seeking such reliefs is a misconceived exercise, as firstly, the Petitioner has to firmly establish the oppressive acts in which he has aggrieved or mismanagement involved in the Companies to which he has filed the Petition - the Company Petition does not raise a single act of oppression or mismanagement in the affairs of the Company i.e. prejudicial to the interests of the stakeholders/members or to the public. Technical irregularities - HELD THAT - Since the shareholding pattern and Board of directors of the Company varies from Company to Company a Petition against 7 different Respondent Companies is not permissible under Section 241 of the Companies Act, 2013. The Petitioner failed to provide the Articles of Association (AoA) and Memorandum of Association (MoA) of each Company which were arrayed as Respondents - The petitioner has filed the Company Petition against 7 Companies, who does not hold minimum threshold mentioned under Section 244 of the Companies Act, 2013. According to the Applicants the Petitioner is not a Shareholder in 3 Companies i.e. RBG Commodities, RBG Broking, RBG Vyapar. Petition is not maintainable as it is not filed in compliance with Companies Act, 2013 and Rules by paying the appropriate fee prescribed under the Rules - application disposed off.

Summary

Issues Involved:
1. Whether the Company Petition under Section 241(1)(b) of the Companies Act, 2013 is maintainable against multiple companies.
2. Whether the Petitioner has established a case of oppression and mismanagement.
3. Whether the Petitioner has complied with procedural requirements, including the payment of prescribed fees and proper identification of parties.

Issue-wise Detailed Analysis:

1. Maintainability of Company Petition under Section 241(1)(b) against Multiple Companies:

The Applicants contended that Section 241(1)(b) of the Companies Act, 2013 allows filing a petition against a single company, and the management of the seven companies involved is not identical. They argued that the Petitioner filed a single petition to avoid paying the prescribed fees for multiple petitions. The Tribunal found that the Petitioner had indeed filed the Company Petition against seven different companies with varying shareholding patterns and management, which is not permissible under Section 241. The Tribunal emphasized that the Petitioner should have filed separate petitions for each company and paid the appropriate fees.

2. Establishment of Oppression and Mismanagement:

The Tribunal examined whether the Petitioner had made out a case under Sections 241 and 242 of the Companies Act, 2013. The Tribunal noted that the Petitioner sought reliefs related to the restructuring of shareholdings and directorships based on a MoU dated 15.09.2016, aiming to resolve family disputes within the RBG HUF family group. The Tribunal found that such reliefs cannot be granted under Sections 241 and 242, as the Petitioner failed to establish continuous acts of oppression or mismanagement. The Tribunal referenced the Supreme Court judgments in Shanti Prasad Jain vs. Kalinga Tubes Ltd and Needle Industries (India) Ltd vs. Needle Industries Newey (India) Holding Ltd, which require continuous acts of oppression up to the date of the petition. The Tribunal concluded that the Company Petition did not raise a single act of oppression or mismanagement prejudicial to the interests of stakeholders or the public.

3. Procedural Requirements and Identification of Parties:

The Applicants pointed out several procedural irregularities, including the Petitioner's failure to disclose the rank of the parties and the improper arraying of seven companies as Respondents. The Tribunal found that the Petitioner had not provided the Articles of Association (AoA) and Memorandum of Association (MoA) of each company involved. Additionally, the Tribunal noted that the Petitioner did not hold the minimum threshold of shareholding required under Section 244 of the Companies Act, 2013, in three of the companies (RBG Commodities, RBG Broking, RBG Vyapar).

Conclusion:

The Tribunal concluded that the Company Petition CP/41/KOB/2020 is not maintainable as it does not comply with the Companies Act, 2013, and the prescribed rules. The Tribunal held that the Petitioner must challenge the actions of the companies through separate applications, ensuring all proper parties are impleaded to provide them an opportunity to defend their case. Consequently, IA/206/KOB/2020 was disposed of, declaring that CP/41/KOB/2020 in its present form is not maintainable.

Dated the 16th day of February, 2021.