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2021 (8) TMI 611 - AT - Companies LawOppression and Mismanagement - Refusal to grant ad interim stay to the holding of EGM - Seeking to give direction for stay regarding the removal of Gajanan Dhakane as a Director of Respondent No. 9 company - refusal to grant stay to the proposed changing the designation of Pralhad Hage from that of Managing Director to Executive Director - seeking declaration of already held EGM as illegal - HELD THAT - Where EGM was held on 7.8.2020, and thereafter a Board of Directors meeting was held on 26.10.2020wherein certain resolutions were passed and where the Appellants had sought ad interim stay, no final order was passed by the NCLT after adjudicating on the oppression of the minority shareholders, or mismanagement in the affairs of the company. The question of granting ad interim stay to the holding of EGM and Board of Directors meeting has to be looked at, from a very limited point of view of prima facie illegality, balance of convenience to the parties and irreparable loss to the Applicants. The two impugned orders do not require any intervention as they do not suffer from any illegality - Since the main petition is presently being heard by NCLT, we refrain from giving any opinion on the larger issue of oppression and mismanagement, as has been alleged in the said petition by the Appellants/Petitioners - Appeal dismissed.
Issues Involved:
1. Refusal to grant ad interim stay to the holding of Extraordinary General Meeting (EGM) on 7.8.2020. 2. Refusal to grant stay regarding the removal of Gajanan Dhakane as a Director. 3. Refusal to grant stay to the proposed change in the designation of Pralhad Hage from Managing Director to Executive Director. 4. Declaration of the already held EGM dated 7.8.2020 as illegal. 5. Allegations of oppression of minority shareholders and mismanagement of the company. Detailed Analysis: 1. Refusal to Grant Ad Interim Stay to the Holding of EGM on 7.8.2020: The appellants sought an injunction to prevent the EGM, requisitioned by Respondent No. 7, from being held on 7.8.2020. The EGM was intended to consider the removal of Gajanan Dhakane as a Director. The NCLT, Mumbai, refused to grant this injunction on 6.8.2020, leading the appellants to appeal the decision. The tribunal noted that the EGM was convened following statutory procedures and the democratic process, thus the refusal to grant an interim stay was justified. 2. Refusal to Grant Stay Regarding the Removal of Gajanan Dhakane as a Director: The appellants argued that the removal of Gajanan Dhakane was done in a malafide manner and was oppressive to the minority shareholders. They claimed that Dhakane’s contribution to the company’s growth and his livelihood were at stake. However, the tribunal found that the decision to remove Dhakane was taken by a majority of shareholders through a legally convened EGM and did not warrant an interim stay. 3. Refusal to Grant Stay to the Proposed Change in the Designation of Pralhad Hage from Managing Director to Executive Director: Similarly, the appellants sought to prevent the change in designation of Pralhad Hage from Managing Director to Executive Director, which was proposed in a Board of Directors meeting on 26.10.2020. The NCLT dismissed this request, and the tribunal upheld this decision, noting that the change was made following statutory procedures and the democratic process. 4. Declaration of the Already Held EGM Dated 7.8.2020 as Illegal: The appellants also sought to declare the EGM held on 7.8.2020 as illegal. The tribunal found that the EGM was convened and conducted in accordance with statutory requirements and the company’s Articles of Association. Therefore, the EGM and the resolutions passed therein were deemed legal. 5. Allegations of Oppression of Minority Shareholders and Mismanagement of the Company: The appellants alleged that the actions of the majority shareholders (Sirur family) amounted to oppression of minority shareholders and mismanagement of the company. They claimed that personal expenses of the Sirur family were being booked in the company’s accounts, and their removal from key positions was a result of their demand for transparency. The tribunal noted that while these allegations could be serious, they could only be decided after a final hearing. The discretionary power exercised by the NCLT in refusing interim relief was not found to be arbitrary or capricious. Conclusion: The tribunal concluded that the NCLT’s orders dated 6.8.2020 and 26.10.2020 did not suffer from any illegality and did not require intervention. The appeals were disallowed, and the main petition on oppression and mismanagement remained pending before the NCLT. The tribunal refrained from giving an opinion on the larger issues until the final hearing. There was no order as to costs.
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