2022 (1) TMI 324 - Tri - Companies Law

Oppression and mismanagement - Seeking to declare the petitioners as directors of the said company and allow the petitioners to take charge as the directors of the company - seeking direction to respondents not to restrain the petitioners from the company premises - seeking direction to 2nd and 3rd respondents not to take any action restraining petitioners taking charge as directors of the said company - seeking direction that the appointment of respondents 2nd and 3rd as null and void - seeking to allow the petitioners to perform all the duties as directors of the said company - Section 241 242 of the Companies Act, 2013. HELD THAT - The majority shareholders are expected to exercise their voting powers to self-remedy, before relying on any statutory provisions to protect themselves from oppression by the minorities. The statutory relief for shareholder s oppression is available to majority shareholders who are not in control of the management of the company and who, for any given reason, are unable to control the board. The remedy for shareholders oppression is also available to majority shareholders, the court would only exercise its powers to remedy, in instances where the majority shareholders are unable to rectify the oppression themselves. The shareholders must show that there exist some special circumstances rendering their majority shareholding powerless, against the oppressor. In the instant petition, petitioners themselves admitted that they are majority shareholders who stated that they are facing oppression and mismanagement from the Respondents. It is admitted fact that the major portion of the equity shares (2/3rd) are held by the 1st and 3rd petitioners and the 2nd Respondent holds only 1/3rd of the total shares - Therefore, the petitioners themselves are still the majority shareholders who are in control of or concerned with the management and operation of the company and have already exercised their voting powers for self-remedy i.e., by removing the Respondents from the board and appointing new Additional Directors. In no way the petitioners have been oppressed by the Respondent Company. Regarding the buying up, as a matter of fact, the petitioners are ready to sell the shares in the Company as per share purchase agreement entered between the 1st 3rd Petitioners and the 2nd respondent. Therefore, this Tribunal directs the petitioners to follow the agreement executed by them with the 2nd Respondent. The respondents are directed to honour the agreement for the sale of shares executed between the petitioners and Respondents on 15.01.2019 and direct the respondents to purchase the 66,667 equity shares of 1st Petitioner for Rupees One crore and 66,666 Equity Shares held by the 3rd Petitioner for a sale consideration of Rupees Ninety-Six Lakh - petition disposed off.

Issues Involved:
1. Allegations of oppression and mismanagement under Section 241 & 242 of the Companies Act, 2013.
2. Validity of the Share Purchase Agreement dated 15.01.2019.
3. Legitimacy of the removal and appointment of directors.
4. Allegations of misuse of Digital Signature Certificate (DSC).
5. Resolution of disputes regarding the sale of shares and the management of the company.

Detailed Analysis:

1. Allegations of Oppression and Mismanagement:
The petitioners, who are majority shareholders, alleged oppression and mismanagement in the affairs of the company by the respondents. They claimed that the respondents hindered their ability to function as directors and manage the company effectively. The respondents countered that the petitioners themselves were responsible for mismanagement and that the petition was filed without locus standi.

2. Validity of the Share Purchase Agreement:
The petitioners and the 2nd respondent entered into a Share Purchase Agreement on 15.01.2019, wherein the 2nd respondent agreed to purchase shares from the petitioners. The agreement stipulated that the 2nd respondent would pay a total of ?1 crore to the 1st petitioner and ?96 lakhs to the 3rd petitioner. However, the 2nd respondent failed to honor the agreement, leading to disputes. The respondents argued that the petitioners did not fulfill their obligations under Clauses 12 and 14 of the agreement, which required them to clear dues and cooperate in the purchase process.

3. Legitimacy of the Removal and Appointment of Directors:
The petitioners convened an Extra-Ordinary General Meeting (EGM) on 28.12.2019, where they removed the 2nd and 3rd respondents from directorship and appointed new directors. The respondents contended that the meeting was invalid as it did not comply with Section 169 of the Companies Act, 2013, and that the resolutions passed were not binding. The tribunal found that the petitioners, being majority shareholders, had the right to remove the respondents from directorship but should have followed proper procedures.

4. Allegations of Misuse of Digital Signature Certificate (DSC):
The respondents alleged that the petitioners misused the DSC of the 3rd respondent to file DIR-12 forms with the Registrar of Companies, thereby appointing new directors without authorization. The tribunal noted the seriousness of this allegation and emphasized the need for proper authorization and compliance with statutory requirements.

5. Resolution of Disputes Regarding Sale of Shares and Management:
The tribunal observed that the core issue was the failure to honor the Share Purchase Agreement. It directed the respondents to purchase the shares from the petitioners as per the agreement to resolve the disputes. The tribunal emphasized that granting the relief sought by the petitioners would ruin the company and adversely affect all shareholders. Therefore, it directed the respondents to complete the purchase within one month.

Findings and Conclusion:
The tribunal found that the petitioners, being majority shareholders, were not oppressed by the respondents. It directed the respondents to honor the Share Purchase Agreement and complete the purchase of shares within one month. The tribunal disposed of the company petition and related interim applications accordingly.

Final Order:
The tribunal directed the respondents to purchase the shares from the petitioners as per the Share Purchase Agreement dated 15.01.2019. The petition was disposed of with no costs, and the related interim application was also disposed of. The order was dated 6th January 2022.

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