2022 (12) TMI 667 - AT - Companies Law

Seeking issuance of summon the witness for examination - NCLT refused to issue summons - disputes of oppression and mismanagement of a company. - The Ld. Counsel for the Appellants during the course of argument and in his memo of Appeal submitted that the Tribunal has completely failed to appreciate that it possesses powers under Section 242 of the Companies Act, 2013 to issue summons to individuals and examine them on oath in appropriate cases. HELD THAT - the Tribunal has examined those documents which have been filed by the parties and the main matter is ripe for arguments, therefore, in the facts and circumstance of the case aforenoted, there is no illegality in the impugned order. Therefore, we do not find any merit in the instant Appeal. Order of NCLT affirmed.

Issues:
1. Appeal against the order of National Company Law Tribunal dismissing the application seeking summons for examination of a witness.
2. Allegations of oppression and mismanagement in a company by certain shareholders.
3. Dispute regarding share transfer forms and the necessity of examining a witness.
4. Applicability of Section 242 of the Companies Act, 2013 for summoning witnesses.
5. Interpretation of Section 56 of the Companies Act, 2013 regarding transfer of shares.

Analysis:
1. The judgment pertains to an appeal filed against the National Company Law Tribunal's order dismissing an application seeking summons for the examination of a witness, Mr. Moolchand Surana, in a case involving allegations of oppression and mismanagement within a company. The Appellants, belonging to the Rajan Goel group, alleged arbitrary reduction of their shareholding by Respondent Nos. 2 and 3, leading to the filing of a petition before the Tribunal. The dispute centered around the transfer of shares and the necessity of examining Mr. Surana, a witness to the share transfer forms, to establish the facts surrounding the transaction.

2. The Appellants contended that the Tribunal erred in not exercising its powers under Section 242 of the Companies Act, 2013 to issue summons for witness examination, emphasizing Mr. Surana's special knowledge regarding the share transfer forms. They argued that mere reliance on documentary evidence and affidavits was insufficient to address the allegations of oppression and mismanagement. In contrast, the Respondents argued that the Appellants failed to provide substantial reasons or material documents to justify summoning Mr. Surana, asserting that the matter was already advanced for arguments and witness examination was unnecessary.

3. The judgment highlighted the importance of proving allegations with irrefutable evidence in proceedings before the Tribunal, especially in cases of oppression and mismanagement. The Respondents emphasized that the Appellants did not present convincing evidence to challenge the share transfer or demonstrate the necessity of examining Mr. Surana. Additionally, the interpretation of Section 56 of the Companies Act, 2013 regarding the transfer of shares was discussed, emphasizing the requirement for timely objections and proper documentation in such transactions.

4. Ultimately, the Appellate Tribunal upheld the decision of the National Company Law Tribunal, affirming that the documents on record were sufficient for adjudication, and the matter was ripe for arguments. The judgment concluded that there was no illegality in the impugned order, dismissing the appeal for lack of merit. The decision underscored the summary nature of proceedings before the Tribunal and the need for parties to substantiate their claims with concrete evidence to support their case effectively.

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