2024 (8) TMI 1218 - HC - Companies Law

Oppression and Mismanagement - lack of jurisdiction to adjudicate the issue of forgery of documents - whether the NCLT has the authority to examine documents allegedly to be forged and fabricated, which purportedly led to the changes in directorship of the company and the transfer of shares to the respondents? - HELD THAT - In the case of CHANNEL FOODS PRIVATE LIMITED, MR. JALEEL HUSSAIN S/O. SHAMSUDHIN, A.K. MANSOOR, G. JOSEPH ASSOCIATES VERSUS MR. A.K. NOWSHAD 2022 (11) TMI 1506 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI. , the appellate body, i.e. the NCLAT unequivocally held that the NCLT has very wide powers under the Companies Act and the NCLT Rules, 2016 to enquire into the allegation of oppression and mismanagement and sending disputed documents for forensic investigation is also part of this enquiry. The learned CLB had denied the adjudication of the dispute on the ground that the contention of the appellant regarding the alleged forgery was out of its jurisdiction - the Rule 43 of the NCLT rules, 2016 as well as the judicial dicta provides for powers to the NLCT to adjudicate such claims and direct expert examination of the alleged forgery. This Court is of the view that the NCLT is well empowered to adjudicate the issues and give its findings on the basis of the contentions advanced by the respective counsel as well as the forensic report. Matter remanded back to the NCLT for adjudication - appeal disposed off by way of remand.

Summary

Issues:
- Jurisdiction of the Company Law Board (CLB) to adjudicate forgery allegations under the Companies Act, 1956.
- Dispute regarding oppression and mismanagement in a company.
- Authority of the National Company Law Tribunal (NCLT) to examine alleged forged documents and changes in directorship.

Analysis:
1. The judgment pertains to appeals filed under Section 10(f) of the Companies Act, 1956 against an order of the CLB dismissing petitions under Sections 397, 398, 402, and 403 of the Act. The appellant alleged oppression and mismanagement in a company where she held shares. The dispute arose due to changes in directorship and shareholding following marital issues and a purported resignation. The CLB dismissed the petitions, directing the appellant to seek redressal in a Civil Court.

2. The appellant contended that the CLB erred in holding it lacked jurisdiction to adjudicate forgery allegations. The appellant argued that the dispute fell within the CLB's domain due to oppression by the management and financial loss suffered. The appellant also challenged the appointment of new directors as contrary to the Companies Act, 1956.

3. The respondents opposed the appeals, claiming they were frivolous. They argued that the CLB lacked jurisdiction to decide forgery issues and that such matters should be addressed in a Civil Court. However, the judgment highlighted Rule 43 of the NCLT Rules 2016, empowering the Tribunal to order forensic examination of disputed documents in cases involving forgery allegations.

4. The judgment referenced a case where the NCLAT affirmed the NCLT's authority to inquire into oppression and mismanagement claims, including forensic examination of documents. The Court emphasized that the NCLT had wide powers under the Companies Act and NCLT Rules to address such issues. Consequently, the matter was remanded to the NCLT for adjudication based on the relevant legal provisions and precedents.

5. In conclusion, the appeals were allowed, and the cases were remanded back to the NCLT for further proceedings. The judgment underscored the importance of ensuring justice, preventing mismanagement, and upholding the rights of all parties involved in corporate disputes. The decision aimed to address the forgery allegations and related issues appropriately within the NCLT's jurisdiction.