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2025 (1) TMI 154 - AT - Companies LawDismissal of petition filed by the appellants under Section 241 of the Companies Act, 2013 - dismissal on the ground it does not meet the criteria as is provided for in Section 244 of the Companies Act, 2013 - HELD THAT - A bare perusal of the impugned order would show the Ld. NCLT had observed Section 244 of the Companies Act, 2013 requires the following conditions for filing an application/petition under Section 241 of the Companies Act viz. a) in case of a company having share capital, not less than 100 members of the company; or b) not less than 1/10 of the total number of its members whichever is less; or c) Any member of members holding not less than 1/10 of the issued share capital of the company. Admittedly there were 30 members of Respondent No.1 at the time of filing of Company Petition. Admittedly four of them filed the petition under Section 241 hence condition (b) above viz. not less than 1/10 of the total number of members could apply was fulfilled, thus Company Petition was maintainable. Appeal allowed. 1. ISSUES PRESENTED and CONSIDERED The core legal questions addressed in this judgment are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Maintainability of the Petition under Section 241 Relevant Legal Framework and Precedents: Section 241 of the Companies Act, 2013, allows members of a company to apply to the tribunal for relief in cases of oppression and mismanagement. Section 244 specifies the eligibility criteria for members to file such applications, requiring either a minimum number of members or a certain percentage of shareholding. Court's Interpretation and Reasoning: The Appellate Tribunal examined the criteria under Section 244, which provides three alternative conditions for eligibility: (a) not less than one hundred members, (b) not less than one-tenth of the total number of members, or (c) members holding not less than one-tenth of the issued share capital. The Tribunal noted that the NCLT focused solely on condition (c) regarding share capital, ignoring the alternative conditions (a) and (b). Key Evidence and Findings: The appellants argued that they met condition (b) as they represented more than one-tenth of the total number of members, given that there were 30 members and the petition was filed by four. The NCLT, however, dismissed the petition based on the appellants not meeting the share capital threshold under condition (c). Application of Law to Facts: The Tribunal found that the NCLT erred by not considering the alternative conditions under Section 244. Since the appellants fulfilled condition (b), the petition was indeed maintainable. Treatment of Competing Arguments: The respondents contended that the appellants did not meet the shareholding requirement. However, the Tribunal emphasized that meeting any one of the conditions under Section 244 suffices for maintainability. Conclusions: The Tribunal concluded that the petition was maintainable as the appellants satisfied the requirement of representing more than one-tenth of the total number of members. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: "Section 244 clearly states that the members had the right to file petition under Section 241 of the Companies Act, 2013, only when the members either fulfil the (i) threshold of not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less or (ii) any member or members holding not less than one-tenth of the issued share capital of the company." Core Principles Established:
Final Determinations on Each Issue:
The judgment underscores the importance of considering all alternative legal criteria in determining the eligibility of members to file petitions under the Companies Act, thereby ensuring that procedural technicalities do not hinder substantive justice.
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