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2017 (12) TMI 1316 - Tri - Companies LawOppression and Mismanagement - Held that - Tribunal is empowered to decide the issue in consonance with new Companies Act, 2013 though the Company petition is initially filed under the Provisions of Companies Act, 1956. And the 2nd respondent is raising several frivolous litigations by misusing process of law by committing several acts of Oppression and Mismanagement as enumerated by the petitioner, and filing several frivolous cases and committing several corporate offences as detailed by the Registrar of Companies, various orders passed by the Special Judge for Economic Offences. Therefore, the Company petition is very well maintainable in accordance with law, and facts and circumstances as detailed supra, would justify to order to wind up R1 Company but such winding up would prejudice the interest of the petitioners as well as the other parties, in addition to R1 Company and public interest in general. Therefore, it would be just, proper and equitable to pass appropriate orders by the Tribunal to put an end to the oppressive actions and mismanagement of second respondent being committed through R1 Company 1 Company by exercising powers U/ss. 397, 398, 402 & 403 of the Companies Act, 1956/Read with Section 241/242 of Companies Act, 2013. The Tribunal, however, cannot interfere in the day to day affairs of the Company. Since words of acts of Oppression and Mismanagement are not defined in the Act, they are to be inferred basing on facts of each case. Ultimately, it is for the management of a Company to manage its affairs, in accordance with its Memorandum and Articles of Association, however, subject to complying with extant provisions of Companies Act, 1956/2013. Therefore, the Tribunal is leaving all sundry issues to the Company to be decided by them, by directing the Company to conduct meetings of the Company to sort out their issues. Therefore, it is necessary to order the R1 Company to convene EGM at an early date so as to sort out their issues suitably. Hereby directed the respondents to restore the shareholding of the petitioners group and the second respondent Group in the ratio of 50 50 total shareholding of R-1 Company, in consonance with the Board s resolution dated 27th February, 2007 and Agreement for Transfer of shares dated 8th April, 2010; Hereby declared that all actions/decisions taken contrary to the interim orders dated 18.05.2011 and 27.09.2012 passed by the CLB are non-est in the eye of law, and these interim orders shall be in force till the next EGM, which is to be conducted by virtue of this order; Hereby directed Respondents No. 1 & 2 to convene an EGM within a period of two months from the date of receipt of copy of this order, by duly following all the provisions of the Companies Act, 2013 as well as the Articles of Association of R1 Company and Principles of Natural Justice, in order to sort out their disputes and to conduct normal business of the R1 Company. The parties are at liberty to raise their respective disputes before EGM to be conducted and resolve their issues therein; The parties are at liberty to approach this Tribunal by way of filing a fresh CP, in case, they are aggrieved by the actions taken during the said EGM to be conducted;
Issues Involved:
1. Maintainability of the Company Petition (CP). 2. Validity and binding nature of the Board Resolution dated 27.02.2007 and the shareholding transfer agreement dated 08.04.2010. 3. Justification of respondents' actions during the pendency of the CP and compliance with the interim order dated 18.05.2011. 4. Reliefs entitled to the petitioner. Detailed Analysis: 1. Maintainability of the Company Petition: The Tribunal found the CP maintainable, emphasizing that the affairs of the 1st respondent company were conducted in a manner prejudicial to the petitioners, thereby justifying the Tribunal's intervention under sections 397, 398, 402, and 403 of the Companies Act, 1956, read with sections 241 and 242 of the Companies Act, 2013. The Tribunal noted that the respondents had engaged in acts of oppression and mismanagement, filing frivolous cases and committing corporate offenses, which warranted the Tribunal's intervention to prevent further prejudice to the petitioners and the company. 2. Validity and Binding Nature of the Board Resolution and Shareholding Transfer Agreement: The Tribunal declared the Board Resolution dated 27.02.2007 and the shareholding transfer agreement dated 08.04.2010 as valid and binding on all parties. The agreement, signed by all parties, facilitated the transfer of shares from Mr. N.A. Nayar to the petitioner and the 2nd respondent, resulting in an equal shareholding of 50% each between the petitioner’s group and the 2nd respondent’s group. The Tribunal rejected the 2nd respondent’s claims of coercion and depression, noting that the 2nd respondent failed to provide substantial evidence to support his allegations. Consequently, the Tribunal ordered the restoration of the shareholding ratio to 50:50. 3. Justification of Respondents' Actions and Compliance with Interim Order: The Tribunal found that the respondents had violated the interim order dated 18.05.2011, which directed them to maintain the status quo regarding the shareholding and share capital of the company. The respondents' actions, including the transfer of shares and removal of the 1st petitioner as director, were declared illegal and non-est in the eye of the law. The Tribunal emphasized that the respondents were not supposed to take any actions affecting the petitioners' interests without the Tribunal's permission, especially given the interim orders in force. 4. Reliefs Entitled to the Petitioner: The Tribunal provided the following reliefs: 1. Directed the restoration of the shareholding ratio between the petitioners' group and the 2nd respondent's group to 50:50, in line with the Board Resolution dated 27.02.2007 and the shareholding transfer agreement dated 08.04.2010. 2. Declared all actions taken contrary to the interim orders dated 18.05.2011 and 27.09.2012 as non-est and maintained the interim orders until the next EGM. 3. Directed the respondents to convene an EGM within two months to resolve their disputes and conduct the company's normal business, adhering to the Companies Act, 2013, the Articles of Association, and principles of natural justice. 4. Allowed the parties to raise their disputes during the EGM and approach the Tribunal with a fresh CP if aggrieved by actions taken during the EGM. 5. Rejected other reliefs as lacking grounds or merits. 6. Disposed of CA No. 68 of 2016 along with the main CP. 7. No order as to costs.
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