2021 (9) TMI 684 - Tri - Companies Law

Transfer of shares - Oppression and mismanagement - Section 242/244 of the Companies Act 2013 read with NCLT rules, 2016 - HELD THAT - This Tribunal observes that as the share transfer form annexed as Annexure P-2 of the petition reflects that the entire shareholding has been transferred to the petitioners from its first directors and further the share certificates are still in possession of the petitioners and has not been transferred to anyone which is evident from the fact that there is no share transfer form or any share certificate filed before the ROC showing transfer of shares in favour of the respondents, thus it shows that the petitioners are still holding entire 100% shares of company. It is clear that there are instances of oppression and mismanagement in the company as although the petitioners have resigned from the directorship of the company by means of Form DIR-12 but reducing their shareholding from 100% to 0% is an oppressive act on behalf of the respondents - the respondents acts are held to be oppressive to the petitioner, and there has been mismanagement in the respondent company, hence the petition deserves to be allowed. Petition allowed.

Summary

Issues: Oppression and mismanagement in the affairs of the respondent company.

Analysis:
1. The petition was filed under Sec. 242/244 of the Companies Act 2013 against oppression and mismanagement in the respondent company.
2. The original directors of the company transferred their shares to the petitioners, who became the sole directors and shareholders.
3. The petitioners duly filed annual returns and financial statements on behalf of the company.
4. An agreement was reached for the sale of shares, but the respondents failed to make full payment, resulting in the petitioners retaining ownership.
5. The respondents later filed documents with the Registrar of Companies, falsely representing themselves as directors and shareholders.
6. The petitioners alleged illegal and fraudulent transfer of shares by the respondents without proper documentation.
7. The petitioners called for a meeting to remove the respondents as directors due to their actions.
8. Despite notices and opportunities, the respondents did not respond or attend the meeting.
9. The tribunal observed that the petitioners still held 100% shares of the company as per the share transfer form and certificates in their possession.
10. The tribunal found instances of oppression and mismanagement, declaring the respondents' actions as oppressive and holding them responsible for mismanagement.
11. The tribunal ordered the cancellation of documents filed by the respondents, declaring the reduction of petitioners' shareholding and change of company address as void and illegal.
12. The Registrar of Company was directed to file a compliance report within one month.

Overall, the petition was allowed, and the order was communicated to all parties involved, disposing of the petition.