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TMI Blog2017 (4) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... as been brought down by way of oppression and mismanagement below 1/10th of the total shareholding without notice and knowledge then it is the duty of the Tribunal to determine whether the applicant had 1/10th of the shareholding prior to the date of alleged oppression and mismanagement. Such petition cannot be dismissed on the ground that the applicants shareholding is below 1/10th of the total shareholding of the Company on the actual date of presentation of the Company Petition. It is a different question whether the shareholding was actually brought down by oppression and mismanagement which is to be decided by the Tribunal on the basis of evidence on record. In the present case, the Tribunal failed to apply the aforesaid principle and erred in holding that the Company Petition preferred by the appellants under Sections 397 and 398 of the Companies Act, 1956 was not maintainable on the date of presentation of the Company Petition. The question of oppression and mismanagement and maintainability in the present case is a mixed question of facts and law. As the petition was filed on the ground that the shareholding of the applicant(s) has been brought down below 1/10th of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the appellants below 10%. 3. The further case of the appellants is that similar illegal additional allotment of shares were made in favour of outsiders or others on 1st March 2014, 25th March 2014 and 29th March 2014 without notice to the appellants and without their consent and knowledge. They came to know of illegal allotment of shares, additional shares to outside company and others on 30th April 2014 from the Audited Balance Sheet. 4. Further case of the appellants is that subsequently also certain allotments were made in the year 2015 including allotments in favour of the appellants. It was so allotted as the respondents orally agreed to redress the grievance of the appellants. There was an oral understanding that some of the shares allotted to M/s Jupiter Goods Private Limited will be transferred to the appellants. In view of such oral understandings the appellants paid a sum of ₹ 25 lacs to M/s Jupiter Groups Private Limited on 7th and 9th May 2014 to enable them to transfer the shares but curiously they returned back the amount to the appellants on 18th May 2015 by RTGS without transferring any shares. 5. Subsequently to redress the grievance, the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 4,50,000 equity shares in the 1st respondent Company which is equal to 3% of the total shareholding. Before the Company Law Board, they placed reliance on a copy of the Annual Accounts for the financial year 2014-2015 in support of their claim. 11. The respondents also claimed that the 1st appellant had signed annual accounts for the Financial Year ended on 31st March 2014, as per which ₹ 15,00,00,000 divided into 1,50,00,000 equity shares of ₹ 10/- each and issue and subscribed share capital of the Company was shown at ₹ 9,85,70,000/- divided into 98,57,000 equity shares of ₹ 10/- each, which was not disclosed by the appellants in their Company Petition and suppressed the same. 12. As on 31st March 2014 there were 23 numbers of Members in the 1st respondent Company and the appellants have filed the Company Petition simply for their personal benefit and not for the benefit of the Company or any other member. The main plea taken by respondents was that the share capital of the appellants being less than 10% i.e. 3% the Petition under Sections 397 and 398 of the Companies Act, 1956 was not maintainable. 13. The stand taken by the respondents was acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reholding of the Company as on the date of presentation of the petition. 17. The decision of Supreme Court in Joint Action Committee of Air Line Pilots' Association of India (ALPAT) v. Director General of Civil Aviation [2011] 5 SCC 435 and Cauvery Coffee Traders Vs. Hornor Resources (International Company Limited) [2011] 10 SCC 420 on the question of estoppel is also not applicable in the present case. 18. The appellants have explained the delay of two years in filing the Company Petition. It is pleaded that they came to know on 30th April 2014 that their shareholding has been brought down to less than 10% from the Audited Balance Sheet which has not been denied by the respondents. The respondents have also not denied that the appellants deposited 25 lacs with the Jupiter Goods Private Limited for transfer of further shares which was returned without the consent of the appellants. 19. In the present case we are also not going to decide the question whether there was any oppression and mismanagement on the part of the respondents in bringing down the share of the appellants below 1/10th of the total shareholding of the company as no such issue has been decided by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o apply for the winding up of a company is available provided that the applicant satisfies the requisite requirements under Sections 397, 398 and 399 of the 1956 Act with respect to holding 10% shares in the total shareholding of the company. It is not necessary that the petitioner(s) must hold the same individually. Such a winding-up petition can even be filed after obtaining the consent of other shareholders, so as to meet the requirement of having an aggregate of 10% out of the total shareholding. 13. The said application is maintainable under Section 397 where the affairs of the company are being conducted in a manner that is prejudicial to public interest, or in a manner that is oppressive with respect to any member or members of the company. (Vide M.S.D.C. Radharamanan v. M.S.D. Chandrasekara Raja.). 14. In Rajahmundry Electric Supply Corpn. Ltd. v. State of Andhra, this Court, while dealing with a case under Section 397 of the 1956 Act and Section 153C of the Companies Act, 1913, which were analogous to the provisions of Section 397 of the 1956 Act held that the issue of whether the petitioner had obtained consent of the members of the company in order to meet the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng down his shareholding below the requirement of 1/ 10th of the total shareholding of the company, thereby deprived him of his right to sue. 28. For the reasons recorded above, we hold that in the cases where an applicant alleges that his shareholding has been brought down by way of oppression and mismanagement below 1/10th of the total shareholding without notice and knowledge then it is the duty of the Tribunal to determine whether the applicant had 1/10th of the shareholding prior to the date of alleged oppression and mismanagement. Such petition cannot be dismissed on the ground that the applicants shareholding is below 1/10th of the total shareholding of the Company on the actual date of presentation of the Company Petition. 29. It is a different question whether the shareholding was actually brought down by oppression and mismanagement which is to be decided by the Tribunal on the basis of evidence on record. 30. In the present case, the Tribunal failed to apply the aforesaid principle and erred in holding that the Company Petition preferred by the appellants under Sections 397 and 398 of the Companies Act, 1956 was not maintainable on the date of presentation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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