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TMI Blog2017 (4) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... reason behind it to curtail unnecessary litigation and to let the companies run their business in their usual course, we have adopted this to consider waiver plea. However, at the cost of repetition, it is hereby mentioned, that no issue raised in this case is related to personal action of shareholders, directorial complaint, in a company like this, will not fall within the ambit of shareholder action. It could not even be said that actions impugned in this case will have impact upon public, usually such situation will arise when business of the company effects the health of public or economy of the country, but by reading the petition, such issue is not present anywhere in the petition. Therefore, we are of the view that the case seeking waiver must be for seeking shareholder action in relation to their economic interest, two there must be a case likely to succeed. On the top of it, the reasons for granting waiver shall be supported by fairly strong and compelling reasons. As to other points of public interest and company interest, we don't believe the issues manifested in the petition are fit for grant of waiver plea. If any violations are noticed to other Acts, there are othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and oppressive to them but also to the company and public on various grounds mentioned in the later part of this Order. 3. Though it is conventional to introduce the case with facts before discussing legal proposition involved, the petitioners counsel, to our perception, having slightly digressed from the legal proposition relevant to decide waiver plea, this Bench hereby discusses the legal proposition first, then factual aspect and then to observe as to whether waiver plea can be granted or not. Before get into it, Sections 241, 241(2), and 244 being relevant, the text of them are placed below. Chapter XVI Prevention of Oppression and Mismanagement 241. Application to Tribunal for relief in cases of oppression, etc (1) Any member of a company who complains that- (a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or (b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provided that the Tribunal may, on an application made to it in this behalf, waive all or any of the requirements specified in clause (a) or clause (b) so as to enable the members to apply under section 241. Explanation -For the purposes of this sub-section, where any share or shares are held by two or more persons jointly, they shall be counted only as one member. (2) Where any members of a company are entitled to make an application under subsection(l), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them. 4. If we see the chapter heading, it is obvious that it is meant for passing reliefs for prevention of oppression and mismanagement in progress, therefore, the purpose and object of this chapter not meant for passing declaratory reliefs by declaring as to whether particular action is valid or invalid in the eye of law, but to prevent oppression or mismanagement resulted from unfairly conducting the affairs of the company regardless of legality of the action complained of so as to establish fairness without prejudice and by simultaneously enabling the company to carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is made out under section 241 and such facts would justify the making of winding up order on just and equitable grounds and such winding up would be unfairly prejudicial to the member or members. May be it is easy to visualise an order under these sections, but to get such an order; one has to pass all the stages mentioned above. 7. The characteristic features of the sections 241,242 244: 1. Any member of a company complaining shall have 10% shareholding or not less than l/10th of members in number of that company referred above, or a member, to whom waiver is granted basing on the proviso to section 244 (1). 2. The complaint shall be about the affairs of the company (here Rl), above referred. Affairs of the company means the affairs of the company which the member/shareholder complaining, a member complaining cannot complain about the affairs of a company other than the company from which he derives qualification or waiver granted. Exception is one-the conduct of the affairs of a subsidiary where the directors of the parent company represented the majority of the subsidiary, and two, if conduct in a company is fraudulent, indicating siphoning funds to other subsidiar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 397, now addition is the above three kinds covered under present perfect time. It does not mean that we can stretch the situations covered under present perfect to past and concluded actions. The actions closed shall not be raked up under section 241 of the Act. By reading these timelines, the complainant can complain the affairs of the Company where actions are in progress or actions finished which started sometime before, the actions just finished or the actions still having effect to the present. Except these actions, nothing could be complained of by the complainant. The act means an act with prejudice or oppression inbuilt at the time of initiation, it can't be said that reflections of past acts not laced with prejudice or oppression have now become oppressive to the complaining party. The basic reasoning is that action must be an act started with malafide to inflict the complaining party by either causing unlawful loss to the complainant or as the case may be or for making unlawful gain at the cost of any of the categories mentioned in the section. 4. Those acts must be conducted in such a manner prejudicial to public interest or to the interests of the above referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies and owner based companies, mostly private companies, reason is, in these companies, the minority cannot transfer their shares to outsiders and they cannot survive in the company by the oppressive actions of the management, as to family companies, mostly they make their livelihood and develop on those companies - therefore, since their roots are embedded in a closed company, they cannot go out; at the same time they can't suffer from oppression from inside; likewise in companies where two three friends come together and start company on quasi-partnership principles with an understanding equal partnership in management, companies come into existence with expectations and explicit or implicit understandings in closely held companies. When this concept has come into existence, there were no companies like Tata and many other companies with global presence. If we see the cases in which these principles are decided, like Symington v. Symington' Quarries Ltd [1905] 8 F 121; In re Yenidje Tobacco Co. Ltd (1916) 2 Ch 426; Loch v. John Blackwood Ltd [1924] A.C. 783; Thomson v. Drysdale (1925. S.C.311); In re Cuthbert Cooper Sons Ltd (1937) Ch.392; Scottish Co-operative Wholesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ypically may include one, or probably more, of the following elements: (i) an association formed or continued on the basis of a personal relationship, involving mutual confidence^ this element will often be found where a pre-existing partnership has been converted into a limited company; (ii) an agreement, or understanding, that all, or some (for there may be 'sleeping' members), of the shareholders shall participate in the conduct of the business; (iii) restriction upon the transfer of the members' interest in the company - so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere. These are the principles broadly warrant courts to make repairs. To avoid abuse of derivative action, in England, a separate chapter namely Derivative claims in England and Wales or Northern Ireland is introduced in 2006 with sections for Derivative claims (section 260), Application for permission to continue derivative claim (section 261);Application for permission to continue claim as a derivative claim (section 262); whether permission to be given (section 263); Application for permission to continue derivative claim brough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rietary rights has been caused to the aggrieved shareholders and it is said when articles of association confer power on the Board to appoint additional director, such appointment can be made even if it is not shown in agenda items (para 129,130,136,169 and 170 and para 116 117). The ratio evident is that it does not matter whether act is legal or illegal, what matters is as to whether proprietary interest of the aggrieved shareholders is effected or not. It has to be kept in mind that if any loss incidentally and in general incurred to all the shareholders out of any business decision, it cannot not become a ground to be taken up under section 241. Majority rule cannot be obliterated on the ground some business is doing losses, In business, it is not that head of the management, in this case Mr Ratan Tata, will have magic of Midas touch, that he can turn any and every venture profitable, at least we don't think he has any such magic in his hands. One thing is true that Mr Ratan Tata is instrumental in making Tata Group into USDlOObillion group. In such a long travel, some business decisions miss out that Midas touch. It is reiterated by English and Indian courts that cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany referred in section 241 shall be prejudicial or oppressive to the member or members or to public interest or to the interest of the company {notable change is category of class of members envisaged in section 241 (1) (b) is omitted), two - facts would justify the making of winding up order on just and equitable grounds, not only that such winding up thought would be unfairly prejudicial to such member or members. If all these conditions are fulfilled, then the Tribunal in its discretion may pass any order including reliefs u/s 242 (2) of the Act. 9. Waiver proviso is introduced in section 244 by converting independent subsection (4) to the old section 399 into a proviso giving discretion to NCLT to consider waiver to the qualification given in the main enactment (section 244 (1)). 8. Therefore, to raise a case under section 241, unless the averments made in the Company Petition has all these characteristics, the pleading cannot be considered as cause of action to file a case u/s 241 of the Companies Act, 2013. 9. Law permits to seek a remedy to the grievances of one's own, but the unique feature in section 241 in Chapter-XVI is that member qualified can seek a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Germany corporate jurisprudence as well, in every country one or other type of bar is manifest so as to prevent a litigation causing fetters to the functioning of company. 12. Any suit or for that matter any court proceeding, will have three stages; as soon as proceeding is initiated, courts will scrutiny it as to whether any cause of action is existing in petition, once petitioning party passes cause of action test, then that petitioner must present a prima facie case to avoid dismissal of the case or an unfavourable directed verdict. The petitioner must produce enough evidence on all elements of the claim to support the claim and shift the burden to the respondent. If the petitioner fails to make a prima facie case, the respondent may move for dismissal or a favourable directed verdict without presenting any evidence to rebut whatever evidence the plaintiff has presented. This is because the burden of persuading a judge or jury always rests with the petitioner. If the said case does not fall within the ambit of cause of action section, then it shall be treated as a Petition without cause of action. At the time of prima facie case test, if prima facie case test is not passed, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; side and respondents' side consented for directions to completion of pleadings, this matter was posted for main hearing with a direction to complete pleadings. It is how directions were given for completion of pleadings. Thereafter on the Petitioner's side moved a Contempt Application against the Respondents stating that the Respondents violated the orders dated 22.12.2016 passed by this Bench, on hearing that Application, this Bench dismissed the Contempt Application stating that no contempt has been made out in the said application. 15. On which, when an Appeal was filed before NCLAT, impugning the Order dated 18.01.2017, the Hon'ble Appellate Tribunal gave directions to hear maintainability plea, if maintainability plea is decided against the Petitioners, then to hear Waiver Plea raised by the Petitioners/ if Waiver Plea is allowed then to hear main Company Petition. 16. In pursuance of the Order passed by the Honourable Appellate Tribunal, this Bench heard maintainability plea wherein a detailed order has been passed stating that the Petition is hit by Section 244 qualification. Since there is direction of Honourable Appellate Tribunal to hear Waiver Plea, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ird of the nominated Directors of the Board so also to remove any person so appointed and in his place, to appoint another person as Director. Article 118 provides that so long as Tata trusts collectively hold 40% of the paid up capital, a selection committee shall be constituted to recommend a person to the post of Chairman of the Board and the Board may appoint the person so recommended as Chairman of the Board. Now the allegation is the Trustees of Tata Trusts and its nominee Directors have not been exercising the powers as contained in the Articles in judicious manner and for they have been taking actions as per R2's bidding, the Petitioners state that it is imperative that the aforementioned Articles i.e. 86,104(B), 118,121 and 121-A be struck off in their entirety. But it is no where mentioned when these articles were amended, whether the petitioners consented to these amendments or not whether these Trustees or nominee Directors used these powers at any point of time. To make an allegation, it is equally imperative to mention that the time when action has been done, thereafter to say that the complaining party has no acquiescence to such actions. If at all any change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding in Tate Steel Limited (TSL). With that leverage, R2 in the year 2007 led the purchase of Corns Group PLC (referred as Corus) by TSL for a sum in excess of $12billion which was more than 33% of its original price, which eventually led Tata Steel go down by this purchase and ever since it has not been doing well. To revive the glory of Tata Steel, when Mr. Mistry (R11) initiated to merge this Tata Steel with Thyssen so as to rid Tata Steel from the financial sufferance, Mr Ratan Tata objected to the proposal causing loss to everybody including the Petitioners. By going through this allegation, it appears that this transaction took place in the year 2007 that was almost 9 years before filing this Company Petition, in all these 9 years, these Petitioners never complained of Tata Steel entering into this transaction. Moreover, it is the case of the Petitioners that Rl Company holds only 31.35% Shareholding in Tata Steel Limited, when Shareholding of Rl is less than 50% in Tata Steel, can such company be called as subsidiary to Rl Company? Moreover, this Tata Steel Limited and its directors are not made as parties to this Petition. It is purely an affair of Tata Steel Limited. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Tata Motors is subsidiary to R1 Company. In the back drop of these facts; this action cannot be called as the affair of R1 Company. Unless the allegation is an affair of R1 Company, it will not fall within four corners of Section 241, henceforth this Bench hereby holds that this allegation has not made out any cause of action. Without prejudice to the holding already given, we must make it clear unless time is along with us; we may not able to have achievement as expected. In this case, Tata group when came out with the idea of Nano, car market situation was different, competition was not as today. When business decisions are linked to public, it can't be said we are right unless plan is materialised. The same is the thing happened in this case. To make it short, we only say business decisions are business decisions, if they are seen with different glasses, it will obviously give different perception. If the minority is given free ride over majority to take these kinds of allegations as acts of oppression against minority, then no company can take any decision. Therefore, courts will only interfere when actions are unconscionable, unjust and laced with fraud so as to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany. Going by this averment, it is true that Article 118 is devised for appointment and removal of Chairman by recommendation of Selection Committee. By going through the Record, it appears that his removal happened not by the recommendation of the Selection Committee but by the Directors of the Board itself. However, by reading this Article, it is evident that Selection Committee shall comprise of (a) three persons nominated jointly by Sir Dorabji Tata Trust and Sir Ratan Tata Trust, who may or may not be Directors of the Company, (b) one person nominated by and from amongst the Board of Directors of the Company and (c) one independent outside person selected by the Board for this purpose. The Chairman of the Committee will be selected by Sir Dorabji Tata Trust and Sir Ratan Tata Trust from amongst the nominees nominated from the Trust. It is also said that quorum for the meeting of the Selection Committee shall be the presence of majority from the members nominated jointly by Sir Dorabji Tata Trust and Sir Ratan Tata Trust. Though it is true that removal has to be done by the recommendation of the Selection Committee, since the Selection Committee is comprised of major ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner based companies but not to companies like Tata Sons, which is completely institutionalised and professionally managed. Therefore, ratio applicable to partnership companies and family companies cannot be applied to R1 Company. In fact R11, had not been made as Chairman as of right on the ground the Petitioners have 18.37% equity Shareholding in the company. It had happened on selection. By virtue of a Selection, he had been taken as Chairman on employment. One thing always to be kept in mind is, section 241 is designed to remedy the grievance of the shareholders and shareholders alone. Therefore, this allegation saying since he has been removed as Chairman, the Petitioners are entitled to take it up as cause of action u/s 241 of the Companies Act is not correct. Removal of R11 as director need not be discussed separately, for the rationale for adjudication on removal of R11 as chairman and Director is one and the same, for it is held that directorial complaint in a company like Tata is not permissible, because the shareholders are sovereign authority to take a call over it. The Petitioners have made side argument saying that RITs father also continued as Director of the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... answering Respondents and Rl Company, henceforth this point does not deserve to become cause of action u/s 241. VIII Another allegation is close relation of R2 with Shiva is purported to have been cause for leakage of Board Meeting discussions to Shiva, because in past also, R2did favour to Shiva at the expense of R1 in relation to Do Co Mo. On reading the Company Petition, the allegation noticed is that R2 caused issuance of 520 billion Shares of TTSL at the rate of ₹ 17 to a Company called Sterling for a throw away price of ₹ 884Crores and then issued TTSL shares to Singapore Company at a price of ₹ 26per share immediately after the transaction with Sterling owned by Shiva who is close to R2. Thereafter, Shiva sold 20.74 Million Shares out of above shares in the year 2008 to Do Co Mo at the rate of ₹ 117.81 per share making huge profit of above ₹ 200Crores; all these facts were admitted by Shiva himself saying he is benefited by his closeness with R2. By reading this allegation from the Company Petition, it appears that the shares in favour of Sterling were transferred way back in the year 2005. Now this Company Petition has come in existence i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roup Company. No details when it happened, no details as to whether R2 abused his position to do such thing, inspite of it, the petitioners have flagged Mr Tata, who made Tata $100billion conglomerate, with ₹ 3crore misappropriation without even mentioning when happened how happened, how Rl connected to it. It is their own case that FFC is today not a group company of TATA. This, we hold as an allegation without any cause of action u/s 241. X Another allegation is since Mr. Mehli Mistry was instrumental in helping R2 in buying an Agricultural land in 1993, R2 through Tata Companies bestowed various contracts upon Mr. Mehli and his Associates making him rich at the cost of Tata Companies. According to the averments of the Petition, it appears that as quid pro quo, R2 awarded to Mr Mehli long term contracts in the year 1993 from TPC spanning over 20 years. The contract ranged from Painting Works to dredging, barging and international shipment of Coal for TPC and most of them without tenders. According to this Petition, Mehli Mistry grew in multiples ever since he got these contracts from TPC which is Group Company of Tata. All these allegations are of 1993 and no allegation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from 2012 till before he was removed. Since R11 was there for almost five years, what prevented R11 to raise this issue either in the Board Meeting or in the General Meeting some time before he was terminated? This has become an issue for him only after he was removed as Chairman of R1 Company. R11 was a Director even before he became a Chairman, therefore, today this Petitioner could not make it as cause of action to target R2 without even placing any single document showing that R2 did something causing loss either to the company or to the Petitioners. By going through the averments of the Petition, there being neither a pleading nor a documentary material to place a prima facie case that some fraud has been taken place in Air Asia and R2 is cause for that fraud, such a grave allegation cannot be thrust upon him from air. Unless there is a consistent pleading and material to make this Bench believe that this averment could be correct, no need to wait until it was formally posted for main hearing. What law says is, there shall not be any inherent lacuna in the pleadings to make out a case, if enough pleading and material to prove an allegation is not there, no party shall be permi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eat it. 22. The Counsel further submits while considering a waiver application, NCLT ought to consider the above issues as found in the case of the Petitioners and to determine by taking their case at its face value. It is not for the NCLT to go into discussion on the merits of such contentions, since to do so, would be a decision on the merits of the case whereas the NCLT at present is only to consider as to whether waiver plea is to be allowed or not. 23. The Counsel further submits that if the waiver application is sought to be rejected on the ground that it does not make out a case under sec.241, then, the only test to be applied for rejection at this stage would be those found in Order VII Rule 11 CPC. And what is to be looked into as is held in catena judgements in such case, is only to see as to whether the petition on the face of it, if taken averments as absolutely correct, makes out a cause of action to maintain the suit (Saleembhai and Others vis. State of Maharashtra and Others (2003 (1) SCC 557)). 24. The Petitioners Senior Counsel Shri Sundaram relied upon the order of a Coordinate Bench of NCLT at Chennai decided on 18.11.2016 in Church of South India Trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section itself. The Legislative intention behind the objective threshold under sec. 244(1) is not only to weed out frivolous cases but even in other cases where substantial grievances may have been raised. The rationale behind this bar is to insulate the company from litigation by shareholders who do not meet the specified threshold. This waiver proviso could be invoked only in exceptional and compelling cases, he says, the Appellate Authority, for this reason alone held that a waiver may be granted only if strong grounds of waiver have been made out. 27. He relied upon three judgements Shri Raghuthilakathirtha Sreepadangalavaru Swamiji v. State of Mysore, AIR 1966 SC 1172), Santosh Ekoba Sonavane v. State of Maharashtra 2010 SCC online Bom 917; Director of Education (Secondary) and another v. Pushpendra Kumar others [1988] 5 SCC 192to say that exception to a section created by way of proviso jcannot swallow the main rule, a proviso cannot regulate a substantive provision and derogation ought to be permitted only in exceptional and compelling cases, and departure from a main provision ought to be made only in exceptional and compelling circumstances where a strong case is ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the petition. (1) Cause of action test (2) prima facie case test and (3) merits (proof) test. The Petitioners to get their relief in the Company Petition, they have to pass through all these tests, wherever fail to pass the test, then there cannot be any chance for them to proceed any further. 30. We have already discussed all the allegations raised by the Petitioners to find out as to whether any cause of action is made out in any of the allegations raised by the Petitioner so as to invoke the jurisdiction under sec.241, but the misfortune is these Petitioners could not make out any cause of action in any of the allegations, as to this aspect, the Petitioners counsel or R11 counsel cannot say that this Bench cannot look into as to whether cause of action is there or not. In any case, if cause of action is not arose, that case has to be dismissed at first blush because no party is supposed to be permitted to improve his case soon after initiating the proceeding before a court of law. The only leave that could be granted to a party is if the Petitioners fail to produce any document that is not in possession or to produce a document or averment that is not within his knowledge e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is not involved and not to self-serve themselves and not to defraud the Petitioners. It is not even the case of the Petitioners that the Respondents have done something so as to make gain to themselves depriving the Petitioners. Moreover, that kind of allegation could be made only when shareholders have not participated in the management decision, here R11 who is the face of the Petitioners group, continued as Chairman of this company from December, 2012 to October 2016. Had there been any decision that affected the interest of the petitioners or the company, what prevented R11 to make an issue when he was at the helm of affairs of the company. R2 who is targeted in this case, in his tenure from 1991 to 2012 grew this company manifold making it $100billion conglomerate by 2011-12. The right of remedy under sec.241 will come into existence to remedy the grievance of the shareholders, if the shareholders, qua as members put to suffering, then it has to be understood that grievance is made out u/s.241. In the situation where the minority shareholders continue in the management, in fact, as head of the management, can today raise an allegation, saying every decision is thrust upon m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to prove that affairs of the company have been or being conducted in a manner prejudicial or oppressive to the interest of the members or the company or the public interest and also to prove such act is just and equitable to wind up the company, then on seeing just and equitable ground for winding up, if such winding up would unfairly prejudice such member or members, then only this Tribunal can pass orders as it thinks fit. 37. In this case the petitioners at threshold itself failed to make out any cause of action to maintain the petition. 38. It is already decided that these Petitioners have no requisite qualification to maintain this petition. As to waiver, it is to be granted only rare and compelling situation, when no cause of action itself is present where is the question of granting waiver in a case like this. 39. If we see English Law, this claim has been bifurcated into derivative action and unfairly prejudicial action. Whenever any relief is sought by the minority on behalf of the company, the court has to grant permission to hear the application on derivate claim. Normally courts will not grant any permission to proceed with derivative claim. If it is a per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can pass orders only when jurisdiction is conferred upon. For this reason, wherever legislature intended to confer this jurisdiction of this Tribunal, it has been explicitly mentioned to what extent it is conferred upon. The party if not in a position to make out case under this chapter, it is open to the party to approach Civil Court that is what has been said in section 430. Section 430 says as below: 430. Civil court not to have jurisdiction No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be wanted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal. 43. The Tribunal can exercise jurisdiction u/s 241, when the issues fall within the four corners of the said section, if the acts not reflecting prejudice or oppression or material change, parties cannot seek reliefs before NCLT. Suppose action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that, in any event, the application of the just and equitable clause would depend upon the facts and circumstances of each case. A note of caution was also introduced that even admission of a petition could prejudice and cause immense injury to a company in the eyes of the investors, if ultimately the petition is dismissed. Mr. Sundaram urged that in a petition under Section 397/398 of the Companies Act, it was not always incumbent on the CLB to order the winding up of a company on the just and equitable principle, but in order to pass any order under Section 397, the Company Law Board would have to arrive at a specific finding that there was just and equitable reason to order such winding up. 46. Ultimately Honourable Supreme Court in the above case, held that company petition u/s 397 398 was not maintainable. The petitioners raised a ground that the allegations shall be taken as oppressive acts against the petitioners considering them as class because they have 18.37% equity relying upon cases decided in scheme matters, the object and purpose in those cases is different, in cases under section 241 are different, hence it is not applicable. Of course if material change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reholders. In cases like this and more specially when the shareholders cannot get relief from any other forum, then we believe waiver is the window to ventilate their grievances in a cases like this, provided strong case is ex facie appearing on record. 50. If really, any such grievance were there to these petitioners, obviously it would become a ground for waiver and their point of substantial equity in the company would help them out, but their equity shareholding of 18.37% in the company on its own cannot become a ground for waiver. 51. Tests for invocation of reliefs keep changing from one situation to other, public interest and company interest are shown back seat as against members' interest, especially economic interest; public interest and company interest are actions fall under derivative actions. Now there are many Regulating and Monitoring authorities come into existence to watch the functioning and performance of the companies. If any violation in respect to public interest is noticed, then, in usual course, respective authority will take action, of course no such specific issue before us. To avoid frivolous grounds under the cause of derivative actions, Engli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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