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TMI Blog2018 (12) TMI 1373X X X X Extracts X X X X X X X X Extracts X X X X ..... eholders of a company claiming to act in the name of that company, on the principle of derivative rights to act for and/or on behalf of, and/or in the name of the company. Learned counsel further argued that at the highest appellants (the original petitioners) could have been directed that the company shall not be allowed to be represented until such time a board resolution was presented or it could have been directed to stand stripped from the array of the appellants. We are, therefore, of the opinion that the appellants (the original petitioners) should have been given time to produce the authority to represent the company or it could have been directed to stand stripped from the arrays of the appellants. Further the second to fourth appellants have also an independent right to move the application for oppression and mismanagement against their interest even if they are representing the company. Therefore, the dismissal of the petition that they do not have a board resolution, etc., would be a partial truth only which should not amount to denial of right of a shareholder to move an application for oppression and mismanagement. The other issue raised by the respondents was that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f land parcels executed in favour of the first respondent or his nominees instead of getting it executed directly in favour of the first appellant. It is also alleged that the second respondent being a majority stakeholder in the first respondent has set up competing business with that the first appellant, breaching the fiduciary relationship and the trust reposed in him by the appellants. Therefore, the appellants had filed Company Petition No. 144(ND) 2016 before the National Company Law Tribunal (hereinafter referred to as the Tribunal) under sections 241-246 of the Companies Act, 2013 read with sections 397, 398 read with sections 402 and 403 and 235 of the Companies Act, 1956 accusing the first respondent of oppression and mismanagement. After hearing the parties, the Tribunal passed the following order (page 5 of 201 Comp Cas) : I am unable to appreciate the arguments advanced by the petitioner. Firstly, in the absence of any resolution passed by petitioner No. 1-company, the maintainability of the proceeding is vitiated by lack of authorisation to file the same. The company is a separate entity and cannot be represented through individual petitioners. Mr. Khosla has rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication 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. (2) Where any members of a company are entitled to make an application under sub-section (1), 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.' The petitioners have candidly admitted that neither petitioner No. 1 nor the other petitioners are shareholders of respondent No. 1company. I, therefore, find the present petitioner not maintainable. It would not be out of place to observe that the allegations made in the present petition are almost the same as in C. P. No. 114 of 2007, which is still pending adjudication on account of initiation of multiple proceedings. The petitioners seek to array herein several other parties who may be just remotely connected with respondent No. 2 and which he did not include in the earlier proceedings. The arraying of such parties in a proceedings under section 241/242 of the Companies Act, 2013, is a total manifestation of misjoinder of parties and an absolute abuse of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued in favour of the appellant. 4. The appellants have argued that the Tribunal has dismissed the company petition in relation to three preliminary objections raised by the respondents that the appellants have no locus standi to file the petition under section 241/242 of the Companies Act, 2013 ; second objection is that no resolution have been passed by the appellant-company authorising appellant to sign, verify or institute the present proceedings. Third objection raised to the maintainability thereby questioning the locus of the appellants as shareholders of the first appellant itself. 5. Learned counsel for the appellants argued that the respondents, even prior to issuance of notice, had challenged these factual assertions, raising 3 contentions. Learned counsel further argued that all these objections were raised by the respondent in the nature of preliminary objections, which at the highest can result in a rejection of the company petition and not its dismissal on merits. Learned counsel for the appellants further argued that on this ground alone the Appellate Tribunal may remand the parties back to the Tribunal to proceed with the company petition after removal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the respondents further argued that no resolution has been passed by the appellant-company (original petitioner) to file the present appeal and the earlier company petition authorising the appellant/ petitioner to sign, verify or institute the present appeal/company petition. In the absence of any resolution, filing of the present appeal against the first respondent and earlier petition is not maintainable. 11. Learned counsel for the respondents raised the objection to the maintainability is questioning the locus of the appellants as shareholders of the first appellant itself. The respondents repudiate that the second appellant is either a director or a shareholder of the appellant-company. Learned counsel for the respondent argued that the agreement dated March 31, 2006 recording the transfer of major equity in favour of the second respondent, as also on the admissions made by the deceased wife of the Mr. Deepak Khosla (the original second petitioner) in various proceedings before different courts. Learned counsel for the respondents argued that the second respondent is holding 51 per cent. equity in the appellant-company. Learned counsel for the respondent argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined whether the first respondent is a necessary party or not and if so the appellants (the original petitioners) would have been directed to make suitable amendments. In the light of it we do not find that the dismissal of the company petition at the preliminary stage on this would be justified and at best the first respondent could only be deleted from the arrays of the parties which also we have to reach a conclusion after some examination. 15. The other issue on which the company petition was dismissed raised in this appeal that no board resolution authorising representation of the appellant-company was presented. On this issue learned counsel for the appellants argued that no board resolution is required to be shown by shareholders of a company claiming to act in the name of that company, on the principle of derivative rights to act for and/or on behalf of, and/or in the name of the company. Learned counsel further argued that at the highest appellants (the original petitioners) could have been directed that the company shall not be allowed to be represented until such time a board resolution was presented or it could have been directed to stand stripped from the array of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Andhra, AIR 1954 SC 251 aforesaid issue was not raised nor decided. For the reasons aforesaid, we are of the view that the law laid down by Supreme Court in Bhagwati Developers P. Ltd. v. Peerless General Finance Investment Co. Ltd. [2013] 178 Comp Cas 1 (SC) and Rajahmundry Electric Supply Corporation Ltd. v. State of Andhra, AIR 1954 SC 251 are not applicable in the case where an applicant alleges 'oppression and mismanagement' in bringing down his shareholding below the requirement of one-tenth of the total shareholding of the company, thereby deprived him of his right to sue. 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 one-tenth of the total shareholding without notice and knowledge then it is the duty of the Tribunal to determine whether the applicant had one-tenth of the shareholding prior to the date of alleged oppression and misman agement. Such petition cannot be dismissed on the ground that the applicants shareholding is below one-tenth of the total shareholding of the company on the actual date of presentation of the company peti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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