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TMI Blog2020 (9) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... icant have no recourse in law if the waiver is not granted and there are just and equitable ground for grant of waiver. FACTS OF THE CASE: 2. The following are the facts of the case submitted by the applicant: - a) The applicant holds 60 equity shares which constitutes 0.01% of the issued, subscribed and paid up capital of the Respondent No. 1 Company (R1). b) The Applicant has to ascertain the actual number of shares held by him in the Respondent No. 1 Company due to the reason that Respondent No. 2 to Respondent No. 7 had never issued any notice of meeting for the issue of rights and/or bonus shares. c) He submits that his father was one of the co-founder of Respondent No. 1 Company and has been instrumental in building brand and worth of Respondent No. 1 Company. He submits that Respondent No. 2 (R2) is the cousin brother and unilaterally controls the affairs of Respondent No. 1 Company. d) Between 20th to 25th June 2018, Respondent No.2 approached the applicant and handed over six blank renunciation forms with respect to alleged further issue of right shares by Respondent No. 1 Company in March 2018. e) The applicant was shocked as soon as Respondent No. 2 gave six b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining the oppression & mismanagement and waiver of such mandatory requirement should not be granted as matter of right but only in exceptional case. iii. The applicant has failed to make out any case for seeking waiver of the requirement of section 244 of the Companies Act, 2013. iv. R1 Company was managed by the Board of directors and not by the R2. Respondents have not given renunciation forms to the applicant and this is only story that is now being made out by the applicant to support his malafide motives. The director's report of the respective years was sent to each and every shareholder and the same is available in the public domain also. Hence the applicant is aware of the issue of shares and is now raising the issue to pressurize the respondents. The offer letters of issue of shares were issued to the applicant for all the rights issues. However, the applicant refused to subscribe to the rights issue. The applicant is well aware of rights issue and preferential issue of shares. v. The Respondent No. 2 neither approached the applicant with request to sign the blank renunciation forms nor requested the applicant to sign the blank renunciation forms. The applicant had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter. (2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter. .............." "244. Right to apply under section 241 (1) The following members of a company shall have the right to apply under section 241, namely: - (a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, subject to the condition that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... member(s) of a company to apply before the Company Law Board under Sections 397-398 (now Section 241), notwithstanding that the requirements of clause (a) or (b), as the case may be of sub-section (1) of Section 399 are not fulfilled. The said provision reads as follows:- 399. Right to apply under section 397 and 398- (1) The following members of a company shall have the right to apply under section 397 or 398:- (a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, provided that the applicant or applicants have paid all calls and other sums due on their shares; (b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members. (2) xxx (3) xxx (4) The Central Government may, if in its opinion circumstances exist which make it just and equitable so to do, authorise any member or members of the company to apply to, [the Company Law Board] under section 397 or 398, notwithstanding that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e required to be noticed by the Tribunal before forming its opinion as to whether the application merits 'waiver' of all or one or other requirement as specified in clauses (a) and (b) of sub-section (1) Section 244:- (i) Whether the applicants are member(s) of the company in question? If the answer is in negative i.e. the applicant(s) are not member(s), the application is to be rejected outright. Otherwise, the Tribunal will look into the next factor. (ii) Whether (proposed) application under Section 241 pertains to 'oppression and mismanagement'? If the Tribunal on perusal of proposed application under Section 241 forms opinion that the application does not relate to 'oppression and mismanagement' of the company or its members and/or is frivolous, it will reject the application for 'waiver'. Otherwise, the Tribunal will proceed to notice the other factors. (iii) Whether similar allegation of 'oppression and mismanagement', was earlier made by any other member and stand decided and concluded? (iv) Whether there is an exceptional circumstance made out to grant 'waiver', so as to enable members to file application under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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