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TMI Blog2021 (6) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... t including those for interim relief sought before NCLT, mainly requesting for a residence to be provided to the Appellant and also for payment of credit card bills of the Appellant go to show the personal nature of allegations calling the same oppression of the Appellant and mismanagement of company s affairs. In the circumstances of the case, the provision of residence and basic remuneration and perquisites, as ordered by the NCLT is a reasonable relief granted to the Appellant. The Respondents have cited the judgment of Hon ble Supreme Court in the case NEEDLE INDUSTRIES (INDIA) LTD. VERSUS NEEDLE INDUSTRIES NEWEY (INDIA) HOLDING LTD. [ 1981 (5) TMI 89 - SUPREME COURT] wherein it was held that a conduct which lacks in probity, conduct which is unfair to and which causes prejudice to the petitioner in the exercise of legal or proprietary rights as a shareholder must be shown to exist. - In the instant case the Appellant has not been able to prove through her claims and allegations that her rights as a shareholder have been treated harshly or unfairly, and therefore her case of her oppression and mismanagement of the affairs of the company is unfounded. The Impugned Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... split. Out of this split Respondent No. 2 received ₹ 15 Lakhs towards his share. 3. Thereafter, Appellant and Respondent No. 2incorporated Respondent No. 1company in Bangalore, each with 50% shareholding, and became Directors of Respondent No. 1company. The Appellant and Respondent No. 2worked towards development of Respondent No. 1company, and it is claimed by the Appellant that she used to receive a remuneration of ₹ 63,500 per month and Respondent No. 2receivedremuneration of ₹ 2 Lakhs per month. Respondent No. 2 has claimed that he provided all the technical expertise in this company. 4. Later some marital dispute arose between the Appellant and RespondentNo. 2. Around the same time, Respondent No. 3, who is an acquaintance of Respondent No. 2,was appointed as a Director in Respondent No. 1Company. The Appellant claims to have been involved in the day-to-day functioning of the company and managing the affairs of the company, particularly during the absence of Respondent No. 2 from the company s headquarters. It is alleged by Appellant that after personal differences arose between Appellant and the Respondent No. 2, he started dealing with the company Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the respondents and the rejoinder of the Appellant thereon. We have also considered the written submissions of all the parties and heard and carefully considered detailed oral arguments of their Ld. Counsels. 8. In the written submission and oral arguments advanced by Ld. Counsel of the Appellant, it has been claimed that the Appellant was a founder-director of Respondent No. 1Companyholding 50% shares in it. According to her, she has invested her own funds in the company and has worked for company s growth and worked during absence of Respondent No. 2 for the benefit of the company. After marital problems arose between her and Respondent No. 2, which are being separately contested, Appellant states that Respondent No. 2 started raising problems to create difficulties for her and make her position in the Respondent No. 1Company untenable. 9. The Ld. Counsel for Appellant has argued that a new company Respondent No. 4 was started by Respondent No. 2 along with Respondent No. 3 and Respondent No. 5 who were made shareholders of the new company, in order to divert business from Respondent No. 1 Company and make it a dummy company to the detriment of the Appellant. The Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aramanan Vs. M.S.D. Chandrasekara Raja and Anr [2008 (6) SCC 750]. (iii) Ms. Heena Dutt v. Chavi Designs Pvt. Ltd. Anr, [2008 (141) Comp Cas 172 (CLB)]. 12. What appears from Judgment of Hon ble Supreme Court in Dale and Carrington Invt. (P) Ltd. v. P.K. Prathapan and Ors.(supra) is that acts of Directors of a company are required to be tested on a much finer scale in order to rule out misuse of power for personal gains or ulterior motives and proper legal procedures should be followed in allotment of additional shares to Managing Director. In the present case no shares were allotted to any shareholder to the disadvantage of the Appellant and against the company s interest. The proposal for increasing the authorized share capital of the company was carried out in accordance with the proper legal procedure, and that too after the pronouncement of order by the Adjudicating Authority, and no particular shareholder was treated unfairly in this process. 13. In M.S.D.C. Radharamanan Vs. M.S.D. Chandrasekara Raja and Anr, Hon ble Supreme Court held that the interest of all the shareholders should be taken into consideration, and not that of the applicant only. It was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made a Director with 50% shareholding in the company. The Learned Counsel for Respondents has also stated that the Appellant s role in the company has been of a sleeping partner and she has neither made any financial contribution nor put in any managerial effort towards the growth of the company. 17. The Ld. Counsel for Respondents has further claimed that the Respondent No. 1 Company has consistently performed quite well, as is evident from the accolades received from its customers (Annexure R 9, R 10 in the Counter Affidavit of Respondent No. 2) and has seen an increase in its revenue and turnover over the years. While no case was made out regarding oppression and mismanagement against Respondent No. 2 before the NCLT Bengaluru, the NCLT had, on compassionate ground, ordered that Appellant be provided residence and basic emoluments for her maintenance and living. In compliance the Respondent No. 1Company has provided her a 3BHK residence and monthly salary of ₹ 75,000, a car and other perquisites. 18. The Ld. Counsel for Respondents has further claimed that the only intention of the Appellant, through this litigation, is to ensure that the benefits that were avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Respondent No. 4) was incorporated to divert business from Respondent No. 1 Company which was a move to oppress her. 21. Another instance of mismanagement and oppression cited by the Ld. Counsel for Appellant that Respondent No. 2 relates to transfer of money from Respondent No. 1 Company s account into his private account (attached at pages no. 122 to 125 of the appeal paper book). Respondent No. 2 has clarified that the credit of ₹ 80 lakhs in his account is the bonus that was given to him which he could not receive earlier due to some liquidity issue. The Ld. Counsel for Respondents has claimed that the Appellant was aware of the same and had therefore approved and signed the accounts for the year 2016-17. Therefore, we do not find any substance in the allegation of the Appellant that Respondent No. 2 used to routinely transfer funds from the company's account to his private account as no other instance of any unauthorized transfer of money has been alleged. 22. The allegation of Appellant regarding approval of certain resolutions in board meetings without providing proper reasons and documents to the Appellant has also been examined by us. The Appellant has in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to be provided to the Appellant and also for payment of credit card bills of the Appellant go to show the personal nature of allegations calling the same oppression of the Appellant and mismanagement of company s affairs. In the circumstances of the case, we are of the opinion that the provision of residence and basic remuneration and perquisites, as ordered by the NCLT is a reasonable relief granted to the Appellant. 25. The Respondents have cited the judgment of Hon ble Supreme Court in the case Needle Industries India Limited versus Needle industries, Lewey (India) Holding Limited [AIR 1981 SC 1298] wherein it was held that a conduct which lacks in probity, conduct which is unfair to and which causes prejudice to the petitioner in the exercise of legal or proprietary rights as a shareholder must be shown to exist. The Learned Counsel of the Respondents has also cited the case law in Rao (VM) Vs Rajeswari Ramkrishnan [1987, 61, COMPCAS 20 (at page 66)] wherein it was held that the oppression complained must affect a person in his capacity as a member of the company; harsh or unfair treatment in any other capacity, example as director or creditor is outside the purview o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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