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TMI Blog2024 (9) TMI 1256X X X X Extracts X X X X X X X X Extracts X X X X ..... easons for passing the order but a perusal of the Impugned Judgement would reveal the submissions of both the parties and the case law(s) cited by them were considered by the Ld. NCLT and only thereafter the impugned order was passed under Section 242(2)(b) of the Act. Admittedly the respondent cannot sell his shares in open market, it being a private company and not a listed one, hence the path chosen by the Ld. NCLT to end controversy amongst directors/shareholders is not prejudicial to anyone and would rather be helpful for smooth running of the company. There are no illegality in the impugned order and accordingly appeal is dismissed. - ( Justice Yogesh Khanna ) Member ( Judicial ) And ( Mr. Ajai Das Mehrotra ) Memkber ( Technical ) For the Appellant : Mr Navin Pahwa, Sr. Advocate with Mr. Yashwardhan, Ms Kritika Nagpal, Mr. Gyanendra Shukla and Mr. Premav Das, Advocates For the Respondent : Mr. Rahul Chitnis, Mr. Hersh Desai and Ms Shwetal Shepal, Advocates for R1. Mr. Vashu Gupta and Mr. Chiranjivi Sharma, Advocates for R2 and R7 JUDGEMENT JUSTICE YOGESH KHANNA , MEMBER ( JUDICIAL ) The present appeal has been filed under Section 421 of the Companies Act, 2013 against an im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies Act. The board of directors has a discretion to declare dividend and the rate of such dividend. There is no company law that I know which obliges a board of directors to use up all its profits by declaring dividend. No company law lays down that all profits must be declared and exhausted in paying dividends. Surely, failure to do so could not be a ground for an application for oppression under Section 397 of the Companies Act. Besides, that will also not be a ground for winding up a company as indicated by Lord Blanesburgh in the observation quoted above in the Privy Council decision in Ripon Press and Sugar Mill Co. Ltd. v. Gopal Chetty [1932] 2 Comp Cas 70 (PC). 5. Further in Maharani Lalita Rajya Lakshmi Vs Indian Motor Co (Hazaribagh) Ltd ors 1961 SCC OnLine Cal 179 the Court held:- 4. The main defect of this application is that the facts alleged are not proved. It is essential to remember that under section 397 of the Companies Act, the Court has to be satisfied that there ' is oppression. It has to be satisfied that the affairs of the company are being conducted in 3 manner oppresive to any member or members of the company. The acts of oppression, therefore, hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% of the issued share capital of the Company. Under Section 236(3) of the Companies Act, 2013, the minority shareholders can offer their shares to the majority shareholders to purchase the minority equity shareholding of the Company in accordance with such rules as may be prescribed. The Petitioner had already offered his shares to the majority shareholders at the market value of the shares computed on the basis of the net worth of the Company, with an increase of 10% per annum over the value of the shares, as on 31st March, 2021. However, neither have the majority shareholders accepted the offer made by the Petitioner. 22. The Petitioner submits that, under the provisions of Section 242(1) of the Companies Act, 2013, this Tribunal has the power to make such order as it thinks fit, to end the matters complained of in the Company Petition. Further, this Tribunal can direct the purchase of shares of the Petitioner by Respondent No. 3 (another member of the Company) under the provisions of Section 242(2) of the Companies Act, 2013. 8. The learned counsel for Respondent No. 1 further argued the Respondent had made out a case under Section 242 of the Companies Act, 2013 ( the Act ) viz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellant herein even intended to file a criminal complaint against his father, the first respondent for alleged mis-appropriation of a sum of Rs.8,15,000/-. A suit for partition, it was furthermore noticed, was pending. It was directed: 77. However, if there is any dispute regarding the method of valuation of the shares and the ultimate valuation arrived at by the valuer, it is open for either parties to approach the Company Law Board for getting the valuation finalised. Thereupon, at the first instance, the second respondent shall purchase the shares of the petitioners, within six months from the date of finalisation of such valuation and on his failure to do so, the petitioner in C.P., shall purchase the shares of the second respondent, within six months thereafter. In the event of both the alternatives failing, the purchase of shares of either the petitioner or the second respondent could be transferred to third parties depending upon the exigency. The Company Law Board is at liberty to pass such further orders under Section 402 of the Companies Act, in commensurate with the views expressed by this court, for the smooth running of the company. 78. In view of the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proposal of respondent No.1 in regard to the appointment of the Additional Director, it does not lie in the month to say that appointment of the Additional Director would serve the purpose. 4. The Company Law Board, in exercise of its jurisdiction under Sections 397 and 398 read with Section 402 of the Companies Act has the requisite jurisdiction to direct a share holder to sell his shares to the other, although no case for winding up of the company has been made out or no actual oppression on the part of the Director has been proved. 8. A shareholder of a company or a Director has several remedies under the Act. Section 433 of the Act envisages filing of an application for winding up thereof, inter alia, in a case where the Company Law Board may form an opinion that it is just and equitable that the company should be wound up. 12. Section 398 of the Act provides for filing of an application for the reliefs in cases of mismanagement. Section 402 provides for the powers of the Company Law Board on an application made under Section 397 or 398 of the Act which includes the power to pass any order providing for the purchase of the shares or interests of any member of the company by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the bar that even the same was objected to by the appellant. 12. In Radharamanan s case (paragraph 42), the Hon ble Supreme Court referred to Samgramsinh P. Gaekwad vs. Shantadevi P. Gaekwad [(2005) 11 SCC 314], wherein the Hon ble Supreme Court held in a given case the court despite holding that no case of oppression has been made out may grant such relief so as to do substantial justice between parties. 13. Further in Tata Consultancy Services Ltd. v Cyrus Investments Pvt. Ltd. and Ors. [2021 (9) SCC 449] ( Mistry s Case ), the Court observed in para 291 that as we have pointed out elsewhere a divorce without acrimony is what is encouraged both in England and in India under the statutory regime. 14. Further in Vidhya Achu Roy v Suraj Mani Engineers Pvt. Ltd. and Ors. [2021 SCC Online NCLAT 793], para 26 records despite a case of oppression and mismanagement not being successfully established by the Appellant, in an act to provide succor to the Appellant, the NCLT, Bengaluru's has provided her relief 15. Though the appellant has contended the Impugned Judgement does not give reasons for passing the order but a perusal of the Impugned Judgement would reveal the submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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