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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 ..... ssion and mismanagement, if any, caused. He refers to the impugned order, more specifically to paras No. 30 and 31 as under:- "30. We have perused the records and heard the counsels in the matter at length. In the backdrop of the facts we are of the considered view that steps need to be taken to end the dispute so that a company will function smoothly. 31. In the interest of equity and justice we direct the company to purchase the shares of petitioner under Section 242(2)(b) of the Companies Act, 2013. Therefore, we appoint CA Sujal Shah, having office at 1st Floor, Arjun, Plot 6A, VP road, Andheri (W), Mumbai 400058, (Contact No.+919821167466) as a Valuer to determine value of shares upon which shares shall be purchased by the Company. The fees for this assignment will be Rs.3,50,000/- and other applicable taxes. The fees for valuer shall be paid by the Respondent No.1 company. 3. It is argued none of the acts complained of in the Company Petition amounts to alleged acts of oppression and mismanagement but rather such alleged acts give a flavour of commercial wisdom of the appellant. Various judgements were cited to show there ought to be a finding of acts of oppression and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the one that I have already stated, namely that the company's affairs are being conducted in a manner oppresive to any member or members of the company and, secondly, that to wind up the company would unfairly prejudice such member or members but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up. It is imperative that the Court's opinion on both these points must be formed in the affirmative before any order could be made under Section 397 of the Companies Act. If the Court is not satisfied on any one of these points and is of the opinion that either a company is not being conducted in a manner oppressive or that, the facts do not justify the making of a winding-up order, then no further question can arise under Section 397. It is also proper to emphasise that the power of the Court to make such order, as it thinks fit, under Section 397(2) of the Act is expressly stamped with the purpose of "bringing to an end the matters complained of." Therefore, wide as the power of the Court is following from the word* of the expression "such order as it thinks fit," it is nevertheles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an end the matters complained of. Further, the Appellant is a private limited company, and Article 5 of the Articles of Association provides shares shall not be transferred except to a person agreed to by all the Directors and at the price fixed by the Directors (Page 146 of the Appeal). 9. Heard. 10. Under Section 242(2)(b) of the Act, the Tribunal has a power to direct the purchase of shares of any member by the Company and per impugned order the Tribunal has exercised such power. 11. Even assuming for the sake of argument the Respondent No. 1 has not established the acts of 'oppression or mismanagement' yet the power exist with the Tribunal to grant the relief as is complained of. In M.S.D.C. Radharamanan vs. M.S.D. Chandrasekara Raja & Anr. [(2008) 6 SCC 750] ('Radharamanan's case'), the Court held as follows : 4. Respondent No.1 filed an application purported to be under Sections 397 and 398 of the Act alleging several acts of oppression on the part of appellant herein before the Company Law Board, Additional Principal Bench, Chennai. The said application was registered as C.P. No. 2 of 2004. By reason of an order dated 16th August, 2004, the Company Law Board while opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Senior counsel appearing on behalf of the appellant, in support of the appeal, submitted : 1. The Company Law Board was not justified in issuing the impugned direction in purported exercise of its jurisdiction under Section 402 of the Act directing him to purchase the shares of the respondent despite arriving at a finding of fact that no act of oppression has been committed by the appellant. 2. The condition precedent for exercise of such power being oppression on the part of a Director of a company being not satisfied, the impugned judgment is wholly unsustainable. 3. The High Court committed a manifest error in passing the impugned judgment in reversing the findings of fact arrived at by the Company Law Board; although no appeal therefrom had been preferred by the first respondent so as to hold that the acts of omission and commission on the part of the appellant constituted such an oppression. 4. Both the High Court as also the Company Law Board committed a serious error in granting the relief in favour of the first respondent without taking into consideration that the grant of relief shall not only be in the interest of the company but also must have a direct ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcised their jurisdiction. 22. In a case of this nature, where there are two shareholders and two Directors, any animosity between them not only would have come in the way of proper functioning of the company but it would also affect the smooth management of the affairs of the company. The parties admittedly are at logger heads. A suit is pending regarding title of the shares of the Company. A contention had been raised by the appellant before the Company Law Board that the 1st respondent having filed a wealth-tax return as Karta of Hindu Undivided Family, he not only has 50 % shares in the Company but also 50% shares in the H.U.F.; whereas the contention of the 1st respondent in that behalf is that the appellant had already taken his half share in the joint family property and the H.U.F. mentioned in the Wealth Tax Return pertains to the smaller H.U.F. which consists of himself and his daughters. 1st respondent is about 80 years old. Because of his old age, he is not in a position to look after the affairs of the company. Even in the grounds of appeal before us, a contention has been raised that it was the 1st respondent, who is the oppressor. We have noticed hereinbefore that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... press argument that prior establishment of oppression and mismanagement needs to be made, the appellant had relied upon (i) Upper India Steel Manufacturing & Engineering Co. Ltd. & Ors. v. Gurlal Singh Grewal & Ors. [2017 SCC Online NCLAT 339], (ii) BSE Ltd. v. M/s Ricoh Company Ltd. & Ors. [2017 SCC Online NCLAT 12] and (iii) Jaladhar Chakraborty & Ors. v Power Tools & Appliances Co. Ltd. [(1994) Comp Cas 505], however, none of the judgments relied upon by the Appellant, apply to the facts of the present case as (i) does not consider Radharamanan's Case. Also, that in case (i) this Tribunal has recorded that no case of 'Oppression and Mismanagement' was made out whereas no such finding is recorded by the Tribunal in the present case. In Case (ii) the judgment was passed at an interim stage, whereas the Impugned Judgment is a final judgment. In Case (iii) is a judgment passed by the Hon'ble Calcutta High Court before the law was laid down by the Hon'ble Supreme Court in Radharamanan's Case and Mistry's Case. 17. Moreso admittedly at prior occasion too the erstwhile directors have sold their shares and hence the company has a precedent. Equally so when the Respondent No.1 does not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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