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2020 (10) TMI 498 - Tri - Companies LawOppression and Mismanagement - transfer of shares - Section 241-242 of the Companies Act, 2013 - principles of quasi partnership - HELD THAT:- Admittedly, it is closely held private limited company of two persons in the form of quasi partnership and on perusal of the record it is found that there is a dispute with regard to the agreement(s) dated 11.08.2017 whereby the Petitioner as well as the Respondent No. 2 have arrived at an understanding to settle and part with on certain terms and conditions. However, dispute arose with regard to non-compliance or deficiency in compliance of the conditions of the said agreement by Respondent No 2. There are no documents on record so as to show that the shares of the Petitioner in question have been transferred to the Respondent No. 2 or any other person(s) after following the due procedure relating to the transfer of shares as claimed by Respondent No 2. There are no concrete evidence or proof filed to show that the payments have actually been made to the Petitioner in the form of cash receipt or bank statement or such other document against the transfer of the shares in favour of the Respondents. Thereby, it is established that the Petitioner still holding 50% of the share capital of the Respondent No. 1 Company and is entitled for his rights as the shareholder of the company. On perusal of the record, it is found that Petitioner annexed Annexure-C i.e. list of shareholders as on 31.03.2018 at page No. 58 of the petition which shows that Petitioner is holding 18,35,500 Nos. of shares and the Petitioner is eligible to file the present petition. For an application under sections 241-242, the act which is contrary to law may not necessarily and by itself support the inference that the law is/was violated with mala fide intention or that such violation was burdensome, harsh and wrongful. There must be continuous act on the part of the members or majority shareholders, continuing upto the date of petition, showing that the affairs of the Company were being conducted in a manner oppressive to some of the members. The conduct must be burdensome, harsh and wrongful. In the instant case, it is found that there is a lack of trust and confidence between the members/shareholders which would not be enough unless the lack of confidence springs from oppression by members in the management of the Company's affairs. Such oppression must involve an element of lack of probity or fair dealing to the members in the matter of his propriety as a shareholder. There are several irregularities in the procedures adopted by the Respondent (s) in compliance of the provisions of the Companies Act, 2013. The Petitioner has established a case of oppression and mismanagement in the affairs of the Respondent No. 1 Company and therefore, the present petition has merit and deserves to be allowed. The Respondent No. 1 Company is brought back to the original position as it was prior to the date of execution of agreement i.e. 11.08.2017 - The resolution (s) dated 30.06.2017, if any, is declared as void and shall not have any effect relating to the appointment of the Respondents No. 3 and 5 as the directors of the Respondent No. 1 Company - appointment of Respondents No. 3, 4 and 5 are declared as illegal and set aside. The Tribunal/Bench hereby orders removal of the said Respondents as the directors of the Respondent No. 1 Company. Petition allowed in part.
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