S. Ahmed Meeran vs Ronny George & Ors

S. Ahmed Meeran .Appellant

Vs.

Ronny George & Ors. .Respondents

Present: For Appellant: - Mr. Rana Mukherjee, Senior Advocate with Mr. Goutham Shivshankar and Ms. Sreoshi Chatterjee, Advocates.

For Respondents:- Mr. Anirudh Wadhwa and Mr. Bhargava Thali, Advocates for Respondent no. 1. Mr. Prasanna.S, Advocate for Respondents 3 to 7.

ORDER

05.10.2017- In both the appeals as common question of law is involved,

they were heard together and disposed of by this common judgment.

2. In Company Appeal (AT) No. 257 of 2017, the appellant has

challenged the order dated 14th July, 2017 passed by National Company

Law Tribunal (hereinafter referred to as "Tribunal") Chennai Bench,

Chennai in CA No. 122/2017 whereby and whereunder the Tribunal

granted 'waiver' under proviso to sub-section (1) of Section 244 of the

Companies Act, 2013 and passed the following order: -

Contd/ -

-2-

"Counsel for Petitioner present. Counsel for R2

present. Counsel for Applicant prayed for waiver of the

requirements under section 244 of the Companies Act

for the purpose of filing Petition under section 241(1).

We have heard both the sides. The Petitioner made out

the case for grant of waiver under section 244. We grant

the waiver of the requirements under section 244(a) by

allowing the Application. Keeping in view the facts and

circumstances of the case and submissions made, we

are inclined to grant relief as prayed under para 10(i)

the 1st Respondent Company may proceed to have the

EGM on 15th July 2017 and may pass the resolution on

the agenda proposed. However, the 1st Respondent

Company is restrained from giving effect to the

resolution passed till further order. Counsel for

Respondent is directed to file the interim counter within

ten days to the application and the Company Petition.

Put up on 27.07.2017 at 10:30A.M."

3. In Company Appeal (AT) No. 258 of 2017, similar order has been

passed by the Tribunal waiving the requirements under sub-section (1)

of Section 244 of the Companies Act, 2013. The order dated 14th July,

2017 passed in CA No. 121/2017 reads as follows: - -3-

"Counsel for Petitioner present. Counsel for R2

present. Counsel for Applicant prayed for waiver of the

requirements under section 244 of the Companies Act

for the purpose of filing Petition under section 241(1).

We have heard both the sides. The Petitioner made out

the case for grant of waiver under section 244. We grant

the waiver of the requirements under section 244(a) by

allowing the Application. Keeping in view the facts and

circumstances of the case and submissions made, we

are inclined to grant relief as prayed under para 10(1)

the 1st Respondent Company may proceed to have the

EGM on 15th July 2017 and may pass the resolution on

the agenda proposed. However, the 1st Respondent

Company is restrained from giving effect to the

resolution passed till further order. Counsel for

Respondent is directed to file the interim counter within

ten days to the application and the Company Petition.

Put up on 27.07.2017 at 10:30A.M."

4. We have heard learned counsel for the appellant and learned

counsel for the respondents.

5. Apart from the fact that both the impugned orders have been

passed in a mechanical manner by the Tribunal without considering any

exceptional circumstances to allow the application for 'waiver' under -4-

proviso to sub-section (1) of Section 244, the Tribunal has not applied its

mind as to whether (proposed) application under section 241 merits

consideration and whether it relates to 'oppression and mismanagement'.

6. The question of grant of 'waiver' under proviso to sub-section (1) of

Section 244 fell for consideration before this Appellate Tribunal in "Cyrus

Investments Pvt. Ltd. & AJqR. Vs. Tata Sons Ltd. & Ors. - 2017 SCC

OnLine NCLAT 261". In the said appeal, the Appellate Tribunal

considering the provisions held as follows: -

"148. Now there is a clear departure from earlier

provision i.e. sub-section (4) of Section 399 whereunder

the Central Government was empowered to permit the

ineligible member(s) to file an application for 'oppression

and mismanagement' by its executive power. Under

proviso to sub-section (1) of Section 244 now the Tribunal

is required to decide the question whether application

merits 'waiver' of all or any of the requirements as

specified in clauses (a) and (b) of sub-section (1) of Section

244 to enable such member(s) to file application under

Section 241. Such order of 'waiver' being judicial in

nature, cannot be passed by Tribunal, in a capricious or

arbitrary manner and can be passed only by a speaking

and reasoned order after notice to the (proposed)

respondent(s). The basic principle ofjustice delivery -5-

system is that a court or a Tribunal while passing an

order is not only required to give good reason based on

record/evidence but also required to show that after

being satisfied itself the Court/ Tribunal has passed such

order. To form an opinion as to whether the application

merits waiver, the Tribunal is not only required to form its

opinion objectively, but also required to satisfy itself on

the basis of pleadings/evidence on record as to whether

the proposed application under Section 241 merits

consideration.

149. The Tribunal is required to take into consideration

the relevant facts and evidence, as pleaded in the

application for waiver and (proposed) application under

Section 241 and required to record reasons reflecting its

satisfaction.

150. The Tribunal is not required to decide merit of

(proposed) application under Section 241, but required to

record grounds to suggest that the applicants have made

out some exceptional case for waiver of all or of any of the

requirements specified in clauses (a) and (b) of sub-

section (1) of Section 244. Such opinion required to be

formed on the basis of the (proposed) application under

Section 241 and to form opinion whether allegation

pertains to 'oppression and mismanagement' of the -6-

company or its members. The merit cannot be decided till

the Tribunal waives the requirement and enable the

members to file application under Section 241.

151. Normally, the following factors are 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?

-7-

(iv) Whether there is an exceptional circumstance

made out to grant 'waiver', so as to enable members

to file application under Section 241 etc.?

152. The aforesaid factors are not exhaustive. There may

be other factors unrelated to the merit of the case which

can be taken into consideration by the Tribunal for

forming opinion as to whether application merits

'waiver'."

7. For the reasons aforesaid and as the impugned order(s) are a non-

speaking order, we have no option but to set aside the impugned orders

both dated 14th July, 2017 passed in CA No. 121/2017 and CA No.

122/2017 and they are set aside. Both the cases are remitted to the

Tribunal for its decision on the question whether the application for

'waiver' merits consideration after notice and hearing the parties.

8. Both the appeals are allowed with aforesaid observation. No costs.

9. In view of the fact that there is no 'waiver' in favour of the

respondents, the question of granting any interim relief does not arise.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice A.I.S. Cheema) (Balvinder Singh) Member (Judicial) Member(Technical)