Sangunity Exim (India) Limited vs Kapil Batra & Amp; Ors

IN THE MATTER OF: Sangunity Exim India Ltd. ...Appellant

Versus

Kapil Batra & Ors. ...Respondents

Present:

For Appellant : Ms Sakshi Singh Mehley, Mr. Sanjiv Kapoor, Mr Ramesh Singh, Sr. Advocate, Mr. Harshit Kumar, Mr. Animesh Sinha, Advocates for Appellant.

For Respondent : Mr. Samarendra Kumar, Mr. AK Pandey, Chief Manager, Advocate for R-5. Ms Manmeet Arora, Mr. Pulkit Deora, Mr Arnav Vidyarthi, Mr Arjun Singh Surjewala, Mr A Biswal, Advocates for R-4. Mr. Manoj Kumar Garga, Advocate for R-2. Mr. Manoj Khanna and Mr. Rajat Bhatia, Advocates for R-1.

ORDER

(Through Virtual Mode)

24.06.2021 Heard the arguments of learned Sr Counsel Mr Ramesh

Singh for the Appellant, Mr Manoj Khanna, for Respondent No. 1, Mr Manoj

Kumar Garg for Respondent No. 2 and M/s Manmeet Arora for Respondent

No 4.

2. Present Appeal emanates from the order dated 4 June 2021 passed by

National Company Law Tribunal, Principal Bench, New Delhi in CP

No.90/241/242/PB/2021, whereby the National Company Law Tribunal has directed the registry as well as the Applicant to issue notice to the other

Respondents.

3. The Appeal is filed on the ground that impugned order is expressly

illegal being in teeth of express provisions of Section 244 of the Companies

Act 2013, including the proviso to it and the well-settled legal position, in as

much as admittedly the shareholding of Respondent No. 1/ Petitioner was

less than 10% of the total issued share capital of the Appellant Company;

hence on this count itself, the Company Petition ought to have been

dismissed. A petition filed by the Petitioner having inter alia less than 10% of

the issued share capital of the Company cannot be treated to have been

properly filed.

4. It is further submitted that the said Company Petition of the

Respondent No. 1/ Petitioner even otherwise could not have been entertained

as it was bereft of any Application in terms of proviso to Section 244 of the

Companies Act 2013. The petitioner has made a bold prayer in the Company

Petition (without any Application as required), praying to "waive the

requirement of 10% shareholding for filing the Petition". But even the said

prayer was not supported by any required/relevant pleadings to avail the said

mandatory requirement in terms of the said proviso.

5. In this appeal, Respondent No. 1/Petitioner being the lone Petitioner,

had maliciously filed the above-stated Petition and admittedly has averred in

para 1 on Page No. 18 of the said Petition that he owes less than 10% of the

shares in the Appellant Company and further again on Page No. 74 in para

Company Appeal (AT) No. 63 of 2021 2 of 9 No. 64 (b) it has been prayed that the NCLT may waive the essential

requirement of 10% shareholding for filing the Petition.

6. It is further pertinent to note that nowhere in the Petition has

Respondent No. 1 made a single averment concerning waiver of the essential

requirement of 10% shareholding since Respondent No. 1 is very well aware

of the fact and even admitted by Respondent No. 1 in its Petition that this

essentiality of 10% shareholding has not been met in accordance with the law.

Therefore, the NCLT ought to have restrained from issuing notice vide the

impugned order dated 4th June 2021 on account of ineligibility of the

Respondent/Petitioner in filing a Petition under Section 241 of the Companies

Act.

7. The Appellant further contends that Respondent No. 1, even though not

representing 1/10th of the total Members of the Appellant Company neither

holding 10% of the total shareholding of the Appellant Company has failed to

file any Application along with its main Petition praying for mandatory waiver

under Section 244 (1) of the Act to file a Petition under Section 241 (1) of the

Act.

8. However, the NCLT, Principal Bench, Delhi erred in admitting the

Petition of Respondent No. 1 in passing the order dated 4 June 2021 by

overlooking the already established position of law that Respondent No. 1 has

no right to file a Petition under Section 241 of the Act without first satisfying

the condition as given under Section 244 of the Act. In the circumstances, the

Appellant pleaded that the impugned order dated 4 June 2021 is bad in law

Company Appeal (AT) No. 63 of 2021 3 of 9 and is liable to be set aside along with the dismissal of the Petition filed by

Respondent No. 1/Petitioner as being non-maintainable under law.

9. It is further contended that the NCLT, Principal Bench, Delhi was

clearly in error in entertaining such Section 241 Application, taking

cognizance in passing an order of notice and directing the Respondents and

the Appellant to file their respective replies is contrary to the statutory

provision of Section 244 of the Companies Act 2013.

10. The Appellant contends that section 244 of the Companies Act provides

the mandatory conditions that must be complied with to be eligible to file an

Application under Section 241 of the Companies Act,2013 for oppression and

mismanagement. The mandatory conditions for maintaining the petition filed

under Section 241 of the Act are contained in Section 244 (1) (a) of the Act

and are reproduced below for ready reference;

"241 Application to Tribunal for relief in cases of oppression, etc.(1) Any member of a company who complains that--

(a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or

(b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture-holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the

Company Appeal (AT) No. 63 of 2021 4 of 9 Board of Directors, or manager, or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under Section 244, for an order under this Chapter.

244. Right to apply under Section 241.--(1) The following members of a company shall have the right to apply under Section 241, namely:--

(a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares;

(b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members:

Provided that the Tribunal may, on an application made to it in this behalf, waive all or

any of the requirements specified in clause (a) or clause (b) so as to enable the members to apply under Section 241.

Company Appeal (AT) No. 63 of 2021 5 of 9 Explanation.--For the purposes of this sub-section, where any share or shares are held by two or more persons jointly, they shall be counted only as one member.

(2) Where any members of a company are entitled to make an application under sub-section (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them.

Corresponding Law: S. 399 of Act 1 of 1956.

Section 244 enforced w.e.f. 1-6-2016"

Section 244. Right to apply under Section 241"

11. Based on the statutory provision of Section 241 and 244 of the

Companies Act, 2013, it is clear that the Application to the Tribunal for relief

in cases of oppression and mismanagement can be filed by any member of the

Company who complains that the affairs of the Company are being conducted

in a manner prejudicial to the public interest or the manner prejudicial or

oppressive to him or any other member or members or the manner prejudicial

to the interest of the Company.

12. But the precondition for filing a petition under Section 241 is provided

under Section 244 of the Companies Act 2013. It lays down the precondition

of filing a Petition that such member has a right to apply under Section 244

for an order under this Chapter. Section 244 (1) (a) of the Act lays down the

precondition being that any member or members must hold not less than one-

tenth of the total number of its Members, or any member or members must

hold not less than 10% of the issued share capital of the Company.

Company Appeal (AT) No. 63 of 2021 6 of 9

13. It is pertinent to mention that proviso to Section 244 (1) provides that

Tribunal may, on an Application made to it in this behalf, waive all or any of

the requirements specified in Clause (a) or Clause (b) to enable the members

to apply under Section 241 of the Act.

14. In the instant case in para 1 of the Petition Petitioner/Respondent No.1

has stated that "the petitioner is holding 1,41,150 shares of Respondent

No. 1 Company and 1,04,490 shares of Respondent No. 2 Company. This

constitute 9.41% shares of Respondent No. 1 Company and 5.22%

shares of Respondent No. 2."

15. Further, in para 64 of the petition petitioner it is stated;

In view of the submissions made hereinabove, it is most respectfully prayed that this Hon'ble Tribunal may kindly be pleased to allow;

(a) Pending disposal of this petition restrain the respondent number 1 from calling an EGM on 2 June 2021.

(b) Waive the requirement of 10% shareholding for filing the petition.

(c) ******

16. Admittedly Petitioner/Respondent No. 1 in this Appeal had filed the

Petition under Section 241 of the Companies Act 2013 alleging acts of

oppression and mismanagement against the Respondents. However, the

Petitioner admits that its shareholding is less than the required 10% eligibility

criteria for filing the petition. Therefore, instead of seeking a waiver under

proviso to Section 244 (1) of the Companies Act 2013, the Petitioner has

sought relief for granting a waiver from the 10% eligibility criteria. The Company Appeal (AT) No. 63 of 2021 7 of 9 question of granting relief may arise only when the petition is admitted, and

the Petitioner is found eligible to file a Petition under Section 241 of the Act.

The NCLT had the power to grant a waiver from any of the conditions laid

down regarding the eligibility criteria for filing the Petition under Section 241

of the Act. But Applicant/Petitioner has to assign a reason; based on that, the

NCLT may or may not waive any of the eligibility criteria as laid down under

Section 244 of the Act.

17. During the argument, Learned Counsel for the Respondent/Petitioner

submits that he has already filed an Application being CA No. 259/2021 for

seeking a waiver from the eligibility criteria for filing a Petition under Section

241 of the Act.

18. The learned Senior Counsel representing the Appellant submits that he

has no objection if the Application CA No. 259/2021, as alleged by

Respondent No. 1/Petitioner seeking waiver of eligibility criteria for filing a

Petition under Section 241, is disposed of before proceeding further in the

case.

19. Admittedly, in this case, notices have been issued without admitting

the Petition and even without considering the eligibility criteria for filing a

Petition under Section 241 of the Companies Act 2013. Consequently, an

Application seeking a waiver from eligibility criteria under proviso to Section

244 (1) of the Companies Act is pending. Therefore in the circumstances, as

stated above, the National Company Law Tribunal is advised that before

proceeding further in the case, Respondent No.1/Petitioner's Application

Company Appeal (AT) No. 63 of 2021 8 of 9 seeking a waiver from eligibility criteria for filing petition U/S 241 of the

Companies Act 2013 should be disposed of first.

20. The appeal is accordingly disposed of--no order as to costs.

[V.P. Singh] Member (Technical) pks/rr

Company Appeal (AT) No. 63 of 2021 9 of 9