IN THE NATIONAL COMPANY LAW TRIBUNAL

NEW DELHI
BENCH-VI

C.P.No.IB-118/241-242/ND/2019

In the matter of:

Sudhir John Horo

Versus

1. Ideaworks Design & Strategy Private Limited

2. Mr. Amit Shahi

3. Mr. Shyam Santhakumari Vasudevan

4. Mr. Rajiv Krishan Nanda

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5. Mr. August Company Counsulting Services
D-209, Sushant Lok Phase-1,
Gurgaon, Haryana 122002

6. Mr. Alok Kumar Agarwal

....Respondents
Coram:
Shri P.S.N. PRASAD
Hon’ble Member (Judicial)
DR. V.K. SUBBURAJ
Hon’ble Member (Technical)

Order Delivered on:03.05.2021

ORDER

PER DR. V.K.SUBBURAJ, MEMBER (T)

1. This is a petition filed by the petitioner under Section 59,241,242

and/or other applicable Sections of the Companies Act 2013 alleging

various acts of oppression and mismanagement in the affairs of the

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Respondent No.1 company against the Respondents. The petitioner

has submitted the following:

i. The present Petition has been filed by the Petitioner alleging

various acts of oppression and mismanagement in the affairs of

the Respondent No.1 Company. The Respondent No.1

Company is a closely held Private Limited Company, which

was incorporated in the name of Ideaworks Design & Strategy

Private Limited (herein after referred to as the “Respondent

No.1 Company”/ “Ideaworks”) under the Companies Act,1956

(“Companies Act”) with the Registrar of Companies, New

Delhi on 24.06.2011 with Corporate Identity No.

U74900DL2011PTC221425. The registered office of the

Respondent No.1 Company is situated at 73, National Park,

Lajpat Nagar-IV, New Delhi-110024.

ii. Petitioner and the Respondent No.2 are known to each other

for many years. That the business relationship between the

Petitioner and the Respondent No.2 in nature of partnership

commenced in the year 2006 when the Petitioner started

working for the sole proprietorship firm of the wife of

Petitioner. Later on, the sole proprietorship was converted into

a partnership firm between the Petitioner and the Respondent

No.2, with the profit sharing ratio being 45:55, respectively.

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 Thereafter, the Respondent No.2 and the Petitioner decided to

form a private limited company in form of a quasi-partnership

and the Respondent No.1 Company was incorporated on

24.06.2011. It is pertinent to note that the Petitioner and

Respondent No.2 agreed to proceed with the understanding that

stood/existed between them in respect of partnership firm.

Meaning thereby, the Petitioner was allotted 45% shareholding

and the Respondent No. 2 was allotted 55% of the shareholding

in the Respondent No.1 Company.

iii. In or about February 2017 the Petitioner being a person of

repute in his filed received an invitation from the Information

and Public Relations Department (Ranchi), Government of

Jharkhand (“IPRD”) to join their services as an Advisor at the

rank of special secretary. In order to avoid any conflict of

interest, it was decided that the Petitioner would resign as a

director from the Respondent No.1 Company and disassociate

from its business operations. With the resignation of the

Petitioner from the board of directors the Respondent No.1

Company on 18.03.2017, the Respondent No.3 was appointed

as a director of the Respondent No.1 Company. To facilitate

the induction of Respondent No.3 on the board of the

Respondent No.1 Company, it was mutually agreed between

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 the Petitioner and the Respondent No.2that they will transfer

250 shares (2.5%) each from their respective shareholding in

favour of the Respondent No.3. on giving effect to the said

understanding the shareholding pattern of the Respondent No.1

would have altered to 52.5% :42.5%: 5% in favour of

Respondent No.2, Petitioner and Respondent No.3

respectively. However, it has recently come to the knowledge

of the Petitioner that Respondent No.2 in connivance with the

other Respondents has transferred the entire shareholding of

the Petitioner in the favour of Respondent Nos. 2 and 3 by

fabricating and forging documents and statutory records of the

Respondent No.1 Company.

iv. On January 26, 2019 the Petitioner while inspecting the records

of the Respondent No.1 Company on the MCA website

discovered that his shareholding in the Respondent No.1

Company was reduced to Zero as shown in the Annual Returns

for the financial year ending 31st March, 2018. The same was

done to usurp the control of the Respondent No.1 Company in

order to siphon fund and divert business. Various email were

exchanged between the Petitioner and the Respondent No.2,

wherein the Respondent No.2 has admitted to have forged and

fabricated the records of the Respondent No.1 Company to

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 give effect to the illegal transfer of shares. The Petitioner has

also in his limited inquiry/diligence came to know about a firm

of the Respondent No.2 namely M/s August Company

Consulting Services in which funds and business of the

Respondent No.1 Company were being diverted.

v. Gross irregularities and illegalities with respect to affairs of the

Respondent No.1 Company including fraudulent and illegal

filing of returns of the Respondent No.1 Company with false

and contents, illegal transfer of shares, manipulation of records,

siphoning of business etc. have drastically surfaced during the

recent times. That constrained by the increasing illegal and

mala fide acts of the Respondents, the Petitioner is approaching

the Hon’ble Tribunal for redressal of his grievances concerning

the acts of oppression and mismanagement in the affairs of

Respondent No.1 Company.

2. The main Respondent No.2 has filed a detailed reply on 12.09.2019

in which he has questioned on the maintainability of the petition. This

Tribunal gave an opportunity to the counsels to argue the matter

relating to maintainability of this petition. The respondent has

submitted the following points in his arguments followed by written

submissions:

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a) The Petitioner has alleged that he was erstwhile holder of 4500

shares of the Respondent No.1 Company (“Company”)

constituting 45% of the share capital of the Company.

Petitioner has further alleged that its entire shareholding was

illegally transferred by Respondent Nos.2 and 3 in their own

names and a result, the Petitioner’s shareholding in the

Company is now zero. In view of the above allegations, the

Petitioner has sought for a rectification of the register of

members of the Company. The Petitioner has further alleged

acts of oppression and mismanagement of affair of the

company by the Respondents.

b) At the outset, it is submitted that the present Petition, as

framed, is not maintainable and the Petitioner is not entitled to

any relief as prayed for since, inter alia, the Petitioner is not a

member of the Company.

c) Under Section 244(1) of the Act, inter alia member/members

holding not less than one-tenth(10%) of the issued share capital

of the company can alone maintain a petition under Section

241.

d) However, it is an admitted position that the Petitioner neither

held any shares of the Company as on the date of the filing of

the present Petition i.e 30 July 2019 nor holds any shares as on

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 date. In fact, the Petitioner ceased to be shareholder of the

Company with effect from 21st April 2017 by transferring his

entire shareholding in the Company in favour of Respondent

Nos.2 and 3.

e) Further, the Petitioner has neither filed any application for

waiver under the proviso to Section 244(1) of the Act nor made

out a single ground for grant of such waiver in the Petition.

Therefore, the Petitioner cannot maintain a petition under

Section 241 and 242 of the Act.

f) Petitioner has filed a composite petition under Sections 59,241

and 242 of the Act. Petitioner has alleged that 4500 shares of

the Company held by him were fraudulently transferred to

Respondent Nos. 2 and 3. On this false premise, he has sought

a rectification of the register of members of the company.

g) It is a settled position of law, as held by the Hon’ble High

Court of Gujarat in GulabraiKalidasNaik&Ors. Vs.

LaxmidasLallubhai Patel &Ors., (1977) 47 Comp Cas 151,

that if the petitioner’s title to membership is in dispute, and he

has to seek a relief of the rectification for getting his name

placed on the register of members to clothe himself with the

rights of a member, it would be improper, till that dispute is

decided, to permit such a person to maintain a petition for

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 oppression and mismanagement because the petitioner is not a

member.

h) In this regard, reliance is also placed on the decision of the

Hon’ble NCLAT in NishalRajsakhavs BND Fashions Pvt. Ltd.

&Ors., 2017 SCC Online NCLAT 243.

i) In view of the above, it is submitted that the present Petition as

framed is not maintainable. Petitioner cannot maintain a

petition under Section 241 and 242 of the Act sine he is not a

member of the Company. Petitioner is required to first

establish his rights as a member of the Company before his

Petition under Section 241 and 242 of the Act can be

maintained.

j) Petitioner cannot invoke Section 241 for relief against alleged

fraudulent transfer of shares.

Section 241(1) of the Act, insofar as it is applicable to the

present case, is extracted below;

“241(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

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 (b) ……

may apply to the Tribunal, provided such member has a right

to apply under section 244, for an order under this Chapter.”

k) On plain reading of the above provision, it is evident that in

order to be able to invoke Section 241 of the Act, the Petitioner

must show that the affairs of the Company have been or are

being conducted in a manner unfairly prejudicial to him or to

public interest. In other words, the Company and conduct of its

affairs must be shown to be instrument or means of oppression.

In this case, as stated above, so far as the alleged fraudulent

transfer of shares is concerned, there is no involvement or

engagement of the Company. The transfer of shares which is

not sought to be disputed by the Petitioner was done privately

on the basis of documents executed by the parties which, the

petitioner now alleges, are forged and fabricated. In these facts,

since there is not engagement or involvement of the company

in the transfer of shares impugned in the present petition.

Petitioner is not entitled to invoke Section 241 of the Act.

3. The counsel for the petitioner countered the submissions of the

respondent and has also filed a reply on 03.01.2020. he has contented

as follows:

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a. The applicant has challenged the maintainability of the present

petition on the account that the Petitioner does not hold

requisite shareholding as prescribed under Section 244 of the

Companies Act, 2013 (“Act”). In present case, the Petitioner’s

shareholding has been reduced below 10%(nil) on account of

illegal transfer of shares. The petition under Section 244 would

be maintainable as the shareholding of the petitioner has been

reduced below 10% due to allegedly illegal transfer of shares,

which has been challenged in the petition being one of the

cause of action and therefore, the petition cannot be dismissed

at the threshold. It may be noted that if the date of presentation

of the petition should be looked into in a technical way, it

could defeat the very purpose of the legislative enactment of

Section 241 of the Act, as the overbearing majority

shareholders can simply by high-handed action or even for

other purpose and by oppressive methods, dismember minority

shareholders and leave them with no remedies, as the

dismembered minority shareholders technically will not

thereafter qualify for maintaining a petition under Section 244

of the Act, being not member at all. As the minority

shareholders will be complaining only after the acts occurred

and when they have been removed from the membership of the

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 company, the understanding and interpretation to be given to

Section 244 is only so as to Author the object of relief to be

given in a situation governed by Sections 241 of the Act and

not to foreclose the options to an aggrieved person and to deny

the very relief sought to be extended to a complaining minority

shareholder/s envisaged under Sections 244 of the Act.

4. The counsel for the petitioner has quoted a number of judgements of

the Hon’ble Company Law Board and the Hon’ble NCLAT in his

favour.

5. We have heard the arguments put forth by both the counsels and

perused the various documents submitted by them. This Tribunal is of

the view that the petitioner has to first establish his right as a member

of the respondent company before going into the issues concerning

oppression and mismanagement of the company. As has been held by

the Hon’ble High Court of Gujarat in GulabraiKalidasNaik& Others

vs. LaxmidasLallubhai Patel& Others case that if the petitioner’s title

to membership is in dispute and he has to seek a relief of the

rectification for getting his name placed on the register of members to

clothe himself with the rights of a member, it would be improper, till

the dispute is decided, to permit such a person to maintain a petition

for oppression and mismanagement because the petitioner is not a

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 member. This observation holds good in this case and as a

consequence this petition is not maintainable.

In view of the above, the petition is disposed of as non-

maintainable.

(-Sd) (-Sd)

(Dr. V.K. SUBBURAJ) (P.S.N. PRASAD)

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