Jupiter Comtex Pvt. Ltd. & Ors. vs Bhavna Sanjay Mistry & Ors.

Per Justice Sharad Kumar Sharma, Member (Judicial)

This Order, would be covering the Orders, to be passed on I.A. No. 6189 of 2026 in Comp. App. (AT) No. 329 of 2026and I.A. No. 6537 of 2026 in Comp. App. (AT) No. 340 of 2026.

The proceedings, under Sections 241 and 242 of the Companies Act, 2013, stood initiated at the behest of Bhavna Sanjay Mistry, in an adjudication that has taken place on 06.07.2026 by the learned NCLT Ahmedabad in CP No. 29(AHM)/2021. Whereby, the Company Petition has been decided with the following directions:-

Both, the Petitioner, Bhavna Sanjay Mistry, and the Appellant herein, i.e., Jupiter Comtex Pvt. Ltd., who was an opposite party to the proceedings of the Company Petition, have expressed their disagreement with the Impugned Order dated 06.07.2026, and, hence, are before us.

The Company Petition was initiated by Bhavna Sanjay Mistry, wherein she sought a relief of declaration to the effect that, the conduct of Respondent Nos. 2 to 4 in CP, i.e., Gitesh Jayantilal Mistry, Jatin Jayantilal Mistry and Rakesh Giteshkumar Mistry, who were the Directors of Respondent No. 1 Company, amounted to be the acts of aberration and malfunctioning in the internal management of the Company and there were blatant acts falling within the domain of Sections 241 and 242, which itself would be establishing intentional acts of oppression and mismanagement.

The Petitioner, Bhavna Sanjay Mistry, prayed for reconstitution of the Board of Respondent No. 1 by excluding Respondent Nos. 2 to 4, along with their conniving officers, agents, servants and representatives, and for passing of an appropriate Order to have her representative in the form of Directors, who was to be nominated by the Petitioner, as per the arrangement since the incorporation of Respondent No. 1 Company.

The other ancillary relief that, was sought was for, was appointment of an independent Auditor to inquire into the financial irregularities allegedly committed by Respondent Nos. 2 to 4, for the period between 2010-11 to 2019-20 (which, has otherwise been argued by the Appellant in Comp. App. (AT) No. 329 of 2026 to be 2024-2025) and to submit his report, so that a buy-back proposal may be taken into consideration by the Petitioner, Bhavna Sanjay Mistry, for purchasing the shares, based upon the actual valuation report. The Petitioner also sought a direction for Respondent Nos. 2 to 4 to undo the illegal gains made by them, which had ultimately resulted in unprecedented losses suffered by the Petitioner and Respondent No. 1 Company.

It is under these factual circumstances that, when the matter was taken up in the context of the reliefs sought in the main Company Petition, the Petitioner argued that she, Bhavna Sanjay Mistry, then held a shareholding of 33.2%, as it stood reflected in the shareholding pattern placed on record and had further substantiated by placing the copy of the share certificate on record. It was further contended by the Petitioner, Bhavna Sanjay Mistry, in her pleadings that Respondent Nos. 2 to 4, had been persistently functioning in utter breach of their fiduciary relationships and the trust reposed in them in the functioning of Respondent No. 1 Company, thereby resulting in multifarious losses.

She, in continuation submitted that M/s Jupiter Comtex Private Limited, was incorporated in the year 2007 under the provisions of the Companies Act, 1956, and was accordingly registered with the Registrar of Companies, Ahmedabad. Prior to its incorporation, the business of the Company was carried on through partnership firms, namely, Jupiter Enterprises and Jupiter Engineering. It is argued that they were engaged in the manufacturing of textile machinery, which was a business being managed by the companies/partnership firms. However, owing to the demise of one of the partners in 2001, these two entities were converted into Jupiter Comtex Private Limited, which came into existence in 2007 to facilitate the business expansion

The Petitioner in the Company Petition submitted, that they had control over the affairs and finances of the Respondent Company, though its management remained under the control of Respondent Nos. 2 to 4 and certain other members of the Mistry family, i.e., Saurin Gitesh Mistry, the son of Respondent No. 2, who was engaged in the administration, though it was a fact that he was not holding any official position, within the setup of the Company.

Records reveal that in 2008, one of the founding members of Respondent No. 1, namely Shri Sanjay Mistry, met with the said demise. It is because of the said situation that, since the Respondent No. 1 was functioning as a family-run quasi-partnership and the family members continued to hold the shareholding and were participating in the management of the Company. Hence, in terms of the understanding that, was arrived at between the partners, the shares held by Shri Vishal Mistry and Smt. Janki Vishal Mistry were shown to have been subscribed amongst the family members.

However, because of the fact that, despite the demise of Mr. Sanjay Mistry, the Petitioner contends that she was holding faith in Respondent Nos. 2 to 4 to manage the affairs of Respondent No. 1, but the trust was breached by Respondent Nos. 2 to 4, who were indulging themselves in the act of oppression and mismanagement, including the siphoning and diversion of funds. In the Petition, the Petitioner has come up with a case that her son, who was employed with Respondent No. 1 Company, was assured that he would be subsequently inducted as a Director on the Board. However, it was pleaded by Petitioner, that later on, he was meted out with discriminatory treatment and coercion at the hands of Respondent Nos. 2 to 4.

It is because of the aforesaid reasons, that the Company Petition was preferred for the aforesaid relief, as it has been briefly stated in the preceding paragraphs. When the breach persisted, the petitioner is shown to have written a letter on 08.09.2020, requesting Respondent Company to split the shares held by her. It was submitted that Respondent No. 1 Company, through Respondent No. 3, would be placing the issue before the Board, for consideration regarding splitting of the shares and for carrying out the Resolution for its adoption.

Thereafter, after the exchange of pleadings, the learned Tribunal formulated three major issues for consideration to decide the controversy inter se between the parties. Primarily, the issues, which were considered by the learned Tribunal were to the effect:-

The learned counsel for the Appellant of Company Appeal (AT) No. 329 of 2026, primarily has drawn the attention of this Tribunal to the finding that has been recorded in the Impugned Judgment, pertaining to the manner in which the valuation report has been taken into consideration. Particularly, he has made reference to the finding recorded in Para No. 59 of the Judgment and argues the issue from the perspective that, as a matter of fact, the valuer who was thus later appointed, i.e., Mr. Dharmendra Dhelariya, and the report submitted by him on 28.03.2025 was nothing but rather a replica of the earlier reports submitted by the earlier valuers, viz. M/s Crest Valuation Services Private Limited, Mr. Pranav Parikh and Mr. Shirish Sharma.

Respondent No. 1’s case before us had been, that, because of the earlier Order passed by the Tribunal on 07.12.2021, it is recorded in the proceedings that exclusively a reply from Respondent No. 1, i.e., Jupiter Comtex Private Limited, was received and by that time i.e., till 07.12.2021 no reply was received from Respondent Nos. 2 to 10, and hence, they were directed to be proceeded ex-parte. Considering the response given by Respondent No. 1 while contesting the proceedings, the Respondent No. 1 had contended that the institution of the Company Petition itself was a gross abuse of process, having been instituted with a malafide intention, as none of the ingredients contemplated to be satisfied under Sections 241 and 242 and Sections 58, 59, 210 and 213 of the Companies Act, 2013 were made out and the Company Petition was liable to be dismissed.

Apart from pleading the aforesaid fact, the Respondent before the learned Tribunal had submitted that there was no prima facie case established to be brought within the ambit of the aforesaid provisions and, thus, it deserved dismissal. It was argued that, rather the proceedings of the Company Petition were nothing but an attempt to interfere in the smooth functioning of the Company and to settle personal disputes under the guise of minority shareholder rights.

They further denied the aspect pertaining to the allegation of diversion of the funds and its business of the Respondent Company, as the Respondent entities operate in a distinct line of business and they do not compete with or prejudice the interest of Respondent No. 1 Company.

The said response of the Respondent was answered by the Petitioner by filing a rejoinder on 07.06.2022.

When the proceedings were again taken up on 17.08.2022, Respondent Nos. 2 to 10, who were earlier directed to be proceeded ex-parte by an Order dated 07.12.2021, they had appeared through their counsel. Respondent Nos. 4 to 6 appeared through their counsel and prayed for filing of reply to the petition. The learned Tribunal observed that, since, by virtue of the earlier Order passed on 17.01.2023, they had already been directed to be proceeded ex-parte, the parties were permitted only to file their written notes of submissions.

Similarly, by an Order dated 19.06.2023, the counsel for Respondents were also directed to file their reply within two weeks. After the exchange of pleadings, the learned Tribunal took up the matter for its final adjudication and, upon considering the rival contentions and particularly in the context of the pleadings raised by the parties, came to conclusion.

During the course of the proceedings of this Company Appeal, what we could see from the findings recorded by the learned Tribunal was that, on 08.02.2024, the parties recorded their submissions in order to bring an end to the controversy by appointment of an independent valuer for the purposes of carrying fresh valuation of the shares of Respondent No. 1 Company, or there was an additional request made that the Company may be directed to buy back the shares of Respondent No. 1 Company, from the Petitioners.

The learned Adjudicating Authority, with the consent of the counsel for the parties, appointed M/s Crest Valuation Services Private Limited, a registered valuer, to determine the fair value of shares of Respondent No. 1 Company, as it was existing between 31.03.2018 and 31.03.2023, and the valuer was expected to give its report within a period of 35 days.

However, there was some distrust which was expressed with the earlier valuer, who was appointed on 11.03.2024 because of the fact that the Petitioner had filed I.A. No. 27 of 2024 under Rule 11 of the NCLAT Rules, 2016 seeking modification of the earlier order of appointment of the valuer dated 11.03.2024, on the ground that M/s Crest Valuation Services Private Limited, which had been appointed as the valuer, had expressed its inability to undertake the valuation and had proposed for a substitution of the valuer.

Consequently, the learned Adjudicating Authority, vide its Order of 25.04.2024, while disposing of the said I.A. No. 27 of 2024 preferred by the Petitioner, appointed Mr. Pranav Parikh (Land & Building), Mr. Shirish Sharma (Plant & Machinery) and Mr. DharmendraDhelariya (Financial Assets) as independent registered valuers to determine the actual face value of shares of Respondent No. 1 Company as on 31.03.2018 and 31.03.2023.

The valuation report was submitted, and the Adjudicating Authority, on 11.07.2024, took on record the valuation reports submitted before the Tribunal, by the appointed valuers in respect of the financial assets, movable assets and immovable assets of Respondent No. 1 Company. Respondent No. 1 is shown to have contested the valuation reports as aforesaid and had filed an affidavit dated 21.08.2024, raising objections towards the contents of the valuation reports as submitted on 11.07.2024.

The Petitioners too filed their objections to the valuers' reports dated 11.07.2024. Since there was a massive rift between the parties as regards the contents of the reports submitted by the valuers, it was observed that the existing valuation reports demonstrated the acts of mismanagement, siphoning of funds, diversion of business to sister concerns, including to M/s Jupiter Machinery, and undervaluation of the Company's assets, which ultimately caused prejudice to the interests of the Petitioners and the other shareholders.

Since there had been a doubt pertaining to the valuers' reports as submitted by the earlier valuers, the Tribunal, vide its order of 28.11.2024, while recording the submissions of both the counsels as against the valuers' reports and on the question of appointment of a new valuer to undertake a fresh valuation of shares of Respondent No. 1 Company, accordingly directed the parties to suggest a valuer.

In pursuance of the Order dated 28.11.2024, Respondent Nos. 1 to 9 filed a proposal, thereby proposing Mr. Darshil Shah, the registered valuer, while the Petitioner also filed its request on 03.12.2024, proposing the name of CA Dr. Anjali Nirav Choksi as a registered valuer. While considering the aforesaid two proposals during the course of hearing that was held on 05.12.2024, the Tribunal considered the proposed name of valuers for appointment as an independent valuer from the panel of the Tribunal. Ultimately, Mr. DharmendraDhelariya was appointed as an independent valuer to determine the valuation of shares of the Company and was called upon to submit the valuation report within 30 days.

It has been argued by the learned counsel for the Appellant that, though Mr. Dharmendra Dhelariya was appointed as an independent valuer to carry out the valuation a fresh, but owing to the fact that whatever report has been submitted by him, in fact, its not an independent report, rather, he has relied upon the earlier reports and made the earlier report as the basis of his report. It is submitted by the Appellant of Comp. App. (AT) No. 329 of 2026 that, the said report submitted by Mr. Dharmendra Dhelariya, should not have been taken as to be the basis for determination of the exact value of the Company's assets.

It is argued by the counsel for the Appellant that, since the valuation report itself does not reflect a true and correct valuation, and as no independent valuation was ever carried out by Mr. Dharmendra Dhelariya, rather, he has referred to the earlier two valuation reports and borrowed the earlier reports, which themselves had been doubted by the parties to the proceedings in the Company Petition, because of the subsequent order by learned NCLT, the same ought not to have been taken as the basis for the fresh report submitted by Mr. Dharmendra Dhelariya for the purposes of being considered while deciding the Company Petition.

Ultimately, the learned Tribunal, while deciding the respective issues based upon the report of Mr. Dharmendra Dhelariya, proceeded to decide the aforesaid issues as mentioned above, observing that Respondent No. 1, i.e., Jupiter Comtex Private Limited, did have an organisational structure having the characteristics of a closely held family company, in which equitable consideration cannot be divorced from the corporate structure. Because of the aforesaid fact that, it was a closely held family company, its commercial activities ought not to be determined divorced from the relationship between the constituent shareholders of the Company.

However, the learned Tribunal, while deciding Issue No. 1, pertaining to the aspect of determination of act of oppression, and to bring the proceedings within the meaning of Sections 241 and 242 of the Companies Act, ultimately observed that the acts complained of did constitute as to the acts of oppression. While holding the aforesaid conclusion, the Tribunal observed that, since it was a closely and internally related company owing to the family relationship, there were different expectations from the branches in order to continue to have a fair and meaningful participation in the affairs of the Company. It was ultimately observed that, because the affairs of the Company and the fruits arising out of the business had to be in consonance with and consistent with its constitutional framework, the same stood frustrated, and the Tribunal came to a conclusion that there had been conduct amounting to oppression.

The learned Tribunal, similarly, while considering Issue No. 2, with regard to the conduct of affairs of Respondent No. 1 Company in a manner constituting mismanagement, based upon the same set of evidence, came to the conclusion that there had been mismanagement in the affairs of the Company, for the reason that a parallel new partnership was incorporated, which was dealing with the sale of textile machinery parts, which was carrying out the similar business to that of Respondent No. 1 Company. The turnover of the said firm increased, whereas the turnover of Respondent No. 1 Company is shown to have decreased. The said aspect has also been argued by the counsels for the Respondents while taking us to the various records.

Ultimately, it was observed that Respondent Nos. 2 to 4 had failed to establish and assign any justified reason for starting a new business, and that too with the exclusion of the Petitioner from carrying out the parallel business, which could be said to be interlinked with one another. Looking to the tenacity of the arguments, we could conclude that the records do reflect that had been serious discord between the parties, which raises the question regarding the manner in which the affairs of Respondent No. 1 Company were being conducted. It is evident, that consequent to the sad demise of Late Shri Sanjay Mistry, and based on the material placed on record, that the management of the affairs of the Company by Respondent Nos. 2 to 4 was in a manner that was established to be detrimental to the interest of Respondent No. 1 Company and its shareholders.

It was further concluded by the learned Tribunal, that there was diversion of business and financial impropriety, resulting in the breach of fiduciary duties, which was of a very high magnitude. While concluding thereof, the Tribunal observed that there was nothing on record to show that the business of Respondent No. 1 Company was to be shared with the Petitioner. Accordingly, the Tribunal held that Respondent Nos. 2 to 4 had diverted the business of Respondent No. 1 Company, and had siphoned its funds, and had entered into related party transactions and committed other breaches, and hence, observed that it was being in a manner which was prejudicial to and oppressive to the functioning and interests of Respondent No. 1 Company.

The learned Tribunal considered as to, under the given set of circumstances and the evidence that has been placed on record, particularly in context of the fractured valuation report and the manner in which the Company has been financially siphoned, adversely affecting the interest of Respondent No. 1 Company, the learned Tribunal, while exercising its powers under Section 242(2)(h) of the Companies Act, recorded its finding in Para No. 5.6, that the removal of Respondent No. 2 as a Director of Respondent No. 1 Company, by exercising powers under Section 242(2)(h) of the Companies Act, and, at the same time, appointing the nominee of the Petitioner, holding 33.20% shares in the Company, as a Director, would ensure that her interest as well as the interest of the Company are protected.

Thus, the removal of some Director from the existing Directors, and adding a Director from the Petitioner's side was taken to maintain a balance in the constitution of the Board, so as to ensure successful operation of the Company and to protect the interest of the stakeholders of the Company. However, and rightly so, there was a denial of appointment of an Administrator because of the fact that the Company was already functioning with a changed configuration of the Directorships, as observed in Para No. 56.5 of the Judgment.

The learned Tribunal considered the fact that the relationship between the parties, which was initially a closely-knit family business, has ultimately fractured, and they have been litigating for several years, levelling serious allegations against one another. The internal mutual confidence between the parties has already been breached. The Tribunal thought that it would not be appropriate to exercise its powers under Section 242(1)(b) to direct the winding up of the Company. Owing to the aforesaid situation, the Tribunal, while drawing its authority vested in it under Section 242(2), had carved out an alternative solution, as has been referred to in the finding recorded in Para No. 62 of the Judgment.

So far as the findings recorded in the conclusion drawn by the Tribunal are concerned:

This would not have been a fair observation made by the learned Tribunal based upon the report of Mr. Dharmendra Dhelariya because, as per the arguments extended by the learned counsel for the Appellant, the report submitted by Mr. Dharmendra Dhelariya was not an independent and fair report, owing to the fact that it was motivated as he had borrowed its implications and the conclusions drawn from the earlier report, which has not been accepted owing to the objections raised by the parties. Hence, at this stage, carrying out the proposal of buying out the shares of the Petitioner/Respondent in Company Appeal may not be feasible outcome to be permitted to be continued under the Impugned Order.

The other finding that has been recorded pertains to the sale consideration and for execution of documents for share transfer deeds, as prescribed under Clauses 2 and 3, as per the finding recorded in the Judgment, which has been directed to be undertaken within a period of 90 days, whether on the basis of valuation determined by the independent registered valuer or at such mutually agreed value between the parties. This, yet again, at the moment is a controversial observation made by the Tribunal because both the things cannot co-exist. Either the valuer's report has to be accepted for the purposes of the transfer of shares in the buy-back policy of the shares of the Petitioner, and if that is to be followed, then there is no question thereafter of a mutually agreed value between the parties.

So far as this stage of the appellate proceedings, is concerned, we are of the tentative view, that is exclusively for the purposes of considering the relief prayed for in the interim application, that it is not in controversy that late Mr. Sanjay Mistry was one of the founding members of the Company. Owing to the fact that the Petitioner never held the office of a Director, there would be a complete exclusion from any meaningful participation in the affairs of Respondent No. 1 Company.

Further, it shows that after the said demise of Mr. Sanjay Mistry, the management of Respondent No. 1 Company remained exclusively within the hands of Respondent Nos. 2 to 4. Respondent Nos. 2 and 3 were brothers, and Respondent No. 4, who is the son of Mr. Gitesh Mistry, Respondent No. 2, in fact, it shows that the business remained in the hands of the family of Gitesh Mistry and Jatin Mistry, though, despite the fact that they were holding only 0.13% of the shares of the Company.

Hence, while staying the effect of the Impugned Order dated 06.07.2026, except for Clause No. (v), as regards Respondent No. 2, Mr. Gitesh Mistry, who would stand removed and cease to hold the office of Director of Respondent No. 1 Company, and thereafter leaving it open for the Petitioner to appoint a nominee as a Director of Respondent No. 1 Company, and upon receipt of such communication from the Petitioner/Respondent Company, through the Board of Directors, shall appoint the Petitioner's nominee as a Director. The directions as contained in Clause (vi) of the Order, are not being disturbed by us. The same would not be given effect to by the Respondent, till next date of listing.