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Judgment
JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL)
This appeal is filed against an impugned order dated 23.11.2023 passed by the Ld. National Company Law Tribunal, New Delhi whereby the petition filed by the appellants under Section 241 of the Companies Act, 2013 against the Respondents have been dismissed on the ground it does not meet the criteria as is provided for in Section 244 of the Companies Act, 2013.
The background of the case as given in the petition filed before the Ld. NCLT is as under:-
The Respondent No.1 Company namely M/s. Adhunik Food Products Private Limited is a private limited company having its registered office at 4080-81/20, First Floor, Naya Bazar, Delhi110006 duly incorporated on 29.03.1989 in terms and provisions of the Companies Act, 1956. The main objective of the Respondent No. 1 company is the production of wheat puffs. The production of wheat puffs was carried out until 1997, after which circumstances forced the company to lease out the factory premises and derive its income through the rent accrued for the same.
Mr. N. K. Bansal passed away on 11.09.1996 and his father Mr. B. L. Bansal and Mr. D. K. Garg joined as directors in the management of the company. Mr. Anshu Gupta resigned in 1998. After the death of N. K. Bansal in 1996, the production of wheat puffs ceased and rental income for the factory premises of the company accrued in the Canara Bank Account of the Company at Dehradun.
Mr. Anshu Gupta rejoined the board of the company in 2010. On 11.10.2012, the Petitioner Mr. L. K. Bansal was appointed as an additional Director of the company. Later on, Mr. B. L. Bansal and Mr. D. K. Garg resigned from the board.
There are 30 members of the Respondent Company and the present petition is being filed by 4 members of the Respondent Company.
The Petitioners collectively constitute more than 1/10 of the number of members holding the company’s share capital and as such the petitioners are eligible under Section 244 to bring an action of oppression & mismanagement and seek other reliefs under Section 241 of the Companies Act 2013.
The Petitioner No.1 was appointed as an additional Director of the Respondent company in 2012, and soon afterwards, became a Director. He remained the director of the Respondent company till he was fraudulently, and illegally removed from the post of directorship on 24.10.2017 by Respondent No.2 on the basis of a forged and fabricated resignation letter and a board resolution.
The Petitioner No.1 currently holds 3.96% of the total shares of the Respondent company. The Petitioners No. 2 currently holds 0.98% shares of the company. The Petitioner No. 3 currently holds 0.98% shares of the company. The Petitioner No.4 currently holds 0.98% shares of the company.
The Respondent No.2 is one of the directors of Respondent No. 1 company, responsible for the management and day-to-day affairs of company. He currently holds 15.03% shares in the company. In 2015-16, he unilaterally increased his shares from 8.89% to 15.034% shares without notifying the board of Directors.
The Respondent No. 3 is the son of the Respondent No. 2 and was appointed as a Director at the sole discretion of the Respondent No. 2 without any consultation or authorization from the board of directors, comprising exclusively of the Petitioner and the Respondent No. 2.
The Respondent No. 4, Mr. Subhash Chander Sharma was appointed as an additional Director of the company vide resolution dated 24.10.2017 that accepted the false and forged resignation letter dated 24.10.2017 of the Petitioner.
It is the case of the appellants at the time of filing of the petition under Section 241 of the Companies Act, 2013 there were 30 members/shareholders of Respondent No.1 company, out of which four members have filed the Company Petition, hence the Petitioners were more than 10% of the members and thus fulfilled the criteria, as envisaged in Section 244 of the Companies Act, 2013. It is argued the learned NCLT had misunderstood the provisions of Section 244 as is evident from the impugned order below:-
8. Analysis and Findings:
i.We have heard the Ld. Counsels for both parties and also perused the documents available on record.
ii.Before going into the merits of the present case, it is relevant to ascertain the maintainability of the present petition in view of the threshold limit as provided under Section 244 of the Companies Act, 2013.
iii.For better appreciation Section 244 of the Companies Act, 2013 is reproduced below for ready reference:
“Section 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)*********
(2)**********
iv.Upon perusal of Section 244 of the Companies Act, 2013, it is evident that only those members of a Company shall have the right to file an Application under Section 241 of the Companies Act, 2013 who fulfil the criteria laid down under the provision of Clause (a) of Section 244 (1) of the Companies Act, 2013. The qualification prescribed under the Section seeks to ensure that only persons with sufficient interests in the affairs of the Company can filed the petition under Section 241 of the Companies Act, 2013.
v.Section 244 clearly states that the members had the right to file petition under Section 241 of the Companies Act, 2013, only when the members either fulfil the (i) threshold of not less than one hundred members of the company or not less than onetenth of the total number of its members, whichever is less or (ii) any member or members holding not less than one-tenth of the issued share capital of the company.
vi.The Petitioners had placed on record the details of shareholders of the Respondent Company, which shows that a total number of 30 shareholders are holding a cumulative share capital of Rs.86,70,620 /-, whereas the present petition is jointly filed by a total 4 petitioners ‘aggregately holding 8.16% of the paid up share capital of the Respondent Company.
vii.We find force in the contention made by the Respondents that the Petitioners constitute only 8.16% i.e. 70752 shares out of 867062 shares which is evident from the MCA Master details. On the other hand, Petitioners contended that the Petitioner No. 1, 2,3 & 4 currently hold 3.96%, 0.98%, 0.98%, 0.98% (6.9%) of the total shares of the Respondent company respectively,
viii.Accordingly, from the perusal of the the Master data details of ©» °* % the Respondent company and the averments made by both parties, we are satisfied that the threshold is not fulfilled by the Petitioners conjointly. .
ix.Therefore, without going into the merits of this case, as required under Section 240-242 of the Companies Act, 2013, we hold that the present petition bearing 363/241/ND/2018 filed under Section 241 of the Companies Act, 2013 is not maintainable and therefore dismissed.
A bare perusal of the impugned order would show the Ld. NCLT had observed Section 244 of the Companies Act, 2013 requires the following conditions for filing an application/petition under Section 241 of the Companies Act viz. a) in case of a company having share capital, not less than 100 members of the company; or b) not less than 1/10 of the total number of its members whichever is less; or c) Any member of members holding not less than 1/10 of the issued share capital of the company.
The Ld. NCLT relied upon only clause (c) above viz. members holding not less than 1/10 of issued share capital of the company to hold the appellant did not fulfil the criteria but whereas it completely ignored these three conditions viz (a), (b) and (c) above can be alternatively applied and if any one of it is satisfied, the company petition under Section 241 would be maintainable.
Admittedly there were 30 members of Respondent No.1 at the time of filing of Company Petition. Admittedly four of them filed the petition under Section 241 hence condition (b) above viz. not less than 1/10 of the total number of members could apply was fulfilled, thus Company Petition was maintainable.
In view of the above the impugned order needs to go and this is set aside. Accordingly, appeal is allowed.
Pending applications are also disposed of.