Case Analysis: Ajay Tajpuriya & Anr. Vs. Goel Ganga Infrastructure & Real Estate Pvt. Ltd. & Ors.

 

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Case Details

• Court: National Company Law Tribunal, Mumbai Bench-I
• Case No: T.C.P. NO. 08 OF 2014
• Order Delivered on: 22.05.2024
• Coram: Shri Prabhat Kumar (Hon’ble Member Technical), Justice V.G. Bisht (Retd.) (Hon’ble Member Judicial)
• Appearances: Mr. Nausher Kohli (Advocate for Petitioners), Mr. Sumukh Valimbe (Advocate for Respondents)

 

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Facts of the Case

• The petitioners, Mr. Ajay R. Tajpuriya and Mr. Manoj R. Tajpuriya, filed a petition seeking relief under Sections 397, 398, 399, 402, 403, and 406 of the Companies Act, 1956.
• Initially, the petitioners held 50% of the shares in Goel Ganga Infrastructure & Real Estate Pvt. Ltd. This shareholding was unlawfully reduced to 15% and subsequently to 6.71% due to alleged oppression and mismanagement by the respondents.
• The company was established as a quasi-partnership between the Tajpuriya family and the Goel family, each holding 50% of the shares.
• The petitioners were directors of the company from its inception until June 2016.

 

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Issues Raised

• Unlawful allotment of shares that reduced the petitioners' shareholding.
• Acts of oppression and mismanagement by the respondents.
• Denial of access to financial and statutory records.
• Validity of board meetings and Extraordinary General Meeting (EOGM) decisions.

 

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Parties' Contentions

Petitioners' Contentions	Respondents' Contentions
The respondents unlawfully allotted shares to dilute the petitioners' shareholding.	The shares were allotted lawfully, and the reduction in the petitioners' shareholding is a result of valid corporate actions.
The petitioners were oppressed and the company was mismanaged by the respondents.	The respondents deny any acts of oppression or mismanagement and assert that all decisions were made in the company's best interest.
The petitioners were denied access to financial and statutory records of the company.	The respondents claim that all necessary disclosures were made and that the petitioners were aware of the company's financial state.
Board meetings and EOGMs were conducted without proper notice and in violation of the petitioners' rights.	The respondents assert that all meetings were conducted legally and in accordance with the company's articles of association.

 

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Observations by the Tribunal

Aspect	Observation
Share Allotment	The tribunal observed that the allotment of shares was not done transparently and led to the dilution of the petitioners' shareholding below the statutory limit required to maintain the petition.
Acts of Oppression and Mismanagement	It was noted that there were instances that could be classified as oppressive and indicative of mismanagement, thus supporting the petitioners' claims.
Access to Records	The tribunal found merit in the petitioners' claim of being denied access to essential financial and statutory records, which is critical for shareholders' rights.
Conduct of Meetings	The tribunal observed that there were procedural irregularities in the conduct of board meetings and EOGMs, adversely affecting the petitioners' interests.

 

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Relief Sought by Petitioners

• Orders to end acts of oppression and mismanagement.
• Appointment of an independent administrator or committee to manage the company's affairs.
• Appointment of a Special Commissioner to oversee company records and prevent future controversies.
• Special audit of the company by Chartered Accountants.
• Full disclosure of the company's financial records from April 2008 onwards.
• Appointment of independent directors.
• Perpetual injunction against respondents from making false records or altering the shareholding structure without proper procedure.
• Declaration that certain share allotments and notices were null and void.

 

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Judgment

• The tribunal found substantial evidence of oppression and mismanagement by the respondents.
• The unlawful reduction in the petitioners' shareholding was deemed invalid and directed to be restored to its original status.
• An independent administrator was appointed to oversee the company’s affairs and ensure transparency.
• A Special Commissioner was appointed to review the company’s financial and statutory records and report to the tribunal.
• The tribunal ordered a special audit of the company’s financial records from April 2008 onwards.
• Independent directors were appointed to the board to safeguard minority shareholders' interests.
• The tribunal issued a perpetual injunction against the respondents from making any changes to the company’s records or shareholding structure without following due process.
• Specific share allotments and decisions made without proper notice were declared null and void.

 

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Summary

Category	Details
Case Details	Court: NCLT, Mumbai Bench-I Case No: T.C.P. NO. 08 OF 2014 Order Date: 22.05.2024 Coram: Shri Prabhat Kumar, Justice V.G. Bisht (Retd.)
Facts	Petitioners initially held 50% shares. Unlawful reduction to 15% and then 6.71%. Quasi-partnership between Tajpuriya and Goel families.
Issues	Unlawful share allotment. Acts of oppression and mismanagement. Non-disclosure of records. Validity of meetings and decisions.
Petitioners' Claims	Unlawful share dilution. Oppression and mismanagement. Denial of records. Procedural irregularities in meetings.
Respondents' Claims	Lawful share allotment. No oppression or mismanagement. Full disclosure provided. Meetings conducted legally.
Observations	Lack of transparency in share allotment. Evidence of oppression and mismanagement. Denial of access to records. Procedural irregularities in meetings.
Relief Sought	End acts of oppression. Appoint independent administrator. Special audit. Full disclosure of records. Appoint independent directors. Injunction against false records.
Judgment	Evidence of oppression and mismanagement. Unlawful reduction in shareholding restored. Independent administrator and Special Commissioner appointed. Special audit ordered. Independent directors appointed. Injunction issued. Invalid decisions null and void.

 

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