JUDGMENT :

DIPANKAR DATTA, J.

THE APPEALS

1. National Company Law Tribunal, Allahabad Bench¹ [NCLT] allowed a company petition² [C.P. IB No. 107/ND/2013] filed by Mrs. Shailaja Krishna³ [Appellant] under Sections 397 & 398 of the COMPANIES ACT , 1956⁴ [1956 Act] by its judgment and order dated 04.09.2018. In appeals there-against⁵ [Company Appeal (AT) No. 379/2018] the National Company Appellate Tribunal, Principal Bench at New Delhi⁶ [NCLAT] vide its common judgment and order dated 2nd June, 2023 set aside the said judgment and order of the NCLT and allowed two sets of appeals of the respondents. These civil appeals assail the said appellate judgment and order of the NCLAT.

BRIEF FACTS

2. The first respondent-Satori Global Limited⁷ [COMPANY] a private limited company was earlier known as Sargam Exim Private Limited. The COMPANY, incorporated on 13.04.2006, primarily engaged in trading of paper. Sargam Exim Private Limited’s transition to Satori Global Limited will unfold as we proceed to narrate the facts.

3. At the time of incorporation in 2006, the authorized share capital of the COMPANY was Rs. 2 crores divided in to 20,00,000 equity shares of Rs. 10 each. The subscribed and paid-up capital of the COMPANY initially was Rs. 3 lac divided into 30,000 equity shares of Rs. 10 each.

4. The Appellant and the second respondent - Mr. Ved Krishna - the Appellant’s husband were the original promoters of the COMPANY. The Appellant initially subscribed to 5,000 equity shares, while the second respondent subscribed to the remaining 25,000 shares. In December 2006, the second respondent transferred 24,500 shares to the Appellant, thereby increasing her shareholding to 29,500 shares. The remaining 500 shares of the second respondent were transferred to the third respondent-Mr. Nirupam Mishra.

5. Subsequently, an additional 10,000 shares were issued to the Appellant. By the end of financial year 2006-2007, she held 39,500 shares of the COMPANY out of a total of 40,000 equity shares of the issued and paid-up share capital, representing more than 98% of the COMPANY’s shareholding.

6. On 01.02.2007, the second respondent resigned from the directorship of the COMPANY. His resignation was accepted at the board meeting and the third respondent was inducted as Director of the COMPANY in his place.

7. In the same year, the company made a long-term investment in M/s Yash Papers Ltd. (now known as Pakka Limited) by acquiring 10 lakh equity shares of the said company of Rs 10 each including 30 lakh equity warrants of Rs 11 each of which Rs 1.10 per warrant was paid. The balance sheet for the year 2007 reflected a holding of approximately 33,34,500 shares in M/s Yash Papers Ltd., representing around 14% of its shareholding.

8. On 15.12.2010, the fifth respondent was inducted as an additional director in the COMPANY. Subsequently, on 17.12.2010, the Appellant is stated to have resigned from the COMPANY. Her resignation was accepted at a board meeting attended by the third respondent and the fifth respondent.

9. On the same day, that is, on 17.12.2010, a gift deed was executed in Faizabad through which the Appellant purportedly transferred her entire shareholding in the COMPANY to the fourth respondent - Mrs. Manjula Jhunjhunwala - her mother- in-law out of love and affection.

10. The Appellant’s entire shareholding was transferred to fourth respondent vide Share Transfer Form dated 01.10.2010 and the validity