JUDGMENT :

A.I.S. Cheema, J.

1. The Appellants were Petitioners 1, 3 to 5 before the National Company Law Tribunal, Kolkata Bench, Kolkata (‘NCLT’ in short) in CP 181/2013. The Petitioner No.2 -Smt. Padmini Rath, wife of Appellant No.1 was Petitioner No.2. She expired when the matter was pending in National Company Law Tribunal. The petition was filed against the present Respondents under Section 397, 398 and 402 of the Companies Act, 1956 (‘old Act’ in brief) claiming oppression and mismanagement on the part of Respondents in the Company – Respondent No.1.

2. The learned NCLT after hearing the matter dismissed the Company Petition and hence, the present appeal by the original Petitioners.

3. The Appellants claimed that the Respondent No.1 Company was incorporated in 1980 with the object of running a hotel at Paradeep in Odisha by founder Directors and shareholders -Shri Antarjyami Pattnaik, Shri Shyam Charan Pattnaik and Smt. Reeta Mohanty. The Appellant No.1 took over the business of Respondent No.1 Company subsequently. He was appointed Managing Director on 2nd July, 1997. The Appellants along with deceased Smt. Padmini Rath were holding 647 equity shares comprising 77.29% of the total paid up share capital of the Company. The total paid up share capital was of Rs.8,37,000/-divided into 837 equity shares of Rs.1,000/-each. The Appellant No.1 was based in Cuttack and Respondent No.2 was based in Paradeep. Respondent No.2 (main contesting Respondent – hereafter referred as ‘Respondent’) was invited by the Appellant No.1 (hereafter, also referred as ‘Appellant’) and was allotted 190 equity shares comprising 22.7% of issued, subscribed and paid up share capital. The shares were allotted to Respondent as compensatory remuneration to look after day-to-day affairs of the Company. According to the Appellants, because of the Appellant, the Company flourished. The Appellant had implicit faith in contesting Respondent. Because the Appellant reposed faith and trust in the Respondent, he gave over the reins of the Company in the hands of the Respondent. At the behest of Respondent, the Appellant from time to time used to put his signatures over blank papers and blank letter pads to ensure smooth running of the business affairs of the Company. This continued for about a decade and with passage of time, the Appellant reposed further faith and confidence in the Respondent.

4. The Appellants claimed that the Appellant (Appellant No.1) received telephone call from one Shri Ramesh Chandra Pratap, F.C.A. Partner of M/s. Pratap & Co. who were Auditors of the Company seeking confirmation of changes in shareholding of the Company for the year ending 2012. The Appellant denied this and the Respondent No.2 assured the Appellant No.1 that the irregularities would be corrected at the earliest. Respondent No.2 intimated the Appellant No.1 that the audit of the accounts had not been completed because of such irregularities and urgent steps are being taken. However, audited Balance Sheets for the year ending 2012 had not been filed. According to the Appellants, the Appellant No.1 then started making enquiries and sometime in March, 2013 came to know that due to the faith reposed in Respondent No.2, the Respondent No.2 had diluted the shareholding of Appellant No.1 in the Company by forging signatures of the Appellant No.1 and siphoning of funds. In March, 2013, Appellants came to know that Respondent No.2 had filed Form 20B with Registrar of Companies showing massive change in shareholding. Form No.5 had been filed by Respondent No.2 as well as Form No.32 had been filed recording resignation of Appellant No.1 from the post of Managing Director and appointing Respondent No.2 in the same capacity. According to the Appellants, Respondent No.2 forged and/or caused signature of Appellant No.1 to be forged in purported Resolution passed in Board Meeting dated 6th March, 2012. Respondents proceeded to raise the authorized share capital of the Company from Rs.12 lak