The Tribunal can direct the purchase of shares to resolve disputes even without a finding of oppression, emphasizing equitable solutions in corporate governance.

JUDGEMENT

JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL)

The present appeal has been filed under Section 421 of the Companies Act, 2013 against an impugned order dated 10.02.2023 passed by the National Company Law Tribunal, Mumbai Bench in Transfer Company Petition No.57/2014.

2. It is the submission of the learned counsel for the appellant that the impugned order simply records the pleadings of the parties but gives no finding on the issue of oppression and mismanagement, if any, caused. He refers to the impugned order, more specifically to paras No. 30 and 31 as under:-

“30. We have perused the records and heard the counsels in the matter at length. In the backdrop of the facts we are of the considered view that steps need to be taken to end the dispute so that a company will function smoothly.

31. In the interest of equity and justice we direct the company to purchase the shares of petitioner under Section 242(2)(b) of the Companies Act, 2013. Therefore, we appoint CA Sujal Shah, having office at 1st Floor, Arjun, Plot 6A, VP road, Andheri (W), Mumbai 400058, (Contact No.+919821167466) as a Valuer to determine value of shares upon which shares shall be purchased by the Company. The fees for this assignment will be Rs.3,50,000/- and other applicable taxes. The fees for valuer shall be paid by the Respondent No.1 company.

3. It is argued none of the acts complained of in the Company Petition amounts to alleged acts of oppression and mismanagement but rather such alleged acts give a flavour of commercial wisdom of the appellant. Various judgements were cited to show there ought to be a finding of acts of oppression and mismanagement prior to passing of an order under sub-section (2) of Section 242 of the Companies Act, 2013.

4. The appellant relied upon Jaladhar Chakroborty and others Vs. Power Tools and Appliances Co Ltd and other 1991 SCC OnLine Cal 300 wherein the Court held:-

27. Regarding the first alleged act of oppression it is well established that non-declaration of dividend per se would riot be considered, oppression as such. In Lalita Rajya Lakshmi v. Indian Motor Co. (Hazaribagh) Ltd., , it was held (at page 212) :

"It is then argued that the board of directors controlled by the managing agents has not been properly declaring dividends. In fact what is said in paragraph 21 of the petition is that dividend which is much below the actual profit earned by the company has been declared. I fail to see how this is an act of oppression to any member or members within the meaning of Section 397 of the Companies Act. The board of directors has a discretion to declare dividend and the rate of such dividend. There is no company law that I know which obliges a board of directors to use up all its profits by declaring dividend. No company law lays down that all profits must be declared and exhausted in paying dividends. Surely, failure to do so could not be a ground for an application for oppression under Section 397 of the Companies Act. Besides, that will also not be a ground for winding up a company as indicated by Lord Blanesburgh in the observation quoted above in the Privy Council decision in Ripon Press and Sugar Mill Co. Ltd. v. Gopal Chetty [1932] 2 Comp Cas 70 (PC)."

5. Further in Maharani Lalita Rajya Lakshmi Vs Indian Motor Co (Hazaribagh) Ltd & ors 1961 SCC OnLine Cal 179 the Court held:-

4. The main defect of this application is that the facts alleged are not proved. It is essential to remember that under section 397 of the Companies Act, the Court has to be satisfied that there ' is oppression. It has to be satisfied that the affairs of the company are being conducted in 3 manner oppresive to any member or members of the company. The acts of oppression, therefore, have not only to be alleged with sufficient particulars but they must be proved also to the satisfaction of the Court. It is also necessary to emphasise that the Court has to form an opinion on two essential points, that are set out in section 397(2) of the Act. These t