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2025 Supreme(Online)(NCLT) 181
NATIONAL COMPANY LAW TRIBUNAL
Shri. Jyoti Kumar Tripathi, Shri. Ravichandran Ramasamy, JJ
Jose Thomas – Appellant
Versus
Sebastian Mattam – Respondent
IA(Companies.Act) - 216/2024
For the Petitioner:Kiran Narayanan
For the Respondent:Terry V. James
Allegations of oppression and mismanagement under the Companies Act require substantial proof, which the Applicant failed to provide, leading to dismissal of the application.
Headnote:(A) Companies Act, 2013 - Sections 241 and 242 - Interlocutory application filed alleging oppression and mismanagement - Applicant claims misuse of company assets and failure to follow proper procedures in share transfers - Respondents accused of financial misconduct and lack of transparency. (Paras 2, 5, 6, 8)
(B) Oppression and Mismanagement - The court found that the allegations did not meet the legal threshold for oppression or mismanagement as defined under applicable laws. (Paras 5, 6)
(C) Due Diligence - The Applicant failed to demonstrate due diligence or internal resolution efforts prior to approaching the Tribunal. (Paras 7, 8)
Facts of the case:
The Applicant alleged that Respondents misused company assets for personal gain, registered a competing company without notice, and failed to provide necessary documentation regarding share transfers.
Findings of Court:
The court determined that the Applicant did not substantiate claims of oppression or mismanagement and lacked the right to seek relief.
Issues: The main issues were whether the actions of the Respondents constituted oppression or mismanagement and if the Applicant had the right to seek the requested documents.
Ratio Decidendi: The court ruled that the allegations did not constitute oppression or mismanagement under the Companies Act, and the Applicant failed to show due diligence or internal resolution efforts.
Result: Application dismissed.
ORDER
Per: Coram.
The present Interlocutory Application bearing No. IA(C/Act)/216/KOB/2024 has been filed under Rule 32 read with Rule 11 of the NCLT Rules, 2016 by Mr. Jose Thomas (hereinafter Applicant M/s. JRT Rock Products Private Limited and 11 Others Respondents ) called “ ”) against Respondents seeking the following relief:
(hereinafter called “ ”
CP(C/Act)/09/KOB/2023 In re: M/s. JRT Rock Products Private Limited.
➢ To direct the Respondents 2 to 5 to produce the following documents: -
a. Copy of letter of Appointment of the Valuer. b. Copy of the report submitted by the Valuer.
c. Copies of bank account statements of all bank accounts of the 1st Respondent company for the period from 01.04.2016 till date.
2. The Brief facts of the case are as follows: -
i. The Applicant herein is the Petitioner in CP(C/Act)/09/OB/2023 filed under Sections 241 and 242 challenging acts of oppression and mismanagement. The Applicant’s specific case is that the respondents misused the assets of the 1st Respondent Company for their financial benefit. On 13.09.2017 a new private company M/s. Mattathil Mines and Developers and Private Limited were registered discreetly by the Respondents in the same line of business as the 1st Respondent Company without the Applicant’s knowledge. The newly registered entity borrowed loans from the 8th Respondent using the assets of the 1st Respondent Company as collateral without informing the shareholders including the Applicant. The loans availed thus were used to settle the personal loans of the Respondents and purchased 10 acres of land in the name of the 7th Respondent Company in February 2018, this is within just 3 months of the existence of the 7th CP(C/Act)/09/KOB/2023 In re: M/s. JRT Rock Products Private Limited.
Respondent company. The said company has applied for a mining permit for quarrying on this 10-acre of land and there is no other business activity for the company. Thus, the Respondents have caused financial loss to both the 1st Respondent Company and the Applicant, its shareholders. The Respondent Nos. 2 to 5 not only sold the company shares behind the Applicant’s back but also utterly failed in their fiduciary duty as Directors by floating separate businesses and diverting the assets of the 1st Respondent Company for private gain, which makes it a classic case of oppression and mismanagement.
ii. The Applicant stated that Respondent Nos. 2 to 5 and Respondent No. 7 have purposefully hidden the fact of availing loans using the assets of the 1st Respondent Company and made false assertions before this Tribunal. The Applicant had specifically sought a direction to the 8th Respondent to place on record details of the loans availed by the 7th Respondent company which had all along been resisted by the other Respondents. Despite taking out notice multiple times and directions by this Tribunal to be present the 8th Respondent has intentionally not appeared to avoid making any statement for it would expose the illegal acts of the other Respondents.
iii. It is stated that Applicant has himself managed to obtain a series of documents evidencing several dubious loan transactions. These loan documents prove the charge of oppression and CP(C/Act)/09/KOB/2023 In re: M/s. JRT Rock Products Private Limited. mismanagement. It is thus clear that Respondent Nos. 2 to 5 have conspired with Respondent Nos. 6 and 9-12 to defraud the 1st Respondent Company for their private interest and to make personal gains. It is also stated that in the reply statement filed by the Respondent in the Company Petition has expressly denied that the assets of the 1st Respondent Company were used for availing loans for any other company. Annexure A-10 - Annexure A-19 disprove the Respondent’s averments and these documents prove that the respondents have committed oppression and mismanagement.
iv. It is stated that the Respondents stated the shares of the 1st Respondent company were sold after its value was fixed at 10,857/- per share by a re
