Majority shareholders cannot invoke oppression claims against minority shareholders for personal grievances under the Companies Act.

IN THE NATIONAL COMPANY LAW TRIBUNAL

AMARAVATI BENCH

(Through Hybrid Mode)

Item No.2

CP/9/241/AMR/2025

IN THE MATTER OF:

Ms. Pillarisetty Venkata Radha …Petitioner

Versus

M/s Kameswari Hotels Pvt Ltd …. Respondent

Under Section: 241 of Companies Act, 2013

Order delivered on 17.07.2025

CORAM:

SHRI UMESH KUMAR SHUKLA SHRI KISHORE VEMULAPALLI HON’BLE MEMBER (TECHNICAL) HON’BLE MEMBER (JUDICIAL)

PRESENT:

For the Petitioner : Mr. C. Chandrasekhar, Adv

ORDER At the time of calling the matter at 10:35 A.M., this Bench observed that the Petition is listed for the first time, and hence, interim reliefs could not be granted without issuing notice and hearing the Respondents. The Bench suggested that notices be issued to the Respondents with a short adjournment for filing their replies, after which the matter could be considered on merits.

This Petition has been filed by the Petitioner under Sections 241 and 242

read with Section 166(5) of the Companies Act, 2013, seeking various reliefs against alleged acts of oppression and mismanagement by Respondent No. 2,

which are mentioned below:

However, during the course of hearing, learned Counsel for the Petitioner misunderstood the observations of the Bench and remarked that the Bench appeared to be "pre-occupied" with the case. Nevertheless, this Bench allowed the Counsel for the Petitioner to advance submissions on facts and legal precedents from 10:45 A.M. to 11:30 A.M. with a detailed hearing lasting approximately 45 minutes. After conclusion of arguments, the Petitioner expressed an intention to withdraw the Petition. However, this Bench is not inclined to permit withdrawal at this stage, more particularly after substantive oral arguments have been advanced and legal contentions recorded.

The Counsel for the Petitioner submitted that the Petitioner holds 43%

shareholding in the company, and along with other members of his group, collectively holds 78% shareholding and 100% control over the Board of Directors. He further alleged that Respondent No. 2, who was removed as Director i Board Resolution dated 11.11.2023, had illegally taken possession of a hotel property owned by the company, renamed it from "Hotel Nagavali" to "Varada Nagavali Hotel", and has allegedly been diverting company revenues for personal benefit.

Under the provisions of the Companies Act, 2013, the management and affairs of a company are governed by the majority shareholders and the Board. Upon hearing the matter at length, this Bench is of the considered view that the Petitioner, along with his group, holds 78% shareholding and complete control over the Board of Directors and if the petitioners even with 78% shareholding and 100% majority in the Board of Directors of the Company is not able to manage the company, it may be the managerial inefficiency and therefore is not a fit case of oppression and mismanagement under Section 241 and 242 of the Companies Act, 2013. In this case, Respondent No. 2, being a minority shareholder with only 22% shareholding, does not possess any authority to interfere in the affairs of the company. The petitioner group holds 78% shareholding and 100% control in the Board of the Company and therefore, the restoration of management control as prayed by the Petitioner, does not arise.

Furthermore, the allegations relating to the illegal possession and occupation of the hotel property by Respondent No. 2 do not fall within the scope of Sections 241 and 242 of the Companies Act, 2013. It is trite law that a majority shareholder, who controls the Board cannot invoke Section 241 against a minority shareholder for alleged acts, which arise more in the nature of personal grievances or management inefficiencies. Section 242 contemplates instances where the affairs of the company are being conducted in a manner oppressive to members or prejudicial to the interests of the company, which is not the case here. The Petitioner further argued that this Tribunal has exclusive jurisdiction under Section 430 of the Companies Act,