Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2023 Supreme(Online)(NCLT) 1482

NATIONAL COMPANY LAW TRIBUNAL
Mrs. Bidisha Banerjee, Member (Judicial), Mr. Balraj Joshi, Member (Technical)
Bhaskar Goswami & Ors. – Appellant
Versus
Small Industries Development Bank of India & Ors. – Respondent
CP/1762 (KB)2019 | CA/3(KB)2020 | CA/1379(KB)2019 | IVN.P/ 300(KB)2020 | CA/41(KB)2021 | Appeal no. 144(KB)2022

Advocates:
For the Appellants/Petitioners: Mr. Yasho Vardhan Deora, Mr. Sumabho Ghose, Mr. Rishav Bannerji
For the Respondents: Not explicitly mentioned

The transfer of shares from government banks to a private individual did not violate law, and allegations of oppression required proof of continuous oppressive conduct by majority shareholders, which was not established.

Headnote:(A) Companies Act, 2013 - Sections 241, 242, and 58 - Company petition filed alleging oppression and mismanagement due to the illegal transfer of shares from government banks to a private individual, R-3, which altered the company’s character and jeopardized government contracts. The petitioners sought to revert the transfer and protect minority shareholders' interests. (Paras 1, 3, 5, 12.2)

(B) Principle of Oppression - The threshold for oppression requires continuous actions by majority shareholders that burden the minority; isolated incidents do not suffice for relief. (Paras 12.1, 12.2)

(C) Right of Board to Refuse Share Transfer - Under Section 58(4), the Board has discretion to refuse registration of transfers for 'sufficient cause', which may include violation of agreements, but must consider existing contracts. (Paras 10.1, 11.5, 11.8)

(D)

Findings of Court:
The transfer of shares was determined to follow a transparent process; the allegations of malafide intentions were unsubstantiated. The Board’s decision to refuse recognition of R-3 as MD was justified, with specific conditions laid for future nominations and management. (Paras 10.3, 12.2) (E)

Result: The petition was dismissed, with the order confirming R-3's shareholding but restricting immediate rights over senior management appointments. (Paras 12.2, 12.5)

Table of Content
1. factual background on the company and parties (Para 2 , 3 , 4)
2. alleged oppression related to share transfer (Para 5 , 6 , 7)
3. overview of company applications filed (Para 8 , 9)
4. arguments concerning legality of transfer (Para 10 , 11)
5. court's analysis and findings (Para 12)

Common Order

Balraj Joshi, Member (Technical):

1. This Court convened through video conferencing.

2. A company petition no. CP 1762 of 2019 came to be filed by the Petitioners against various respondents as brought out hereunder. CP 1762 is filed by the Bhaskar Goswami and 6 Ors being the members and employees of WEBCON are claiming relief against the oppressive and prejudicial acts of the Respondents 1 to 4. R-5 is the Company namely WEBCON.

Brief Facts of the case

3. The company under consideration here is Called WEBCON Consulting (India) ltd., a company incorporated under the Companies Act 1956 on 31^st May 1979 . The subscribers to the Memorandum were all nationalized banks and financial institutions owned by the Central as well as State Governments. The basic object of the company is to provide consultancy in the field of industry, so as to provide data-based information to the entrepreneurs as also provide consultancy on project formulation and its financing etc.

The shareholding structure of the company (pg 9 of the Petition) as at31^st March 2018 was as under:

Name of Shareholders	No. of Shares	%age
Small Industries Development bank of India (SIDBI), Govt. of India	39000	21.67
West Bengal Industrial Development Corporation Limited (WBIDCL), Govt. of West Bengal	34500	19.17
Andaman And Nicobar Islands Integrated Development Corporation Limited (ANNIDCO), Govt of India.	30000	16.67
ICICI Bank Ltd.	12800	7.11
Industrial Finance Corporation of India (IFCI Ltd), Govt. of India.	12700	7.05
Allahabad Bank	7800	4.33
West Bengal Small Industries Development Corporation Limited (WBSIDCL),Govt. of West Bengal	7500	4.17
Sikkim Industrial Development & Investment Corporation Limited (SIDICO), Govt. of India	7500	4.17
State Bank of India	4800	2.67
United Commercial Bank	3900	2.17
Central Bank of India	3900	2.17


United Bank of India	3900	2.17
Bank of India	3900	2.16
Canara Bank	3900	2.16
Punjab National Bank	3900	2.16
Total	1,80,0 00	100

The authorised share capital of the company is Rupees Fifty five Crores divided into 5,50,00,000 shares of Rs. 10/- each. The issued , subscribed and paid up capital of the Company is Rs 18,09,000/-only.

4. For the sake of clarity the respondents in the main company petition are as under :

R1 is Small Industries Development Bank of India, a body corporate formed and constituted under the Small industries Development Bankf of India Act, 1989 having its registered office at MSME Development Centre, BKC , Bandra E, Mumbai .

R2 is ICICI Bank Limited having its registered office at Vadodra Gujarat.

R3 is an individual namely Mr. Sanwar Lal Saini who is carrying on business from H.no. 120 Mohyal Colony Jhorsa , Near MMI School, Sector 40 , Gurgaon , Haryana

R4 is an individual namely Mr. Aziz Ansari , a resident of Barisha Kolkata is a shareholder, holding 1375 shares and had been an employee of the Petitioner company , looking after the Administrative & HR matters as a Manager. He was terminated by the Petitioner on 3.10.2019 for indulging in activities which were detrimental to the interest of the company.

R-5 is a company registered under Companies Act 1956 namely WEBCON Consulting (India) ltd.

R-6 is Mr. Sandeep Bannerjee who is a Proforma respondent who was the MD of the Company i.e. WEBCON.

5. It is alleged by the petitioners that the event of said oppression was triggered when the 1^st and 2^nd Respondents, holding 21.56% and 7.07% of the share capital of the R-5 , respectively, illegally and fraudulently transferred their shareholding to the R3, who is a Chartered Accountant by profession and is operating from his house in Gurgaon (Haryana). Since the shares held by the R1 & R2 were in Dematerialised form, therefore the transfer was effected with the depository with

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