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2026 Supreme(Online)(NCLT) 2531

NATIONAL COMPANY LAW TRIBUNAL
Sunil Mandwani – Appellant
Versus
SANTOSH DEVCON PRIVATE LIMITED – Respondent
IA No. 6/2026 in CP/8(MP)2026

Advocates:
For the Petitioner:PRABUDDHA SINGH GOUR
For the Respondent:Lucky Jain

In an oppression petition under the Companies Act, interim relief can be granted to restrain transfer of company's immovable property even if it is stock-in-trade, where prima facie case of illegal reduction of shareholding is established.

Headnote:(A) Companies Act, 2013 — Sections 241, 242 and 244 — Oppression and mismanagement — Interim relief — Application for status quo regarding shareholding and properties — Reduction of shareholding from 87.75% to 0.56% through alleged illegal rights issue — Agreements dated 27.10.2022 between applicant and respondents — Alleged breach of agreements — Pending arbitration — Restraint order by Supreme Court and Arbitral Tribunal regarding alienation of immovable properties — Distinction between movable assets/stock-in-trade and immovable properties — Interpretation of court orders — Whether Company can be restrained from transferring property — Prima facie case, balance of convenience and irreparable harm. (Paras 1, 24-30, 31-38, 40-42)

(B) Oppression and mismanagement — Maintainability of petition — Petition filed under Sections 241 and 242 of Companies Act, 2013 — Distinct cause of action from arbitration — Not forum shopping but forum choosing. (Para 39)

Facts of the case:
The applicant, who initially held 87.75% shareholding in the respondent company, alleged that respondent Nos. 2 and 3, acting in concert, illegally reduced his shareholding to 0.56% through a sham rights issue and were attempting to alienate the subject land (10.462 hectares at Village Limbodi, Indore) valued at over Rs. 250 Crores. Agreements dated 27.10.2022 between the applicant and respondents were allegedly breached. The applicant sought interim relief of status quo regarding shareholding and properties.

Findings of Court:
The Tribunal found that the applicant had established a prima facie case, as his shareholding was reduced from 87.75% to 0.56% without proper offer of rights issue. The balance of convenience favored the applicant, as allowing transfer of assets would complicate proceedings and cause irreparable harm to the applicant's rights. The Tribunal rejected the respondents' contention that the immovable property could be treated as stock-in-trade and held that the Supreme Court's order prohibited alienation of immovable properties.

Issues: Whether the company can be restrained from transferring its immovable property during the pendency of the petition alleging oppression and mismanagement, and whether the interpretation of the Supreme Court's order allowed such transfers by treating the property as stock-in-trade.

Ratio Decidendi: The Tribunal held that (a) the company acts through its directors and cannot claim separate legal entity to defeat interim protection; (b) the Supreme Court's order distinguished between immovable properties (which cannot be transferred) and movable assets/stock-in-trade (which can be dealt with); (c) the applicant established prima facie case, balance of convenience, and irreparable harm; and (d) the arbitration and company petition causes of action are distinct — the former deals with personal agreements while the latter deals with oppression as a shareholder.

Result: IA allowed with directions to maintain status quo regarding immovable property and not to further reduce applicant's shareholding pendente lite.

Table of Content
1. nature of application and relief sought (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11)
2. respondents' submissions against interim relief (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21)
3. admitted facts regarding shareholding and agreements (Para 22 , 24 , 25)
4. analysis of prima facie case and balance of convenience (Para 23 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42)
5. final order granting interm relief with status quo (Para 43 , 44 , 45)

ORDER

DATED: 07.05.2026 (I) NATURE OF APPLICATION AND RELIEF SOUGHT

1. The present Application bearing IA No. 6/2026 has been filed by the Applicant on 19.04.2026 in Company Petition No. CP/8(MP)2026, seeking the following reliefs:

1. Allow the Application and list the Company Petition bearing C.P. No. 08/2026 for hearing the parties on interim relief.

2. Grant ad-interim ex parte direction of status quo with respect to the shareholding and properties of the Company.

(II) SUBMISSIONS OF APPLICANT:

2. That the Petitioner has filed the main Company Petition under Sections 241, 242 and 244 of the Companies Act, 2013 alleging acts of oppression and mismanagement committed by the Respondents and seeking protection against alienation or creation of third-party rights over the Subject Land admeasuring 10.462 Hectares situated at Village Limbodi, Tehsil and District Indore, on which the residential colony Mahalaxmi Dham stands.

3. Ld. Counsel for the Applicant submits that Respondent Nos. 2 and 3 are brothers engaged in the real estate business in Indore, who have illegally, and in violation of the Companies Act, 2013, reduced the shareholding of the Applicant from 87.75% to 0.56% in the Respondent Company and are in the process of reducing it further by an illegal rights issue pursuant to a sham EGM of the Respondent Company purportedly held on 17.01.2026. The Applicant had gone to attend the said EGM scheduled on 17.01.2026 and found the door of the registered office (i.e., the residential address of Respondent No. 3) locked and no one present at the scheduled time. The Applicant has not participated in the said rights issue and allotment of shares as it would amount to acquiescence to the illegal acts of the Respondents.

4. Respondent Nos. 2 and 3 caused the resignation of the Applicant from the Directorship of the Company promoted by him, got 30,000 shares held by the Applicant cancelled by entering into a settlement before this Tribunal in TP No. 112/2019 filed by Shri Radheshyam Mandwani (R-13) and Shri Mukesh Matta (R-14), and induced the Applicant to induct Respondent Nos. 2 and 3 as Additional Directors in the Company pursuant to the Agreements dated 27.10.2022 entered between the Applicant and R-2 and R- 3. The sole intention of R-2 and R-3 to execute the said Agreements was to gain absolute control over the management of the Company and its valuable Subject Land.

5. The Agreements dated 27.10.2022 were entered when R-2 and R-3 approached the Applicant with an offer to purchase his 5,100 shares in the Company, in lieu of the Applicant entering into a settlement in TP No. 112/2019 where the Applicant would agree to cancellation of 30,000 shares held in his name, resign as Director, and induct R-2 and R-3 as Additional Directors. The total consideration was Rs. 43 Crores under the said Agreements, out of which Respondent Nos. 2 and 3 paid only Rs. 1 Crore at the time of entering the Agreements and then breached all their obligations after taking over absolute control of the Company and also buying out the shares of the other two erstwhile Directors, namely Radheshyam Mandwani (R-13) and Mukesh Matta (R-14), pursuant to separate Share Purchase Agreements dated 09.11.2022.

6. Ld. Counsel further submits that R-2 and R-3 are also parties to the ongoing arbitration proceedings initiated by the Applicant bearing Arb. Case No. 13/2025 pending before Hon'ble Mr. Justice Shantanu Kemkar (Retd.), who was appointed as Sole Arbitrator vide order d

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2026 Supreme(Online)(NCLT) 2531

NATIONAL COMPANY LAW TRIBUNALSunil Mandwani – AppellantVersusSANTOSH DEVCON PRIVATE LIMITED – RespondentIA No. 6/2026 in CP/8(MP)2026

In an oppression petition under the Companies Act, interim relief can be granted to restrain transfer of company's immovable property even if it is stock-in-trade, where prima facie case of illegal reduction of shareholding is established.

NATIONAL COMPANY LAW TRIBUNAL
Sunil Mandwani – Appellant
Versus
SANTOSH DEVCON PRIVATE LIMITED – Respondent
IA No. 6/2026 in CP/8(MP)2026