Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLT) 3717

NATIONAL COMPANY LAW TRIBUNAL
Brajendra Mani Tripathi, Judicial Member, Man Mohan Gupta, Technical Member
Ram Charan Pal – Appellant
Versus
Marg Polytech Pvt Ltd – Respondent
C.P. No. 20/MP/2020

Advocates:
For the Appellants/Petitioners: Pratik Tripathi
For the Respondents: Samank Mohabe, Smriti Nagar

The power to issue shares is a fiduciary obligation; any attempt to alter voting control through preferential allotment without adhering to mandatory statutory notice and valuation requirements constitutes oppression, regardless of the company's financial distress or the petitioner's prior conduct.

Headnote:(A) Companies Act, 2013 - Sections 42, 62(1)(c), 92, 101, 129, 213, 241, 242 - Oppression and Mismanagement - Preferential allotment of shares resulting in dilution of majority shareholding - Mandatory requirements - Compliance - The legislative scheme governing preferential allotments is intended to protect existing shareholders from arbitrary dilution of proprietary and voting rights - Compliance with statutory requirements is not a mere technicality but a substantive safeguard against abuse of power. (Paras 3.5, 3.6, Issue 3)

(B) Companies Act, 2013 - Sections 241, 242 - Equitable relief - Maintainability - Doctrine of clean hands - Although proceedings seeking relief for oppression and mismanagement are equitable in nature and require claimants to approach the forum with clean hands, this doctrine cannot be invoked to perpetuate an illegality or validate a process that fails to satisfy mandatory statutory requirements. (Paras 6, Issue 6)

(C) Companies Act, 2013 - Sections 447, 448 - Jurisdiction - Adjudication of criminal offences - Proceedings under the sections concerning oppression and mismanagement are not the appropriate forum for conducting a detailed inquiry into allegations of forgery, criminal misconduct, or fraud, which remain within the domain of competent investigative and regulatory authorities. (Issue 4)

Facts of the case:
Petitioners filed a petition alleging oppression and mismanagement, including the illegal appointment of an additional director, unauthorized share allotment meant to dilute their majority shareholding, and failure to comply with statutory filing requirements. The respondents argued the actions were necessary due to financial distress and that one of the petitioners was complicit in management. One respondent contended her digital signature was fraudulently used on statutory filings.

Findings of Court:
The court held that while the appointment of the additional director was not proved to be mala fide, the preferential allotment of shares lacked compliance with statutory provisions regarding notice and valuation, effectively reducing the petitioners' majority shareholding unlawfully. The court declined to adjudicate on allegations of forgery and criminal misconduct against a third-party professional, leaving those to regulatory authorities.

Issues: The main issues were the maintainability of the petition, the validity of the director's appointment, the legality of the preferential share allotment, the liability regarding the use of a digital signature on statutory forms, and whether the conduct of the parties constituted oppression and mismanagement.

Ratio Decidendi: Directors possess authority to issue shares, but such authority must be exercised for the benefit of the entity and not for the collateral purpose of altering voting control. Statutory safeguards, including clear notice for general meetings and proper valuation for share allotment, are mandatory and cannot be bypassed under the guise of commercial necessity.

Result: Petition partly allowed; preferential allotment declared illegal, null and void; register of members directed to be rectified.

Table of Content
1. factual background involving allegations of oppression and mismanagement. (Para 1)

PRONOUNCEMENT OF ORDER

Delivered on 12/06/2026

The case is fixed for pronouncement of the order.

The order is pronounced in open Court vide separate sheet.

[An Application filed under Section 213, 241 and 242 of the Companies Act, 2013]

1. This is an Application under Section 213, 241 and 242 of the Companies Act, 2013 seeking following reliefs:

i. Pass an appropriate order, relief's, directions under section 241 an 242 of the Companies Act, 2013 to bring to an end the aforesaid acts of oppression and mismanagement perpetrated by the respondents and for necessary orders and reliefs in respect thereto, including as prayed for therein;

ii. Scheme be regulated to run and manage the affairs of the Respondent No. 1 Company by the Hon'ble Tribunal;

iii. Remove Respondent No. 4 as Directors of the Respondent No. 1 Company;

iv. Issue direction to the Respondent No. 7 to vacate the factory premises of the Respondent No. 1 Company;

v. To investigate the various acts of mismanagement by the Respondent No. 2, 3 and 4 in the Respondent no. 1 Company;

vi. order investigation into the books of accounts and the affairs of the Respondent No.1 Company under section 213 of the Companies Act, 2013 and issue necessary directions to Performa Respondent No. 7;

vii. to declare the resolution dated 17.01.2019 passed for the allotment of 32,500 Equity Shares to the Respondent No. 4 and meeting of Board dated 17.01.2019 as null and void;

viii. To declare the Annual General Meeting dated 30.09.2017 and 30.09.2018 for FY 2016-17 and 2017-18, respectively as null and void;

ix. To declare the Extra Ordinary General Meeting dated 16.01.2019 and 20.05.2019 as null and void;

x. To declare the meeting of Board dated 29.06.2017, 28.08.2017, 23.11.2017, 03.02.2018, 24.10.2018, 06.03.2019, 18.08.2019 and any other meeting held thereafter as null and void.

xi. Direct Respondents to provide inspection of records and registers of the Respondent No. 1 Company and provide certified copies thereof to the Petitioners;

xii. Restrain the Respondents from sell, alienate, mortgage, charge or create third party right on the movable, immovable or Intellectual Properties Right developed or held in the Respondent No. 1 Company;

xiii. Pass an appropriate order against the Respondents for various non compliances under the Companies Act, 2013 as disclosed under this petition;

xiv. Pass an appropriate order under the sections invoked herein including Section 447 and 448 of the Companies Act, 2013 against the Respondents for filling of false and misleading information with Ministry of Corporate affairs;

xv. Take appropriate action against the Respondent No. 5 and 6 for false and misleading certification and submission of form MGT-14 and Form PAS-3 with Ministry of Corporate affairs and direct the Institute of Cost and Management Accountant to take appropriate action for the professional misconduct;

I. PARTIES TO THE PETITION

The Petitioners are Mr. Ram Charan Pal (Petitioner No. 1) and Mr. Ghisi Lal Pal (Petitioner No. 2), residents of H No. 5, Old Village, Arvind Vihar, Bagmugaliya, Huzur, Bhopal – 462043, Madhya Pradesh. They are shareholders, promoters, and directors of Respondent No. 1 Company and collectively held 54.02% of the equity share capital prior to the allotment impugned in this Petition.

Respondent No. 1 is M/s Marg Polytech Private Limited, a company incorporated under the Companies Act, having its registered office at H-5, Bag Mugalia Extension, Bhopal, MP – 462043. Respondents No. 2 and 3 are Mr. Gaurav Bhardwaj and Mr. Rana Singh respectively, directors of the Company, who have effectively been in control and management of its affairs. Respondent No. 4 is Mr. Praphull Goyal, who was appointed as Additional Director/Director. Respondents No. 5 and 6 are practicing Cost and Works Accountants who certified and filed false forms with the Ministry of Corporate Affairs

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2026 Supreme(Online)(NCLT) 3717

NATIONAL COMPANY LAW TRIBUNALBrajendra Mani Tripathi, Judicial Member, Man Mohan Gupta, Technical MemberRam Charan Pal – AppellantVersusMarg Polytech Pvt Ltd – RespondentC.P. No. 20/MP/2020

The power to issue shares is a fiduciary obligation; any attempt to alter voting control through preferential allotment without adhering to mandatory statutory notice and valuation requirements constitutes oppression, regardless of the company's financial distress or the petitioner's prior conduct.

NATIONAL COMPANY LAW TRIBUNAL
Brajendra Mani Tripathi, Judicial Member, Man Mohan Gupta, Technical Member
Ram Charan Pal – Appellant
Versus
Marg Polytech Pvt Ltd – Respondent
C.P. No. 20/MP/2020