Tribunal holds petitioner ineligible under Companies Act, 2013; finds no credible evidence of financial irregularities or illegal director appointments
The National Company Law Tribunal (NCLT), Ahmedabad Bench, on November 7, 2025, dismissed the petition filed by Mr. Dhiren Pratapmal Bhandari against DB Shapriya Construction Limited and others, alleging oppression and mismanagement under Sections 397, 398, 402, 403, and 406 of the Companies Act, 1956 and corresponding provisions of the Companies Act, 2013.
The petitioner, who held a single equity share amounting to 0.001% of the company's paid-up share capital and served as the Chief Executive Officer (CEO) and resident director of the company till March 30, 2015, sought relief to reinstate him as director and to set aside the appointments of two additional directors said to have been made without due process. He alleged serious financial irregularities, including siphoning of funds exceeding Rs. 3 crores, falsification of books of accounts, unauthorized diversion of bank loans for personal use by the majority shareholders and directors residing abroad, and wrongful exposure of his personal properties mortgaged as collateral to bank recovery actions.
The company and respondents denied all allegations, contending the petition was an abuse of process, non-maintainable as the petitioner failed the eligibility criteria under Section 244 of the Companies Act, 2013, and that the petitioner was an integral part of the management during the relevant period. They asserted that the petitioner resigned voluntarily, and the subsequent appointments of additional directors were necessary to maintain the statutory minimum number of directors. They further denied any financial misconduct and stated that all accounts were duly audited and approved by the petitioner himself.
The Tribunal observed that while the petitioner was a promoter director and CEO responsible for the company’s day-to-day affairs till March 2015, he held only a negligible shareholding and did not meet the statutory threshold of holding at least one-tenth of the share capital to maintain such a petition. Although the Tribunal noted the Hon'ble NCLAT had restored the petition to enable adjudication on merits, it proceeded to examine the substantive allegations.
On the question of alleged financial irregularities and mismanagement, the Tribunal found no credible or independent evidence substantiating the claims. The audited financial statements bearing the signatures of the petitioner himself contradicted his allegations of falsification. The Tribunal held that managerial discord and lack of mutual confidence among directors, without more, does not amount to oppression.
Regarding the appointment of additional directors, the Tribunal found these actions were statutory and done following the petitioner’s resignation, which was confirmed by documentary evidence including the petitioner’s own email and the forms filed with the Registrar of Companies. The Tribunal held that even if procedural lapses occurred, they did not amount to oppression or mismanagement affecting the petitioner’s rights as a shareholder.
Finally, on the removal of the petitioner from directorship, the Tribunal held that the cessation was effected pursuant to the petitioner’s own resignation and recorded duly with the RoC. Mere loss of office does not constitute oppression unless it prejudices a member’s proprietary rights, which was not demonstrated here.
In conclusion, the NCLT dismissed the petition in its entirety, holding the petitioner’s claims devoid of merit. The Tribunal underscored that allegations must be supported by clear evidence of unfair conduct and breach of fiduciary duty to constitute oppression or mismanagement under the Companies Act.
Bottom Line:
Minority shareholder holding 0.001% shares cannot maintain petition for oppression and mismanagement where he was also CEO and resident director during the alleged mismanagement; resignation as director validly accepted; appointment of additional directors to maintain statutory compliance upheld; allegations of financial irregularities unsubstantiated.
Statutory provision(s): Sections 397, 398, 402, 403, 406 of Companies Act, 1956; Sections 241, 244 of Companies Act, 2013
