NCLT Grants Waiver for Alleged Oppression and Mismanagement Case Against Indian Commodity Exchange

Tribunal Allows Waiver Under Companies Act for Shareholders to Pursue Claims of Corporate Malfeasance

In a significant ruling, the National Company Law Tribunal (NCLT) in Ahmedabad has granted a waiver under Section 244(1)(a) of the Companies Act, 2013, allowing Kailash Ramkishan Gupta and other shareholders to proceed with their petition against Indian Commodity Exchange Limited. The petition alleges acts of oppression and mismanagement by the company. The Tribunal, comprising Member (Judicial) Sh. Shammi Khan and Member (Technical) Sh. Sanjeev Sharma, recognized exceptional circumstances warranting the waiver, highlighting corporate malfeasance concerns such as regulatory breaches and financial mismanagement.

The Applicants, who collectively hold a substantial number of shares, had their eligibility to file the petition challenged due to a provisional attachment of shares under the Prevention of Money Laundering Act, 2002 (PMLA). However, the Tribunal noted that the attachment did not transfer ownership or extinguish shareholder rights, thereby allowing these shares to be considered for eligibility.

The decision to waive the requirement was based on the Tribunal's satisfaction of exceptional circumstances, including the deregulation of the company by SEBI, financial distress, undervalued asset sales, and excessive managerial remuneration. These actions were deemed to affect the interests of the company and its members at large.

The ruling underscores the discretionary nature of the proviso to Section 244(1)(a), which the Tribunal exercised judiciously to ensure access to justice and prevent technical bars from defeating substantive claims. The case will now proceed on its merits, with notices to be issued to the respondents for further proceedings.

Bottom Line:

Waiver under Section 244(1)(a) of Companies Act, 2013 granted to Applicants alleging oppression and mismanagement, noting exceptional circumstances and prima facie case of corporate malfeasance.

Statutory provision(s): Companies Act, 2013 Sections 241, 242, 244(1)(a); Prevention of Money Laundering Act, 2002

Kailash Ramkishan Gupta v. Indian Commodity Exchange Limited, (NCLT)(Ahmedabad) : Law Finder Doc Id # 2804203