Maintainability of oppression petitions depends on disputed share transfers and allotments; factual disputes preclude summary threshold dismissal.

Maintainability of a company petition under statutory oppression remedies cannot be decided as a preliminary threshold where material factual disputes exist about share transfers and allotments. The petitioner prima facie meets the quantitative shareholding threshold when the impugned transfer alleged to be by duress is excluded; the subsequent allotment relied on to dilute holdings is factually disputed and raises questions about compliance with statutory allotment procedure that cannot be resolved summarily. Limitation and rectification arguments involve mixed law and fact issues and do not bar inquiry where transfers or allotments are alleged to be coercive, fraudulent, or continuing acts of oppression.

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Issues: (i) Whether the maintainability of the company petition under Sections 397 and 398 (read with Section 399) can be decided as a preliminary issue; (ii) Whether the petitioner satisfies the threshold shareholding requirement under Section 399 in view of an impugned transfer and a subsequent disputed allotment of shares.

Analysis: The petitioner originally held 52,652 shares and, excluding the impugned transfer of 33,126 shares claimed to have been made under duress, retains 19,526 shares which represent 18.29% of the issued capital and prima facie satisfy the quantitative threshold in Section 399. The subsequent allotment of 258,216 shares in 2003-04, relied on by respondents to reduce the petitioner's shareholding to 5.34%, is seriously disputed on facts including notice and knowledge; those factual disputes and the question whether the allotment was in contravention of the statutory procedure under Section 81(1)/(1A) cannot be resolved at the threshold. The two-month rectification period in Section 111A(3) applies to ordinary transfers but, on the material before the Board, does not operate to bar relief where transfer is alleged to be by coercion or fraud; the limitation contention raises mixed questions of law and fact and is not amenable to summary disposal. Established principles require caution in rejecting petitions at threshold and permit inquiry on merits where acts of allotment or transfer are contested and may amount to continuing acts of oppression or affect maintainability.

Conclusion: The maintainability objection raised by respondents as a preliminary issue is not tenable; the disputed impugned transfer and the subsequent allotment must be examined on merits and, ignoring the disputed allotment, the petitioner prima facie satisfies Section 399 and is entitled to maintain the company petition. The respondents' application challenging maintainability is dismissed and the company petition will proceed to hearing.

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