Tribunal Rules in Favor of Appellant on Oppression & Mismanagement Allegations, Orders Fair Share Valuation

The Tribunal found in favor of the appellant on allegations of oppression and mismanagement, illegal removal from directorship, non-payment of dividends, and siphoning off funds. It directed fair valuation of the appellant's shares and provided an exit mechanism. The respondents were prohibited from receiving remuneration until the appellant's exit was finalized. The order included reinstating the appellant as a director temporarily and allowing potential share purchase at a discounted rate. The Tribunal ensured proper implementation of the order and prohibited future remunerations or alienation of company assets. The appeal was disposed of with no costs awarded.

---

---

Issues Involved:
1. Allegations of oppression and mismanagement.
2. Illegal removal of the appellant from directorship.
3. Non-payment of dividends and siphoning off funds.
4. Fair valuation and exit of the appellant from the company.
5. Remuneration of directors despite non-operational status of the company.

Detailed Analysis:

1. Allegations of Oppression and Mismanagement:
The appellants alleged oppression and mismanagement under sections 397, 398, 402, 403, and 406 of the Companies Act, 2013. The Tribunal found that the company’s affairs were being managed in a manner that ignored the interests of the appellant, who held the maximum shareholding. The Tribunal noted the distrust between the petitioner and the respondents, which led to the company’s dysfunctional state.

2. Illegal Removal of the Appellant from Directorship:
The Tribunal found that the termination of the appellant as a director was not legal, subject to the final decision in the pending civil suit. The appellant’s removal did not comply with mandatory statutory requirements under sections 100 and 101 of the Companies Act, 2013, rendering the decision of the meeting illegal and the removal null and void.

3. Non-payment of Dividends and Siphoning Off Funds:
The appellant contended that no dividends were paid for many years, which was not contradicted by the respondents. The Tribunal noted that the company’s non-operational status and the remuneration drawn by the respondents amounted to siphoning off funds and oppression of minority shareholders.

4. Fair Valuation and Exit of the Appellant from the Company:
The Tribunal directed an independent valuer to determine the fair value of the appellant’s shares as of 31.03.2015. The valuation would consider the company’s non-operational status and leased property. The respondents were directed to cooperate with the valuer and submit necessary documents. The appellant was to be given an exit by the respondents by paying the determined amount with interest. If the respondents declined or failed to pay, the appellant could purchase the respondents’ shares.

5. Remuneration of Directors Despite Non-operational Status:
The Tribunal questioned the entitlement of respondents to receive remuneration when the company was non-operational and the appellant received no such remuneration. The Tribunal directed that the respondents should not draw future remunerations until the appellant’s exit is finalized, and the amount should form part of the company’s income to be distributed among shareholders.

Conclusion:
The Tribunal modified the earlier order to reinstate the appellant as a director until his exit and provided a mechanism for fair valuation and potential purchase of shares. The respondents were directed to quote the acquisition value per share, giving the appellant the right to purchase at a discounted rate. If the appellant failed to exercise this right, the respondents could purchase the appellant’s shares. The Tribunal ensured that the order was implemented properly and directed the respondents not to draw future remunerations or alienate company assets during the interim period. The appeal was disposed of with no order as to cost.

---