Shareholders granted injunction against property sale by company directors

The National Company Law Tribunal, New Delhi, granted an injunction in favor of the Petitioners, shareholders of the first Respondent company, restraining Respondents 2 to 7 from selling company property or altering the shareholding pattern without permission. The Tribunal found merit in the Petitioners' claims of misappropriation of property and potential irreparable loss if the property was sold, thus issuing the injunction until further orders. Compliance was required, with the case scheduled for a hearing on 12th November 2020.

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Issues: Shareholders' rights, Misappropriation of property, Injunction against selling property, Change in shareholding pattern

In this case before the National Company Law Tribunal, New Delhi, the Petitioners, who are shareholders in the first Respondent company holding 37% of its shares, alleged that the Respondents were selling company property and diverting the proceeds to their personal accounts, thus depriving the Petitioners of their rights. The Petitioners sought relief, claiming a prima facie case, arguing that the balance of convenience favored them, and asserting that irreparable loss would occur if the property was sold. The Tribunal found merit in the Petitioners' contentions and issued an injunction restraining Respondents 2 to 7 from selling the company's property until further orders. Additionally, the Respondents were directed not to alter the shareholding pattern without prior permission from the Tribunal. The Petitioners were instructed to provide a copy of the order to the Respondents for compliance. The matter was listed for further hearing on 12th November 2020.

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