2016 (12) TMI 1494 - Tri - Companies Law

Dismissal of Company Petitions for Lack of Shareholder Status under Companies Act - Importance of Genuine Commercial Interest

Mr. Anilkumar Poddar Versus M/s Nessville Trading Pvt. Ltd. and Others

The Bench dismissed the Company Petitions, ruling that the Petitioner, lacking shareholder status, was not entitled to relief under Section 163 of the ... Entitlement to supply of copies of documents - inspection of the documents - Held that:- Petitioner is not being a shareholder of the company, this Bench, in agreeing with the argument of the Respondents' counsel, holds that he is not entitled to seek this relief under section 163 of the companies Act 1956 and there being no purpose for granting such a relief to the Petitioner, these Petitions are hereby dismissed considering these litigations as misconceived, vexatious and frivolous. Issues:- Supply of copies of Members' Register and Annual Returns for specific years to the Petitioner- Entitlement of the Petitioner to seek relief under Section 163 of the Companies Act, 1956- Interpretation of the term 'any other person' in Section 163(2) of the Companies Act, 1956- Justifiability of the Company Petitions filed by the PetitionerDetailed Analysis:The Petitioner filed Company Petitions against several companies seeking copies of Members' Register and Annual Returns for specific years. The Petitioner claimed to have sent emails requesting inspection of documents, followed by requests for copies when initial inspection was allowed. The companies initially refused but later provided inspection, prompting the Petitioner to file the Petitions when copies were not supplied. The Respondents argued that the Petitioner had no commercial interest in the companies and had a history of targeting companies for monetary gain. The Respondents contended that the Petitioner's actions were vexatious and frivolous, aimed at extortion rather than genuine inspection of documents.The main legal argument revolved around the interpretation of Section 163(2) of the Companies Act, 1956, specifically the term 'any other person.' The Respondent Counsel argued that this term should be limited to persons with commercial interests in the company, such as shareholders, debenture holders, creditors, or financiers. It was contended that the Petitioner, lacking any commercial interest, did not fall within the scope of this provision. Additionally, the Respondent Counsel highlighted that the Company Law Board had the discretion to refuse orders for supply of copies if the request was deemed to be for corrupt purposes or against public policy.Furthermore, the Respondent Counsel pointed out that the companies in question were closely held private entities, not subject to the same regulations as listed or public companies. They argued that the Petitioner failed to provide a valid reason for requiring the documents and accused the Petitioner of engaging in frivolous litigation to harass the companies. The Respondent Counsel urged the Bench to dismiss the Company Petitions and impose costs on the Petitioner due to the vexatious nature of the litigation.Ultimately, the Bench agreed with the Respondents' arguments, ruling that the Petitioner, lacking shareholder status, was not entitled to the relief sought under Section 163 of the Companies Act, 1956. The Bench deemed the Petitions misconceived, vexatious, and frivolous, leading to their dismissal without costs. The judgment highlighted the importance of genuine commercial interest and the potential misuse of legal provisions for personal gain, emphasizing the need for valid reasons when seeking relief under company law.