Tribunal upholds NCLT decision on sale deeds, finds oppression & mismanagement

The tribunal upheld the NCLT's decision to set aside the sale deeds due to lack of proper authorization and violation of company laws. It found oppression and mismanagement by certain respondents, highlighting misappropriation of funds and fraudulent activities. The tribunal dismissed the appeals, emphasizing that the disqualified respondent's actions were not protected under the Companies Act and attracted criminal liability.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Allegations of oppression and mismanagement.
3. Validity of sale deeds dated 03.11.2015 and 04.11.2016.
4. Bona fide purchaser claims by Respondent No.8.
5. Jurisdiction of NCLT to decide on the matter.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The tribunal addressed the issue of delay in filing the appeal by examining the reasons presented in the IA. It concluded that the delay in the presentation of the appeal was justified and thus condoned it.

2. Allegations of Oppression and Mismanagement:
The Original Petitioner, a shareholder holding 9.33% of the share capital, alleged that Respondent No.2, despite being disqualified and having resigned, continued to act as a Director and executed a sale deed without informing other shareholders or passing a resolution. The NCLT found that there was indeed oppression and mismanagement by Respondents 2 to 4. It was highlighted that Respondent No.2 had misappropriated company funds and that the entire Katta family had indulged in fraudulent activities.

3. Validity of Sale Deeds Dated 03.11.2015 and 04.11.2016:
The NCLT set aside the sale deeds executed by Respondent No.2 in favor of Respondent No.7 and subsequently by Respondent No.7 to Respondent No.8. The tribunal noted that Respondent No.2 was not a Director at the time of executing the sale deed and had been disqualified due to a criminal conviction. The sale was conducted without proper authorization, violating the Articles of Association and the Companies Act, 2013.

4. Bona Fide Purchaser Claims by Respondent No.8:
Respondent No.8 claimed to be a bona fide purchaser who had exercised due diligence. However, the tribunal found that the documents presented to support this claim were obtained after the sale deed was executed and were not part of the records before the NCLT. The tribunal concluded that Respondent No.8 failed to verify the vendor's title adequately and thus could not be considered a bona fide purchaser.

5. Jurisdiction of NCLT to Decide on the Matter:
Respondent No.8 argued that the issue should be decided by a Civil Court under the Specific Relief Act and not by the NCLT. However, the NCLT found that it had the jurisdiction to decide on the matter as it involved allegations of oppression and mismanagement under the Companies Act, 2013.

Conclusion:
The tribunal dismissed both appeals, upholding the NCLT's decision to set aside the sale deeds and rejecting other reliefs sought by the Original Petitioner due to lack of sufficient material. The tribunal also clarified that the actions of Respondent No.2, who had resigned and was disqualified, could not be protected under Section 176 of the Companies Act, 2013, and attracted criminal liability.

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