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of <h1>NCLT Upholds Order Against Appellants for Oppression & Mismanagement</h1> <h3>Sh V.J. Paul Joseph S/o Sh Joseph, Sh P.J. Gregory, S/o Sh Joseph, Sh P.J. Joseph, S/o Sh John, Sh V.J. Peter, S/o Sh Joseph, Sh Gilroy Mendez Versus Alexander Correya, Sh Henry Peter, Sh V.R. Jude Jose, Kathrikutty Augusthy, Ullas Shankar Purohit, Deepa Simon, M/s Bhagyodayam Company, Ms Yoland Correya And Kathirkutty Augusthy, Ullas Shankar Purohit, Deepa Simon Versus Alexander Correya, Sh Henry Peter, Sh V.R. Jude Jose, M/s Bhagyodayam Company, Sh V.J. Paul Joseph, Sh P.J. Gregory, Sh P.J. Joseph, Sh V.J. Peter, Sh Gilroy Mendez</h3> Sh V.J. Paul Joseph S/o Sh Joseph, Sh P.J. Gregory, S/o Sh Joseph, Sh P.J. Joseph, S/o Sh John, Sh V.J. Peter, S/o Sh Joseph, Sh Gilroy Mendez Versus ... Issues Involved:1. Allegations of oppression and mismanagement.2. Amendments to the Articles of Association (AOA) without proper approval.3. Unauthorized sale of company properties.4. Expulsion of members without due process.5. Jurisdiction and maintainability of the petition under Section 241/242 of the Companies Act, 2013.6. Compliance with court orders and principles of natural justice.Detailed Analysis:1. Allegations of Oppression and Mismanagement:The original petitioners alleged that the Managing Director usurped the goodwill and assets of the company for personal gain, expelled opposing members, and conducted affairs in a non-transparent manner. The NCLT found that the appellants had gravely misused their positions, committed acts of oppression, and mismanaged the company by violating the Articles of Association and court orders. The NCLT directed the appointment of an interim Administrator to investigate the fraud and misappropriation committed by the appellants.2. Amendments to the Articles of Association (AOA) Without Proper Approval:The appellants amended Clauses 31 and 41 of the AOA without the prior consent of the Central Government, which was declared illegal by the Registrar of Companies. The NCLT held that these amendments were void and of no effect. The matter of amendment of AOA was also sub judice before the High Court of Kerala.3. Unauthorized Sale of Company Properties:The appellants sold prime land to certain respondents without any resolution in the AGM of the company. The NCLT declared these sale agreements illegal, null, and void, as they were against the order of the Hon’ble High Court of Travancore-Cochin and the Munsif Court. The appellants argued that the Board had the power to sell properties, but the NCLT found that the decision was not taken by the required number of Trustees and was a policy decision needing General Body approval.4. Expulsion of Members Without Due Process:The appellants expelled members without issuing show cause notices and without adhering to the principles of natural justice. The NCLT stayed the expulsion orders, noting that the powers to expel were vested with the General Body and not the Board. The appellants' claim that no members were expelled was contradicted by their own documents, which were not filed before the NCLT.5. Jurisdiction and Maintainability of the Petition Under Section 241/242 of the Companies Act, 2013:The appellants contended that the petition under Section 241/242 was not maintainable as the company was a Section 8 charitable company. However, the NCLT, referencing the Supreme Court's decision in M.S.D.C Radharamanan v. M.S.D Chandrasekara Raja, held that it had the widest power to grant relief to protect the interests of the company, especially given the glaring illegalities and irregularities committed by the appellants.6. Compliance with Court Orders and Principles of Natural Justice:The NCLT found that the appellants had acted in contravention of court orders and principles of natural justice, particularly in the expulsion of members and unauthorized sale of properties. The appellants' non-cooperation with the Administrator and failure to provide required documents further demonstrated their disregard for legal processes.Conclusion:The appeals were dismissed, and the NCLT's order was upheld. The appellant in Company Appeal (AT) No.338/2018 was imposed a cost of Rs. 10 lakh for showing disrespect to the court of law, to be deposited within 30 days, failing which action would be taken as per law.
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