Appeal dismissed challenging waiver under Companies Act. Tribunal upholds waiver, allows company petition. Allegations of oppression and mismanagement to be investigated.

The appeal challenging the waiver granted by the National Company Law Tribunal under Section 244 of the Companies Act, 2013 was dismissed. The Tribunal upheld the waiver, allowing the respondent to file a company petition under Section 241 read with Section 242. The Tribunal found that the respondent's allegations of oppression and mismanagement, along with the validity of the consent affidavits and the removal of the respondent as Managing Director, warranted a detailed inquiry and could not be dismissed at the threshold.

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Issues Involved:

1. Validity of the waiver granted by the Tribunal under Section 244 of the Companies Act, 2013.
2. Allegations of oppression and mismanagement by the appellants.
3. Compliance with the threshold of minimum 10% shareholding for filing a company petition.
4. Validity of the consent affidavits filed by the respondent’s family members.
5. The role and removal of the respondent as Managing Director.

Detailed Analysis:

1. Validity of the Waiver Granted by the Tribunal:
The appeal was filed under Section 421 of the Companies Act, 2013, challenging the order of the National Company Law Tribunal (NCLT) that allowed the respondent's application for a waiver under Section 244 of the Act. The Tribunal had waived the requirements for filing a company petition under Section 241 read with Section 244, stating, "it is a fit case where the requirements laid down under Section 244(1)(a) of the Act, 2013 need to be waived off." The Tribunal reasoned that the company petition could not be dismissed at the threshold, as it required a detailed inquiry into the matter complained of.

2. Allegations of Oppression and Mismanagement:
The respondent, holding 5000 shares (0.04% of the total issued share capital), alleged acts of oppression and mismanagement by the appellants, specifically his removal from the position of Managing Director without proper procedure. The respondent claimed that his removal violated the Articles of Association (AoA), particularly Article 52, which vested the power of appointment and removal of the Managing Director with the controlling shareholders, not the Board of Directors.

3. Compliance with the Threshold of Minimum 10% Shareholding:
The appellants argued that the respondent did not meet the threshold of minimum 10% shareholding required to maintain a company petition. The respondent contended that, along with his family members, he held 2.93% shares, and his wife held 25% of Kurinji Metals Pvt Ltd, which in turn held 30.42% of the shares in the appellant company. The Tribunal found that the consent affidavits of the respondent’s family members, filed with the rejoinder, were valid and within the meaning of Section 244(2) of the Act.

4. Validity of the Consent Affidavits:
The appellants challenged the timing and validity of the consent affidavits filed by the respondent’s family members. The Tribunal noted that these affidavits were filed with the rejoinder and accepted them as valid consent within the meaning of Section 244(2). The Tribunal emphasized that technical compliance issues should not detrimentally affect the respondent’s rights.

5. The Role and Removal of the Respondent as Managing Director:
The Tribunal acknowledged that the respondent was managing the affairs of the appellant company as the Managing Director, as per the Joint Venture Agreement, even though it was not incorporated in the AoA. The notice circulated on 6.5.2019 and the resolution passed on 14.5.2019 confirmed the removal of the respondent from his position. The Tribunal found that the removal process violated the Joint Venture Agreement and the AoA, constituting an act of oppression.

Conclusion:
The Tribunal concluded that the waiver granted under Section 244 was valid, considering the exceptional and compelling circumstances. The appeal was dismissed, and the Tribunal upheld the waiver, allowing the respondent to file the company petition under Section 241 read with Section 242 of the Companies Act, 2013. The Tribunal emphasized that the issues of oppression and mismanagement required a detailed inquiry and could not be dismissed at the threshold.

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