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of <h1>Tribunal sets aside land sale, orders return of price with interest, denies winding up.</h1> <h3>3A Capital Services Ltd. Versus Sanghi Spinners India Ltd. And Others (NO. 2)</h3> 3A Capital Services Ltd. Versus Sanghi Spinners India Ltd. And Others (NO. 2) - [2020] 223 Comp Cas 151 (NCLT - Hyd) Issues Involved:1. Alleged oppression and mismanagement by Respondent No. 1.2. Sale of 400 acres of land to Respondent No. 14.3. Conversion of partly paid-up shares to fully paid-up shares.4. Petitioner's request for exit from the company.5. Petitioner's alternative request for winding up the company.Detailed Analysis:1. Alleged Oppression and Mismanagement by Respondent No. 1:The petitioner alleged that the respondents engaged in acts of oppression and mismanagement, including selling a significant portion of land at a throwaway price without proper authorization or valuation, and without convening an extraordinary general meeting. The Tribunal found that the sale of land was conducted without proper notice to the petitioner and without a valid resolution from an extraordinary general meeting, constituting an act of oppression and mismanagement.2. Sale of 400 Acres of Land to Respondent No. 14:The Tribunal noted that the sale of 400 acres of land to Respondent No. 14, a related party, was conducted at a price significantly lower than the market value and the Ready Reckoner price. The sale was also found to be in violation of an interim order by the Company Law Board and lacked transparency as no public notice was issued. The Tribunal concluded that the sale was an act of oppression and mismanagement, and thus, the sale agreement was set aside. Respondent No. 1 was directed to return the sale price to Respondent No. 14 with interest.3. Conversion of Partly Paid-Up Shares to Fully Paid-Up Shares:The petitioner challenged the conversion of partly paid-up shares to fully paid-up shares, alleging it was done to dilute their shareholding. The Tribunal found that the conversion was necessary to raise funds to meet the debt obligations and was not an act of oppression or mismanagement. The shares were converted to fully paid-up shares to raise money for clearing the company's debt liabilities.4. Petitioner's Request for Exit from the Company:The petitioner sought to exit from the company by selling their shares at a fair valuation. The Tribunal noted that valuation could not be done at this stage due to pending land ceiling proceedings. However, the petitioner was allowed to sell their shares to existing shareholders at the offered price, and if the existing shareholders were not willing to purchase, the petitioner could sell the shares to a third party.5. Petitioner's Alternative Request for Winding Up the Company:The Tribunal rejected the request to wind up the company, citing the pending land ceiling proceedings and the unresolved ownership of the company's lands. The Tribunal emphasized that winding up should be a last resort and other remedies should be pursued first.Conclusion:The Tribunal allowed the petition, setting aside the sale agreement with Respondent No. 14 and permitting the petitioner to sell their shares to existing shareholders or third parties. Respondent No. 1 was directed to return the sale price to Respondent No. 14 with interest. The request for winding up the company was denied due to the pending land ceiling proceedings.
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