2023 (4) TMI 1202 - AT - Companies Law

Appellate Tribunal upholds shareholder's right to inspect company records under Companies Act, 2013

M/s. Chawla and Choudhary Trading Co. P. Ltd., Mr. Achal Chawla (Director), Mrs. Neha Chawla (Director), Mrs. Madhu Chawla (Director) Versus Mr. Gulshan Kumar Chawla

The Appellate Tribunal upheld the Respondent's statutory right to inspect the company's records as a shareholder and director under the Companies Act, ... Inspection of records on dates, time and venue to be decided by the Appellants under intimation to the Respondent within a week of pronouncement of said impugned order - Section 421 of the Companies Act, 2013 - Original petition pending adjudication before the Tribunal under Section 241 & 242 of the Companies Act, 2013 - Whether there was any error in the impugned order which allowed the Respondent to examine the statutory records of the Appellant No. 1 Company taking help of the Chartered Accountant/ Company Sectary, if so desired, and also directing the Appellants herein to provide conducive environment? - HELD THAT:- Since, the main petition is yet to be finally decided on merits, this Appellant Tribunal is not required to look into the various other issues raised by the Appellant herein. It is found that the Respondent has legal rights for inspections of documents as ordered by the Tribunal. This Appellate Tribunal do not find any error or infirmity in the impugned order dated 20.02.2019 - Appeal dismissed. Issues Involved:1. Inspection of Company Records by the Respondent.2. Allegations of Oppression and Mismanagement.3. Legality of the Extraordinary General Meeting (EGM).Summary:1. Inspection of Company Records by the Respondent:The appeal was filed under Section 421 of the Companies Act, 2013 against the order dated 20.02.2019, which allowed the Respondent to inspect the records of the Appellant No. 1 Company. The Tribunal directed the Appellants to permit the Respondent to inspect the original statutory records and to fix dates, time, and venue for such inspection within a week. The Appellants argued that the Respondent's conduct was detrimental to the company's interests and that the inspection could harm the company. However, the Tribunal upheld the Respondent's statutory right to inspect the documents as a shareholder and director, as per Sections 94, 119, and 128 of the Companies Act, 2013.2. Allegations of Oppression and Mismanagement:The Appellants alleged that the Respondent engaged in activities detrimental to the company, including colluding with a competitor and siphoning off money. They claimed that the Respondent's actions led to the closure of the company's business unit. The Respondent denied these allegations, stating they were false and intended to continue acts of oppression and mismanagement. The Respondent asserted his long-standing involvement with the company and his right to inspect the company's records.3. Legality of the Extraordinary General Meeting (EGM):The Appellants called for an EGM to remove the Respondent from the directorship, which was stayed by the Tribunal. The Respondent argued that the EGM was illegal and that the Tribunal ordered the status quo regarding board composition and shareholding. The Tribunal found that the Respondent, as a shareholder and director, had the right to inspect the company's records and that the Appellants' cited judgments were not directly relevant to the issue.Conclusion:The Appellate Tribunal found no error or infirmity in the impugned order dated 20.02.2019 and dismissed the appeal, affirming the Respondent's right to inspect the company's records. The main petition regarding allegations of oppression and mismanagement is still pending adjudication before the Tribunal.