Appellant must prove membership before raising oppression issues under Companies Act, 2013.

The NCLAT affirmed the NCLT's decision that the Appellant must establish membership before addressing oppression and mismanagement issues. The appeal challenging the dismissal of the petition under Sections 59, 241, 242 of the Companies Act, 2013 was dismissed, upholding the NCLT's order dated 03.05.2021.

---

---

Issues Involved:
1. Maintainability of the petition under Sections 59, 241, 242 of the Companies Act, 2013.
2. Alleged illegal transfer of shares and oppression.
3. Requirement to establish membership before addressing oppression and mismanagement claims.

Summary:

Maintainability of the Petition:
The Appellant filed an appeal u/s 421 of the Companies Act, 2013, challenging the order of the NCLT, which dismissed the petition under Sections 59, 241, 242, and other applicable sections, holding it non-maintainable. The Appellant argued that the reduction of his shareholding below 10% due to alleged acts of oppression and mismanagement should not preclude the maintainability of the petition. The NCLT, however, required the Appellant to first establish his right as a member of the company before addressing the issues of oppression and mismanagement.

Alleged Illegal Transfer of Shares and Oppression:
The Appellant, holding 45% of the shares in the Respondent No. 1 Company, alleged that Respondent No. 2, in collusion with others, illegally diluted his shareholding by forging documents and transferring his shares without consent. The Appellant discovered the reduction of his shareholding to zero upon inspecting the company's records. Despite objections and requests for clarification, the Respondents allegedly failed to provide satisfactory responses. The Appellant claimed these actions constituted oppression and mismanagement, warranting rectification of the register of members.

Requirement to Establish Membership:
The NCLT held that the Appellant must first establish his right as a member of the company before proceeding with claims of oppression and mismanagement. This position was supported by the precedent set in the case of Gulabrai Kalidas Naik & Others vs. Laxmidas Lallubhai Patel & Others, where it was held that a petitioner must first resolve disputes regarding membership before maintaining a petition for oppression and mismanagement.

Judgment:
The NCLAT affirmed the NCLT's decision, holding that the Appellant must establish his membership before addressing the issues of oppression and mismanagement. The appeal was dismissed, and the NCLT's order dated 03.05.2021 was upheld. The registry was directed to upload the judgment and send a copy to the NCLT.

---