Oppression and mismanagement jurisdiction can invalidate a lease executed in breach of statutory requirements and company articles.

In oppression and mismanagement proceedings, the Tribunal's jurisdiction was described as wide enough to invalidate a corporate transaction and grant consequential relief where the company's affairs were conducted prejudicially and in breach of mandatory statutory requirements and the articles of association. A pending civil suit limited to a permanent injunction did not bar examination of the lease deed because it did not ? Need English only. The lease of the company's sole immovable asset, executed without the written consent required by the articles and in breach of related party and board authority requirements, was treated as invalid and oppressive. The challenged order setting aside the lease deed and consequential directions was sustained.

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Issues: (i) Whether the Tribunal could set aside the lease deed and grant consequential relief under the oppression and mismanagement jurisdiction despite the pendency of a civil suit; (ii) Whether the board resolution and lease deed were invalid as a related party transaction executed in breach of the Companies Act, 2013 and the articles of association.

Issue (i): Whether the Tribunal could set aside the lease deed and grant consequential relief under the oppression and mismanagement jurisdiction despite the pendency of a civil suit.

Analysis: The pending civil suit was confined to a prayer for permanent injunction and did not seek adjudication of title or ownership over the property. The dispute before the Tribunal concerned the legality of the board action and the lease deed executed in respect of the company's sole immovable asset. The jurisdictional objection based on res sub judice was therefore rejected, and the power under the oppression and mismanagement provisions was treated as wide enough to grant effective relief where the company's affairs were conducted in a manner prejudicial to its interests.

Conclusion: The Tribunal was competent to examine the transaction and to grant the relief of setting aside the lease deed notwithstanding the civil suit.

Issue (ii): Whether the board resolution and lease deed were invalid as a related party transaction executed in breach of the Companies Act, 2013 and the articles of association.

Analysis: The lease was executed without the written consent of all members in a duly convened general meeting, which the articles required for alienation or lease of the company's undertaking or immovable property. The transaction was found to be contrary to the mandatory requirements governing related party transactions and board powers. The terms of the lease were also treated as oppressive and adverse to the company's interests, and the Tribunal's power under the oppression and mismanagement provisions extended to setting aside such an unlawful arrangement and imposing consequential directions.

Conclusion: The board resolution and lease deed were held invalid and the relief granted by the Tribunal was upheld.

Final Conclusion: The appeal failed, and the impugned order setting aside the lease deed and granting consequential relief was sustained.

Ratio Decidendi: In proceedings for oppression and mismanagement, the Tribunal may invalidate a corporate transaction and grant consequential relief where the transaction is executed in breach of mandatory statutory requirements and the company's governing articles, and the pendency of a limited civil injunction suit does not bar such adjudication.

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