Company law remedies in oppression cases are not barred by lack of consent where transactions are pleaded fraudulent or void.

In proceedings under Sections 241 and 242 of the Companies Act, 2013, the Tribunal's wide remedial power is not confined by the consent proviso in Section 242(2)(f) where the pleaded case is that transactions are fraudulent, sham, or void; consent was therefore not a condition precedent. The earlier order allowing collapse only where consent already existed did not create a universal consent requirement. Detailed pleadings supported by RBI, SFIO and forensic material alleging circuitous routing of funds required merits examination. The application was also not barred by election, estoppel, or approbate and reprobate merely because separate Section 7 proceedings had been pursued.

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Issues: (i) Whether the earlier order permitting collapse of transactions only where consent had been given was misconstrued as making consent a mandatory precondition in all cases; (ii) whether consent of the counterparty is a condition precedent for relief under Sections 241 and 242 of the Companies Act, 2013 where the pleaded case is that the transactions are fraudulent and void; (iii) whether the pleadings and materials, including regulatory and forensic reports, required adjudication of the alleged circuitous and fraudulent transactions; and (iv) whether the application was barred by election, estoppel, or approbate and reprobate because separate Section 7 proceedings had earlier been pursued.

Issue (i): Whether the earlier order permitting collapse of transactions only where consent had been given was misconstrued as making consent a mandatory precondition in all cases?

Analysis: The earlier order had allowed collapse only in respect of transactions where consent was already available in the proceedings then before the Tribunal, while expressly leaving the disputed transactions open for examination in pending proceedings. That limited disposal did not lay down a general rule that consent was indispensable for every future request to unwind or collapse transactions.

Conclusion: The impugned order wrongly treated the earlier order as imposing a universal consent requirement.

Issue (ii): Whether consent of the counterparty is a condition precedent for relief under Sections 241 and 242 of the Companies Act, 2013 where the pleaded case is that the transactions are fraudulent and void?

Analysis: Section 242(1) confers wide powers to make such order as the Tribunal thinks fit to bring an end to oppression and mismanagement. Section 242(2)(f) is illustrative and deals with termination, setting aside, or modification of subsisting agreements, but its proviso cannot limit the general power under sub-section (1) where the relief sought is founded on allegations that the transactions are sham, fraudulent, or void. In such a case, the requirement of consent does not operate as an absolute fetter.

Conclusion: Consent of the parties was not a condition precedent on the facts pleaded.

Issue (iii): Whether the pleadings and materials, including regulatory and forensic reports, required adjudication of the alleged circuitous and fraudulent transactions?

Analysis: The application contained detailed pleadings on six transactions and was supported by the RBI inspection report, SFIO report, and forensic material indicating that funds were routed through third parties to bypass regulatory directions and reach group entities. These materials were sufficient to necessitate consideration of the true nature of the transactions and their alleged fraudulent character.

Conclusion: The Tribunal ought to have examined the allegations on merits.

Issue (iv): Whether the application was barred by election, estoppel, or approbate and reprobate because separate Section 7 proceedings had earlier been pursued?

Analysis: The earlier Section 7 proceedings did not create a bar against raising the plea that the transactions were fraudulent or void. The doctrines of election, estoppel, and approbate and reprobate cannot be used to prevent a party from challenging transactions alleged to be illegal or void ab initio, particularly where the statutory regime and public interest are involved.

Conclusion: The application was not barred by election, estoppel, or approbate and reprobate.

Final Conclusion: The dismissal of the collapsing application and the consequential orders allowing the connected applications could not be sustained, and the matter required fresh consideration on merits by the Tribunal below.

Ratio Decidendi: In proceedings under Sections 241 and 242 of the Companies Act, 2013, the Tribunal's wide remedial power is not curtailed by the consent proviso in Section 242(2)(f) where the pleaded case is that the impugned transactions are fraudulent, sham, or void, and such allegations cannot be shut out by election, estoppel, or approbate and reprobate.

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