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| The Tax Publishers 2020 TaxPub(CL) 0770 (NCLAT-Kochi) COMPANIES ACT, 2013
Section 241 Section 242
Where directors violated process laid down either in Companies Act or Articles of Association of company and indulged in oppression of minority shareholders and effected change in control and management of company by their financial clout, muscle power and by adopting dubious methods to achieve their ends, same was in violation of section 241/242 of the Act.
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Application to Tribunal for relief in cases of oppression, etc. - Illegal removal of directors from Board - Change in control and management of company by frivolous and dubious methods - Maintainability of petition
The petitioners were promoters of respondent-company. They could not mobilise funds to run company successfully, therefore, they inducted respondents-directors in company. Respondents gave loan to company. Gradually, respondents started creeping acquisition of shares hiding real intentions of taking over company and in this process, they violated policy guidelines of MIB. When respondents were asked to reduce shareholding to comply with MIB guidelines, a chain of events was triggered that led to removal of petitioners from directorship. Held: The respondents did not bother to follow process laid down either in the Companies Act or Articles of Association of company in order to achieve their ends. Respondents convened board meetings and extra-ordinary general meeting illegally and Company Secretary, Auditor and ultimately Chairman and petitioners-directors were illegally removed. Thus, respondents indulged in oppression of minority shareholders and effected change in control and management of company by their financial clout, muscle power and by adopting dubious methods which was in violation of section 241/242.
REFERRED :
FAVOUR : In favour of petitioner.
A.Y. :
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