Yogesh Patel Vs Arzoo.com (India) Private Limited & Ors. (NCLT Mumbai)
The NCLT Mumbai partly allowed a company petition alleging oppression and mismanagement in the affairs of a private company. The petition raised allegations relating to dilution of shareholding, fraudulent transfer of shares, irregularities concerning another shareholder’s shares, financial transactions with a third-party entity, and non-compliance with the Companies Act. During the proceedings, a Special Purpose Audit was conducted, which reported discrepancies and non-cooperation in the production of records.
On the allegation of dilution of the petitioner’s shareholding through a proposed issue of shares, the Tribunal noted that the proposed allotment had never materialised and the auditor had found that no shares were allotted pursuant to the AGM. It therefore declined to examine the valuation-related allegations, while observing that the company ought to have ensured service of AGM notice in accordance with Section 101 of the Companies Act, 2013.
Regarding the transfer of 68,015 shares, the Tribunal relied on the audit report, which confirmed that the shares had originally been allotted to another shareholder pursuant to a board resolution and that the return of allotment had been filed with the Ministry of Corporate Affairs. The Tribunal found that the register of members instead reflected these shares in the name of another respondent, no transfer documents were produced, and no sufficient explanation was offered for removal of the original shareholder’s name. Holding this to be a continuing act of oppression, the Tribunal directed the company to rectify the register of members by restoring the shares to the original shareholder and to issue the corresponding share certificate.
