Hemant Gupta Vs Yulu Bikes Pvt. Ltd. & Ors. (NCLT Bengaluru)
Summary : The National Company Law Tribunal (NCLT), Bengaluru Bench, comprising Shri Sunil Kumar Aggarwal, Member (Judicial), and Shri Radhakrishna Sreepada, Member (Technical), dismissed the waiver application filed by Hemant Gupta, co-founder and former Chief Operating Officer (COO) of Yulu Bikes Private Limited, under Section 244(1) of the Companies Act, 2013. The application arose from a company petition filed under Sections 241 and 242 alleging oppression and mismanagement by the company’s promoters and management. The principal controversy concerned the petitioner’s eligibility to maintain the proceedings, the computation of his shareholding in a company having both equity and preference share capital, and whether the allegations disclosed exceptional circumstances warranting waiver of the statutory eligibility requirements.
The petitioner submitted that he had been associated with Yulu Bikes since its incorporation on 7 August 2017 and had contributed substantially to the company’s establishment, business development and operational growth. According to him, the other promoters and management systematically excluded him from important decisions, restricted his participation in internal meetings and business reviews, discontinued operational updates, and removed references to him as a co-founder from the company’s website and promotional materials. He alleged that his exclusion intensified during the Series B funding negotiations involving Magna International and Bajaj Auto Limited. He further claimed that the respondents had convened extraordinary general meetings at short notice, notwithstanding his express objections, and had failed to accurately record his dissent in the minutes. These actions, coupled with changes to the Articles of Association, allegedly deprived him of valuable rights attached to his promoter status.
A major dispute concerned the computation of the petitioner’s shareholding for the purposes of Section 244(1)(a). The petitioner claimed that he held 8,900 equity shares before the subdivision of shares in September 2022, following which his holding increased to 89,000 equity shares. He relied upon the numerical proportion of his shares to the total equity and preference shares issued by the company and contended that he held 10.02% of the total paid-up share capital as on 31 March 2022 and approximately 17.12% as on 31 March 2024. He maintained that he had therefore satisfied the statutory threshold of one-tenth of the issued share capital. Alternatively, he argued that where the alleged oppression itself involved dilution of shareholding, the position immediately preceding the disputed transactions should be considered. He sought waiver in the alternative on the ground that the alleged conduct of the respondents constituted exceptional circumstances.
The petitioner also challenged the manner in which the company conducted extraordinary general meetings on 25 August 2022, 9 September 2022 and 14 September 2022. According to him, these meetings were convened on unusually short notice despite his refusal to consent, and significant resolutions relating to the issuance of compulsorily convertible preference shares, changes in the capital structure, appointment of directors and amendments to the Articles of Association were passed without adequately protecting his rights. He alleged violations of the statutory requirements concerning notice and maintenance of minutes under the Companies Act, 2013. He further complained that his removal as Chief Operating Officer and Key Managerial Personnel was contrary to the statutory requirements governing such appointments and removals. He questioned the company’s valuation exercises during subsequent funding rounds, alleging that a substantially unchanged valuation was maintained despite deterioration in business performance and financial projections.
The respondents strongly opposed the application and disputed the petitioner’s computation of shareholding. They submitted that the expression ‘issued share capital’ under Section 244 necessarily includes both equity and preference share capital and that the appropriate comparison must be made by reference to the nominal monetary value of the entire issued capital rather than by merely counting the number of shares. According to the respondents, the petitioner’s holding of ₹89,000 represented only 3.11% of the issued share capital in FY 2021-22, 1.89% in FY 2022-23 and 1.51% in FY 2023-24 and FY 2024-25. They also relied upon shareholders’ agreements and communications relating to the funding rounds to contend that the petitioner had been aware of progressive dilution of his percentage holding. They maintained that the petitioner had incorrectly represented his shareholding and had failed to establish the minimum statutory eligibility requirement.
The respondents further contended that the company petition was essentially an attempt to pursue personal grievances rather than a genuine claim involving oppression and mismanagement. They pointed to the petitioner’s demand for partial liquidity against his equity shares, his termination from employment, his alleged expectation of appointment as a director and the removal of references to him from promotional materials. According to them, these matters were governed by contractual arrangements, employment terms and ordinary managerial decisions and could not automatically be characterised as oppression of a shareholder. They also submitted that the petitioner had consented to contractual arrangements permitting additional investments and issuance of shares. The subsequent dilution, according to the respondents, arose from legitimate funding transactions and affected shareholders proportionately rather than being directed specifically against the petitioner. They therefore opposed the exercise of the Tribunal’s discretionary power to waive the statutory threshold.
On the preliminary question of maintainability, the Tribunal examined the requirements of Sections 241 and 244 of the Companies Act, 2013 and the circumstances in which waiver of the prescribed membership or shareholding threshold may be granted. The Tribunal noted that the original company petition had been instituted on 23 August 2025, whereas the waiver application was filed subsequently on 1 December 2025, after the respondents raised objections regarding eligibility. It considered this procedural sequence significant because waiver is intended to enable an otherwise ineligible member to institute proceedings alleging oppression and mismanagement. The Tribunal observed that a person who already satisfies the statutory eligibility requirements does not require waiver, while a person who does not satisfy those requirements must establish a proper basis for obtaining relaxation. The petitioner’s simultaneous assertion of eligibility and request for waiver was therefore examined against the statutory framework and the material placed on record.
On the computation of shareholding, the Tribunal considered the statutory distinction between equity and preference share capital under Section 43 and the definition of membership under Section 2(55) of the Companies Act, 2013. It concluded that the entire issued share capital, comprising both equity and preference share capital, must be considered while determining eligibility under Section 244. The Tribunal did not accept the petitioner’s method of calculating his percentage merely by comparing the number of equity shares held by him with the aggregate number of shares of different classes. It also considered the petitioner’s contention that the shareholding before the alleged oppressive dilution should be adopted. The Tribunal observed that the shareholding position at the relevant date must be examined and that allegations of intentional dilution could be considered in assessing whether exceptional circumstances existed. However, a reduction in percentage holding resulting from further issuance of shares does not, by itself, establish oppressive or discriminatory conduct.
Applying the principles governing waiver discussed in the Cyrus Investments litigation, the Tribunal considered whether the applicant was a member of the company, whether the proposed petition genuinely concerned oppression and mismanagement, whether similar allegations had previously been concluded, and whether exceptional circumstances justified relaxation of the statutory threshold. The petitioner’s status as a member was not in dispute. However, the Tribunal found that his termination as Chief Operating Officer primarily raised an employment-related grievance governed by contractual arrangements. Similarly, his alleged non-appointment as director, changes in organisational hierarchy and removal from promotional materials did not establish the exceptional circumstances necessary for waiver. With regard to shareholding dilution, the Tribunal noted that the petitioner was a party to the shareholders’ agreement permitting subsequent funding rounds, that the dilution affected shareholders proportionately, and that opportunities had been provided to participate in further investments. There was insufficient material demonstrating that the petitioner’s shareholding had been selectively or disproportionately diluted to oppress him.
Having considered the rival submissions, documentary material, funding arrangements and governing statutory provisions, the Tribunal concluded that the petitioner had failed to demonstrate exceptional circumstances warranting waiver under Section 244(1) of the Companies Act, 2013. The allegations relating to employment, promoter recognition, liquidity expectations and management participation were insufficient, individually or cumulatively, to justify dispensing with the statutory eligibility requirements. The Tribunal therefore dismissed C.A. No. 211/2025 by its order dated 4 November 2026. Consequently, C.P. No. 117/BB/2025, filed under Sections 241 and 242, also stood dismissed, and proceedings in the other pending interlocutory applications were closed. The decision emphasises that statutory eligibility for oppression and mismanagement proceedings cannot be bypassed merely by alleging commercial disagreements, personal grievances or proportionate dilution arising from investment transactions; waiver must be supported by circumstances satisfying the judicially recognised criteria.
Cases Discussed
- Cyrus Investments Pvt. Ltd. & Anr. v. Tata Sons Ltd. & Ors., 2017 SCC OnLine NCLAT 261; (2019) 212 Comp Cas 269 (NCLAT) — Used by the parties and considered by the Tribunal for the Section 244 waiver criteria, including membership, genuine oppression allegations, previously concluded claims and exceptional circumstances.
- Tata Consultancy Services Ltd. v. Cyrus Investments (P) Ltd., (2021) 9 SCC 449 (Supreme Court) — Cited by the applicant in support of the discussion on the Cyrus litigation and waiver principles.
- Chandra Pardhanani v. Mac Charles (India) Ltd., 2010 SCC OnLine Kar 5341 (Karnataka High Court) — Cited by the seventh respondent regarding the meaning of issued share capital.
- Brookfield Technologies Private Limited v. Shailaja Iyer, Company Appeal (AT) No. 110 of 2020 (NCLAT) — Cited by the seventh respondent on bona fides and disclosure by a petitioner seeking relief.
- Northern Projects Ltd. v. Blue Coast Hotels and Resorts Ltd., (2009) 148 Comp Cas 279 — Cited by the seventh respondent in support of the statutory standing requirement.
- Adesh Kumar Gupta v. Liberty Shoes (citation not specified in source) — Cited by the respondents in opposing the claim that the pleaded facts amounted to exceptional circumstances.
- Lieutenant Colonel Sandeep Dewan v. Ootacamund Club (citation not specified in source) — Cited by the respondents in the discussion of the limits of the waiver jurisdiction.
