Arun Gupta & Anr. Vs South Eastern Carriers Limited & Ors. (Supreme Court of India)
Summary: The Supreme Court, comprising Justice Dr. Dhananjaya Y. Chandrachud and Justice M.R. Shah, dismissed Civil Appeal No. 1024 of 2021 filed by Arun Gupta and another appellant against South Eastern Carriers Limited and other respondents. The appeal concerned an order of the National Company Law Tribunal (NCLT) appointing a Special Officer in the affairs of the respondent company. The NCLT had given reasons for the appointment, particularly in paragraphs 42 and 44 of its judgment dated 1 October 2019, and the National Company Law Appellate Tribunal (NCLAT) had affirmed the decision. The Supreme Court found no error warranting interference and upheld the appointment.
The underlying company petition involved allegations of oppression and mismanagement and had remained pending since 2016. During the hearing, counsel for the appellants pointed out that the dispute had already continued for several years and requested an early decision in accordance with Section 422 of the Companies Act, 2013. The provision requires the Tribunal to deal with applications and petitions as expeditiously as possible and lays down a statutory framework aimed at timely disposal.
As an alternative to continued litigation, the appellants suggested that, since the shareholding was closely held among members of the same family, an amicable resolution through mediation might be considered. Such a resolution could enable one or more groups of shareholders to purchase the shareholding of other groups and thereby resolve the family-company dispute. This was a submission made on behalf of the appellants, rather than a finding that mediation was legally mandatory or that a buyout was appropriate.
The Supreme Court recorded those submissions and permitted the appellants to approach the NCLT for an expeditious hearing with reference to Section 422. It further observed that any proposal for an amicable settlement through a mediatory process could be placed before the NCLT when the proceedings were taken up. Importantly, the Supreme Court expressly declined to make any observations or findings on the merits of the proposed mediation and left the matter to the NCLT to consider appropriately.
By its signed order dated 9 April 2021, the Supreme Court dismissed the appeal against the Special Officer’s appointment and disposed of the pending application. The order neither finally adjudicated the underlying oppression and mismanagement allegations nor directed the NCLT to order a compulsory shareholder buyout or mediation. Its operative significance lies in affirming the existing appointment of the Special Officer while preserving the parties’ opportunity to seek expeditious disposal or explore voluntary settlement before the NCLT.
FULL TEXT OF THE ORDER OF SUPREME COURT
1. The order of the National Company Law Tribunal1 appointing a Special Officer is based on sound reasons which have been adduced, particularly in paragraphs 42 and 44 of the judgment dated 1 October 2019. The order has been affirmed by the National Company Law Appellate Tribunal. There is no error, warranting interference.
2. Mr Ashwani Kumar, learned counsel appearing on behalf of the appellants, submits that the petition for oppression and mismanagement has been pending since 2016 and, hence, it is appropriate that it is disposed of at an early date in compliance with the mandate of Section 422 of the Companies Act 2013. In the alternative, it has been submitted that having regard to the fact that the shareholding is held within the members of a family and is closely held, it would be appropriate if mediation is resorted to so that any one or more of the groups of shareholders can buy out the shareholding of others.
3. We are recording the above submissions in order to permit the appellants to move the NCLT for expeditious hearing having regard to the mandate of Section 422. Any offer which the appellants have for an amicable solution through a mediatory process can be urged before the NCLT when the proceedings are taken up. We make no observations or findings thereon and leave it open to the NCLT to take an appropriate view.
4. Subject to the aforesaid, the appeal shall stand dismissed.
5. Pending application stands disposed of.
1. The appeal is dismissed in terms of the signed order.
2. Pending application stands disposed of.
Footnote 1: “NCLT”
