Share Transfer or Mere Arbitration Not Proof of Oppression: NCLT Ahmedabad

Hitesh Shah & Anr Vs Aquafil Polymers Company Pvt Ltd & Ors (NCLT Ahmedabad)

Companies Act, 2013 Vis-a-Vis Arbitration Clause in a Contract.

The existence of an arbitration clause does not take away jurisdiction of NCLT to consider and decide allegations of oppression and mismanagement.

NCLT, Ahmedbad Bench observed in its recent judgement dated 18.07.2025 in the matter of Aquafil Polymers Co. Pvt ltd.

Snippets:

1.NCLT clarifies that although the Share Purchase Agreement (SPA) is governed by contractual law, this does not by itself prevent the Tribunal from examining the contract terms if they are integrally connected to such allegations.

2. Mere transfer of shares, even to a party involved in arbitration, does not ipso facto amount to oppression, unless it is shown that such transfer was made with the sole object to prejudice the Directors (Petitioners) or defeat the corporate interest of company.

3. The proceedings u/s 241-242 are equitable in nature.

4. NCLT must address the foundational principle of equity: he who comes to equity must come with clean hands. The very essence of equity requires candour, fairness and transparency.

FULL TEXT OF THE NCLAT JUDGMENT/ORDER

1.This common order is being passed in the Company Petition bearing number CP No. 5 of 2023 which was filed before this Tribunal on 17.01.2023. Upon the course of the proceedings several IAs and Company Applications came to be filed in this Company Petition by both the Petitioners as well as Original Respondents, all arising out of or relating to the same set of facts and underlying disputes forming the subject matter of the main petition. In order to avoid multiplicity of orders and in view of the common issues involved, this common order is being passed to dispose of the Transfer Petition along with all pending IAs and Company Applications.

2. The Company Petition bearing number CP No. 5 of 2023 is filed by the Petitioners under Sections 241 and 242 of the Companies Act, 2013 (hereinafter as, “the Act”) read with Rule 11 of the National Company Law Tribunal Rules, 2016 (hereinafter as, “the NCLT Rules, 2016″), alleging acts of oppression and mismanagement that are prejudicial to the interest of the Company and its stakeholders, further seeking following reliefs:-

A. set aside the ongoing acts of Oppression and Mismanagement in the overall interest of the company and its stakeholders

B. declare the transfer of shares and allotment of shares to the Respondent No.2 and 3 as null and void and reduce the share capital and rectify the register of members.

C. direct permanently the erring Respondents to restore back the papers, documents, registers, accounts and properties and assets of the Respondent No.1 Company and permanently restrained from using the Respondent No.1’s goodwill before the public at large.

D. reconstitute the Board of Directors of the R1 – Company and by removing the Respondent No-2, Respondent No.3 and the Respondent No. 4.

E. declare the decision / resolution(s) as passed in the board meeting dated 03.12.2022 appointing the internal auditor and withdrawing the powers of the Petitioners as bad in law, non-est and illegal as well as declare the circular resolution dated 02.01.2023 and 10.01.2023 as bad in law and illegal and oppressive and consequential actions of appointing the conciliator to be declared as bad in law and oppressive conduct.

F. declare the decision / resolution(s) pertaining to other business which are prejudicial to the rights of the petitioner as bad in law and illegal.

G. pass such other and further orders to regulate the affairs of the company permanently in the overall interest of the company, members and public at large.

3. IA No. Fi of 2023 has been preferred in the above Company

Petition by the applicants who are also the Original Petitioners in the main Company Petition, under Section 425 of the Act read with Rule 11 of the NCLT Rules 2016, seeking the following reliefs:-

A. admit the application and held the erring Respondent No. – 2, 3, 4, 5 for the criminal contempt committed and held them guilty for criminal contempt of court.

B. Such other and further orders as this Tribunal deem fit and proper in the interest of justice.

4. IA No. 9 of 2023 has also been preferred by the Original Petitioners of the main Company Petition, under Rule 11 of the NCLT Rules 2016 seeking following reliefs:-

A. admit the application and stay the EOGM dated 14.02.2023 of the R-1 Company as getting conducted by the erring respondents in the overall interest of the company and the petitioners.

B. Pending hearing and final disposal of the application the respondents are required to be stayed from taking any decision or passing any resolution prejudicial to the rights of the petitioners directly or indirectly.

C. Pending hearing and final disposal of the petition, the alleged board resolutions dated 03.12.2022, 02.01.2023 and 23.01.2023 be stayed/ suspended.

D. Such other and further orders as this Tribunal deem fit Vand proper in the interest of justice.

5. Comp. Application No. 3 of 2023 has been filed by the applicant who is originally the Respondent No. 2 in the main Company Petition, under Rule 11 of the NCLT Rules, 2016 read with Section 8 of the Arbitration and Conciliation Act, 1996, seeking following reliefs:-

A. pass appropriate order referring the parties to the main CP no. 5 of 2023 to arbitration as per and in accordance with Section 8 of the Arbitration and Conciliation Act, 1996;

B. pending hearing and disposal of the present application, this Tribunal be pleased to pass appropriate order staying the proceedings of CP 5 of 2023 pending before this Tribunal;

C. pass ex parte ad interim / interim prayers in tet ins of prayer clause b hereinabove; and / or

D. pass such other and further reliefs as this Tribunal may deem necessary.

6. Comp. Application No. 13 of 2023 has been filed by the Original Petitioners of the main Company Petition, under Rule 11 of the NCLT Rules, 2016, seeking following reliefs:-

A. admit the application and set aside the impugned decision of 03.07.2023 and 04.07.2023 of passing of the Circular resolution for transfer of the shares by R3 and R5 to R7 pending hearing and final disposal of the CP no. 5 of 2023.

B. direct the erring Respondent no. 7 not to exercise any  right over the illegal purported transfer of the equity shares by R3 and R5 pending hearing and final disposal of the CP No. 5 of 2023.

C. restore the shareholding pattern of the R1 Company as of 01.07.2023 if illegally the purported transfer is effected.

D. direct the R8 pending hearing and final disposal of the CP no. 5 of 2023, to mark the R1 Company under management dispute in the interest of the RI Company.

E. Such other and further orders as this Tribunal deem fit and proper in the interest of justice.

7. Since the Company Petition, the Interlocutory Applications, the Company Applications, and the Contempt Application all arise from the same set of facts; the Tribunal finds it appropriate to first set out, in brief, the background which has led to the present proceedings. The facts, as narrated below, have given rise to certain disputes between the parties and form the basis of not only the main petition but also the connected applications filed from time to time.

8. Background of the Case:

8.1. The genesis of the present proceedings traces back to the year 2019, when a Share Purchase Agreement (SPA) dated 25.09.2019 was executed between four parties, namely, Mr. Hitesh Shah and Mr. Poojan Hitesh Shah (Petitioner Nos. 1 and 2 respectively), Ms. Anita Roy (Respondent No. 2), and Aquafil Polymers Company Private Limited (Respondent No. 1 Company).

8.2. The Aquafil Polymers Company Private Limited, is a company registered under the provisions of the Companies Act, 1956, and now being governed under the provisions of the Companies Act, 2013. The Company was incorporated on 04.05.1995 bearing CIN U17119GJ1995PTCO25756. The nominal capital of the company is Rs. 3,00,00,000 (Rupees Three Crores) 30,00,000 equity shares consisting of 10/- each, while the paid-up share capital of the Company is Rs. 2,59,08,680/-. The subscriber to the Memorandum of Association and Article of Association were Mr. Govindbhai J Prajapati and Mr. Haresh I Prajapati both had subscribed 10 equity shares each. The petitioners thereafter took over the management from the original subscriber.

8.3. The Petitioner No. 1 became the Managing Director of the company on 22.01.1997 and Petitioner No. 2 became the Director of the company on 01.10.2012 and ever since they form a part of the Board of Directors and all the operational, managerial, and financial decisions has been taken by them.

8.4. The Respondent No.1 Company is engaged in the business specializing in engineering, procurement, design, supply, installation, construction EPC, operations and maintenance (OM) for projects in a water and waste water Treatment Segment Business. The Petitioners herein were undertaking work orders through tenders from the Government and semi-government bodies and systematically completed the work order and there were other work orders which are pending and in operation and few other projects where the bid has been made.

8.5. It is submitted by the Applicants that Respondent No. 1 Company is a going concern and, in furtherance of its ongoing projects, is required to incur substantial expenditure towards working capital. To meet such business requirements, Respondent No. 1 availed financial facilities from the State Bank of India, against which collateral security was provided by the Petitioners as well as by Respondent No. 1 Company. It is further submitted that the working capital cycle was disrupted due to non-receipt of payments that were due and payable to Respondent No. 1 by its clients. As a result, the liabilities towards the bank escalated significantly, and owing to the continued default in servicing the said debt, the State Bank of India (account being managed by Stressed Asset Management Branch, Satellite Ahmedabad) classified the account of Respondent No. 1 Company as a Non-Performing Asset (NPA) with an accumulated outstanding debt of Rs. 52 Crores (Rupees Fifty Two Crores Only).

8.6. The company thereafter approached the bank through various correspondences for settlement of bank dues and finally vide State Bank of India letter dated 28.02.2019, bank accepted offer from the company for settlement of dues by paying Rs. 18 Crores (Rupees Eighteen Crores only) as against outstanding debt of 52 Crores within a period of one year in line with the terms and conditions detailed in the bank letter dated 17.6.2019 having Letter Ref. No. SAMB/AHM/2019-20/JS/338.

8.7. In view of the understanding arrived at between the Bank, the Company, and the Petitioner Nos. 1 and 2, the Bank agreed to release the assets of the Petitioners, which had been mortgaged as collateral security against the debt, upon full realisation of the settlement amount within the stipulated timeframe.

8.8. Faced with an acute but temporary financial constraint, the Petitioners came into contact with Luri Watersystems India Private Limited, represented to be an Indian arui of Luri Watersystems GmbH, Germany, a company engaged in engineering and research in wastewater and stormwater treatment. Respondent No. 2, who is also a Director of Respondent No. 6 Company, expressed interest in investing in Respondent No. 1 Company, considering its commercial potential. A due diligence exercise was conducted through PwC, which submitted its report dated 26.02.2019. Relying on this report and the audited financials of Respondent No. 1, Respondent No. 2, in her personal capacity, subsequently proposed to invest directly in Respondent No. 1 and entered into the Share Purchase Agreement dated 25.09.2019.

8.9. As per the Share Purchase Agreement dated 25.09.2019:-

a) Respondent No. 2 agreed to subscribe to 75% of the equity shares of Respondent No. 1 Company for a total consideration of Rs. 1,94,31,510/ -, based on an independent valuation and mutual negotiations. The share subscription was to commence upon completion of conditions stipulated under the clauses titled Share Subscription and/or Share Purchase.

b) It was further agreed that the collateral securities of the Petitioners and Respondent No. 1, valued up to 18 Crores and held by the Bank, could be utilised for raising funds, if required, through a separate agreement between the Petitioners and Respondent No. 2. In the interim, Respondent No. 2 undertook to arrange for and ensure repayment of funds under the approved One-Time Settlement (OTS) with the State Bank of India, within the stipulated timelines.

c) The shareholding pattern of the Company as on the date of the Agreement, immediately upon Completion (as defined therein), is set out in Schedule 4, Part – A of the agreement produced as below:-

Name of the Shareholder	No. of Equity Shares	Percentage of Shareholding
SUBSCRIBER (Ms. Anita Roy)	19,43, 151	75.00%
Mr. Hitesh Shah	2,76,011	14.35%
Mr. Poojan Shah	3,71,076	10.65%

d) Further according to the agreement, the petitioners will be liable to pay of the past liability of the unsecured creditors as on audited book of 31st March 2019, if any, and for which the petitioners will also use the amount received under the disputed receivables.

e) Also, the petitioners shall be entitled to recover any disputed receivables arising out of pending or future arbitration, awards, or litigation in favour of the Company, subject to first settling the outstanding unsecured creditors as per the books of account as on 31.03.2019. The amount so received shall be adjusted against the short-term borrowings extended by the Petitioners, including loans aggregating to Rs. 4.22 Crores.

f) According to Clause 6.4 of the agreement, any amount received under disputed receivables shall be credited to the Company’s existing current accounts with YES Bank and Bank of India, which shall remain operated exclusively by the existing Promoters i.e. the Petitioners.

g) Clause 6.5 iterates that all liabilities arising from disputes or litigations involving the petitioners, or where they are impleaded due to the Company’s past activities, shall be  the sole responsibility of the petitioners. They shall keep the Company informed of such matters to safeguard its interests.

h) Clauses 6.3 to 6.5, read together, clarify that the new management shall neither derive benefit from nor bear any liability arising out of past disputes or litigations. All such rights and obligations shall rest solely with the petitioners, who shall indemnify the new management fully and unconditionally.

8.10. It is the case of the Petitioners that Respondent No. 2 failed to fulfill the obligations undertaken under the Share Purchase Agreement, particularly with respect to business development and managerial involvement. Despite Clause 9.3.5 of the SPA mandating shareholders to guide the company in its best interest, Respondent No. 2 allegedly made no effort to explore or secure new business opportunities for the company. The Petitioners assert that day-to-day management continued to be carried out solely by them, as Respondent No. 2, even after the agreed cut-off date, refrained from assuming any operational control or contributing towards the company’s growth.

8.11. The Petitioners further contend that, relying solely on their own efforts and technical expertise, they brought in the prestigious 24×7 Water Supply Project for the city of Ranchi. They managed the project independently for three years, arranged necessary funding, and even extended personal guarantees to subcontractors and vendors, thereby safeguarding the company from blacklisting and litigation. Respondent No. 2, on the other hand, is alleged to have failed to provide any financial or managerial support for the said project. This inaction, according to the Petitioners, amounts to a breach of the SPA and defeats the very object of Respondent No. 2’s induction into the company.

8.12. It is the Petitioners’ case that Respondent No. 2 failed to comply with the financial obligations undertaken under Clauses 10.1 and 10.2 of the Share Purchase Agreement (SPA), which required an infusion of 18 Crores for the purposes of settling the outstanding dues of Respondent No. 1 Company, including the One-Time Settlement (OTS) with the State Bank of India, as well as for ongoing business operations. While Respondent No. 2 is alleged to have infused a sum of Rs. 13,27,40,348/-, this amount fell short of the agreed commitment. The Petitioners assert that the burden of negotiating and executing the OTS with SBI ultimately fell upon them, and that a portion of the said amount i.e., Rs. 7,06,00,000/- was forfeited by SBI due to non-compliance with the OTS repayment schedule.

8.13. It is further contended that the alleged infusion of Rs. 13,27,40,348/- also included the share purchase consideration of Rs. 1,94,31,151/-, which, despite forming part of the settlement amount, was never paid to the Petitioners and was instead deposited directly into the account of Respondent No. 1 Company. According to the Petitioners, this non-payment renders the transfer of equity shares invalid and non-est in law. They submit that, despite the shortfall in the agreed fund infusion, Respondent No. 2 assumed control over 75% shareholding and, along with Respondents Nos. 3 and 4, took over the management of the Company, effectively sidelining the original promoters, i.e., the Petitioners.

8.14. The Petitioners allege that Respondent No. 2 has acted in violation of Clauses 6.3, 6.4, and 6.5 of the Share Purchase Agreement (SPA), which conferred exclusive rights upon the Petitioners over disputed receivables arising prior to the cut-off date. Clause 6.4 specifically mandated that all such receivables be credited to the existing current accounts maintained with YES Bank and Bank of India, with exclusive operational control vested in the Petitioners. Contrary to this arrangement, Respondent No. 2 is alleged to have interfered with the Petitioners’ rights by unilaterally appointing new directors and revoking the Petitioners’ authority over the designated accounts, thereby frustrating the agreed mechanism for managing pre-cut-off disputed receivables.

8.15. Further, Respondent No. 2 is alleged to have undermined ongoing arbitration proceedings critical to Respondent No. 1 Company’s recovery efforts by entering into settlements with opposing parties and filing ill-conceived applications before the Arbitral Tribunal, contrary to the Company’s and the Petitioners’ interests. These actions, according to the Petitioners, not only contravene the express terms of the SPA but also amount to usurpation of benefits rightfully due to them. In response, the Petitioners have filed a separate petition before the Honble High Court of Gujarat challenging the said acts, which is presently pending adjudication, thereby underscoring the seriousness of the alleged breaches committed by Respondent No. 2.

8.16. It is the Petitioners’ case that the original proposal for investment in Respondent No. 1 Company was initiated by Luri Watersystems India Pvt. Ltd. (Respondent No. 6), an Indian entity associated with the German-based Luri Group, which operates in a similar line of business. After conducting due diligence on Respondent No. 1, it is alleged that Respondent No. 2, acting as Director and Key Managerial Personnel of Respondent No. 6, deceitfully bypassed the said entity and independently induced the Petitioners to transfer shares in her favour. The Petitioners contend that Respondent No. 6 is acting in concert with Respondent No. 2 with the ultimate objective of taking over the Company, and is thus a necessary and proper party to these proceedings.

8.17. It is further alleged that Respondent No. 2, upon acquiring majority control, convened a Board meeting on 03.12.2022 and withdrew the Petitioners’ authority to represent the Company in arbitration proceedings that were nearing conclusion. Such actions, including communications sent to the Arbitral Tribunal, are claimed to have been undertaken in collusion with the opposing party, JITF, thereby jeopardising the Company’s interests. The Petitioners also challenge the appointment of an internal auditor, Mr. 0. Maloo, purportedly tasked with conducting audits retrospectively from 2016, which they claim is both impermissible and intended to create adverse evidence against them. These acts are alleged to be oppressive and aimed at coercing the Petitioners into exiting the Company, allowing Respondent No. 2 and her affiliates to usurp control and benefit from the Petitioners past c, efforts and recoveries.

8.18. The Petitioners allege that Respondent No. 2, acting in collusion with the opposing party JITF, sought to usurp control over the arbitration proceedings pending in relation to Respondent No. 1 Company. Following the Board meeting dated 03.12.2022, which the Petitioners claim was illegally convened; Respondent No. 2 allegedly scheduled another meeting for 22.12.2022 solely to neutralize opposition. At this meeting, an attempt was made to appoint one Mr. Adarsh Pal Singh – allegedly a stranger with conflicting interests and a defaulting corporate background-as Director. The proposal was defeated due to an equal vote, with Petitioner No. 1 casting the deciding vote against it. However, Respondent No. 4 was later unlawfully inducted onto the Board to manufacture a majority and deprive the Petitioners of management control.

8.19. Subsequently, just a day before the scheduled arbitration hearing on 11.01.2023, Respondent No. 2 circulated a circular resolution seeking sole authority over all business and legal affairs of the Company.

This resolution was allegedly supported by Mr. Adarsh Pal Singh, who represented himself as a Director despite the prior rejection of his appointment. Petitioners immediately dissented in writing. On the same evening, Respondent No. 2 is alleged to have unilaterally initiated a conciliation process with JITF and proposed the name of a retired judge as mediator. Within minutes, JITF accepted the offer and agreed to put arbitration proceedings in abeyance. Petitioners allege that this sequence of back-to-back emAils between Respondent No. 2 and JITF shows pre-planned collusion intended to sabotage the arbitration.

8.20. The Petitioners further submit that on the morning of 11.01.2023, the proposed mediator consented to commence mediation that very afternoon, confirming their fear that the process was orchestrated to derail the ongoing arbitration where the Company stood to recover approximately Rs. 15 Crores. These actions, they contend, not only violate the Share Purchase Agreement but also amount to oppressive conduct intended to sideline the Petitioners and capture full control of Respondent No. 1. As interim relief, the Petitioners seek restraint against the proposed mediation, suspension of the circular resolution dated 02/03.01.2023, and nullification of resolutions allegedly passed on 03.12.2022, 09/10.01.2023, and 10.01.2023, citing grave acts of oppression and mismanagement.

8.21. The Petitioners allege that the Board meeting convened on 03.12.2022 was conducted in their absence despite prior intimation of their inability to attend and categorical objections raised by them. In the said meeting, Respondent No. 2 and her allies allegedly undertook actions that were prejudicial to the rights and proprietary interests of the Petitioners, including the unilateral withdrawal of their powers. It is further alleged that, under the guise of regular business, the Respondents appointed an internal auditor of their choice, allegedly to create adverse evidence against the Petitioners. The Petitioners contend that this appointment was not only unjustified, since Respondent No. 2 herself had conducted due diligence and signed off on audited accounts upon joining in 2019-but was also an attempt to retrospectively question accounts from 2016, thereby undermining statutory auditors and past financial statements.

8.22. The Petitioners further challenge the validity of the Annual General Meeting (AGM) held on 24.12.2022, asserting that it was not confined to the approval of accounts but was used as a platform to push through unrelated and prejudicial resolutions. They submit that the withdrawal of their powers, the appointment of the internal auditor, and other decisions taken at the Board meeting and AGM, without their consensus, constitute acts of oppression and mismanagement. As such, the Petitioners seek that these actions be set aside or kept in abeyance during the pendency of the present proceedings, in order to safeguard the affairs and governance of Respondent No. 1 Company.

8.23. The Petitioners have also prayed for interim reliefs in the present petition, apprehending that further prejudicial actions may be taken against them during the pendency of the proceedings. The interim reliefs sought are reproduced herein below for reference:-

A. suspend the resolution, decision taken by erring respondents through illegal circular resolution meeting or through any such purported illegal meeting taking away the rights of the petitioners from pursuing the arbitration proceedings on behalf of the R-1 Company and further would be pleased to restrain the erring respondents from taking any decision prejudicial to the rights and interest of the Petitioner.

B. suspend powers of the erring Respondents usurped of pursuing the pending arbitration proceedings and negotiating with the opponent party to the R-1 through any mode.

C. the decisions as taken in the Board Meeting dated 3.12.2022 be suspended in the overall interest of the justice.

D. the decisions as taken by way of illegal circular resolution dated 02(03).1.2023 and 10.1.2023 be suspended as well as illegal proceedings of conciliation as undertaken with unlawful powers before the retired judge of Patna High Court be suspended.

E. direct the Respondent 2 to 5 and their allies not to conduct any board meeting(s) as well as General Body Meeting(s) detrimental to the rights of the petitioners and/or against the interest of the R-1 Company.

F. direct for continuation of the arbitration proceedings before the Arbitral Tribunal against J1TF with the existing powers of the Petitioners as officers/ directors of the R-1 Company in the interest of the R-1 Company.

G. suspend the powers of the Respondent No-2 and Respondent No.3 of taking policy decision.

H. suspend the voting rights of the Respondent No.2 and Respondent No.3 as members in the overall interest of justice or in the alternatively direct the Respondent No.2 and Respondent No.3 not to take any policy decision on. the basis of their shareholding in any general meeting in the overall interest of justice.

I. direct the Respondent Nos. 2 to Respondent No.4 and other erring directors not to create any board minutes, general body meeting minutes, or create or extinguish any entry in the registers, documents, accounts and further not to operate the bank accounts of the Respondent No.1.

J. direct the erring not to represent the Respondent No-1 company to the public at large in the overall interest of the company through any mode.

K. regulate the affairs of the Respondent No.1 Company including conducting of the meetings.

L. Such other and further orders as this Tribunal deems fit and proper in the interest of justice.

9. Petitioner No. 2 has placed on record an additional affidavit dated 17.01.2023 highlighting events that transpired after the filing of the petition.

9.1. It is averred that Respondent No. 2, by email dated 16.01.2023, sought the issuance of notice for a Board meeting scheduled on 23.01.2023, purportedly to include an agenda under Section 115 of the Companies Act, 2013. The Petitioners contend that a prior notice dated 14.01.2023 had already been issued proposing an EoGM for, inter alia, the removal of Petitioner No. 1 from the position of Director, Managing Director, and Chairman of Respondent No. 1 Company. This, they assert, was a calculated move aimed at disabling the Petitioners’ ability to file a reply in ongoing arbitration proceedings, as directed by the Learned Arbitrator on 11.01.2023.

9.2. It is further alleged that although the AGM held on 24.12.2022 approved the annual accounts and the same were filed with statutory authorities within the prescribed deadline, Respondent No. 2 later engaged in a series of unilateral and oppressive actions. These included proposing a Board meeting without disclosing the agenda, and eventually introducing a resolution to remove Petitioner No. 1. The Petitioners contend that such actions were designed to wrest control, disrupt ongoing legal proceedings, and were in violation of interim reliefs sought through Prayers A and E in the petition. The Petitioners therefore seek urgent restraint against further Board or General Body meetings intended to undermine their position or sabotage the affairs of Respondent No. 1.

10. To the above averments, an affidavit-in-replywas filed by Respondent No. 2 on 31.03.2023 vide Inward Diary No. D391 denying all the submissions made by the petitioners and further making following contentions:-

10.1. At the outset, Respondent No. 2 has raised a preliminary objection to the maintainability of the present petition, contending that the disputes sought to be raised herein arise out of the Share Purchase Agreement dated 25.09.2019, executed between the Petitioners and Respondents No. 1 and 2.

10.2. It is the case of Respondent No. 2 that Clause 16 of the said Share Purchase Agreement contains a binding dispute resolution mechanism, which provides for reference of any disputes, including those concerning the validity, existence, or termination of the agreement, to arbitration. The relevant clause, as extracted from the agreement, reads as follows:

“16. DISPUTE RESOLUTION

16.1 If there is any dispute, controversy, claim or disagreement of any kind whatsoever between or among the Parties in connection with or arising out of or in connection with this Agreement, including arty question regarding its existence, validity or termination thereof (a ‘Dispute”), a Party may give the other Parties notice that a Dispute has arisen (a “Dispute Notice’) and the Parties shall negotiate to amicably resolve the Dispute within thirty (30) Business Days of service of the Dispute Notice (or such longer period as the Parties may mutually agree) (the ‘Resolution Period”).

16.2 If the Dispute is not so resolved within the Resolution Period, the Dispute shall be referred to and resolved bu arbitration in accordance with the Arbitration Act. The number of arbitrators shall be three. One arbitrator each will be nominated for appointment by the SUBSCRIBER and the Promoters and the two arbitrators so appointed will select the third arbitrator who will also be the chairman of the arbitral tribunal. The seat, or legal place, of arbitration shall be Ahmedabad. The language be used in arbitral proceedings, shall be English. The arbitrators, must state the reasons for their decision in writing, shall be bound by strict rules of law in making their decisions, and shall not be rendered to a decision ex aequo et bono. The arbitral award shall be final, binding and enforceable against the parties, and judgment thereon may be entered in any court of competent jurisdiction for its execution…”

10.3. Respondent No. 2 submits that the allegations raised by the Petitioners-particularly those relating to the withdrawal of authorisation of the Petitioners to represent Respondent No. 1 in pending legal proceedings, as well as other grievances flowing from the alleged breach of the Share Purchase Agreement are disputes that are clearly referable to arbitration in terms of Clause 16. The intention of the parties, as evident from the agreement, was to resolve such matters exclusively through arbitration.

10.4. In view of the foregoing, it is the submission of Respondent No. 2 that this Tribunal lacks jurisdiction to entertain the present petition, and that the Petitioners ought to be directed to invoke the agreed dispute resolution mechanism provided under the Agreement.

10.5. Respondent No. 2 further contends that the petition suffers from vague and haphazard drafting, in violation of Rule 20(3) of the NCLT Rules, 2016, as it relies on bulky annexures without corresponding or coherent averments. It is also submitted that the interim reliefs sought by the Petitioners, if granted, would effectively amount to granting the final reliefs at the interim stage, which is impermissible in law and would cause serious prejudice to the Respondents.

10.6. It is submitted that the Petitioners have not approached this Tribunal with clean hands and have filed the present petition with ulterior motives, primarily to exclude Respondent No. 2 from the affairs of Respondent No. 1 Company. It is contended that the petition fails to meet the requirements under Sections 241 and 242 of the Act, and instead, it is the Petitioners who are guilty of oppressive conduct. The petition, therefore, amounts to an abuse of process aimed at undermining Respondent No. 2’s rights under the Share Purchase Agreement dated 25.09.2019.

10.7. It is averred that serious irregularities were discovered in the Guwahati project (which is the subject matter of arbitration in Aquafil Polymers Company Private Limited v. M/ s JITF Water Infrastructure Limited, GCCI ADRC Case No. A-042/2018). A letter dated 14.07.2022 issued by the Guwahati Metropolitan Development Authority pinpointed a variation in construction, indicating that Respondent No. 1 Company had not properly executed the project work and had issued fictitious bills. In light of this bad and malafide conduct of the petitioners, Respondent No. 2 issued an email dated 19.12.2022 to the Arbitral Tribunal, apprising it of her authority to represent Respondent No. 1 Company in the pending proceedings.

10.8. It is submitted that a police complaint was lodged on 22.08.2022 against the Petitioners alleging various illegalities in the affairs of Respondent No. 1. A copy of the said complaint is annexed as “Annexure-C” to the reply. It is further averred that the present petition has been filed merely as a counterblast to the said police complaint and is therefore untenable in law.

10.9. It is submitted that Respondent No. 2 was shocked to learn that during the period between December 2012 to January 2013, Respondent No. 1 Company, under the management of the Petitioners, had dishonoured a cheque dated 30.12.2012 bearing no. 846732, amounting to Rs. 50,00,000/- (Rupees Fifty Lakhs), issued in favour of Jain Infraprojects Limited. Despite this serious lapse, the Petitioners allegedly secured enhanced financial facilities from the State Bank of India. It is stated that Jain Infraprojects Limited has initiated five criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 before competent courts in Calcutta. A copy of the dishonoured cheque is annexed as “Annexure-D” of the reply.

10.10. It is further averred that the Petitioners failed to disclose these pending litigations or the underlying financial liabilities in the company’s books of accounts. Respondent No. 2 states that she recently received an email dated 24.01.2023 from Jain Infraprojects Limited, asserting their claims and demanding repayment. Copies of the trail email correspondence exchanged between 24.01.2023 and 27.01.2023 by Jain Infra with Respondent No. 2 and the Petitioners are annexed as “Annexure-E” of the reply, and a copy of the case status report of the said pending proceedings is annexed as “Annexure-F” of the reply.

10.11. It is submitted that as per Clauses 3.14 and 3.15 of the Agreement dated 25.09.2019, the Petitioners were obligated to disclose all ongoing projects and business risks of Respondent No. 1.. However, Respondent No. 2 states that the Petitioners failed to disclose a dispute with M/s. Hitachi Private Limited, thereby breaching their obligation. M/ s. Hitachi Private Limited had issued a notice invoking arbitration under Section 21 of the Arbitration and Conciliation Act, 1996 on 10.08.2020, to which Petitioner No. 2 responded on 19.08.2020 and Petitioner No. 1 for Aquafil-Wintech JV on 27.08.2020. Rejoinder letters were further issued by M/s. Hitachi Private Limited on 21.10.2020 and 27.10.2020. Copies of the said correspondence are annexed as “Annexure-G”.

10.12. It is submitted that the Petitioners failed to disclose certain liabilities of Respondent No. 1, in breach of their obligations under the Agreement dated 25.09.2019. Specifically, a liability under the Value Added Tax Act, 2005 relating to a project in Mysore was only brought to the attention of Respondent No. 2 through an email dated 19.09.2022 from Chartered Accountant Mr. Pratik Modi (Annexure-H). Further, by a show-cause notice dated 11.01.2023 (Annexure-P of the reply), Respondent No. 2 sought justification for non-disclosure of guarantees extended by the company for third-party loans.

10.13. Additionally, an email dated 27.01.2023 from one Mr.Ajay Mahajan, claiming dues of Rs. 30 lakhs for investment in a project of Respondent No. 1, was received by Respondent No. 2, to which no clarification has been offered by the Petitioners despite requests. Email correspondence from 25.01.2023 to 27.01.2023 is annexed as Annexure-l. These acts, it is submitted, amount to concealment of material liabilities in violation of the Agreement.

10.14. It is submitted that in July 2018, the Petitioners approached Respondent No. 2 to invest in Respondent No. 1 Company and to buy out their shares. During the due diligence by Respondent No. 6, it was highlighted that the company had been declared an NPA by the SBI. At that stage, Respondent No. 2 was not in management and the PwC valuation report dated 16.11.2018, relied upon by the Petitioners, was limited to a property in Bajana, Surendranagar, Gujarat.

10.15. In October 2018, Respondent No. 2 met senior SBI officials who, along with the Petitioners, allegedly misrepresented the financial condition of Respondent No. 1 and assured that collateral worth 40 Crores had been provided. Based on such assurances, SBI offered a One Time Settlement of Rs. 18 Crores against dues of Rs. 52 Crores, with an assurance, recorded in an email dated 26.10.2018 that the amount would be refunded if the OTS was not approved. Relying on these representations and clause 10.1 of the Agreement dated 25.09.2019, Respondent No. 2 invested Rs. 17 Crores, conditional upon receiving a list of encumbrance-free collaterals.

10.16. However, on 28.06.2022, Respondent No. 2 discovered that the properties listed as collateral lacked clear title, and one did not exist. A table of these properties is annexed as “Annexure-K” and the Copies of Farm No. 7/12 extracts as Annexure-L. It is further submitted that SBI sanctioned loans without due diligence. Upon discovering the defects, Respondent No. 2 sought refund and exit via email dated 16.11.2022, to which Petitioner No. 1 replied on 22.11.2022 with allegedly baseless allegations. The email exchange is annexed as Annexure-M.

10.17. It is submitted that Standard Chartered Bank extended loan facilities to Petitioner No. 1 vide sanction letter dated 30.09.2010, wherein Respondent No. 1 Company was also made a party. Upon default by Petitioner No. 1, proceedings under the SARFAESI Act, 2002 were initiated, and Respondent No. l’s accounts were declared NPA on 01.12.2013. Subsequently, a show-cause notice dated 20.06.2014 under the RBI Circular dated 01.07.2012 on Wilful Defaulters was issued to Respondent No. 1 and its directors. Relevant documents include: the order dated 09.09.2014 in Special Civil Application No. 10120 of 2014 passed by the Hon’ble High Court of Gujarat at Ahmedabad (Annexure-N), the SLP (C) No. 021232 of 2014 and the Hon’ble Supreme Court’s order dated 28.01.2015 (Annexure-0), and the RBI circular itself (Annexure-Q).

10.18. It is further submitted that Respondent No. 2 had issued a show-cause notice dated 11.01.2023 to Petitioner No. 1 seeking clarification on this issue, the contents of which are adopted herein and annexed as Annexure-P. Despite restrictions under clause 2.5(a) of the said RBI circular prohibiting additional lending to willful defaulters, State Bank of India continued to grant facilities to Respondent No. 1, allegedly in collusion with the Petitioners.

10.19. Respondent No. 2 contends that the Petitioners induced her to enter into the agreement dated 25.09.2019 through false representations regarding the company’s goodwill and collateral. Accordingly, by email dated 09.06.2022, Respondent No. 2 requested the return of her investments in lieu of the acquired shares. The said email is annexed as Annexure-R.

10.20. Respondent No. 2 states that she had requested Mr. Richi Shah, Company Secretary of Respondent No. 1, to convene a Board Meeting on 26.11.2022 to ensure statutory compliance, particularly to approve the financial statements before the deadline for conducting the AGM (30.11.2022). However, due to a typographical error, the notice issued on 19.11.2022 inadvertently mentioned the date as 26.09.2022 instead of 26.11.2022.

10.21. Instead of cooperating, Petitioner No. 1 raised objections through an email dated 25.11.2022. To avoid conflict, Respondent No. 2 then proposed rescheduling the Board Meeting to 03.12.2022, giving prior intimation by email dated 26.11.2022. Despite adequate notice, the Petitioners chose not to attend. The meeting proceeded in their absence and resolutions were passed, including the approval of financials and appointment of an internal auditor. Email exchanges between the parties from 19.11.2022 to 03.12.2022 are annexed as Annexure-S and Annexure-T.

10.22. Respondent No. 2 contends that the appointment of an internal auditor was in line with clause 9.3.2 and clause 17.2.10 of the Agreement dated 25.09.2019, which had envisaged such a step. Further, she points out that Petitioner No. 1 falsely claimed in an email dated 02.01.2023 that the AGM was held on 25.11.2022, despite no such meeting taking place. The said email correspondence is annexed as Annexure-U.

10.23. It is submitted that Petitioner No. 1, acting in connivance and as a counterblast to the Board Meeting held on 03.12.2022, issued an email dated 15.12.2022 to convene another Board Meeting on 22.12.2022. Respondent No. 2 alleges that the petitioners attempted to circumvent the resolutions passed in the earlier meeting without addressing the concerns previously raised. Communications exchanged between Petitioner No. 1 and Respondent No. 2 from 15.12.2022 to 22.12.2022 are annexed as Annexure-V.

10.24. Respondent No. 2 raised strong objections via email dated 22.12.2022 regarding the conduct of the meeting, terming it a clear instance of mismanagement. Said objection is annexed as Annexure-W. It is further contended that, as per clause 7.3 of the Agreement dated 25.09.2019, the petitioners were to be re-designated as non-executive technical directors, yet continued to exercise control in violation of the agreed terms.

10.25. It is submitted that the Board of Directors of Respondent No. 1 passed a circular resolution on 09.01.2023, whereby Mr. Adarsh Pal Singh was duly appointed as an Additional Director. Respondent No. 2 contends that the said appointment was in exercise of her right under clause 9.1 of the Agreement dated 25.09.2019, and no illegality can be attributed to the said action.

10.26. It is submitted that Respondent No. 2 issued an email dated 16.01.2023 to convene a Board Meeting on 23.01.2023. The Petitioners had earlier issued a notice dated 14.01.2023 under Section 115 of the Act, to which objections were raised. Respondent No. 2 contends that the Petitioners misinterpreted the Tribunal’s order dated 18.01.2023 to object to the said meeting, whereas the order did not impose any restriction on convening Board meetings.

10.27. It is stated that Respondent No. 2 issued a Notice dated 23.01.2023 convening an Extra-Ordinary General Meeting on 14.02.2023 to deliberate on the future course of action regarding the affairs of Respondent No. 1 company and for implementing the terms of the agreement dated 25.09.2019. Respondent No. 2 further submits that the statement recorded before this Tribunal on 18.01.2023 is not intended to be continued beyond 31.01.2023. It is averred that the Petitioners have approached this Tribunal with unclean hands, have suppressed material facts, and have attempted to mislead the Tribunal by raising false and untenable allegations, and therefore the petition is liable to be dismissed.

11. The matter was first listed on 18.01.2023, on which date learned counsel for Respondent No. 2 made a statement before this Tribunal that no decision prejudicial to the interest of the Petitioners would be taken until the next date of hearing. In view thereof, the matter was adjourned to 31.01.2023, and subsequently taken up on 01.03.2023, when the order on interim reliefs was reserved.

12. Meanwhile, IA No. 8 of 2023 came to be instituted by the Petitioners on 31.03.2023 under Section 425 of the Act, wherein the Petitioners alleged willful disobedience and criminal contempt on the part of the Respondents for purportedly violating the directions issued by this Tribunal.

13. Subsequently, IA No. 9 of 2023 was also filed by the  Petitioners on 07.02.2023, inter alia, seeking reliefs pertaining to (i) the stay of the EoGM proposed to be held on 14.02.2023 and (ii) the stay of effect and operation of certain resolutions alleged to have been passed in the Board Meetings convened by the Respondents.

14. Further, Respondent No. 2 has also filed an application bearing CA No. 3 of 2023 on 01.02.2023, inter alia, seeking appropriate directions from this Tribunal to refer the parties to arbitration in terms of the arbitration clause contained in the Agreement, and for a consequential stay on the proceedings in the main Company Petition.

15. It is noted that the order on interim reliefs was pronounced on 15.03.2023, wherein this Tribunal observed that although it was submitted on behalf of Respondent No. 2 that the Petitioners’ authority to represent the company ought to be curtailed owing to apprehensions that their continued appearance before the Arbitrator may expose her to legal complications, this Tribunal held that the Share Purchase Agreement sufficiently protects the rights of Respondent No. 2. It was further observed that while the Petitioners may have claims pertaining to disputed receivables, and the issue of set-off against past liabilities remains pending adjudication, at this interim stage without delving into the merits of such claims-it is just and proper to permit the Petitioners, being directors of Respondent No. 1 company, to appear and represent the said company in all pending judicial, quasi-judicial, or arbitral proceedings. Accordingly, this Tribunal directed that pending final adjudication of the main petition, the Petitioners shall be permitted to appear for and represent Respondent No. 1 Company in all judicial, quasi-judicial, or arbitral proceedings currently pending against it.

16. During the pendency of the main. Company Petition and the parallel arbitration proceedings, it came to light that Original Respondent No. 2, along with Original Respondents No. 3 and 4, proposed to transfer their aggregate shareholding amounting to 13.02% to Respondent No. 7 in the present application, namely M/ s. JWIL Infra Ltd. (formerly known as M/s. JITF Water Infrastructure Limited), against whom Respondent No. 1 Company is already at an advanced stage of arbitration proceedings.

17. Subsequently, a Circular Resolution was circulated on 01.07.2023. Petitioner No. 2 raised objections to the same vide communication dated 04.07.2023. However, Respondent No. 2, vide email dated 04.07.2023, noted the objections and proceeded to approve the Circular Resolution on the basis of majority consent.

18. In view of the above, the Petitioners filed an application bearing no. CA No. 13 of 2023 under Section 241 and 242 of the Act against the Respondents, alleging further acts of Oppression and Mismanagement. It is the case of the Petitioners that the inclusion of JWIL Infra Ltd. as a shareholder by allotting stake out of the 75% aggregate stake held by Respondent No. 2 under the Agreement and using such majority control, Respondent No. 2, her allies, and now JWIL Infra Ltd., seek to defeat the rights and legal claims of Respondent No. 1 Company and the Petitioners by passing adverse resolutions and thereby sabotaging the arbitration proceedings which are in an advanced stage. It was further alleged by the Petitioners that the said transfer of shares was in contravention of Article 13 of the Articles of Association of Respondent No. 1 Company which states that “no share shall be transferred to a person who is not a member of company so long as any Member or any person selected by the Directors as one whom it is desirable in the interest of the Company to admit to membership is willing to purchase the same at the fair value”.

19. To the above, Original Respondent No. 2 and JWIL (Respondent No. 7 in the application) have filed their respective replies in CA No. 13 of 2023, in which they have submitted that the Petitioners have relied upon an outdated version of the Articles of Association (AOA) not only in the present application but also in the main Company Petition, despite having themselves filed a revised AOA with the Registrar of Companies in 2016 through Form MGT-14. The revised AOA, duly signed and filed by Petitioner No. 1, supersedes the earlier version. Such reliance on a superseded document amounts to a false declaration in judicial proceedings, attracting the provisions of Sections 193 and 199 of the Indian Penal Code, read with Section 424(4) of the Companies Act, 2013.

20. In view of the multiplicity of issues arising during the course of proceedings in the main Company Petition, this Tribunal, vide order dated 18.10.2023, directed the Petitioners to consolidate and summarise the relevant facts and the reliefs sought, by framing the issues involved across all pending interlocutory applications as well as the main Company Petition. Thereafter, with the consent of both parties, the issues for adjudication were formally recorded by this Tribunal vide order dated 12.12.2024. Both sides were accordingly directed to file an issue-wise synopsis along with a concise convenience compilation in support of their respective submissions. The issues so framed are as under:-

(1) Share Purchase Agreement: Did both the parties fulfil their mutual obligations arising out of the said Share Purchase Agreement?

(2) Whether the appointment of Directors was in terms of Share Purchase Agreement?

(3) Transfer of shares to JWIL (erstwhile JITF) oppressive or not?

(4) Whether the Applicants have approached this Tribunal with clean hands?

(5) Whether this Tribunal has jurisdiction to entertain Share Purchase Agreement, which is governed by the terms and conditions of the Contract Act, 1972?

(6) Can petitioners be held liable for perjury and misuse of legal process by filing invalid AOA in Company Petition No. 05/2023?

21. In compliance with the directions issued vide order dated 12.12.2024, the Petitioners filed their synopsis along with the convenience compilation on 16.01.2025, bearing Inward Diary No. D3253. Respondent No. 2 filed her synopsis along with the compilation on 13.01.2025, bearing Inward Diary No. D227.

22. We have heard the counsel for the petitioners as well as the respondents and perused the material available on record.

Observation and Directions of this Tribunal:

23. It is evident from the prolonged and contentious course of proceedings that the relationship between the petitioners and the respondents has deteriorated beyond repair. Both sides have consistently levelled serious allegations and counter-allegations against each other, and have been unable to arrive at any consensus despite multiple opportunities extended by this Tribunal. Their conduct throughout demonstrates that there exists no mutual trust or willingness to jointly participate in the affairs of Respondent No. 1 Company. Yet, they continue to be bound by the existing shareholding structure, which has only contributed to further discord and paralysis in the management of the company.

24. On 16.01.2025, during the course of proceedings, this Tribunal, upon hearing the parties and considering the overall conduct of the matter, took note of the deadlock between the parties and gave one last opportunity to settle the differences by way of an amicable solution. Following was observed by this tribunal vide order dated 16.01.2025:

“After hearing the submissions, we find that there are irreconcilable differences between the parties, which is admitted by the Counsel appearing for the parties. The two major shareholders, that is, the petitioner holding 25% and respondent No. 2, 61% shareholders, state that there are irreconcilable differences between the shareholders. Both the parties have been at logger heads with each other for long, and allegations and counter-allegations have been levelled against each other. There is a third shareholder holding 13%, who is represented through Mr. Rashesh Sanjanwala, Sr. Advocate, respondent No. 7 in Comp.App/ 13 (AHM) 2023.

In view of the irreconcilable differences as expressed by the respective advocates appearing for P-1, R-7, and R-2 in person, this Tribunal deems it fit to give last opportunity to the existing shareholders of the company to buy out each by way of a mutual agreement.

The respective Counsels and the parties in person seeks two weeks’ time to ponder on the matter and seek instruction from respective clients.

Let all these parties file an affidavit to this effect, within a period of 21 days, from the date of this order.

Re-list for hearing on 13.02.2025.”

25. Despite the final opportunity granted by this Tribunal vide order dated 16.01.2025 for the parties to explore the possibility of an amicable resolution through mutual buyout arrangements, no consensus could be arrived at between the parties.

26. This Tribunal, having recorded the pleadings, rival submissions, and documentary evidence, shall now proceed to examine and adjudicate upon the issues framed vide order dated 12.12.2024. The reasoning on each issue shall be addressed sequentially in order to arrive at a just and conclusive determination. Only thereafter shall this Tribunal proceed to consider what consequential or remedial orders, if any, are warranted under the facts and law applicable to the present case.

27. Issue No. 1 – Whether both the parties fulfilled their mutual obligations arising out of the Share Purchase Agreement dated 25.09.2019?

A. At the outset, it must be noted that both Petitioners and Respondent No. 2 have placed significant reliance on the Share Purchase Agreement dated 25.09.2019 to establish their respective claims of breach and non-performance. The Agreement, by mutual consent, forms the foundational document governing the post-investment corporate structure, rights, obligations, and governance model of the Respondent No. 1 company.

B From the material on record, it emerges that several clauses of the Agreement, particularly Clause 3.14, 3.15, Clause 7.3, Clause 9.1, Clause 9.3.2, Clause 10.1 and Clause 17.2.10, among other clauses were repeatedly referred to by both sides in support of their respective grievances. Respondent No. 2 alleges that the Petitioners failed to disclose material liabilities and pending litigations of Respondent No. 1 Company, misrepresented the status of collateral offered to SBI, and deliberately withheld facts relating to disputes with third parties such as Jain Infra, Hitachi Pvt. Ltd., and Standard Chartered Bank. It is further alleged that these omissions amount to breach of warranties and non-fulfilment of the representations forming part of the Agreement.

C. On the other hand, the Petitioners have contended that all requisite information was either known or reasonably available to Respondent No. 2 at the time of executing the Agreement, and that the allegations are an afterthought to wriggle out of contractual obligations post investment.

D. Upon perusal of the record, it is evident that there existed material non-disclosures and ongoing disputes which were either not disclosed or not disclosed in sufficient detail to Respondent No. 2 prior to the execution of the Agreement. These include pending proceedings under Section 138 of the NI Act, SARFAESI proceedings initiated by Standard Chartered Bank, and an arbitration claim involving Hitachi Pvt. Ltd. All of which cast a shadow on the financial and legal standing of Respondent No. 1 company. Further, the issue of unclear or non-existent title in properties pledged as collateral was not clarified to the satisfaction of Respondent No. 2 despite specific contractual obligations in Clause 10.1 of the Agreement.

E Thus, this Tribunal finds that there was substantial non-fulfilment of obligations under the Share Purchase Agreement by the Petitioners, particularly in relation to disclosure of liabilities, title to collateral securities, and material disputes. At the same time, Respondent No. 2 has also not demonstrated full performance, particularly in terms of payments of the purchase price as mentioned and agreed upon in the agreement and attempting collaborative corporate functioning post-investment and escalating disputes to litigation at an early stage.

F. Accordingly, this Tribunal holds that neither party has fully honoured the spirit and letter of the Share Purchase Agreement, and mutual trust between the shareholders has broken down irretrievably, which reflects in the present dispute.

28. Issue No. 2: Whether the appointment of Directors was in terms of the Share Purchase Agreement?

A. It is not disputed that the Share Purchase Agreement dated 25.09.2019 contained detailed provisions in relation to the composition of the Board of Directors of Respondent No. 1 company. Clauses 9.1, 9.3.2, and 17.2.10 of the Agreement contemplate that the Respondent No. 2, upon acquiring the majority shareholding, would be entitled to appoint directors, including an internal auditor, and the Petitioners’ designation would be changed from Executive Directors to Non-Executive Technical Directors.

B.The documents placed on record clearly show that subsequent to the Agreement, Respondent No. 2 convened various Board Meetings and passed resolutions for appointments, including of Mr. Adarsh Pal Singh as an Additional Director on 09.01.2023 by Circular Resolution. Petitioners have challenged these appointments primarily on the ground that such Board Meetings were improperly convened or carried out in disregard of their objections.

C. However, the Tribunal finds that the appointments made by Respondent No. 2 were not inconsistent with the Share Purchase Agreement per se. The Agreement  expressly empowers Respondent No. 2 to make such appointments. The Petitioners’ objections appear to relate more to procedural irregularities rather than to the authority or entitlement of R-2 under the contract. These procedural lapses, while not ideal, do not invalidate the appointments, especially considering that the Petitioners themselves had failed to participate in several meetings despite being given advance notice.

D. Furthermore, emails dated 16.11.2022, 22.11.2022, and 02.01.2023 exchanged between the parties show that Petitioners were aware of such meetings and decisions, yet they failed to take timely steps either for stay or legal challenge before this Tribunal.

E. Accordingly, this Tribunal holds that the appointment of Directors, including the appointment of Mr. Adarsh Pal Singh, was in terms of the Share Purchase Agreement and within the powers vested in Respondent No. 2 under the said Agreement.

29. Issue No. 3: Whether the Transfer of Shares to JWIL (erstwhile JITF) was Oppressive or Not?

A. It is an admitted fact that Respondent No. 2, along with other shareholders aligned with her, transferred approximately 13.02% shareholding to Respondent No. 7 i.e., M/s. JWIL Infra Ltd. (formerly known as JITF Water Infrastructure Ltd.). The said transfer was approved via Circular Resolution circulated on 01.07.2023 and objected to by Petitioner No. 2 on 04.07.2023. However, Respondent No. 2 proceeded with the said resolution asserting majority consent.

B. The Petitioners have alleged that such transfer is a calculated act of oppression as JWIL is already a counterparty in ongoing arbitral proceedings with Respondent No. 1 Company, and its induction as a shareholder would prejudice the legal position and defense of the company in those proceedings. Further, the Petitioners have contended that the Share Purchase Agreement gave them protective rights against any such adversarial takeover or dilution of control which could harm Respondent No. l’s position in ongoing litigation.

C. However, this Tribunal notes that mere transfer of shares, even to a party involved in arbitration, does not ipso facto amount to oppression, unless it is shown that such transfer was made with the sole object to prejudice the Petitioners or defeat the corporate interest of Respondent No. 1 company. It is also relevant to note that the Petitioners continue to hold 25% shareholding and remain as Directors on record.

D. That said, the timing and context of the transfer are certainly questionable. It is undisputed that JWIL is directly involved in an arbitration against R-1 Company, which is at an advanced stage. Allowing such a party to become a shareholder with voting rights, and thereby participate in Board-level decisions, creates a potential conflict of interest. This raises a serious apprehension of dilution of Respondent No. 1’s defense and further aggravates the ongoing trust deficit between the principal stakeholders.

E Further, no satisfactory explanation has been provided by Respondent No. 2 as to how such a transfer aligns with the fiduciary duty owed to the company, especially when the company is embroiled in a high-stakes arbitration with the very same entity.

F. In view of the above, this Tribunal is of the opinion that while the act of transfer in itself may not be illegal, it does appear to be oppressive in effect, considering the existing litigation context, breakdown of trust among shareholders, and absence of safeguards to ensure that Respondent No. l’s interests are not prejudiced.

30. Issue No. 4: Whether the Applicants Have Approached This Tribunal With Clean Hands?

A. The proceedings under Section 241-242 are equitable in nature and this Tribunal must address the foundational principle of equity: he who comes to equity must come with clean hands. The very essence of equity requires candour, fairness and transparency. It is the Petitioners’ case that they have approached this Tribunal under Sections 241 and 242 of the Act, alleging acts of oppression and mismanagement by Respondent No. 2 and others. However, the Respondents have drawn the Tribunal’s attention to certain material irregularities on the part of the  Petitioners.

B. During the course of proceedings, several significant facts came to light which had neither been disclosed in the pleadings nor brought to the attention of this Tribunal by the Petitioners. It began with the Respondents drawing attention to a willful defaulter notice issued by Standard Chartered Bank, which was followed by revelations that the Respondent No. 1 Company had already been classified as an NPA prior to the execution of the Share Purchase Agreement.

C. As the proceedings progressed, more instances of nondisclosure surfaced, including the pending arbitra1  proceedings with Hitachi, which had a bearing on the company’s financial health, and the claims instituted by Jain Infra as well as those filed by one Mr. Ajay Mahajan, among others. These matters involved considerable monetary stakes and had the potential to significantly impact the valuation and liabilities of the Company. Yet, none of these were disclosed by the Petitioners at the time of the SPA or thereafter, either in their statutory filings over the course or the pleadings filed before this Tribunal.

D A further instance of concealment emerged when the Petitioners relied upon an outdated version of the Articles of Association in support of their case despite the fact that a new AOA had been adopted by them in the year 2016 and duly filed with the RoC. This Tribunal notes that such reliance is not incidental or peripheral. The Petitioners have specifically extracted and invoked clauses from the outdated AoA to advance its claims and to substantiate allegations regarding the governance and rights within the Respondent No. 1 Company. Had the outdated AoA merely been annexed without being relied upon as the foundation of substantive arguments, this Tribunal may have considered extending the benefit of the doubt on grounds of inadvertent error. However, given the deliberate reference and emphasis placed on the outdated provisions, not only in their replies to the interlocutory applications but also in the main Company Petition, such benefit cannot be extended in the present case. The invocation of superseded provisions while simultaneously omitting the current and weakens the credibility of the defense taken.

E. Therefore, this Tribunal holds that the Petitioners have not approached this Tribunal with clean hands. Their conduct reflects a conscious suppression of facts which were necessary for the Tribunal to arrive at a fair and just conclusion. While the Petitioners allege oppression and mismanagement against the Respondents, their own conduct falls short of the standards required of a party seeking equitable relief under Section 242.

31. Issue No. 5: Whether This Tribunal Has Jurisdiction to Entertain the Share Purchase Agreement, which Is Governed by the Terms and Conditions of the Indian Contract Act, 1872?

A. To determine whether this Tribunal has jurisdiction to entertain the present Company Petition, it is necessary to examine the scope and contours of the jurisdiction  conferred upon the NCLT under Sections 241 and 242 of the Companies Act, 2013. For ease of reference, the relevant statutory provisions are reproduced herein below:

“241. Application to Tribunal for relief in cases of oppression, etc.-

(1) Any member of a company who complains that-

(a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or

(b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company’s shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members,

may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter.

(2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter.

Provided that the applicants under this sub-section, in respect of such company or class of companies, as may be prescribed, shall be made before the Principal Bench of the Tribunal which shall be dealt with by such Bench.

(3) Where in the opinion of the Central Government there exist circumstances suggesting that-

(a) any person concerned in the conduct and management of the affairs of a company is or has been in connection therewith guilty of fraud, misfeasance, persistent negligence or default in carrying out his obligations and functions under the law or of breach of trust;

(b) the business of a company is not or has not been conducted and managed by such person in accordance with sound business principle or prudent commercial practices;

(c) a company is or has been conducted and managed by such person in a manner which likely to cause, or has caused, serious injury or damage to the interest of the trade, industry or business to which such company pertains; or

(d) the business of a company is or has been conducted and managed by such person with intent to default its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose or in a manner prejudicial to public interest,

the Central Government may intiate a case against such person and refer the same to the Tribunal with a request that the Tribunal may inquire into the case and record a decision as to whether or not such person is a fit and proper person to hold the officer of director or any other office connected with the conduct and management of any company.

(4) The person against whom a case is referred to the Tribunal under sub-section (3), shall be jointed as a respondent to the application.

(5) Every application under sub-section (3)-

(a) shall contain a concise statement of such circumstances and materials as the Central Government may consider necessary for the purpose of the inquiry; and

(b) shall be signed and verified in the manner laid down in the Code of Civil Procedure (5 of 1908), for the signature and verification of a plaint in a suit by the Central Government. “

“242. Powers of Tribunal.-

( 1 ) If, on any application made under section 241, the Tribunal is of the opinion-

(a) that the company’s affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a mariner prejudicial to the interests of the company; and

(b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up,

the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit.

(2) Without prejudice to the generality of the powers under sub-section (1), an order under that sub-section may provide for-

(a) the regulation of conduct of affairs of the company in future;

(b) the purchase of shares or interests of any members of the company by other members thereof or by the company;

(c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital;

(d) restrictions on the transfer or allotment of the shares of the company;

(e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case;

(f) the termination, setting aside or modification of any agreement between the company and any person other than those referred to in clause (e):

Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned;

(g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference;

(h) removal of the managing director, manager or any of the directors of the company;

(i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims;

(j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause (h);

(k) appointment of such number of persons as directors, who may be required by the Tribunal to report to the Tribunal on such matters as the Tribunal may direct;

(l) imposition of costs as may be deemed fit by the Tribunal;

(m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made.

(3) A certified copy of the order of the Tribunal under subsection (1) shall be filed by the company with the Registrar within thirty days of the order of the Tribunal.

(4) The Tribunal may, on the application of any party to the proceeding, make any interim order which it thinks fit for regulating the conduct of the company’s affairs upon such ter Ins and conditions as appear to it to be just and equitable.

(4A) At the conclusion of the hearing of the case in respect of sub-section (3) of section 241, the Tribunal shall record its decision stating therein specifically as to whether or not respondent is a fit and proper person to hold the officer of director or any other officer connected with the conduct and management of any company.

(5) Where an order of the Tribunal under sub-section (1) makes any alteration in the memorandum or articles of a company, then, notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any, permitted in the order, to make, without the leave of the Tribunal, any alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles.

(6) Subject to the provisions of sub-section (1), the alterations made by the order in the memorandum or articles of a company shall, in all respects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act and the said provisions shall apply accordingly to the memorandum or articles so altered.

(7) A certified copy of every order altering, or giving leave to alter, a company’s memorandum or articles, shall within thirty days after the making thereof, be filed by the company with the Registrar who shall register the same.

(8) If a company contravenes the provisions of sub-section (5), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.”

B. At the outset, this Tribunal acknowledges that the Share Purchase Agreement dated 25.09.2019, executed between the Petitioners and Respondent No. 2, is a contractual document governed by the Indian Contract Act, 1872. The said SPA also contains an arbitration clause. However, the mere existence of an arbitration clause or the fact that the SPA is governed by contractual law does not, by itself, bar this Tribunal from examining the terms of the SPA if such terms are integrally connected to the allegations of oppression and mismanagement under Sections 241 and 242 of the Companies Act, 2013.

C. At this juncture, this Tribunal would like to place reliance on the judgment of Hon’ble NCLAT, Principal Bench, New Delhi in the matter of Indus Motor Company Private Limited & Ors. v. Mr. T.P. Anilkumar & Ors., Comp. Appeal (AT) No. 204 of 2020, wherein it was held by the Hon’ble Appellate Authority that:-

“13. It is seen from Sections 241 & 242 of the Act that the power to Order winding up of a Company’ is contained under the Act and is conferred on the Court and Arbitrator, notwithstanding any Agreement, which in the instant case, is the 2007 MoU, entered into between the parties, shall have no jurisdiction to Order the winding up of a Company. The Arbitrator cannot possibly give those reliefs prayed for in this Company Petition, and would be in a position to adjudicate only a few of the reliefs mentioned in para 7, but will not be able to pass any Order as provided for under Sections 241 & 242 of the Act. Merely because there is an Arbitration Clause’ in an Agreement, the jurisdiction of NCLT & NCLAT under Sections 241  & 242 of the Act cannot be shackled.”

(Emphasis Supplied)

D. Moreover, it has been authoritatively held by the Hon’ble apex Court that the judicial authority before whom an action is brought is required to first determine whether the subject matter of the dispute is one which is capable of being decided by an arbitrator. In Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd., (1999) 5 SCC 688, the Hon’ble Supreme Court observed:

“4. Sub-section (1) of Section 8 provides that the judicial authority before whom an action is brought in a matter, will refer the parties to arbitration the said matter in accordance with the arbitration agreement. This, however, postulates,  in our opinion, that what can be referred to the arbitrator is only that dispute or matter which the arbitrator is competent or empowered to decide.

5. The claim in a petition for winding up is not for money. The petition filed under the Companies Act would be to the effect, in a matter like this, that the company has become commercially insolvent and, therefore, should be wound up. The power to order winding up of a company is contained under the Companies Act and is conferred on the court. An arbitrator, notwithstanding any agreement between the parties, would have no jurisdiction to order winding up of a company. The matter which is pending before the High Court in which the application was filed by the petitioner herein was relating to winding up of the company. That could obviously not be referred to arbitration and, therefore, the High Court, in our opinion was right in rejecting the application.”

(Emphasis Supplied)

E. This Tribunal also places reliance on the judgment of the Hon’ble NCLAT in Dhananjay Mishra v. Dynatron Services Private Limited, Company Appeal (AT) No. 389 of 2018, wherein it was held that:

“8. The dictum of Hon’ble Apex Court is loud and clear. The judicial authority which includes the National Company Law Tribunal which is ceased the Company Petition under Section 241-244 raw 246 of the Companies Act, 2013 would be bound to refer the parties to arbitration of the matter brought before it in accordance with the arbitration agreement provided that the arbitrator is competent or empowered to decide such dispute.  Be it seen that the claim in the Company Petition pending adjudication before the Tribunal relates to matters arising out of the two Memorandums of Understanding. Disputes raised by the Respondent No. 1 in the Company Petition are in regard to alleged acts of oppression and mismanagement. It is alleged by Respondent No. 1 in the Company Petition that the Appellant has neither transferred the assets of ‘Yeoman Marine Services Pvt. Ltd’ to the newly formed company as provided in Second MOU nor conducted the business  in accordance with the First MOU but has also allotted 51 per cent equity shares in the Company to himself and his wife thereby assuming complete management control to the exclusion of Respondent No. 1 seriously prejudicing its interests. From the relief clause in the Company Petition, it emerges that Respondent No. 1 seeks relief under Section 241 to 244 r/ w 246 of the Companies Act, 2013 to bring an end to the acts of oppression and mismanagement perpetrated by the Appellant besides directing joint management and control of the company by Respondent No.1 and the Appellant. Petitioner (Respondent No. 1) also sought the relief of induction of two Nominee Directors on the Board of Directors besides other allied and connected reliefs in addition to carrying out of independent audit through an independent Auditor. The allegations in the Company Petition and the nature of relief claimed therein leaves no room for doubt that the Company Petition raises vital issues pertaining to exclusive jurisdiction of the Tribunal. Relief claimed in the backdrop of allegations of oppression and mismanagement would depend on the finding that the affairs of the Company have been conducted in a manner prejudicial or oppressive to the Petitioner (Respondent No. 1 herein) and that to windup the Company would unfairly prejudice Petitioner though otherwise the facts justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up. The Tribunal,  empowered under Section 242 (2) of Companies Act,  2013 may, with a view to bring to an end the matters complained of, make such order as it thinks fit. On a plain reading of Section 242, it is manifestly clear that  the facts should justify the making of a winding up order on just and equitable grounds. Admittedly, Arbitrator would have no jurisdiction to pass a winding up order on the ground that it is just and equitable which falls within the exclusive domain of the Tribunal under Section 271(e). That apart acts of non-service of notice of meetings, financial discrepancies and non-appointment of Directors being matters specifically dealt with under Companies Act and falling within the domain of the Tribunal to consider grant of relief under Section 242 of Companies Act render the dispute non-arbitrable though it cannot be disputed as a broad proposition that the dispute arising out of breach of contractual obligations referable to the MOUs or otherwise would be arbitrable. It is also indisputable that the statutory powers and plenary jurisdiction vested in the Tribunal renders it the appropriate forum to deliver result-oriented justice. Admittedly, the statutory jurisdiction vested in the Tribunal cannot be exercised by the Arbitrator. Given the nature of allegations in the Company Petition in the context of reliefs that survive for consideration there is no escape from the conclusion that the dispute raised in the Company Petition and sought to be referred for arbitration is non-arbitrable. No exception in this regard can be taken to the view adopted by the Tribunal.”

(Emphasis Supplied)

F. Similarly, in the present petition as well, the nature of reliefs sought by the Petitioners, including but not limited to the removal of directors, rectification of the register of members, and declaration of certain acts of the Respondents as oppressive and prejudicial to the interests of the Petitioners and the company, are statutory in nature and fall squarely within the domain of this Tribunal under Sections 241 and 242 of the Companies Act, 2013. Such reliefs are not within the scope of adjudication by an arbitrator, as they pertain to matters affecting the internal governance and functioning of the company, for which the Tribunal alone has been vested with exclusive jurisdiction. Accordingly, the disputes raised in the present petition are non-arbitrable, and the jurisdiction of this Tribunal to entertain and adjudicate upon the same remains unaffected by the existence of any arbitration clause or agreement between the parties.

G. Further, Hon’ble Supreme Court in Bennett Coleman and Co. & Ors. v. Union of India & Ors., (1972) 2 SCC 788, have discussed the powers of the Courts/Tribunals under Section 397 and 398 r.w. Section 402 of the 1956 Act (replaced by Section 241 and 242 of the 2013 Act) which have reproduced below:

“16. if the legislature had desired that the court’s powers while acting under section 397 or 398 read with section 402 should be exercised subject to or in consonance with the other provisions of the Act it would have said so. Moreover, the topics or subjects dealt with by sections 397 and 398 are such that it becomes impossible to read any such restriction or limitation on the powers of the court acting under section 402. Under section 397 read with section 402 power has been conferred on the court “to make such orders as it thinks fit” if it comes to the conclusion that the affairs of a company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members and that to wind up the company would unfairly prejudice such member or members but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up “with a view to bringing to an end the matters complained of”…..”

H. In the present case, the Petitioners have alleged that Respondent No. 2 acted in breach of the SPA by unilaterally excluding them from representing Respondent No. 1 Company before the Arbitral Tribunal, thereby frustrating the rights conferred to them under Clause 11.3 of the SPA. Similarly, Respondent No. 2 has alleged that the Petitioners failed to disclose material liabilities and disputes at the time of execution of the SPA, which goes to the root of the corporate governance of Respondent No. 1 Company.

I. Thus, these breaches, though arising from the SPA, have a direct bearing on the management and affairs of the Company. As a result, the Tribunal is not being called upon merely to adjudicate contractual disputes in isolation, but to examine whether such conduct amounts to oppression and/or mismanagement under the Companies Act.

J. Moreover, the reliefs sought by the Petitioners include removal of Directors, rectification of the register of members, and other matters concerning the internal affairs and management of the company. These are not matters that can be decided by an arbitrator. The nature of the allegations and the statutory reliefs sought fall squarely within the exclusive jurisdiction of this Tribunal under Sections 241 and 242 of the Companies Act, 2013.

K. Therefore, this Tribunal is of the considered view that the disputes raised in the present petition are not arbitrable and must be adjudicated by this Tribunal in exercise of its statutory jurisdiction. The existence of an arbitration clause does not take away the jurisdiction of this Tribunal to consider and decide upon the allegations of oppression and mismanagement made in the petition. Clause 16 of the Share Purchase Agreement, which mandates arbitration for disputes arising out of the agreement, is limited to contractual disputes and does not extend to statutory claims of oppression and mismanagement under Sections 241 and 242, which are exclusively within the Tribunal’s jurisdiction.

32. Issue No. 6: Whether the Petitioners Can Be Held Liable for Perjury and Misuse of Legal Process by Filing an Invalid AOA in Company Petition No. 05 of 2023?

A. The Respondents have alleged that the Petitioners deliberately filed an outdated version of the Articles of Association in Company Petition No. 05 of 2023, thereby misleading this Tribunal. It is not in dispute that the AOA so filed was not the latest version and that a duly amended and updated version had been adopted and registered in the year 2016.

B. Despite being aware of this, the Petitioners continued to rely on the outdated. AOA even during the present proceedings. No satisfactory explanation was offered for this lapse. While such conduct is highly inappropriate and indicative of a lack of diligence, this Tribunal is not persuaded that the strict threshold necessary to establish perjury or deliberate abuse of process has been met in the present facts.

C. Perjury under Section 191/193 of the Indian Penal Code requires a deliberate false statement under oath with intent to deceive, and Section 424(4) of the Companies Act, 2013, addresses false statements in filings. The petitioners’ reliance on an outdated AOA, while negligent and inappropriate, does not demonstrate a clear intent to mislead the Tribunal, as no evidence suggests deliberate falsification of material facts.

D. However, this lapse shall be taken into account while moulding the final reliefs and assessing costs, as it reflects a disregard for procedural fairness and candour expected before this Tribunal.

33. What emerges undeniably from the entire course of proceedings is that, despite being bound together in the shareholding structure of Respondent No. 1 Company, neither side has demonstrated the intent or capacity to collaborate or discharge their fiduciary responsibilities in good faith. The record is replete with instances where both parties have acted at cross-purposes, with consistent accusations and counter-allegations reflecting deep-seated mistrust and hostility.

34. This Tribunal, in its order dated 16.01.2025, had noted the irreconcilable differences between the major shareholders, including Petitioner No. 1 (holding 25%) and Respondent No. 2 (holding 61%), compounded by the transfer of 13.02% shares to JWIL, a party with conflicting interests.. Hence, had accordingly granted one final opportunity to all shareholders to arrive at an amicable resolution by way of mutual buyout. Despite that, no meaningful resolution emerged. Instead, what has unfolded is a pattern of concealment, non-disclosure, procedural lapses, and an evident absence of transparency by both sides.

35. In ordinary circumstances, this Tribunal would have found it appropriate to recommend winding up of the Company under Section 242(1) (b) of the Companies Act, 2013, as the conduct of the parties makes it abundantly clear that the Company cannot be carried on in accordance with sound principles of corporate governance and probity.

36. However, a winding up order cannot be granted in a vacuum. Several critical factors, such as the pendency of arbitration proceedings, claims by third parties including financial institutions and vendors, and the possibility of contingent liabilities, present a complex and unsettled picture. The parties themselves, despite being Directors on the Board, have withheld vital information not only from each other but also from this Tribunal.

37. It is evident that what has been brought on record are fragmented pieces of a larger puzzle, each side presenting only those parts that suit their version, while omitting key documents and disclosures. In the process, this Tribunal has been left to reconstruct the affairs of the Company in an incomplete and speculative manner, without access to a full and truthful account of its functioning.

38. In view of the above, this Tribunal is of the considered opinion that a forensic audit of the accounts and affairs of the Respondent No. 1 Company, to be conducted by an independent and neutral agency, is the most appropriate course of action. Such an audit shall not only reveal the true financial position of the Company but will also assist this Tribunal in determining the nature and extent of mismanagement, undisclosed liabilities, related party transactions, and the actual status of operations. The findings of such audit will serve as the basis for any further directions, including but not limited to valuation of shares, restructuring, or even winding up, if ultimately warranted. The forensic audit is also necessary to safeguard public interest, given Respondent No. l’s engagement in critical water and wastewater treatment projects for government and semi-government bodies.

39. Secondly, given the complete erosion of mutual trust and the clear absence of accountability in managing the affairs of the Company, this Tribunal hereby directs the removal of the present Managing Director of Respondent No. 1 Company under Section 242(2)(h). In his place, an Independent Administrator shall be appointed, who shall function as a Director of the Company until further orders, in terms of Section 242(2)(k). The Administrator shall take charge of the day-to-day affairs, oversee compliance, extend full cooperation to the forensic auditor, and ensure that the operations, if any, are not prejudiced by the ongoing dispute. This measure is necessitated in the larger interest of protecting the integrity of the Company and the interests of stakeholders.

40. Accordingly, this Tribunal hereby orders as under:-

I.  An Independent Forensic Auditor, being a certified forensic accountant or a reputed firm with no prior association with the parties, is appointed to conduct a detailed audit of the affairs of Respondent No.1 Company from the date of share purchase agreement till the date of this order.

II. The audit shall cover, inter alia, financial transactions, related-party dealings, compliance with the Share Purchase Agreement dated 25.09.2019, undisclosed liabilities, and the status of ongoing projects and litigations, and to specifically identify any misuse or diversion of funds for non-business or personal purposes, or for purposes not in the best interest of the company, starting from the date of execution of the Share Purchase Agreement till date.

III. The said audit shall be completed and the report be submitted within 60 days from the date of appointment of the auditor by this Tribunal.

IV. Both sides are directed to suggest names of three qualified professionals to be considered for appointment as Independent Forensic Auditor on or before 28.07.2025. The Tribunal shall select one auditor based on qualifications, experience, and independence, or appoint an independent auditor from reputed forensic accounting firms if no suitable consensus is reached.
tor The current Managing Director shall stand removed with immediate effect, in terms of Section 242(2)(h) and in exercise of powers under Section 242(2)(k), this Tribunal appoints as an Independent Administrator, to function as a Director on the Board of Respondent No.1 Company, who shall assume charge forthwith upon appointment.

VI. The Independent Administrator shall have authority to manage day-to-day operations, ensure statutory compliance, and oversee the forensic audit, but shall not make policy decisions or alter the company’s strategic direction without prior Tribunal approval. Existing directors shall cooperate with the Administrator but retain their statutory rights and duties unless otherwise directed.

VII. Both parties shall propose three qualified individuals or firms, preferably retired judges, senior advocates, or professionals with at least 10 years of experience in corporate governance or administration and having no prior association with the parties, by 28.07.2025. The Tribunal shall appoint one Administrator based on qualifications and independence, or select an independent professional if no suitable consensus is
reached who shall assume charge forthwith upon appointment.

VIII. The Independent Administrator shall take all necessary steps to secure, preserve and oversee the operations, assets, and records of the Company, and shall also ensure compliance with the forensic audit process.

IX. An Audit Oversight Committee is constituted comprising

(i)the Independent Administrator appointed by this Tribunal, as the chairperson of this committee; further,

(ii)one nominee Director from the Petitioner’s side, and

(iii)Respondent No.2. This Committee shall extend full cooperation to the Forensic Auditor and ensure timely access to all documents, records, and information.

X. The resolutions passed in the Board Meetings dated 03.12.2022, 02.01.2023 and 10.01.2023, and any subsequent resolutions passed during the pendency of these proceedings are hereby set aside. The Independent Administrator shall coordinate with the Petitioners to ensure continuity of arbitration proceedings against JWIL, subject to Tribunal oversight. Respondents No. 2, 3, 4, 5, and JWIL are restrained from taking any actions, a including filing applications or negotiating settlements, that may interfere with the arbitration proceedings without prior Tribunal approval.

XI. The shareholding pattern of Respondent No.1 Company as existing on 01.07.2023 shall stand restored as this was the date prior to the circular resolutions dated 01.07.2023 and 04.07.2023, which effected the oppressive share transfer to JWIL, thereby maintaining the status quo ante pending further adjudication.

XII. The deadlock and oppressive share transfer to JWIL necessitate a fair valuation for a potential buyout. Hence, two independent valuers are appointed to determine the fair value of the Company’s shares as on 01.07.2023, with a report due within 30 days after the receipt of the report of forensic audit. This Tribunal directs both parties to propose three qualified individuals or firms duly registered with IBBI by 28.07.2025 with no prior association with the parties, failing which, the Tribunal shall appoint an independent valuers duly registered with IBBI, who shall assume charge forthwith upon appointment.

XIII. The petitioners and Respondent No. 2 shall explore a buyout based on the valuers’ report, with negotiations to  conclude within 30 days of the report’s submission. In the event no agreement is reached within the stipulated 30 days, the Tribunal may issue further directions, including but not limited to ordering a mandatory buyout at the fair value determined by the valuers or considering winding up under Section 242(1)(b).

XIV. The cost of the forensic audit, monthly remuneration of the Independent Administrator plus the applicable taxes, out-of-pocket actual expenses of travel as well as stay and fee of the Valuers shall be initially borne equally by the Petitioners and the Respondent No.2. The parties shall deposit their respective shares of the estimated costs into an escrow account maintained by the Independent Administrator within 15 days of the auditor’s and valuers’ appointment. Any disputes regarding cost allocation shall be referred to the Tribunal for resolution.

XV. Liberty is granted to either party to seek further directions post submission of the forensic audit report, including, but not limited to, reliefs concerning valuation, buyout, or any further recourse as may be warranted in law.

XVI. The parties are directed to maintain status quo in the shareholding pattern and directorial appointments until further orders. No third-party rights shall be created or encumbered in respect of the assets of the Company, including tangible and intangible properties such as physical assets, financial instruments, intellectual property, and contractual rights, during the pendency of further proceedings.

XVII. The Company’s bank accounts shall be operated only with the administrator’s approval, except for arbitration-related transactions.

XVIII. The interim order dated 15.03.2023, permitting the petitioners to represent Respondent No. 1 in all judicial, quasi-judicial., or arbitral proceedings, shall continue until further orders, subject to oversight by the Independent Administrator.

XIX. The Independent Administrator shall submit fortnightly reports to the Tribunal on the progress of the forensic audit, compliance with these directions, and the  company’s operations, with the first report due within 14 days of assuming charge.

41. Insofar as the issue of contempt is concerned, upon consideration of the facts on record, this Tribunal does not find the conduct of the Respondents to amount to grave or willful contempt so as to warrant separate proceedings under the Contempt of Courts Act, 1971. The Tribunal has examined the respondents’ actions, including the share transfer to JWIL and the resolutions passed on 03.12.2022, 02.01.2023, and 10.01.2023. While these actions raised concerns of oppression, they were purportedly undertaken under the respondents’ interpretation of their rights under the SPA and did not involve direct defiance of specific Tribunal orders, as the statement on 18.01.2023 was limited to the next hearing date (31.01.2023).

42. The Respondents’ actions, including the share transfers and resolutions, while questionable, do not satisfy the threshold of willful disobedience or deliberate defiance of Tribunal orders as required under Section 2(b) of the Contempt of Courts Act, 1971, as they were purportedly based on their interpretation of their rights under the SPA and company governance norms.

43. It is further observed that the acts complained of, particularly in relation to the changes in shareholding and Board composition, stand duly remedied by the directions issued hereinabove, including the restoration of the shareholding pattern, setting aside of the impugned resolutions, and appointment of an Independent Administrator. Therefore, no separate direction is issued on this count.

44. In view of the foregoing findings and directions, Interlocutory Application No. 8 of 2023 in Company Petition No. 5 of 2023, filed by the Petitioners seeking initiation of contempt proceedings, stands rejected and is accordingly disposed of.

45. Likewise, Company Application No. 3 of 2023 in Company Petition No. 5 of 2023, filed by Respondent No. 2 seeking reference to arbitration, is rejected and disposed of as the Tribunal has jurisdiction over oppression and mismanagement claims.

46. Further, Interlocutory Application No. 9 of 2023 filed by the Petitioners in CP No. 5 of 2023, is partly allowed in 471 terms of the directions contained in this order and is accordingly disposed of.

47. Moreover, Company Application No. 13 of 2023, filed by the Petitioners in CP No. 5 of 2023, is allowed in terms of the directions contained in this order and is accordingly disposed of

48. The CP No. 5 (AHM) of 2023 be listed for compliance on 31.07.2025. Parties shall file affidavits confirming compliance with the above directions by 28.07.2025.

49. The company shall file a certified copy of this order with the Registrar of Companies, Ahmedabad, within 30 days, as per Section 242(3) of the Companies Act, 2013.

50. A certified copy of this order may be issued, if applied for, upon compliance with all requisite formalities.