Case: – Jitendra Virmani v/s MRO – Tek Reality Limited; Company Appeal (AT) No. 363/2019
The National Company Law Appellate Tribunal (NCLAT) Chennai recently dismissed an appeal brought forth by the Appellant i.e., Chairman and Founder of the Embassy Group, seeking relief against alleged oppression and mismanagement concerning a real estate development venture undertaken by MRO-Tek Reality Limited.
The background of this case involved multiple legal proceedings initiated by the Appellant before Civil Courts in Bengaluru, the order of NCLT Bangalore became the subject of appeal before the NCLAT Chennai.
The NCLAT, in its verdict held that a mere irregularity or infirmity is insufficient to substantiate claims of oppression and mismanagement. It was highlighted by the NCLAT in its judgement that a single irregular act or infirmity does not constitute oppression; rather, a continuous pattern of oppressive behaviour by the majority is pivotal for such claims.
The Appellate Tribunal also noted that mere irregularities or illegality in a company’s governance doesn’t automatically qualify as oppression or mismanagement. The NCLAT elucidated that not every instance of illegality or irregularity in a company’s affairs translates to oppressive conduct and observed that there is ‘no straight jacket cast iron formula’, specified, to define the term ‘oppression’ and ‘mismanagement’.
The NCLAT further clarified that a single act may not be enough for claiming relief under allegations of oppression. The Appellate Tribunal also held that the ingredients of Section 242 of the Companies Act, 2013 have ‘no application’, whatsoever, for redressal of ‘grievances of wrong acts’, of the management of a company and a mere, ‘illegal’ or invalid act would not be termed as acts of ‘oppression’.
Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate
Connect with Mr. Bhatt on Linkedin: https://www.linkedin.com/in/adit-ravishbhatt/
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