Non-Supply Of Daily Account Statements To Former MD Not Oppression: NCLT Mumbai In Sapat International Case

The National Company Law Tribunal (NCLT) at Mumbai has held that non-supply of daily account statements and Management Information and Analysis (MIA) reports to a director of Sapat International Pvt Ltd, who raised the grievance after ceasing to be managing director, does not by itself amount to oppression or concealment of company affairs.

The ruling was delivered by a bench of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar while dismissing a company petition filed by shareholder Nikhil Jayant Joshi, who alleged oppression and mismanagement in the family-run tea business.

“Therefore, it cannot be said that only because that the accounts statements or daily transactions statements or MIA Statements are not sent daily to the Director as against when he was the managing director, that there is oppression or there is concealment of the accounts of the company or concealment of the business transacted by the Respondent No. 1 Company,” the tribunal observed.

The dispute arose after the petitioner ceased to be Managing Director on March 31, 2024, following differences within the family-controlled company. He alleged that daily financial statements, transaction details and MIA reports were no longer being shared with him and claimed that the non-disclosure indicated concealment of company affairs and siphoning of funds by Anish Jayant Joshi.

The company contended that the petitioner continued as a director, received notices of all board and committee meetings, and remained aware of the affairs of the company. They also argued that he had earlier participated in the very business decisions that he later challenged, including matters relating to procurement, distributors, and recruitment of employees.

The tribunal noted that company law does not mandate daily sharing of account statements or MIA reports with directors and recorded that the petitioner had been given inspection of records.

It further observed that he had served as joint managing director until March 31, 2024 and had been involved in the management of the company before raising the present allegations.

The bench found that the allegations of siphoning of funds, concealment of accounts, and mismanagement were unsupported by documentary evidence and observed that the dispute appeared to arise from personal differences within the family rather than any act amounting to oppression or mismanagement under company law.

Holding that no case of oppression or mismanagement was made out, the tribunal dismissed the company petition and declined the reliefs sought by the petitioner.