NCLT Chennai Dismisses Oppression Plea Against Aum Consultancy, Calls Dispute Contractual

The Chennai Bench of the National Company Law Tribunal (NCLT) on 6 May dismissed a petition filed by H. Ramesh against Aum Consultancy Private Limited alleging oppression and mismanagement in the affairs of the company.

Judicial Member Sanjiv Jain and Technical Member Venkataraman Subramaniam held that the disputes raised were contractual in nature and did not disclose any continuing oppressive conduct under Sections 241 and 242 of the Companies Act. The Bench observed:

“The requirement under law is not the existence of isolated or past disputes arising out of contractual arrangements, but the demonstration of a continuing course of conduct which is burdensome, harsh or lacking in probity and which affects the rights of a shareholder in the conduct of the affairs of the Company.”

H. Ramesh stated that he invested in the company in 2010 under a Share Purchase Agreement after N.K. Sashi Kumar represented that the company had strong prospects in bio-engineering and allied sectors. He claimed that he invested Rs. 58.80 lakhs and acquired 5,88,291 shares on the assurance that he would eventually obtain majority control of the company.

He further alleged that he later discovered misrepresentation of the company's financial position, along with concealment of liabilities and losses. He also challenged a 2008 transaction involving the sale of the company's property at Adyar, Chennai, to Om Gurudev Enterprises Private Limited, alleging that it was fraudulent and intended to benefit Sashi Kumar personally.

Ramesh additionally alleged siphoning of company funds and assets, misuse of company vehicles, unauthorised removal of raw materials, and diversion of company funds for personal use by Sashi Kumar. He contended that these acts amounted to oppression and mismanagement prejudicial to the interests of the company and its shareholders, and sought restoration of assets and surcharge against Sashi Kumar.

The respondents opposed the petition, stating that similar issues had already been raised in earlier civil proceedings before the Madras High Court and that Ramesh had suppressed material facts.

The Tribunal observed that most allegations related to transactions between 2008 and 2012 and found no cogent material showing any continuing oppressive conduct or exclusion of Ramesh from management. It held:

“The absence of such material, coupled with the nature of dispute being essentially contractual and historical, leads this Tribunal to the conclusion that the essential ingredients of oppression and mismanagement are not satisfied.”

The Tribunal further held that challenges relating to the registered sale deed raised issues of title and validity of transfer of immovable property, which fall within the jurisdiction of civil courts. It stated:

“It is well settled that the jurisdiction of this Tribunal under Sections 241 and 242 is primarily confined to examining oppression and mismanagement in the conduct of affairs of the Company and does not extend to adjudication of independent title disputes or cancellation of registered instruments, which fall within the domain of civil courts. Even though allegations of fraud may incidentally arise, such issues cannot be adjudicated in isolation in the proceedings under the company law unless they are directly and inseparably connected with ongoing acts of oppression in the corporate functioning of the Company.”

The Bench also noted that Ramesh failed to make full disclosure regarding prior civil proceedings and appeared to re-agitate substantially similar disputes before the Tribunal.

Accordingly, the NCLT dismissed the petition.

For Petitioner: Advocate K Koteswara Rao

For Respondents: Advocates G Shanthi Meenakshi and K Sumathi