Resigned Director Cannot Claim Oppression Solely On Ground Of Subsequent Board Changes: NCLT Kolkata

The National Company Law Tribunal (NCLT), Kolkata Bench, has held that a shareholder who continues to remain a member of a company can maintain a petition alleging oppression and mismanagement even after resigning as a director.

However, it clarified that a person who has resigned from the board cannot subsequently complain of oppression merely on the ground that the board's composition changed after their resignation.

A Bench of Judicial Member Bidisha Banerjee and Technical Member Siddharth Mishra observed:

“Having herself resigned from the position of the Director she cannot establish a case of oppression and mismanagement due to material change in the Board of Company as Section 241(1)(b) contemplates. Further, there being no further dilution of the shareholding from the date she resigned till the date she filed the present petition, she cannot complain about any material change in shareholding as the same Section 241(1)(b) contemplates.”

The ruling came on a petition filed by Mohuya Chakroborty against Efedra Pharmaceuticals Private Limited and its directors. Chakroborty, a founding director of the company, initially held 50% of its shares. Her shareholding was later reduced to 17% through an Extraordinary General Meeting held in March 2024.

In her petition, Chakroborty claimed that she was forced to resign from the board. She alleged that her estranged spouse, Arindam Bhattacharya, inducted two additional directors without notice or a valid board resolution, withheld information about the company's affairs, and exercised unilateral control over its banking operations and business transactions. She also questioned his authority to appoint directors and change the registered office.

The respondents, however, attributed the dispute to matrimonial discord between the estranged spouses. Referring to Chakroborty's resignation dated November 1, 2025, and her stated intention to sell and transfer her shares, they argued that the petition sought to convert personal and directorial grievances into a shareholder dispute.

The Tribunal noted that despite resigning as a director, Chakroborty continued to hold 17% of the company's shares. Referring to the NCLAT's decision in Cyrus Investments Pvt. Ltd. v. Tata Sons Ltd., it held that directorship is not a prerequisite for maintaining a petition alleging oppression and mismanagement.

“It is thus established that any “Member” of a company can maintain a petition for oppression and mismanagement. Such member need not necessarily be a director in the company.”, the tribunal noted.

While holding the petition maintainable, the Bench found that the allegations did not establish oppression and mismanagement. It observed that Chakroborty could not rely on changes in the board after her resignation as a ground for alleging oppression.

The Tribunal also noted that there had been no further dilution of her shareholding after she left the board.

Relying on decisions of the Supreme Court and the Madras High Court, the Tribunal reiterated that complaints relating to directorship cannot by themselves sustain proceedings for oppression and mismanagement.

Concluding that the acts complained of did not fall within that category, it disposed of the petition with liberty to Chakroborty to pursue remedies before an appropriate forum. The Tribunal also observed that the respondent would be at liberty to provide her a fair exit from the company in accordance with law.

For Petitioner: Advocates B. Gayatri, Pritam Paul and Souvik Das.

For Respondent: Advocates Kanishk Kejriwal and Riyanshu Agarwal.