Allegations Of Oppression To Be Tested Only At Final Hearing, Not Amendment Stage: NCLT Mumbai

On 5 June, the Mumbai Bench of the National Company Law Tribunal (NCLT) held that allegations of oppression and mismanagement cannot be examined at the stage of deciding an application for amendment of pleadings in a company petition, observing that such issues can be adjudicated only at the final stage after parties are given an opportunity to contest the amended pleadings on merits.

Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar allowed an amendment application filed by shareholder Nutan Pradhan in her petition alleging oppression and mismanagement against Ghatge Patil Automobiles Pvt Ltd and its management. The Bench observed:

“With regard to the issues of oppression and mismanagement raised by the Respondents in the present Application, it is observed that whether the Petition establishes acts of oppression or mismanagement can be examined only at the stage of adjudication of the Petition, at which time the Respondents would have been given an opportunity to respond to the amended Petition on merits. Therefore, such issues cannot be prejudged while deciding the limited question of amendment.”

The dispute arose after Pradhan executed a gift deed on 24 April 2024 transferring 5,000 shares of the company to her brother Kiran Patil. When the transferee sought registration of the share transfer, the company declined to act on the request, leading to subsequent proceedings before the NCLT and NCLAT concerning the share transfer.

Thereafter, the company convened an extraordinary general meeting on 13 October 2025 and amended its Articles of Association to introduce restrictions on transferability of shares. Pradhan relied on these developments to pursue allegations of oppression and mismanagement.

The company opposed the amendment application, arguing that the petition had become infructuous, was barred by res judicata and res sub judice, and that the proposed amendments would change the nature of the proceedings.

Relying on the Supreme Court's decision in Life Insurance Corporation of India Ltd. v. Sanjeev Builders Pvt. Ltd., the Tribunal reiterated that courts must adopt a liberal approach to amendments that assist in determining the real controversy between parties.

The Bench found that the proposed amendments arose from subsequent events, including refusal to register the share transfer, amendments to the Articles of Association, and the conduct of the extraordinary general meeting. It held that these developments formed a continuing chain of events connected to the original pleadings and did not alter the nature of the petition. It observed:

“In the present case, the applicant has sought to introduce facts relating to (a) refusal to register the gift / transfer of 5,000 shares from the Petitioner to Original Respondent No. 7; (b) deliberate amendments made to the Company's Articles of Association; (c) manner in which the EOGM was held. All these facts occurred after filing of the Company Petition and constitute a continuing series of acts linked to the foundation of the petition. Therefore, the amendment sought by the Petitioner, and consequently to be incorporated in the Petition, is relevant to deciding the real controversy arising between the parties and does not in any manner change or alter the character and nature of the Petition.”

Accordingly, the NCLT allowed the amendment application and directed the petitioner to file the amended petition within one week.