Inability To Meet 10% Shareholding Requirement Alone Not Ground To Waive Eligibility For Oppression Plea: NCLT Mumbai

The National Company Law Tribunal (NCLT), Mumbai Bench, has ruled that a minority shareholder's inability to muster the requisite 10% shareholding, by itself, does not constitute an exceptional circumstance warranting waiver of the eligibility requirements to pursue an oppression and mismanagement petition.

The bench of Judicial Member Vinay Goel and Technical Member Charanjeet Singh Gulati observed,

“The mere assertion that the Applicant is a minority shareholder and cannot muster the requisite 10% shareholding, by itself, cannot constitute an exceptional circumstance.”

The tribunal made the observation while dismissing an application filed by Sudhir Thackersey seeking waiver of the eligibility requirements under Section 244(1) of the Companies Act, 2013, to pursue an oppression and mismanagement petition against Capricon Realty Private Limited.

Thackersey held 122 shares, representing approximately 1.37% of the company's share capital. He contended that Capricon Realty functioned as a quasi-partnership based on family relationships, mutual trust and an understanding that family members would participate in its management.

He alleged that following the implementation of a 2020 MoU, Raoul Thackersey consolidated his shareholding and exercised majority control over the company, eventually excluding him from management and decision-making.

Thackersey also alleged that Raoul exercised effective control over Bhishma Realty Limited, another substantial shareholder of Capricon Realty. He argued that this made it practically impossible for him to meet the statutory eligibility requirements.

The respondents opposed the waiver, pointing out that Bhishma Realty itself held more than 10% of Capricon Realty's share capital. They also argued that several other shareholders were available to support Thackersey's petition.

The tribunal relied on the NCLAT's judgment in Cyrus Investments Private Limited & Anr. v. Tata Sons Limited & Ors., 2017 SCC OnLine NCLAT 261, which laid down the parameters for granting waiver under Section 244(1).

Applying these principles, the NCLT found that Thackersey was a member of the company and that his allegations concerning exclusion from management and reduction of his tenure as Managing Director prima facie related to oppression and mismanagement. However, this alone was not enough to establish exceptional circumstances warranting waiver.

The tribunal noted that Capricon Realty had 109 shareholders, including Thackersey. Excluding him, Raoul Thackersey, Tanya Thackersey, Bhishma Realty, and Jasna Thackersey, approximately 104 other shareholders collectively held 21.77% of the company's share capital.

Even if Bhishma Realty was excluded from consideration, other shareholders remained available. The tribunal found no material to show that Thackersey could not seek their support.

It also noted that disputes concerning the family arrangements reflected in the 2011 and 2014 MoUs were pending before the Bombay High Court. These disputed arrangements did not, by themselves, provide grounds for waiver.

The NCLT dismissed the waiver application and consequently dismissed the underlying oppression and mismanagement petition as not maintainable for failure to meet the requirements under Section 244(1)(a).