Santosh Devcon Shareholder's Multi-Forum Relief Bid Was 'Forum Choosing,' Not Forum Shopping: NCLT Indore

The National Company Law Tribunal (NCLT) in Indore has rejected Santosh Devcon Pvt. Ltd.'s objection that shareholder Sunil Mandwani was forum shopping by pursuing remedies before multiple fora in a dispute over the alleged reduction of his stake, holding that the company law case raised a distinct cause of action.

“The present petition has been filed under Sections 241 and 242 of the Companies Act, 2013 alleging oppression by illegal reduction of the Applicant's shareholding and suppressive treatment as a shareholder — a cause of action that is distinct, independent and falls exclusively within the jurisdiction of this Tribunal. This is not forum shopping; this is forum choosing," the tribunal held. 

The bench of Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta held so while allowing an interim application filed by Mandwani in his company petition, alleging oppression and mismanagement in the affairs of the company.

Mandwani alleged that his shareholding in Santosh Devcon was unlawfully reduced from 87.75% to 0.56% through a rights issue carried out without offering shares to him, despite his being the majority shareholder at the time.

He also claimed that respondents Kamal Nachani and Ankush Nachani induced him to surrender control of the company under agreements dated October 27, 2022, under which they agreed to buy his stake for ₹43 crore.

According to Mandwani, they paid only ₹1 crore and then failed to honour the remaining obligations.

The dispute concerns land measuring 10.462 hectares in Village Limbodi in Indore, where the Mahalaxmi Dham residential colony stands.

Mandwani told the Tribunal that the company had begun executing plot sale transactions in April 2026 against the backdrop of restraint orders passed in related proceedings before the Supreme Court and the arbitral tribunal.

The respondent-company opposed the plea, arguing that Mandwani held only 0.56% shares and was trying to obstruct legitimate business operations.

They contended that the plots were part of the company's stock-in-trade and could be sold as part of its ordinary business. They also argued that Mandwani was seeking similar relief before multiple fora.

Rejecting this contention, the Tribunal said the arbitration proceedings concerned contractual disputes between Mandwani and the Nachanis, while the company petition involved allegations of oppression and illegal reduction of shareholding.

On the issue of the plot sales, the Tribunal rejected the respondents' argument that the land could be treated as stock-in-trade for the purpose of sale.

“To accept the Respondents' contention would be to render the first part of the order entirely otiose and meaningless — which cannot be the intent of the Hon'ble Supreme Court.”

The Tribunal held that Mandwani had established a prima facie case, including a prima facie violation of Section 62 of the Companies Act.

It directed the respondents to maintain the status quo over the disputed immovable property and restrained any further reduction in Mandwani's 0.56% shareholding until further orders.