Supreme Court Refuses To Interfere With NCLAT Order In 35-Year-Old Peerless Shareholder Dispute

The Supreme Court has refused to interfere with the National Company Law Appellate Tribunal's order setting aside the National Company Law Tribunal, Kolkata's decision.

The NCLT had cancelled the allotment of 30,000 equity shares by Peerless General Finance & Investment Co Ltd (PGFI) to three companies allegedly connected with the Roy-Sen group, as well as the subsequent transfer of 15,626 shares.

A Division Bench of Justices P.S. Narasimha and Alok Aradhe refused to interfere with the NCLAT's April 16, 2026 order which held that no case of oppression or mismanagement by the Roy-Sen group against the Chatterjee group was made out under Sections 397-398 of the Companies Act, 1956.

The dispute dates back to October 30, 1987, when PGFI's Board resolved to privately place 30,000 equity shares of ₹100 each. The issue was approved at the AGM on December 30, 1987, and the shares were allotted on April 26, 1988 to three companies allegedly connected with the Roy-Sen group.

Parasmal Lodha had participated in the relevant meetings without recording any objection. He later resigned from the Board and along with Bhagwati Developers Pvt Ltd, sold 15,626 shares to Debashree Investments and Services Pvt. Ltd., associated with the Roy family.

The NCLAT noted that Lodha had participated in and approved the relevant resolutions without recording dissent, holding:

“Under Section 193(4)(b) of the Companies Act, 1956, if a director disagrees with a resolution he is required to record his dissent in the minutes. Silence amounts to assent. Admittedly the aforesaid resolution were passed unanimously and thereafter was placed before the shareholders. Since no such dissent was ever recorded, hence Respondent No. 1 – M/s BDPL is now estopped from alleging the facts contrary of the official minutes.”

The Chatterjee group initiated proceedings in 1991, alleging oppression and mismanagement and contending that the transactions altered control of PGFI. It was also alleged that company funds were indirectly used to facilitate purchase of its own shares, contrary to Section 77 of the Companies Act, 1956.

NCLAT rejected the allegations, holding that the alleged Section 77 violation was not established through definite evidence. It also noted that the subsequent petitioners had not independently established oppression.

The tribunal further cautioned against unsettling transactions after more than 33 years, considering the consequences for the company's past resolutions, dividends and related statutory compliances.

Accordingly, the Supreme Court declined to interfere with the NCLAT order, leaving undisturbed its decision setting aside the NCLT's cancellation of the disputed share allotment and transfer.

For Appellant: Senior Advocates Gopal Subramaniam, Jishnu Saha, Mohd Faraz Anees, AOR, Advocates Kartik Vashisht, Epsita, Nitin Bajpai

For Respondent: Senior Advocates Harish Salve, C.U. Singh, Advocates Bikram Sarkar, Arunabha Deb, Anand Sukumar, AOR Ashika Daga, Bhupesh Kumar Pathak, C. U. Singh, AOR, Debanjan Mandal, Mahima Cholera, Siddhartha Deb Roy, Shubhank Tandon, Kunal Mimani, AOR S. Sukumaran, Anand Sukumar, AOR Bhupesh Kumar Pathak, Ruche Anand, Kartikey Bhatt, AOR