NCLT Dismisses Petition in Family Property Dispute under Companies Act, 2013

NCLT, Mumbai Bench dismissed a Companies Act, 2013 petition as a family share dispute lacking evidence of oppression. Allegations of share transfer and director removal were unsubstantiated.

In a recent development in the legal arena, the National Company Law Tribunal ("NCLT"), Mumbai Bench, consisting of Justice Shri V.G. Bisht (Judicial Member) and Shri Prabhat Kumar (Technical Member), has made a significant ruling. The tribunal dismissed a petition lodged under Section 241-242 of the Companies Act, 2013, on the grounds that the petition essentially constitutes a family dispute over shares in the properties owned by the Company.

Section 241 of the Companies Act, 2013, provides authority to any member of a company to approach the NCLT seeking intervention when the company's affairs are conducted in a manner detrimental to public interest, the company's interest, or in a manner prejudicial or oppressive to its members. Similarly, Section 242 of the Companies Act, 2013, delineates the powers of the NCLT in cases involving oppression and mismanagement.

The inception of the dispute stems from the incorporation of Laxsons (India) Pvt. Ltd. ("Company") by Late Mr. Bharat Khater and Ms. Urvashi Bharat Khater ("Petitioner"). The Company is involved in the business of manufacturing, dealing, importing, and exporting electronic and electrical goods. Notably, the Petitioner is the mother of Mr. Avinash Bharat Khatter, Ashwin Bharat Khatter ("Respondent No. 2"), and Ruchi Ashwin Khatter ("Respondent No. 3"), who also serve as directors of the Company.

Following Mr. Avinash's departure, facilitated by a Deed of Family Settlement executed in 2015, a series of contentious events unfolded. The Petitioner alleges that subsequent to the demise of Mr. Bharat Khatter in 2016, Respondent No. 2 initiated legal proceedings for probate of a purportedly fabricated will. This probate petition, now transformed into a suit, awaits adjudication before the Bombay High Court. Moreover, the Petitioner contends that Respondent No. 2 fraudulently transferred shares previously held by Mr. Bharat Khatter in his name, leading to her purported expulsion from the matrimonial residence by Respondent No. 2 and 3.

Adding to the complexity, in 2020, the Petitioner received a notice under Section 169 of the Companies Act, 2013, coupled with an agenda for a Company Board Meeting, proposing her removal from Directorship.

In response to these allegations, the Petitioner invoked Sections 241-242 of the Companies Act, 2013, alleging oppression and mismanagement by Respondent No. 2 and 3 within the Company. The relief sought included a declaration of the voidness of the notice, agenda, and resolution for her removal from Directorship, nullification of the share transfer to Respondent No. 2, and an injunction restraining Respondent No. 2 & 3 from alienating the Company's assets.

The NCLT Bench deliberated on the contentions presented by both parties. Notably, the Bench observed evidence provided by Respondent No. 2 indicating the Petitioner's consent to the transfer of Mr. Bharat's shares. Moreover, the Petitioner failed to contest the authenticity of her signatures on the transfer deed and share certificate endorsement. Consequently, the Bench deemed the oppression allegation as an afterthought.

Addressing the issue of the Petitioner's alleged ousting from her matrimonial residence, the Bench emphasized its irrelevance to the Company's affairs. Similarly, regarding the disposal of Company properties by Respondent No. 2, the Bench noted the absence of evidence suggesting misappropriation or personal gain by Respondent No. 2.

In its ruling, the NCLT emphasized the equitable jurisdiction vested in it under Sections 241 & 242 of the Companies Act, 2013. The tribunal concluded that the petitions, essentially reflecting a family dispute over the Company's property shares, were not maintainable and warranted dismissal. Furthermore, it was noted that the Petitioner had concealed documents demonstrating her consent to the transfer of her husband's shares to Respondent No. 2.

The NCLT, Mumbai Bench, in the case of Urvashi Bharat Khater v Laxsons (India) Private Limited & Others, dismissed the petition under Section 241-242 of the Companies Act, 2013, holding it to be a family dispute concerning shares in the Company's properties.