The tribunal found that the petitioners were indeed members, the issues had not been previously adjudicated, and the NCLT had exercised its discretion appropriately in line with principles laid down in the Cyrus Investments ruling
The National Company Law Appellate Tribunal (NCLAT) Delhi Bench dismissed an appeal challenging the National Company Law Tribunal (NCLT) Kolkata’s order that granted a waiver under Section 244(1)(b) of the Companies Act, 2013, in a petition alleging oppression and mismanagement in the Calcutta Cricket & Football Club, Respondent-1 noting that serious allegations and public interest considerations justified allowing the petition to proceed.
Somangsu Biswas,appellant,challenged the NCLT Kolkata order dated January 17, 2024, which allowed a waiver of eligibility under Section 244(1)(b) of the Companies Act, 2013, in a case involving allegations of oppression and mismanagement in the Calcutta Cricket & Football Club.
Expert-Led PF & ESIC Course – Enroll Now & Get Certified
Respondents 16 to 19 had filed a company petition under Sections 241 and 242, alleging mismanagement in the affairs of the Club. Since the Club is a Section 8 company with no share capital and around 1,850 members, they were required to meet the threshold of at least 20% membership to file such a petition. As they did not meet this requirement, they sought a waiver under the proviso to Section 244(1)(b).
The appellant, also a general committee member of the Club, argued that the waiver was granted without issuing proper notice and that the petitioners represented only 0.002% of the total membership. It was contended that the NCLT had failed to record any reasoning or opinion on whether the case involved genuine allegations of oppression and mismanagement, as required under the law. Reliance was placed on previous NCLAT rulings, including Cyrus Investments Pvt. Ltd. v. Tata Sons Ltd., which laid down the need for exceptional circumstances and a reasoned order when granting such waivers.
The respondents defended the order, stating that advance notices were served, counsel for several parties were present during the hearing, and no objections were raised at the time. They also argued that the petition included serious allegations such as wrongful conduct of AGM, embezzlement of funds, and violation of court orders, which warranted the waiver. It was submitted that the NCLT had considered public interest and the heritage value of the Club in its decision.
Expert-Led PF & ESIC Course – Enroll Now & Get Certified
The matter involved a debate over procedural fairness, the threshold for filing under Section 241, and whether the NCLT had exercised its discretion appropriately while granting the waiver.
The two member bench comprising Justice Yogesh Khanna (Judicial Member) and Ajai Das Mehrotra (Technical Member) heard both parties and reviewed the records. It noted that the petitioners were members of the respondent company, a Section 8 entity, and had filed a case alleging oppression and mismanagement. These issues were not decided in any earlier proceedings.
The NCLT had observed internal disputes among members, particularly relating to an AGM held on 11 September 2023, and took note of the public interest involved as the company was set up to promote sports. The Tribunal found that the conditions laid down in the Cyrus Investments judgment for granting waiver under Section 244 were met.
Master DTAA – International Taxation | Live Online Course
The Tribunal also referred to earlier cases, including Brookefield Technologies and Photon Infotech, where similar waivers were granted in the presence of serious allegations. It further noted that 90 other members had also raised concerns about mismanagement in a letter to the club.
Since the NCLT had exercised its discretion after considering the relevant factors and had not passed any order on the merits of the case, the Tribunal found no reason to interfere. The appeal was accordingly dismissed.
Subscribe Taxscan Premium to view the Judgment
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
