Vipul Ganda is an Independent Litigation Counsel with over 14 years of experience and a proven track record in Litigation and Dispute Resolution.

Aruna Oswal Versus Pankaj Oswal & Ors.


Court / Forum : Supreme Court of India
Citation : Civil Appeal No. 9340 of 2019
Coram : Justice Arun Mishra and Justice S. Abdul Nazeer
Subject : Sections 241 and 242 of the Companies Act, 2013
Date of Decision : 2020-07-06

Brief Facts

  • The Appellant preferred the appeal against the order of NCLAT which affirmed the order of NCLT order concerning the maintainability of petitions filed under Section 241 and 242 of the Companies Act, 2013 (“Act”).
  • The husband of Appellant held 39.88% shareholding in Respondent No. 2 Company. After the demise of Appellant’s husband, the shares were registered in the name of Appellant on the basis of nomination made by him during his lifetime under Section 72 of the Act.
  • Respondent No. 1 is the son of Appellant, who filed a partition suit claiming one-fourth entitlement of shareholding of Respondent Nos. 2 and 16 Companies.
  • Thereafter, Respondent No. 1 filed a company petition under Sections 241 and 242 of the Act alleging oppression and mismanagement regarding the affairs of Respondent Nos. 2 and 16 Companies.

Issues

  1. Whether a company petition under Sections 241 and 242 of the Act is maintainable when the determination of ownership of shares in such petition is the subject-matter of the pending partition suit?

Decision

  • The Hon’ble Supreme Court held that the NCLT ought not to have entertained the company petition because of the pending civil dispute. It was observed as under:
    “The basis of the petition is the claim by way of inheritance of 1/4thshareholding so as to constitute 10% of the holding, which right cannot be decided in proceedings under section 241/242 of the Act.”
  • It was further held that the question as to the right of Respondent No. 1 is required to be adjudicated in the civil suit, including the effect of nomination in favour of the Appellant.
  • Reliance was placed on the decision of Sangramsinh P. Gaekwad and Ors. v. Shantadevi P. Gaekwad[1] where it was held that adjudication of the question of ownership of shares is eminently a civil dispute and not contemplated under Section 397 of the Companies Act, 1956.
  • The Hon’ble Supreme Court dismissed the company petition but granted Respondent No. 1 the liberty to file a fresh company petition, in case of necessity, after the adjudication of the pending partition suit.

Vipul Ganda is a Delhi based Advocate practicing largely at the Delhi High Court. His practice focus is Dispute Resolution and Litigation and his practice areas include Arbitration, Commercial, Civil, Constitutional, Corporate and Criminal Litigation.