TATA CONSULTANCY SERVICES LIMITED v. CYRUS INVESTMENTS PVT. LTD. AND ORS.

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A Directors of the two Trusts. CPM himself had proposed a Governance framework which recognised pre-consultation with the Trusts. Therefore, the findings of NCLAT as though the pre-consultation as well as the affirmative voting right conferred upon the Directors nominated by the Trust, undermined the role of the Board of Directors of Tata Sons, are completely B perverse; (xi) The direction issued by NCLAT to the majority (Tata Group) to consult the S.P. Group, for all future appointments of Executive Chairman or Director, is wholly unsustainable in law. This direction tantamount to striking down Articles 104B and 118, C even though the challenge to these Articles had already been given up.

10Copy pinpoint10. Contentions on behalf of S.P. Group: 10.1 Shri C. Aryama Sundaram, learned Senior counsel, appearing D on behalf of the S.P. Group raised the following contentions, both in defense of that portion of the judgment of NCLAT which had gone in their favour and also for attacking NCLAT for not going further: (i) Tata Sons could very well be treated as a two group company where the relationship between the groups was in the nature of E a quasi partnership, which created equitable obligations. The relationship between the family of CPM and the Tata family, spans over seven decades and was one of trust and mutual confidence. S.P. Group had acted as the guardian of Tata Group’s interest when the Trust had no affirmative voting rights;

F (ii) The existence of a quasi partnership can be presumed whenever it is found (a) that an Association was formed or continued on the basis of a relationship involving mutual trust and confidence; (b) that there was an understanding that some of the members would participate in the management of the company; or (c) that there was a restriction upon the transfer of the member’s G interest in the company. One or more of these elements were found to exist in the relationship between Tata Group and S.P. Group and hence it was in the nature of quasi partnership; (iii) The Trustees misused the Articles of Association to undermine the Board of Directors of Tata Sons and also caused erosion of H their ability to exercise independent judgment and to act in the

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interest of the Company. RNT as well as Soonawala demanded A pre-consultation and prior clearance of the agenda items to be placed before the Board. There were instances (a) when the Trust-Nominee Directors objected to matters being placed before the Board without the approval of the Trust, (b) when RNT edited the minutes of the Board meetings that he did not attend, B (c) when RNT questioned certain operational and business decisions of Tata Motors, (d) when the Trustees overruled the views of the Tata Group legal counsel in the DoCoMo disputes and (e) when the Trustees interfered in business decisions such as Welspun acquisition and rights issue of Tata Motors; (iv) Tata sons was a public company in form and conduct, as they accepted public deposits even after 13.12.2000 till September- 2002 and hence the conversion of the company into a private company by a hand written order of the ROC, effected at night just before NCLAT was to hear the appeals, was completely shocking. The conversion of the company into a private company was aimed at avoiding a higher standard of scrutiny statutorily required for public companies. The conversion also adversely affected the ability of Tata Sons to raise funds, thereby increasing borrowing costs. Due to this conversion, Tata Sons became obliged to refund money to insurance companies which held substantial investments in the instruments issued by the company. E Therefore the conversion of the company into a private company lacked probity and prejudiced the proprietary rights of minority shareholders; (v) The removal of CPM was contrary to the provisions of Article 118, which required the setting up of a Selection Committee F both for appointment as well as removal. In fact Article 121B contemplates a 15 days’ notice, but the same was also not complied. Therefore, the removal of CPM, carried out without there being any agenda for the same and without there being any deliberation or discussion, was wholly illegal. The manner G in which three Directors were inducted into the Board without being vetted by the Nomination and Remuneration Committee and the manner in which the resolution for removal was passed would show that it was pre-planned. It was quite strange that CPM’s performance came to be appreciated by the Nomination and Remuneration Committee in June-2016 and this Committee H

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A had two members, who later became parties to the resolution removing him from Executive Chairmanship; (vi) The removal of CPM from the Directorship of Tata Sons as well as the Directorship of the other Group Companies showed complete lack of probity, since veiled threats were sent to the B Board of Directors of the other group companies for the withdrawal of the Tata brand, if they failed to fall in line. 10.² Carrying the baton from Shri Aryama Sundaram, it was contended by Shri Shyam Divan, learned Senior counsel, as follows: (i) With the coming into force of the Companies Act, 2013, C law has moved from ‘corporate majority’ or ‘Corporate democracy’ to ‘corporate governance’, which includes the principles of fairness. This is seen from sections 135, 148, 151, 166 and 177. (ii) Law now enjoins companies to be operated and managed within a statutory framework i.e. by a Board of Directors and no one else, as per s.149 of the 2013 Act. (iii) Directors of companies have a fiduciary role vis-à-vis the company with the highest level of duty, which cannot be outsourced or delegated and their allegiance should only be to the company alone. (iv) Once a director is appointed, his duty is only to the company and none else, irrespective of how he is appointed. (v) There was a series of acts of oppression, including the breach of Articles, misuse of Articles and also a violation of the essential understanding between the two groups. This was found by the NCLAT. (vi) There was a clear lack of probity and honesty in the dealings of the majority. The concept of probity is much broader and wider than integrity. (vii) There was a long good faith relationship between the Tata group and SP group, developed over several decades and this has to be viewed in the context of a

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specific statutory framework that existed from 1964 upto A 2000. (viii) In matters of this nature, the Court is obliged, in its equitable jurisdiction, to take note of the status of the company in question, which is at the top (apex) of the pyramid, with several stakeholders including the minority shareholders of the company itself, the employees and shareholders of the operating companies controlled by the company etc. (ix) NCLAT has recorded detailed findings on facts and there is no perversity in those findings. Therefore there is actually no scope for interference by this court. (x) The reliefs sought in the company petition, are consistent with the provisions of the Companies Act, 2013 including Section 163 (proportionate representation) and sub- Sections (1), (5), (7) and (8) of Section 242 of the Act. D 10.3 Mr. Janak Dwarakadas, learned counsel appearing on behalf of CPM, the original composer of this musical ensemble, raised the following contentions: (i) Lack of financial probity is not the only ground on which the ‘just and equitable’ clause for winding up can be E invoked. Infraction of a legal and/or proprietary right is also a ground for invoking it. (ii) Proprietary right includes the right to be governed in accordance with the Articles of Association and the provisions of the Act. Independence and autonomy of F Board is guaranteed by law. Interference by majority shareholders that encroaches upon the Board’s autonomy and independence, is an infraction upon the proprietary rights of minority shareholders. (iii) Art. 104B, 121 and 121A have been misinterpreted, G misconstrued and misapplied to mean that majority shareholders have a right to seek pre-consultation or pre-clearance before matters can be placed before the Board of Tata Sons or Tata Operating Companies. The right to nominate 1/3rd directors by Tata Trusts (A.104B), H

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A the requirement of affirmative vote of a majority of nominee directors (A.121) and Article 121A, do not alter the fact that nominee directors have a fiduciary duty in exercising these powers to act in the interests of the company alone. Article 122(b) provided that Tata Sons shall be board-managed. But the true legal scope and meaning of these Articles were never understood. (iv) The role and duties of nominee Directors should have been well defined and kept within the confines of law. (v) The Nomination and remuneration Committee, in its meeting held on June 28, 2016, expressed the need for clarity on the functioning of the Board of Tata Sons in relation to Tata Trusts as well as its role vis-a-vis the group companies. (vi) NCLAT has recorded a finding that 3 attempts were made by CPM to place before the Board of Tata Sons, a governance structure and that this became the principal cause for his removal. This finding of fact cannot be set at naught by this court. 11 Contentions on behalf of the Tata Trusts E Assailing the judgment of NCLAT, Shri Mohan Parasaran, learned Senior counsel appearing for the Trusts, contended as follows: (i) Impugned judgment did not deal with the detailed findings of fact rendered by NCLT, nor the arguments advanced on behalf of the Trustees of the Tata Trust. F (ii) Impugned judgment employed erroneous tests to determine oppression under section 241 of the 2013 Act (iii) Mere unwise or loss making business decisions etc. cannot be construed as acts of mismanagement so as to justify winding up on just and equitable grounds. For G holding the majority guilty (a) there must be a sequential chain of events leading up to the date of filing the petition; (b) the conduct must be burdensome, harsh and wrongful qua the minority; and (c) there must be an element of

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lack of probity depriving the proprietary rights of the SP A group as shareholders. (iv) This is not a case of quasi-partnership (v) Impugned judgment is replete with erroneous findings of fact that influenced the conclusions drawn and reliefs granted B

(vi) Impugned judgment misattributes the replacement of CPM to RNT and grants reliefs that were not prayed for. (vii) Though the Trust-Nominee Director introduced the C resolution for CPM’s removal, it was ultimately the majority of the Board that voted in favor of the resolution. (viii) Impugned judgment goes against the fundamentals of corporate democracy by taking away basic rights of shareholders D (ix) By directing that all future appointments to directorial positions in Tata Sons can be made only through mutual “consultation” with the SP Group and that only a person “on whom both the groups have trust” can be appointed, NCLAT has undermined the role of majority. This could E create a stalemate and an impasse by giving minority shareholders a veto power. (x) This direction also renders mute, the right of the Tata Trusts to nominate directors under Art.104B even though its validity was not under challenge before NCLAT. F (xi) Impugned judgment’s interpretation of affirmative voting rights u/ Art 121 is conceptually and legally wrong. (xii) NCLAT took the affirmative right to mean unilateral power to implement decisions (referencing para 155 of the judgment). G

12Copy pinpoint12. Contentions of Tata Consultancy Services (TCS) Attacking one portion of the judgment of NCLAT which issued a direction to TCS to reinstate CPM as a Director, Ms. Fereshte D. Sethna, learned counsel appearing for TCS argued as follows:- H

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A (i) NCLAT lacked jurisdiction to direct CPM’s reinstatement, as TCS was not party to the original proceedings or appellate proceedings. Neither the SP Group, nor CPM had prayed for reinstatement of CPM to the board of directors of TCS B (ii) Due process was followed in the removal of CPM from the board of TCS. CPM was granted opportunity to make a representation against the proposed resolution for his removal in compliance with section 169 of the Companies Act. Unanimous approval was granted by the board of directors of TCS at their meeting dated C 17.11.2016 for convening an EGM for removal of CPM from the board of directors. Circulation of representation against his proposed removal on 05.12.2016 was made by CPM to members. Requisite majority of shareholders (93.11%) passed resolution at EGM dated 13.12.2016, D for the removal of CPM. 57.46% of public institutional shareholders were in favor of the resolution for his removal. Further, 71.88% of public shareholders were in favor of resolution for his removal. (iii) Action against TCS not maintainable by the SP Group E as they did not meet the requisite threshold under section 244 of the Companies Act, 2013. The SP Group held only 0.24% in direct equity interests in TCS which stood at 0.55% on 13.12.2016, and has since been diluted to 0.05% on 18.12.2019 – the date of the impugned order.

F (iv) There was no allegation of oppression and mismanagement made out against TCS. (v) TCS was denied the opportunity of hearing which was contrary to the principles of natural justice. (vi) NCLAT lacked jurisdiction to grant reinstatement as G CPM’s tenure of office came to an end on 16.06.2017.

13Copy pinpoint13. Contentions of others 13.1 Shri Tushar Mehta, learned Solicitor General, appearing on behalf of the Registrar of Companies, made submissions to the limited extent of justifying the action of the RoC in issuing an amended certificate H

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of incorporation. According to him, the Articles of Association of Tata A Sons contained provisions which come within the parameters of the definition of a ‘private company’ under section 2(68) of the Act. The amendment merely recognized a pre-existing reality and the RoC followed the extant provisions of the Act. But unfortunately, the NCLAT passed remarks, though it claimed it did not, without even hearing the B RoC beforehand. 13.² Shri Zal Andhyarjuna, learned counsel appearing for Shri Noshir A. Soonawala, submitted that Soonawala has never been accused of wrongdoing in his 44 years of association with the Tata Group and even during CPM’s tenure as Director. He has not attended a single meeting of the Board of Directors of Tata Sons since his retirement. He C was requested to act as advisor to Tata Sons which received unanimous approval of the Board in 2010. CPM would therefore, approach him from time to time for advice on financial matters of Tata Sons. Soonawala has, on his own initiative, sent only two notes to CPM and RNT which were purely advisory in nature and cannot be construed as being D “directions” or “instructions” from him. The Note dated 04.12.2015 was an analysis of Tata Sons’ past financial results pointing out areas of concern and the Memo dated 09.07.2015 concerned Tata Tele Services Limited, an unlisted company having financial problems. Therefore, he argued that NCLAT was wrong in attributing to him, interference with the affairs of Tata Sons. E

14Copy pinpoint14. Questions of law arising for consideration 14.1 Though the learned counsel for the parties have raised innumerable contentions touching upon every aspect, micro or macro, and which we have faithfully recorded in paragraphs 9 to 13 above, the F jurisdiction of this Court under Section 423 of the Companies Act, 2013, is primarily to answer questions of law arising out of the proceedings before the Tribunal and Appellate Tribunal. 14.² Therefore, from the rival contentions, the questions of law that arise are formulated as follows:- G (i) Whether the formation of opinion by the Appellate Tribunal that the company’s affairs have been or are being conducted in a manner prejudicial and oppressive to some members and that the facts otherwise justify the winding up of the company on just and equitable ground, is in tune with the well settled H

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A principles and parameters, especially in the light of the fact that the findings of NCLT on facts were not individually and specifically overturned by the Appellate Tribunal ? (ii) Whether the reliefs granted and the directions issued by the Appellate Tribunal, including the reinstatement of CPM B into the Board of Tata Sons and other Tata companies, are in consonance with the pleadings made, the reliefs sought and the powers available under Sub-section (2) of Section 242 ? (iii) Whether the Appellate Tribunal could have, in law, muted the power of the Company under Article 75 of the Articles of C Association, to demand any member to transfer his ordinary shares, by simply injuncting the company from exercising such a right without setting aside the Article ? (iv) Whether the characterisation by the Tribunal, of the affirmative voting rights available under Article 121 to the D Directors nominated by the Trusts in terms of Article 104B, as oppressive and prejudicial, is justified especially after the challenge to these Articles have been given up expressly and whether the Tribunal could have granted a direction to RNT and the Nominee Directors virtually nullifying the effect of these Articles ? E (iv) whether the re-conversion of Tata Sons from a public company into a private company, required the necessary approval under section 14 of the Companies Act, 2013 or at least an action under section 43A(4) of the Companies Act, 1956 during the period from 2000 (when Act 53 of 2000 came into force) to 2013 (when the 2013 Act was enacted) as held by NCLAT ?

15Copy pinpoint15. Legislative History of Oppression, Mismanagement and Unfair Prejudice 15.1 Before we take up the questions of law formulated above for consideration, we think it would be useful to look at the legislative history of oppression, mismanagement and prejudice/ unfair prejudice, both in England and India, as colonial vintage continues to haunt us (fortunately or unfortunately), both in legislative drafting and in judicial decision making even till date. H

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In England A 15.² The history of legislative action to regulate incorporated companies, in England, is just 176 years old. It begins with the Joint Stock Companies Act, 1844. Until then, the government created corporations under a Royal Charter or an Act of Parliament with the grant of a monopoly over a specified territory. The best known example is the British East India Company, to which Queen Elizabeth I granted the exclusive right to trade with all countries to the east of the Cape of Good Hope. During this period, Corporations essentially used to act on the government’s behalf, bringing in revenue from their exploits abroad. 15.3 A chartered company (similar to East India Company), known as the South Sea Company, was established in 1711 to trade in the Spanish South American colonies. The South Sea Company’s monopoly rights were supposedly backed by the Treaty of Utrecht, signed in 1713 as a settlement following the War of Spanish Succession. Investors in the UK were promised high returns of unimaginable proportions, which led to the shares of the company being traded by avaricious investors at high premium. By 1717, the South Sea Company became so wealthy despite having done no real business that it assumed the public debt of the UK government. This was the first speculative bubble that the country (or perhaps the world) saw, but by the end of 1720, the bubble had “burst”, leading to bankruptcies and the passage of The Bubble Act, E 1720. 15.⁴ The UK Bubble Act, 1720 prohibited the establishment of companies without a Royal Charter and it remained in force until its repeal in 1825. By 1825, Industrial Revolution had gathered pace, necessitating a legal change. The Bubble Companies Act 1825 lifted the F restrictions, but it did not resolve the problem fully. 15.5 Therefore in 1843, the Parliamentary Committee on Joint Stock Companies, chaired by William Gladstone made a report, which led to the enactment of the Joint Stock Companies Act 1844. This Act made it possible for ordinary people to incorporate companies through a G simple registration procedure. However, it did not permit limited liability. 15.6 Then came the Limited Liability Act, 1855, which allowed investors to limit their liability in the event of business failure, to the amount they invested in the company. These two features - a simple registration procedure and limited liability - were subsequently codified H

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A in the first modern company law enactment, namely the Joint Stock Companies Act 1856. The Joint Stock companies Act, 1856 made it possible for any 7 individuals, subscribing to shares individually, to form a limited liability company. This was subsequently consolidated with a number of other statutes in the Companies Act 1862, which was described by Francis Palmer as the Magna Carta of Co-operative enterprises. B 15.7 The Companies Act, 1862 consolidated the laws relating to the incorporation, regulation and winding up of trading companies and other associations. Though this Act did not provide for any remedies to the minority shareholders in respect of oppression and mismanagement, Section 79 empowered the Court to wind up a company whenever the C Court was of the opinion that it is just and equitable to wind up the company. This Act also contained a provision conferring a limited right upon a dissentient member, whenever a sale or transfer of the business or property of the company took place in the course of winding up proceedings. D 15.8 However, when fraudulent practices in relation to the formation and management of companies came to the fore, an investigation was ordered by a Committee chaired by Lord Davey. The Committee submitted a report along with a draft Bill in June, 1895. This Bill became the Companies Act, 1900. This Act also did not contain any E provision relating to oppression and mismanagement. So was the case with the Companies (Consolidation) Act, 1908. The Act of 1908 was examined by a committee presided over by Lord Wrenbury in 1918 and again by a committee headed by Greene, K.G. in 1926, which led to the Companies Act, 1929.

F 15.9 During the second world war, a Company Law Reforms Committee chaired by Lord Cohen was appointed (in 1943) by the President of the Board of Trade to consider and report what major amendments are needed to the 1929 Act, particularly “to review the requirements prescribed in regard to the formation and affairs of companies and the safeguards afforded for investors and for the public interest”. This Committee’s report dealt specifically with 2 problems, namely (i) the hardship caused to the legal heirs of a deceased shareholder of a private company in the matter of disposal of the shares, due to the restriction on the transferability of shares and (ii) the abuse of office by the Directors in siphoning off huge profits in the form of remuneration, to the detriment of the small shareholders. After analyzing

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these 2 issues in paragraphs 58 and 59 as illustrative cases, the Cohen A Committee, recommended that “a step in the right direction would be to enlarge the power of the Court to make a winding-up order by providing that the power shall be exercisable notwithstanding the existence of an alternative remedy”. Paragraphs 58 to 60 of the Report reads as follows: B

58. Restrictions on transfer of shares. - It has been represented to us that the provisions which are inserted in the articles of a private company for the restriction of the transfer of the shares have caused hardship especially where the legal representatives of minority shareholders have to raise money to pay estate duties. The directors of the company, who are usually the principal shareholders, sometimes exercise their power to refuse to register transfers to outsiders, with the result that executors, who must realise their testators’ shares in order to pay estate duty, have to sell to the directors or persons approved by them at prices much lower than the values at which the shares are assessed by the Board of Inland Revenue in valuing the estate of the deceased for purpose of estate duty. This difficulty is not in law peculiar to private companies since there is no legal impediment to a public company having in its articles a provision subjecting transfer of shares to the approval of the directors though Stock Exchanges do not accept it where leave to deal is required. This restriction is valued as a means of keeping a family business under the control of the family and we see no sufficient reason for its removal, particularly if our suggestion in paragraph 6o is adopted. F

59. Excessive remuneration of directors. - Another abuse which has been found to occur is that the directors absorb an undue proportion of the profits of the company in remuneration for their services so that little or nothing is left for distribution among the shareholders by way of dividend. G This may happen where, for example, two persons trading in partnership form their business into a limited company and one partner dies-, leaving his shares to his widow who takes no active part in the business. At present the only remedy open to the minority shareholder is to commence an action to H

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A restrain the company from paying the remuneration on the ground that such payment is a fraud on the minority, since the Court would not make a winding-up, order in view of the alternative remedy.

60. Oppression of minorities.-We have carefully examined suggestions intended to strengthen the minority shareholders of a private company in resisting oppression by the majority. The difficulties to which we have referred in the two preceding paragraphs are, in fact, only illustrations of a general problem. It is impossible to frame a recommendation to cover every case. We consider that a step in the right direction would be to enlarge the power of the Court to make a winding-up order by providing that the power shall be exercisable notwithstanding the existence of an alternative remedy. In many cases, however, the winding-up of the company will not benefit the minority shareholders, since the break-up value of the assets may be small, or the only available purchaser may be that very majority whose- oppression has driven the minority to seek redress. We, therefore, suggest that the Court should have, in addition, the power to impose upon the parties to a dispute whatever settlement the Court considers just and equitable. This discretion must be unfettered, for it is impossible to lay down a general guide to the solution of what are essentially individual cases. We do not think that the Court can be expected in every case to find and impose a solution; but our proposal will give the Court a jurisdiction which it at present lacks, and thereby at least empower it to impose a F solution in those cases where one exists. 15.10 Ultimately, in para 153 of the report, a recommendation was made to amend the provision relating to winding up, by adding the following: There be a new section under which, on a shareholder’s G petition, the Court, if satisfied that a minority of the shareholders is being oppressed and that a winding-up order would not do justice to the minority, should be empowered, instead of making a winding-up order, to make such other order, including an order for the purchase by the majority of H

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the shares of the minority at a price to be fixed by the Court, A as to the Court may seem just 15.11 Lord Cohen committee report led to the enactment of the Companies Act, 1948, in which a provision was incorporated in section

210. The heading given to the Section was, “Alternative Remedy to Winding up in Cases of Oppression”. This provision reads as follows:- B “210. Alternative remedy to winding up in cases of oppression (1) Any member of a company who complains that the affairs of the company are being conducted in a manner oppressive to some part of the members (including himself) or, in a case falling within subsection (3) of section one hundred and sixty- C nine of this Act, the Board of Trade, may make an application to the court by petition for an order under this section. (2) If on any such petition the court is of opinion— (a) that the company’s affairs are being conducted as aforesaid; and (b) that to wind up the company would unfairly prejudice that part of the members, but otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up; the court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company’s affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company’s capital, or otherwise. (3) Where an order under this section makes any alteration in or addition to any company’s memorandum or articles, then, notwithstanding anything in any other provision of this Act but subject to the provisions of the order, the company concerned shall not have power without the leave of the court to make any further alteration in or addition to the memorandum or articles inconsistent with the provisions of the order; but, subject to the foregoing provisions of this H

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A subsection, the alterations or additions made by the order shall be of the same effect as if duly made by resolution of the company and the provisions of this Act shall apply to the memorandum or articles as so altered or added to accordingly. (4) An office copy of any order under this section altering or B adding to, or giving leave to alter or add to, a company’s memorandum or articles shall, within fourteen days after the making thereof, be delivered by the company to the registrar of companies for registration; and if a company makes default in complying with this subsection, the company and every officer of the company who is in default shall be liable to a C default fine. (5) In relation to a petition under this section, section three hundred and sixty-five of this Act shall apply as it applies in relation to a winding-up petition, and proceedings under this section shall, for the purposes of Part V of the Economy D (Miscellaneous Provisions) Act, 1926, be deemed to be proceedings under this Act in relation to the winding up of companies. 15.12 But the word “oppressive” appearing in section 210 of the 1948 Act, was construed by the House of Lords in Scottish Cooperative E Wholesale Society vs. Meyer1 to mean “burdensome, harsh and wrongful”. The expression “wrongful” gave rise to some uncertainty as to whether it required actual illegality or invasion of legal rights. Moreover, the provision invited 2 criticisms namely (i) that the requirement to establish grounds which justified winding up under the just and equitable F clause was itself harsh and (ii) that section 210 would not apply to an isolated act, but applied only to a course of conduct. 15.13 Therefore, the Jenkins Committee of 1962 recommended use of the term “unfairly prejudicial”. Parliament adopted it in Section 75 of the Companies Act, 1980. Later, this section 75 of the 1980 Act G became, with an amendment, Section 459 of the Companies Act, 1985. Sections 459 to 461 of the Companies Act, 1985 were included in Part XVII, under the caption “Protection of Company’s Members against Unfair Prejudice”. Sections 459 to 461 read as follows:-

1 1959 A.C.324 H

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459. Order on application of company member. A (1) A member of a company may apply to the court by petition for an order under this Part on the ground that the company’s affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of some part of the members (including at least himself) or that any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial. (2) The provisions of this Part apply to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law, as those provisions apply to a member of the company; and references to a member or members are to be construed accordingly. 460 Order on application of Secretary of State (1) If in the case of any company— D (a) the Secretary of State has received a report under section 437, or exercised his powers under section 447 or 448 of this Act or section 44(2) to (6) of the [1982 c. 50.] Insurance Companies Act 1982 (inspection of company’s books and papers), and E (b) it appears to him that the company’s affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of some part of the members, or that any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial. F he may himself (in addition to or instead of presenting a petition under section 440 for the winding up of the company) apply to the court by petition for an order under this Part. (2) In this section (and, so far as applicable for its purposes, in the section next following) “company” means any body G corporate which is liable to be wound up under this Act. 461 Provisions as to petitions and orders under this Part (1) If the court is satisfied that a petition under this Part is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of. H

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A (2) Without prejudice to the generality of subsection (1), the court’s order may— (a) regulate the conduct of the company’s affairs in the future, (b) require the company to refrain from doing or continuing an act complained of by the petitioner or to do an act which B the petitioner has complained it has omitted to do, (c) authorise civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the court may direct,

C (d) provide for the purchase of the shares of any members of the company by other members or by the company itself and, in the case of a purchase by the company itself, the reduction of the company’s capital accordingly. (3) If an order under this Part requires the company not to make any, or any specified, alteration in the memorandum or articles, the company does not then have power without leave of the court to make any such alteration in breach of that requirement. (4) Any alteration in the company’s memorandum or articles made by virtue of an order under this Part is of the same effect as if duly made by resolution of the company, and the provisions of this Act apply to the memorandum or articles as so altered accordingly. (5) An office copy of an order under this Part altering, or giving leave to alter, a company’s memorandum or articles shall, within 14 days from the making of the order or such longer period as the court may allow, be delivered by the company to the registrar of companies for registration ; and if a company makes default in complying with this subsection, the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine. (6) Section 663 (winding-up rules) applies in relation to a petition under this Part as in relation to a winding-up petition.

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The words in bold letters in the above extract in section 459, were A later substituted by the words “unfairly prejudicial to the interests of its members generally or of some part of its members” by a 1989 amendment which came into effect in 1991. 15.14 The Companies Act, 1985 was repealed by the Companies Act, 2006, which had the dubious distinction of being the longest Act in B British parliamentary history, with 1300 sections and 16 schedules. (until it was overtaken by the Corporation Tax Act, 2009). Part 30 of the Act contains 3 provisions in sections 994 to 996 (apart from others), grouped under the heading “Protection of Members against Unfair Prejudice”. Paragraph 1265 of the Explanatory Notes to the 2006 Act, confirms that Sections 994-998 restate sections 459, 460 and 461 of the 1985 Act. C

15.15 Sections 994 to 996 of the Companies Act, 2006 read as follows:- “994 Petition by company member (1) A member of a company may apply to the court by D petition for an order under this Part on the ground— (a) that the company’s affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or E (b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial. (2) The provisions of this Part apply to a person who F is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law as they apply to a member of a company. (3) In this section, and so far as applicable for the purposes of this section in the other provisions of this Part, “company” means— G

(a) a company within the meaning of this Act, or (b) a company that is not such a company but is a statutory water company within the meaning of the Statutory Water Companies Act 1991 (c. 58). H

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A 995 Petition by Secretary of State (1) This section applies to a company in respect of which— (a) the Secretary of State has received a report under section 437 of the Companies Act 1985 (c. 6) (inspector’s B report); (b) the Secretary of State has exercised his powers under section 447 or 448 of that Act (powers to require documents and information or to enter and search premises);

C (c) the Secretary of State or the Financial Services Authority has exercised his or its powers under Part 11 of the Financial Services and Markets Act 2000 (c. 8) (information gathering and investigations); or (d) the Secretary of State has received a report from an investigator appointed by him or the Financial Services Authority under that Part. (2) If it appears to the Secretary of State that in the case of such a company— (a) the company’s affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members, or (b) an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial, he may apply to the court by petition for an order under this Part. (3) The Secretary of State may do this in addition to, or instead of, presenting a petition for the winding up of the company. G (4) In this section, and so far as applicable for the purposes of this section in the other provisions of this Part, “company” means any body corporate that is liable to be wound up under the Insolvency Act 1986 (c. 45) or the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 H (N.I. 19)).

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996 Powers of the court under this Part A (1) If the court is satisfied that a petition under this Part is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of. (2) Without prejudice to the generality of subsection (1), the court’s order may— B

(a) regulate the conduct of the company’s affairs in the future; (b) require the company— (i) to refrain from doing or continuing an act complained of, or (ii) to do an act that the petitioner has complained it has omitted to do; (c) authorise civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the court may direct; (d) require the company not to make any, or any specified, alterations in its articles without the leave of the court; (e) provide for the purchase of the shares of any members of the company by other members or by the company itself and, in the case of a purchase by the company itself, the reduction of the company’s capital accordingly. Legislative history in India 15.16 In India, the earliest legislation made for the ‘Regulation of Registered Joint Stock Companies’ was Act No. XLIII of 1850. This Act provided for the registration of every un-incorporated company of partners, associated under a deed containing a provision that the shares in the stock or business of the said company, are transferable without the consent of all the partners. It will be fascinating for those interested in history, to know that under this 1850 Act, the Supreme Courts of Judicature at Calcutta, Madras and Bombay were conferred not only with the power of registration of such companies but also with a power to enforce the performance by the directors of any of their duties under the Act or the deed of partnership. These courts also had a consequential power to punish a person for contempt, if there was any disobedience of the order of the court. The concepts such as minority, majority, oppression, mismanagement etc., were alien to this Act of 1850. H

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A 15.17 Then came Act No.XIX of 1857 which provided for the incorporation and regulation of joint stock companies and other associations either with or without limited liability of the members thereof. The primary object of the Act was to enable the members of the joint stock companies and other associations to limit their liability for the debts and engagements relating to those companies and associations. It was under this Act that for the first time the prescription that 7 or more persons associated for any lawful purpose may form themselves into an incorporated company with or without limited liability by subscribing their names to a Memorandum of Association, was introduced. By this very same Act the prohibition for 20 or more persons to carry on any partnership in trade or business having gain as its object, unless they are registered as a company, was also introduced. But even in this Act the concepts such as oppression and mismanagement etc., were not dealt with (perhaps due to the fact that East India Company alone was granted such a privilege). D 15.18 Thereafter, a full-fledged enactment known as The Indian Companies’ Act, 1866 was passed with a view to consolidate and amend the laws relating to the incorporation, regulation and winding up of trading companies and other associations. Even this Act, did not provide for any remedy in the case of oppression and mismanagement, though provisions were made for winding up including voluntary winding up. E 15.19 The above Act No. X of 1866 was repealed by The Indian Companies Act No. VI of 1882. This Act also did not contain provisions for an individual or group of shareholders/members to seek redressal against oppression, mismanagement or any unfair prejudicial treatment.

F 15.20 Then came The Indian Companies Act, 1913 (Act No.VII of 1913) which repealed the 1882 Act and the amendments made thereof. Interestingly, this 1913 Act also repealed one particular provision in the Indian Arbitration Act, 1899. Though in the original enactment of 1913, there was no provision relating to oppression and mismanagement, the Amendment Act 52 of 1951 inserted Section 153C to The Indian G Companies Act, 1913. This Section 153C reads as follows :- “153C. Power of court to act when company acts in a prejudicial manner or oppresses any part of its members.-(1) Without prejudice to any other action that may be taken, whether in pursuance of this Act or any other law for the time H

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being in force, any member of a company who complains that the affairs of the company are being conducted- (a) In a manner prejudicial to the interest of the company, or (b) In a manner oppressive to some part of the members (including himself) may make an application to the court for an order under the section. (2) An application under sub-section (I) may also be made by the Central Government if it is satisfied that the affairs of the company are being conducted as aforesaid. C (3) No application under sub-section (I) shall be made by any member, unless- (a) In the case of a company having a share capital, the member complaining- (i) has obtained the consent in writing of not less than\ D one hundred in number of the members of the company or not less than one-tenth in number of the members, whichever is less or (ii) holds not less than one-tenth of the issued share capital of the company upon which all calls and other sums due have been paid; and (b) In the case of a company not having a share capital the member complaining has obtained the consent in writing of not less than one-fifth in number of the members, and where there are several persons having the same interest in any such application and the condition specified in clause (a) or clause (b) of this sub-section is satisfied with reference to one or more of such persons, any one or more of them may, with the permission of the court, make the application on behalf of, or for the benefit of, all persons so interested, and the provisions of rule 8 of Order G I of the First Schedule to the Code of Civil Procedure, 1908 (Act V of 1908), shall apply to any such application as it applies to any suit within the meaning of that rule.

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A (4) If on any such application the court is of opinion- (a) that the company’s affairs are being conducted as aforesaid, and (b) that to wind up the company would unfairly and materially prejudice the interests of the company or any part of its members, but otherwise the facts would justify the making of a winding up order on the ground that it is just and equitable that the company should be wound up, the court may, with a view to bringing to an end the matters complained of, make such order in relation thereto as it thinks fit. (5) Without prejudice to the generality of the powers vested in a court under sub-section (4), any order made under that sub-section may provide for-

D (a) the regulation of the conduct of the company’s affairs in future; (b) the purchase of the shares or interests of any members of the company by other members thereof or by the company; E (c) in the case of a purchase of shares or interest by the company being a company having a share capital, for the reduction accordingly of the company’s capital or otherwise; (d) the termination of any agreement, howsoever, arrived at, between the company and its manager, managing agent, managing director or any of its other directors; (e) the termination or revision of any agreement entered into between the company and any person other than any of the persons referred to in clause(d), provided that no such agreement shall be termination or revised except after due notice to the party concerned and in the case of revision of any such agreement, after obtaining the consent of the party concerned thereto;

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(f) the setting aside of any transfer, delivery of goods, A payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under sub-section (I), which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference. B (6) Where an order under this section makes any alteration in, or addition to, the memorandum or articles of any company, then notwithstanding anything contained in any other provision of this Act, but subject to the provisions of the order, the company concerned shall not have power without the leave of the court to make any further alteration in, or addition to, the memorandum or articles inconsistent with the provisions of the order, but subject to the foregoing provisions of this sub-section the alterations or additions made by the order shall have the same effect as is duly made by a resolution of the company, and the provisions of this Act shall apply to the memorandum or articles as so altered or added to accordingly. (7) A certified copy of every order under this section altering or adding to, or giving leave to alter or add to, the memorandum or articles of any company shall, within fifteen days after the making thereof, be delivered by the company to the registrar for registration, and if a company makes default in complying with the provisions of this sub-section, the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees. F (8) It shall be lawful for the court upon the application of any petitioner or of any respondent to a petition under this section and upon such terms as to the court appears just and equitable, to make an such interim order as it thinks fit for regulating the conduct of the affairs of the company pending the making of a final order in relation to the application. G (9) Where any manager, managing agent, managing director or any other director or any other person who has not been impleaded as a respondent to any application under this section applies to be made a party thereto, the court shall, if it is satisfied that his presence before the court is necessary H

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A in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the application, direct that the name of any such person be added to the application. (10) In any case in which the court makes an order terminating any agreement between the company and its manager, managing agent or managing director or any of its other directors, as the case may be, the court may, if it appears to it that the manager, managing agent, managing director or other director, as the case may be, has misapplied or retained or become liable or accountable for any money or property of the company or has been guilty of any misfeasance or breach of trust in relation to the company, compel him to repay or restore the money or property or any part thereof respectively with interest at such rate as the court thinks just, or to contribute such sums to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust as the court thinks just, and the provisions of sections 235 and 236 of this Act shall apply as they apply to a company in the course of being wound up. Explanation.- For the purposes of this section, any material change after the 21st day of July, 1951, in the control of a company, or in the case of a company having a managing agent in the composition of the managing agent which is a firm or in the control of the managing agent which is a company, may be deemed by the court to be a fact which would justify the making of a winding-up order on the ground that it would be just and equitable that the company should be wound up: Provided that the court is satisfied that by reason of the change the interests of the company or any part of its members are or are likely to be unfairly and materially prejudiced” G 15.21 After the country attained independence, a Company Law Committee was appointed by the Government of India for the revision of the Companies Act with particular reference to Indian trade and industry. The Committee submitted its report in March-1952. After circulating the Report to all State Governments, Chambers of Commerce, H Trade Associations and other bodies and after examining the inputs

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received, the Companies Act, 1956 (Act no.1 of 1956) was passed. This A Act included a full Chapter in Chapter VI of Part VI, containing elaborate provisions for the prevention of oppression and mismanagement. This Chapter was divided into two parts, with Part A dealing with the powers of the Court/Tribunal and Part B dealing with the powers of the Central Government. Sections 397, 398 and 402 of the Act are of significance and, hence, they are extracted as follows: “397. Application to Court for relief in cases of oppression.- (1) Any members of a company who complain that the affairs of the company are being conducted in a manner oppressive to any member or members (including any one or more of themselves) may apply to the Court for an order under this section, provided such members have a right so to apply in virtue of section 399. (2) If, on any application under sub-section (1), the Court is of opinion - D (a) that the company’s affairs are being conducted in a manner oppressive to any member or members; and (b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up; the Court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit.

398. Application to Court for relief in cases of mismanagement.-(1) Any members of a company who complain- (a) that the affairs of the company are being conducted in a manner prejudicial to the interests of the company; or (b) that a material change (not being a change brought about by, or in the interests of, any creditors including debenture holders, or any class of shareholders, of the company) has taken place in the management or control of the company, whether by an alteration in its board of Directors, or of its managing agent or secretaries and H

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A treasurers, or in the constitution or control of the firm or body corporate acting as its managing agent or secretaries and treasurers, or in the ownership of the company’s shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be B conducted in a manner prejudicial to the interests of the company; may apply to the Court for an order under this section, provided such members have a right so to apply in virtue of section 399. C (2) If, on any application under sub-section (1), the Court is of opinion that the affairs of the company are being conducted as aforesaid or that by reason of any material change as aforesaid in the management or control of the company, it is likely that the affairs of the company will be conducted as aforesaid, the Court may, with a view to bringing to an end or preventing the matters complained of or apprehended, make such order as it thinks fit. 402 - Powers of Court on application under section 397 or

398. - Without prejudice to the generality of the powers of the Court under section 397 or 398, any order under either section may provide for- (a) the regulation of the conduct of the company’s affairs in future;

F (b) the purchase of the shares or interests of any members of the company by other members thereof or by the company; (c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital; G (d) the termination, setting aside or modification of any agreement, howsoever arrived at, between the company on the one hand, and any of the following persons, on the other, namely:- (i) the managing director, H (ii) any other director,

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(iii) the managing agent, A (iv) the secretaries and treasurers, and (v) the manager. upon such terms and conditions as may, in the opinion of the Court, be just and equitable in all the circumstances of the case. (e) the termination, setting aside or modification of any agreement between the company and any person not referred to in clause (d), provided that no such agreement shall be terminated, set aside or modified except after due notice to the party concerned and provided further that no such agreement shall be modified except after obtaining the consent of the party concerned; (f) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under section 397 or 398, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (g) any other matter for which in the opinion of the Court it is just and equitable that provision should be made.” 15.22 After the economy of the country opened up and the national and international economic environment changed, the Government decided to replace the 1956 Act with a new one. Accordingly, the Companies Bill, 2009 was introduced in the Lok Sabha. But this bill was withdrawn and the Companies Bill, 2011 was introduced. This eventually became the Companies Act 2013. Among the many changes brought about by this Companies Act 2013, those relating to protection of minority shareholders is what is relevant for our purpose. In fact, paragraph 5(ix) of the Statement of Objects and Reasons for the Companies Act, 2013 deals with the issue of protection of minority shareholders. It reads as follows: “5. (ix) Protection for Minority Shareholders: (a) Exit option to shareholders in case of dissent to change in object for which public issue was made. H

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A (b) Specific disclosure regarding effect of merger on creditors, key managerial personnel, promoters and non- promoter shareholders is being provided. The Tribunal is being empowered to provide for exit offer to dissenting shareholders in case of compromise or arrangement. B (c) The Board may have a director representing small shareholders who may be elected in such manner as may be prescribed by rules.” 15.23 Chapter XVI of the 2013 Act containing Sections 241 to 246 deals exclusively with “Prevention of Oppression and C Mismanagement.” Sections 241 and 242 are of relevance for our purpose and hence it is extracted as follows: “241. Application to Tribunal for relief in cases of oppression, etc. — (1) Any member of a company who complains that— (a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or (b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company‘s shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter. (2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner H

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prejudicial to public interest, it may itself apply to the A Tribunal for an order under this Chapter:

242. Powers of Tribunal.— (1) If, on any application made under section 241, the Tribunal is of the opinion— (a) that the company‘s affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company; and (b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up, the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. D (2) Without prejudice to the generality of the powers under sub-section (1), an order under that subsection may provide for— (a) the regulation of conduct of affairs of the company in future; E (b) the purchase of shares or interests of any members of the company by other members thereof or by the company; (c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital; (d) restrictions on the transfer or allotment of the shares of the company; (e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case; (f) the termination, setting aside or modification of any agreement between the company and any person other than those referred to in clause (e): Provided that no such H

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A agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned; (g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (h) removal of the managing director, manager or any of the directors of the company; (i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection D Fund or repayment to identifiable victims; (j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause (h); E (k) appointment of such number of persons as directors, who may be required by the Tribunal to report to the Tribunal on such matters as the Tribunal may direct; (l) imposition of costs as may be deemed fit by the Tribunal; (m) any other matter for which, in the opinion of the F Tribunal, it is just and equitable that provision should be made. (3) A certified copy of the order of the Tribunal under sub- section (1) shall be filed by the company with the Registrar within thirty days of the order of the Tribunal. G (4) The Tribunal may, on the application of any party to the proceeding, make any interim order which it thinks fit for regulating the conduct of the company‘s affairs upon such terms and conditions as appear to it to be just and equitable.

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(5) Where an order of the Tribunal under sub-section (1) A makes any alteration in the memorandum or articles of a company, then, notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any, permitted in the order, to make, without the leave of the Tribunal, any alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles. (6) Subject to the provisions of sub-section (1), the alterations made by the order in the memorandum or articles of a company shall, in all respects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act and the said provisions shall apply accordingly to the memorandum or articles so altered. (7) A certified copy of every order altering, or giving leave to alter, a company‘s memorandum or articles, shall within thirty days after the marking thereof, be filed by the company with the Registrar who shall register the same. D

(8) If a company contravenes the provisions of sub-section (5), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term E which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.” 15.24 Thus the English legislative history of the provisions relating to oppression, mismanagement and prejudice, show 3 F milestones, namely (i) the introduction in the year 1862, of the ‘just and equitable clause’ for winding up and the conferment of a limited right on the dissentient member, whenever a transfer or sale took place in the course of winding up proceedings, (ii) the provision of an alternative remedy to winding up, in case of oppression of G minority, in the year 1948 and (iii) the shift from oppression to the ‘unfair prejudice’ quotient in 1980/1985. The journey, in other words, was from “winding up on just and equitable cause” to “oppression” to “unfair prejudice”.

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A 15.25 But in so far as India is concerned, what was incorporated in section 210 of the English Companies Act, 1948, inspired the insertion of section 153-C of the Indian Companies Act, 1913, by way of an amendment in 1951. Then came sections 397 and 398 of the 1956 Act, with certain modifications. An overhaul of these provisions resulted in B Sections 241 and 242 of the 2013 Indian Act, on the model of (and not exact reproduction of) sections 459 to 461 of the English Companies Act, 1985 and sections 994 to 996 of the English Act of 2006. 15.26 The change of language and the consequential change of parameters for an inquiry relating to oppression and mismanagement C from 1951 to 1956 and from 1956 to 2013 and thereafter can be best understood, if the anatomy of the statutory provisions are dissected and presented in a table :-

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15.27 From the table given above, it could be seen that the changes brought about in India in course of time, were material. These changes can be summarised as follows: (i) While the conduct of the company’s affairs in a manner that warrant interference, should be “present and continuing”, under the 1913 Act and 1956 Act, as seen from the usage of the words “are being”, the conduct could even be “past or present and continuous” under the 2013 Act as seen from the usage of the words “have been or are being” (But the conduct cannot be of a distant past); (ii) Prejudice to public interest and prejudice to the interests of any member or members were not among the parameters prescribed in the 1913 Act, but under the 1956 Act prejudice to public interest was included both under the provision relating to oppression and also under the provision relating to mismanagement. Prejudice to the interest of the company was included only in the provision relating to mismanagement. D But under the 2013 Act conduct prejudicial to any member or prejudicial to public interest or prejudicial to the interest of the company are all added along with oppression; (iii) Under the 1913 Act, the Court should be satisfied that winding up under the just and equitable clause will not only unfairly prejudice but E “also materially prejudice” the interests of the company or any part of its members. But in the 1956 Act and 2013 Act, the words “and materially” do not follow the word “unfairly”. Moreover, under the 1956 Act and 2013 Act all that is required to be seen is whether the winding up will unfairly prejudice “such member or members” indicating F thereby that the focus was on complaining/affected members. 15.28 Having thus seen the shift in the Indian legislative policy under Act 52 of 1951 (amending the 1913 Act) and then under the 1956 Act as amended by Act 53 of 1963 and thereafter under the 2013 Act, let us also see how the shift in the legislative policy happened in the G United Kingdom. A table similar to the one given in para 15.26, is presented below insofar as the English Law is concerned:

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15.29 There are a few notable features of the shift that happened E in England. They are (i) from a “conduct oppressive to some part of the members” the focus has shifted to “conduct unfairly prejudicial to the interests of the members generally or of some part of its members”: (ii) conduct prejudicial to public interest or prejudicial to the company’s interest, does not form part of the scheme of English Law; (iii) any actual or proposed act or omission, can also be challenged under F English Law on the ground that it would turn out to be prejudicial; (iv) the question of the Court forming an opinion that the facts would otherwise require an order for winding up on just and equitable ground but that the same will unfairly prejudice the complaining members, does not arise under the English Law any more. G 15.30 But despite the huge shift in England, there appears to be a common thread running in all the enactments, both in India and England. In all the 3 Indian enactments, namely the 1913 Act, 1956 Act and the 2013 Act, the Court is ordained, generally to pass such orders “with a view to bringing to an end the matters complained of”. This sentence H is found in Section 153C(4) of the 1913 Act. It is found in Section 397(2)

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as well as 398(2) of the 1956 Act and it is also found in Section 242 (1) A of the 2013 Act. This is also the common thread that runs through the statutory prescriptions contained in the English Acts of 1948, 1985 and

2006. Therefore, at the stage of granting relief in an application under these provisions, the final question that the Court should ask itself is as to whether the order to be passed will bring to an end the matters B complained of. Having thus seen the development of law, let us now take up the questions of law one after another.

16Copy pinpoint16. Question No. 1 16.1 The first question of law arising for consideration is whether the formation of opinion by the Appellate Tribunal that the company’s C affairs have been or are being conducted in a manner prejudicial and oppressive to some members and that the facts otherwise justify the winding up of the company on just and equitable ground, is in tune with the well settled principles and parameters, especially in the light of the fact that the findings of NCLT on facts were not individually and specifically overturned by the Appellate Tribunal ? D

16.² An analysis of the provisions of Section 241(1)(a) read with clauses (a) and (b) of Sub-section (1) of Section 242 shows that a relief under these provisions can be granted only if the Tribunal is of the opinion – E “(1) that the company’s affairs have been or are being conducted in a manner – (a) Prejudicial to any member or members or (b) Prejudicial to public interest or F (c) Prejudicial to the interests of the company or (d) Oppressive to any member or members and (2) that though the facts would justify the making of a winding up order on the basis of just and equitable clause, such a winding up G would unfairly prejudice such member or members. 16.3 Keeping in mind the above statutory prescription, if we go back to the pleadings, it will be seen that the complainant companies forming part of the S.P. Group pitched their claim in their original petition on the ground: H

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A (i) that the affairs of Tata Sons are being carried as though it was the proprietary concern of RNT; and (ii) that though the oppressive conduct of the respondents was such that it would be just and equitable to wind up Tata Sons under Section 241, but such winding up would unfairly prejudice B the interests of the complainants. 16.⁴ The specific allegations on which the complainant companies (of the S.P. Group) sought relief are as follows:- (i) The abuse of a few Articles of Association and the control exercised by the Tata Trust and its nominee Directors over the C Board of Directors of Tata Sons; (ii) The removal of CPM as Executive Chairman; (iii) Transactions with Mr. C. Sivasankaran of Sterling Infotech and the transactions in which Tata Teleservices got entangled; D (iv) Acquisition of Corus Group Inc of U.K.; (v) Doomed Nano Car project; (vi) The grant of inter-corporate bridge loan to sterling computers; E (vii) The dealings with NTT DoCoMo which eventually led to an arbitration award for a huge sum of money; (viii) The sale of a flat to Mehli Mistry and the grant of huge personal favours to the companies owned and controlled by Mehli Mistry. F 16.5 Each and every one of the allegations forming the basis of the complaint, was dealt with by NCLT and categorical findings based on evidence was recorded by NCLT. The findings recorded by NCLT allegation-wise, are indicated in paragraph 6.1 above. 16.6 None of the above findings, except the one relating to the removal of CPM was specifically and individually overturned by NCLAT. In addition NCLAT focused on the conversion of Tata Sons from a public company to a private company. 16.7 For easy appreciation, we present in the following table, the allegations made in the complaint, the findings recorded by NCLT with an indication whether NCLAT dealt with the same or not:

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Whether A NCLAT Allegation Findings of NCLT dealt with specifically Siva Group Co. – 1. On 03.10.2013, Siva wrote No specific

1. Non-payment of a letter to CPM seeking an finding. B due amount by Siva exit from TTSL in lieu of the Group (Sterling) as financial strain it was facing. per arbitral award On 08.10.2013, RNT wrote to in TTSL- NTT CPM requesting him to meet DoCoMo deal (para Siva to discuss the 218-234) pre dicament, in lieu of C

2. Acquisition of lat ter’s prev ious shares in TTSL by contributions in the history Siva and Temasek of TTSL. However, this was

3. Info leak three year s befor e the pert aining to Docomo issue, which cropped initiation of action up in 2016. (Para 222, 233) D against Siva 2. The loan given by one of

4. Acquisition of the Tata Group Companies Dishnet DSL (Kalimati) to Siva Company (DDSL) from Siva was paid back and Group undertaking given by the company was released. Siva E himself provided personal guarantee for the loan taken from Standard Chartered Bank. Moreover, no Tata Group company paid any money for acquisit ion of F TTSL shares by Siva Group. (Para 228)

3. Ultimately, Siva had to pay its group pro-rata share of the Docomo award. Siva, on 19.09.2016, then sought G damages from Tata Sons for the alleged mismanagement of TTSL, for the ensuing losses incurr ed by it. However, this did not prove any special relationship with H

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A RNT. (Para 221, 230, 233,234)

4. Acquisition price of TTSL by both Siva and Temasek had unanimous approval of the shareholders. (Para 230)

B 5. Transaction was not done not behind the back of CPM and connected parties. (Para 230)

6. The reason for the difference in the acquisition C prices between Temasek (Rs.26/ share) and Siv a Group (Rs.17/share) was owing to more shareholding rights with Temasek. (Para 230)

D 7. CPM made more profits from the acqui sition of shares of TTSL than Siva Group. (the latter had sold its shares to NTT-Docomo in 2008). Co mplainant companies also acquired shares of Tata Teleservices Ltd. at Rs. 15/ per share. (Para 230)

8. NTT-DoCoMo also acquired shares from brother and father of CPM. CPM was also a beneficiary like Siva but this was not disclosed by the complainant companies. The rate at which the petitioners acquired the shares of TTSL is less than the rate at which Siv a acquired them and the gain made by the petitioners by selling sha res of NTT DoCoMo was more than the H

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gain made by the Siva Group. A (Para 230)

9. The acquisition happened in 2006 and it is sought to raise after 10 years, during which period CPM was part of that board and also the B Executive Chairman for a period.

10. No proof on record to show leakage of info

11. It was Mr. Nitin Nohria (Trust Nominee director) and not CPM, who proposed to initiate legal action against Siva. (Para 231)

12. With respect to Tata Capital giving a loan to Mr. Siva, due diligence carried out on the same, and no role in the grant of this loan can be attributed to RNT. (Para 234)

13. The acquis ition of Dishnet DSL (DDSL) from E Siva group took place in

2004. CPM has not argued that he was unaware of this acquisition. Nor has it been argued that RNT made any illicit gain out of it. In fact, it F was commercial decision of TTSL. This issue was brought to the notice of CPM way back in October, 2013, but he never complained earlier. (Para 235) G Neither TTSL nor Kalimati nor Tata Capital were ar r ayed a s par ty to the proceeding.

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A Air Asia India Ltd. Air Asia not made a party.At No specific & V i s t a r a : - the time when resolution for finding. Diversion of funds Joint Venture was placed on through a Global 06.12.2012, CPM was active terrorist. in discussions and was a consenting par ty to t he B same . The said Joint Venture was incorporated on 28.03.2013 and CPM did not raise any issue till his removal in 2016. (Para 242- 244) C CPM contends that the deal was struck with Mr. Hamid Reza Malakotipour who was classified as a Global ter rorist by t he United Nat ions. However, t he all egation of indirectly financing terrorism through the involvement of such third par ties, is se rious and demeaning. (Para 241) After claiming that he has no say in the AirAsia transactions, CPM claims to have protected the interest of the company by limiting its exposure and ensuring no fallback liability. These two claims conflict with each other. (Para 242) With respect to the Joint Venture with Singapore Airlines to set up Vistara, all Air Asia decision are fait accompli upon him, and thus, he is estopped from denying knowledge regarding these transactions. (Para 244) It would be preposterous to allege that RNT funded a H

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terrorist through hawala A with diversion of AirAsia India funds. (Para 245) Mehli Mistry:- The contract for dredging at No specific

1. A warding of Trombay was awarded in finding. dre dging and 1993 and renewed for various B Shipping contracts tenures (5 times) from 2002 (without tenders) to – 2014. CPM held Mehli’s Companies directorship of Tata Power by Tata Power. from 1996-2006 & 2011-

2. Purchase of 2016, but never raised any agricultural land by objection. (Para 258) C RNT at Alibaug in 2004 barging cum dredging 1993 where Aqua contract – with regard to the Farms (in w hich award of contract by Tata Mr. Mehli was a Power to MPCL, there is par t ner) was a nothing on material to prove confirming party to that this caused loss to TPC. the sale deed. (Para 259) D

3. Sale of 2006 Shi pping Contr act B a k h t a w a r awarded by Tata Power to a Apa rtment at consortium (comprising of Colaba to MPCPL MPSPL and Mercator Lines (which belongs to Ltd.) – Letter written by Mr. Forbes Gokak Ltd.) Mehli to Tata Power dated E

04. 05.201 3 pertained to issue of coal storage, which does not pr ove any expropriation or bullying by him. Since, the company of Mr. Mehli was the contractor, F he only wrote to Tata Power to ensure proper coo rdina tion a nd joint decision making to sustain a smooth supply chain to Trombay Power house. (Para G 263)

This (Alibaug) was a regular transfer that took place in

1993. Pr ev ious ly, Aqua H

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A Farms had made payments to the original landowner for purchase, but the sale deed did not fructify. Aqua Farms was made a confirming party, as RNT reimbursed Aqua B Farms for the original payment that it had made to the original land owners. Simply put, the moment RNT reimbursed Aqua Farms, the vendors of the land would C execute the sale deed in favour of RNT. This was a mere sale t ransac tion between two parties, which cannot be used to argue that contracts were bestowed to D Mr. Mehli(Para 253)

No unjust enrichment of RNT at the cost of Company – Forbes Gokak Ltd. not ar rayed as a par ty – E Allegation raised in 2016 of the events which can be traced back to 2002 – This was not a company related affair, as RNT retired from the company and has not been in management since 2012 – Not a case falling under 241. (Para 252) Corus acquisition The allegation that Tata No specific Steel acquired Corus at an finding. inflated price is without basis. (Para 301) The price quoted by Tata Steel was GBP 608 Pence per shar e, w hile their competitors’ final bid was GBP 603 Pence per share. H (Para 301)

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Acquisition of Corus was a A collective decision by Tata Steel. CPM (Director at Tata Stee l) appr oved ev ery resolution of Tata Steel, for entering into auction and for conf irming the f inal acquisiti on sha re pr ice. Acquisition was undertaken following due governance process under the supervision of the Board, wit hout any dissent of shareholders of Tata Steel. (Para 300) To salvage the company from the losses incurred from the Cor us acquisit ion, TSL entered into a merger with D ThyssenKrupp. There is no material to prove that RNT had any role in preventing the same. (Para 303) Tata Motors - Nano It is well established that No specific Project :- RNT was not in the finding. E management of either Tata Motors or the company after retirement. There is not a single instance where the advice of RNT was directly implemente d without F cons iderat ion by the respective Board. (Para 267) Tata Motors and Jayem Auto incorporat ed a Joint Venture. This happened under the stewardship of G CPM. (Para 275) CPM never objected over any visit, corr espondence or investment by RNT in Jayem Auto. (Para 272) H

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A Merely because Tata Motors Finance (TMF) had a loss of Rs. 392 Crores (towards Nano out of Rs.2000 Crores) for financing Nano, it cannot be use d to make a case of mismanagement against RNT. (Para 280) With regard to personal visits of RNT to the Jayem Auto factory and about the enquiries sought apropos to the projects, no personal benefit to RNT or harm to Tata Motors has been proved. (Para 281-282) No ev idence of the UPSI causing prejudice to the interest of Tata Motors has been placed by CPM, upon whom the burden of proof was. (Para 284) Seeking information does not amount to conducting affairs of the company. (Para 285) The correspondences of RNT to CPM regarding the supply of cars to Ola/ Uber, were done to t r y to get into business with either of the two. (Para 290-293) Wellspun Sin ce the acquisition of No specific Acquisition by Tata Welspun was not put up to finding. Power the Board of Tata Sons for prior approval and it came up only after Tata Power had signed the paper s for acquisition, making Tata Sons a f ait accompli, the nominee directors had to indulge in consultations and H

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the same did not tantamount A to interfer ence by the Trusts.(Para 384, 385, 543) The oppres sive CPM’s father was a director No specific nature of Articles at the time when finding. 104B, 121, 121A amendments were made to and 75 B the Articles of Association on 13/09/2000. (Para 371) Article 118 was amended on 06/12/2012 when CPM was chairman. (Para 372) CPM was also a party to the resolution passed on 09/ C 04/2014, amending the ar t icles so as t o confer affirmative rights in favour of the Trust-Nomina ted directors. (Para 373) Article 75 was always in D existence and neither CPM nor his fat her nor the complainant companies ev er made a complaint. (Para 393) E The provision in the The two Trusts, if they really No specific Articles of wished, could have had the finding. Association Board of Directors entirely entitling the two with their nominees. But trusts to have 1/3 they allowed the Articles of of the directors Association only to have the F with affirmative minimum requirement and vote, is prejudicial hence the same cannot be to the interests of termed as oppressive of the the members and minority. (Para 419) the interests of the company G

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A 16.8 NCLAT, being an Appellate Tribunal, conferred with the power under sub-Section (4) of Section 421 to confirm, modify or set aside the order of NCLT, can be taken to be a final court of fact. An appeal from the Order of the NCLAT to this Court under Section 423 is only on a question of law. Considering the nature of the jurisdiction conferred upon NCLAT, it is clear that the findings of the NCLT, not specifically modified or set aside by NCLAT should be taken to have reached finality, unless the parties aggrieved by such non-interference by NCLAT have approached this Court, raising this as an issue. Though SP group has also filed an appeal in C.A. No. 1802 of 2020, the grievance aired therein, as seen from para 3 of the memorandum of appeal, is limited to the failure of NCLAT to grant certain reliefs. The failure of NCLAT to specifically overturn the findings of fact recorded by NCLT, is not assailed in the SP group’s appeal. Therefore, we have no hesitation in holding that the allegations relating to (i) transactions with Siva and Sterling Group of Companies; D (ii) Air Asia; (iii) Transactions with Mehli Mistry; (iv) the losses suffered by Tata Motors in Nano car project; and (v) the acquisition of Corus E reached finality. 16.9 The findings recorded by NCLAT for the grant of reliefs, revolved primarily around the removal of CPM, the affirmative voting rights, interference by nominee Directors and the conversion of Tata Sons into a private company. In other words, these are the 4 areas in F which NCLAT can be taken to have undertaken a scrutiny and reversed the findings of NCLT. Therefore, for answering the first question of law, we need to focus mainly on these issues on which NCLAT expressly overruled NCLT. 16.10 Out of these 4 specific issues on which NCLAT overruled G NCLT, 3 issues will also be covered in our discussion on questions of law 4 and 5.. Therefore, we shall take up in this chapter, the question (i) whether the removal of CPM could have been the basis for the allegation that the company’s affairs have been or are being conducted in a manner oppressive or prejudicial to the interests of some of the members and (ii) H

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whether the findings recorded by NCLAT about the existence of just and equitable clause is in accordance with the well established principles of law. Removal of CPM 16.11 CPM was first removed only from the post of Executive Chairman of Tata Sons, but not from the Directorship, by the resolution of the Board dated 24.10.2016. This acted as the trigger point for CPM, to launch an offensive. On the very next day namely 25.10.2016, CPM wrote a mail alleging total lack of corporate governance and failure on the part of the directors to discharge their fiduciary duties. He also called all the Trust nominee directors as postmen. Though the mail was labelled as ‘confidential’, a copy of the mail landed up with the media creating a “sensation”. NCLT recorded a finding that CPM who owes a duty to explain this leakage of confidential mail, could not provide a satisfactory answer and that therefore, by virtue of section 106 of the Evidence Act, the leakage has to be traced to CPM. NCLAT did not overrule this finding. D

16.12 The mail compelled Tata sons to issue a Press Statement on 10.11.2016. This was followed by the removal of CPM from the Directorship of Tata Industries Limited, Tata Consultancy Services Limited and Tata Teleservices Limited, all of which happened during the period from December 12 to December 14, 2016. Seeing clearly the course of destiny (which was actually set in motion by none other than himself), CPM resigned from other operating companies of Tatas such as The Indian Hotels Company Limited, Tata Steel Limited, Tata Motors Limited, Tata Chemicals Limited and Tata Power Limited, on 19.12.2016, on the eve of the Extraordinary General Meetings of those companies, convened for considering resolutions for his removal. On the very next day namely, 20.12.2016 the complainant companies, of which CPM is the pivot, filed a petition C.P.No.82 of 2016 before NCLT, Mumbai, under Sections 241 and 242 read with Section 244 of the Companies Act, 2013. G 16.13 Around this time, as if by coincidence, the Principal Officer of Tata Sons received a letter dated 29.11.2016 from the Deputy Commissioner of Income Tax (Exemptions) seeking certain information under Section 133(6) of the Income Tax Act, 1961 in the case of Tata Education Trust. Tata Sons, through a reply dated 09.12.2016 furnished H

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A necessary information along with the requested documents. The Deputy Commissioner of Income Tax also called for some additional information by subsequent letters, and the information so called for, was also furnished. 16.14 Claiming that a mail dated 20.12.2016 issued by the Deputy B Commissioner of Income Tax seeking further information under Section 133(6) was copy-marked to him, CPM sent a reply to the Income Tax department confirming (i) that the Directors appointed by Tata Trust controlled the decision making processes by virtue of the affirmative voting rights; (ii) that RNT and Soonawala have on many occasions sought prior information and consultation; (iii) that the conduct of the C Trustees posed several regulatory risks; and (iv) that the office of RNT, in his capacity as Chairman Emeritus was funded by Tata Sons, including the cost of his overseas travel by private jet. To this letter to the Deputy Commissioner of Income Tax was enclosed certain files purportedly containing the information sought. D 16.15 Upon coming to know of CPM’s letter to the Deputy Commissioner of Income Tax, Tata Sons lodged a protest through a letter dated 26.12.2016. It was followed by a legal notice issued by Tata Sons to CPM on 27.12.2016 pointing out that he was guilty of breach of confidentiality and that he had passed on confidential and sensitive information contained in 4 box files, without any authority. CPM sent a legal reply dated 05.01.2017 claiming that he had a statutory obligation to cooperate with Income Tax authorities. As if to display his courage of conviction, CPM sent another letter dated 12.01.2017 to the Deputy Commissioner of Income Tax sending one more file and assuring the authorities that he would continue to check the records and submit any additional data/information as and when available. 16.16 In the light of whatever transpired as narrated above, a “Special Notice and Requisition” was moved on 03.01.2017 convening an EGM of Tata Sons for considering the removal of CPM as Director of Tata sons. It must be remembered at this stage that by the Resolution G of the Board of Tata Sons dated 24.10.2016, CPM was merely removed from the post of Executive Chairman, but he continued to be a member of the Board as a Non Executive Director even after 24.10.2016. It must also be remembered that it was during his continuance as the member of the Board that CPM exchanged correspondence/legal notice H

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with Tata Sons and also passed on information along with certain files, A to the Income Tax authorities claiming to be a very “law abiding citizen”. 16.17 Since the EGM of Tata sons was scheduled to be held on 06.².2017, for considering the resolution for CPM’s removal from the Directorship, the Companies (S.P. Group) which filed the complaint before the NCLT moved an interim application before NCLT for a stay of the B EGM. NCLT declined stay and the appeal against the refusal to grant stay was also dismissed by NCLAT. Therefore, the EGM proceeded as scheduled on 06.².2017 and CPM was removed from the Directorship of Tata Sons. In his place Mr. N. Chandrasekharan, was appointed as Executive Chairman. C 16.18 In the Company Petition as it was originally filed on 20.12.2016, the complainant companies had sought a set of 21 reliefs, one of which was for a direction to the respondents (the company and its directors) not to remove CPM (who was cited as R-11 in the original petition) from the directorship of Tata Sons. This was in prayer clause (F) of Paragraph 153 of the main company petition. This prayer was in D direct contrast to the reliefs sought in prayer clauses (A) and (B). Prayer clause (A) was for superseding the existing Board of Directors and appointment of an Administrator. Prayer in clause (B) was for appointment of a retired Supreme Court Judge as Non Executive Chairman and for appointment of a new set of independent Directors. E 16.19 After the dismissal of the interim application moved for stalling the EGM scheduled to be held on 06.².2017 and after the passing of the resolution for the removal of CPM in the EGM held on 06.².2017, the complainant companies moved an application for amendment of the original petition so as to include two additional prayers namely (i) F reinstatement of the representative of the complainant companies on the Board of Tata Sons; and (ii) amendment of the Articles of Association to provide for proportional representation. 16.20. However, eventually the prayers made in clauses (A), (B) and (C) were not pressed. Prayers in clauses (F), (Q) & (R) were also G not pressed on the ground that they had become infructuous. In Paragraph 3.⁴ above we have extracted the reliefs as originally sought in the main company petition and in the table in Paragraph 4.11 we have indicated the prayers additionally made and the reliefs either given up or sought to be modified. H

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removal from Directorship can never be held to be an oppressive or A prejudicial conduct, was sufficient to throw the petition under section 241 out, especially since NCLAT chose not to interfere with the findings of fact on certain business decisions. 16.25 The subsequent conduct on the part of CPM in leaking his mail dated 25-10-2016 to the Press and sending replies to the Income B Tax Authorities enclosing 4 box files, even while continuing as a Director, justified his removal even from the Directorship of Tata Sons and other group companies. A person who tries to set his own house on fire for not getting what he perceives as legitimately due to him, does not deserve to continue as part of any decision making body (not just the Board of a company). It is perhaps this realisation that made the complainant companies give up their original prayer for restraining the company from removing CPM and singing a different tune seeking proportionate representation on the Board. 16.26 For assailing the decision to remove CPM from the Chairmanship of Tata Sons, it is contended (i) that Tata Group performed exceedingly well under his stewardship; (ii) that the Nomination and Remuneration Committee for the Financial Year 2015-16 endorsed his performance and even recommended a pay hike and performance linked bonus; and (iii) that the Board unanimously approved these recommendations on 29.6.2016 just four months before his unceremonious removal. E 16.27 First of all, the above contention is in direct conflict with the entire foundation on which the whole case of the complainant companies was erected. If CPM and the members of the Nomination and Remuneration Committee as well as the entire Board were on the same page till 29.6.2016 that the company was doing well under the stewardship of CPM, then there can be no allegation that the company’s affairs were conducted in a manner oppressive or prejudicial to the interest of anyone, namely the company or the minority, at least until 29.6.2016. On the contrary if the company’s affairs have been conducted in a manner oppressive or prejudicial, even before 29.6.2016, the other members of the Board and CPM could not have formed themselves into a mutual admiration society to laud CPM’s performance and CPM acknowledging that the company was doing well when he was in the driver’s seat. 16.28 An important aspect to be noticed is that in a petition under Section 241, the Tribunal cannot ask the question whether the removal of a Director was legally valid and/or justified or not. The question to be H