The National Company Law Appellate Tribunal(NCLAT) has held that breach of terms of the settlement agreement would not fall under Oppression and Mismanagement under Companies Act, 1956.
M/s. Pramerica ASPF – II Cyprus Holding Limited, the Petitioner/Appellant before the Company Law Board, Chennai under Sections 397, 398, 399, 402, 406 & 542 of the Companies Act, 1956 (`Act’) seeking to declare the Meetings of the Board of Directors of the first Respondent Company/M/s. MetroCorp Infrastructure Ltd. (MetroCorp’), held as `null & void’ and to declare the `Mortgage Deeds’ as `null & void’ and ordered for cancellation of the said Deeds of Mortgage.
M/s. MetroCorp approached one `Bekman Helix India Consulting Private Ltd.’ (`BHIC’) for funds for the development of a `Residential Project’ and BHIC in return approached the `Petitioner’, which is an `Investment Company’, to make a Foreign Direct Investment in the `Real Estate and Infrastructure Business of MetroCorp’. Accordingly, the `Petitioner’/`Appellant’ invested a sum of Rs.110Crs./- by subscribing to Rs.2,20,000/- Compulsory Convertible Debentures (`CCD’) having a face value of Rs.5,000/- each.
A `Shareholder’s Agreement’, `Put and Call Option Agreement’ and `Cash Management Agreement’ was entered into between the `Petitioner’ and MetroCorp on 12.02.2009 to effectuate the FDI.
The `Appellant’ has challenged four impugned Board Meetings 02.11.2009, 10.11.2009 & 25.11.2009, on the ground that no `Notice’ was issued to the `Appellant’ and further despite several directions by the NCLT vide Orders dated 11.12.2018, 10.01.2019, 05.02.2019 & 25.02.2019, the second and third Respondents have failed to provide any documentary evidence of `Notices’ having been served.
It was submitted that NCLT has failed to take into account that the documents filed by Respondents are fabricated as it can be seen from the `Notice’ dated 24.06.2013 for convening a Meeting on 30.07.2013 was issued by the second Respondent in his capacity as a Director and on the same date the alleged `Notice’ was issued by Members for convening an EOGM under Section 169(6) of the Act signed by R-2 and addressed to the Board.
It was evident that fraud was committed by the Respondents as the Plots which were meant to finance the purchase of the Appellant’s shares, have already been sold by the Respondents.
“The scope and objective of Sections 397, 398 & 399 of the Act defining `Oppression and Mismanagement’ does not entail the `Tribunal’ to adjudicate on the issues arising from the facts of the attendant case on hand. Even if there is any breach of the Terms of Settlement, it cannot be construed as an issue which would fall within the ambit of the definition of `Oppression and Mismanagement’ as defined under the ‘Act’. “ the two-member bench comprising Justice M. Venugopal, Member (Judicial) and Ms Shreesha Merla, Member (Technical) held.
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