NCLT Waives One-Tenth Shareholding Mandate, Allows Former ICEX Promoters to Maintain Oppression & Mismanagement Case [Read Order]

The Ahmedabad Bench of the National Company Law Tribunal (NCLT) recently waived the statutory one-tenth shareholding requirement under Section 244(1)(a) of the Companies Act, 2013, permitting former promoters and shareholders of the Indian Commodity Exchange Limited (ICEX) to maintain an oppression and mismanagement case against the commodity and derivatives exchange’s management.

The plea was instituted by Kailash Ramkishan Gupta - a former promoter and shareholder of ICEX and Neptune Overseas Limited, an Ahmedabad-based shareholder company. The applicants preferred the present application against the ICEX management on allegations of oppression and mismanagement, including undervalued asset sales, excessive managerial remuneration and statutory violations under the Companies Act.

The petitioners sought a waiver of the statutory requirement that shareholders must collectively hold at least 10% issued share capital of the company that they seek to initiate proceedings against under Sections 241-242 of the Companies Act, 2013.

The applicants, represented by Tirth Nayak, submitted before the Tribunal that they collectively held over 5,54,20,499 equity shares in ICEX, which in ordinary circumstances would satisfy the 10% threshold required to initiate proceedings under Sections 241-242 of the Companies Act.

However, 4,82,09,060 shares belonging to Neptune Overseas Limited had been provisionally attached by the Enforcement Directorate (ED) under the Prevention of MoneyLaundering Act (PMLA). The applicants argued that this attachment was only preventive and did not affect their ownership or voting rights, thereby constituting exceptional circumstances warranting a waiver of the threshold requirement.

Ravi Pahwa represented ICEX and its executives and contested the maintainability of the application contending that attached shares cannot be reckoned as the title is sub-judice under PMLA.

Prutha Bhavasar appeared for the Enforcement Directorate (ED) and submitted that the attachment is confined to the shares as "proceeds of crime" under Section 2(1)(u) of PMLA, without impinging on the Applicants' administrative control or voting rights in ICEX.

The matter was heard by a Bench comprising Shammi Khan (Judicial Member) and Sanjeev Sharma (Technical Member).

Highlighting exceptional circumstances, the Tribunal noted that ICEX, once a SEBI-recognised commodity derivatives exchange had been de-recognised for regulatory violations and was currently in financial distress.

The alleged acts of oppression and mismanagement including those of undervalued asset sales, excessive managerial remuneration and non-compliance with statutory obligations were found to be prejudicial to shareholders’ interests.

The bench referred to the Supreme Court decision in Hind Overseas Private Limited vs. Raghunath Prasad Jhunjhunwalla & Anr. (1976) to note that in the absence of any final order under PMLA divesting the Applicants of their proprietary rights, the attached shares must be considered as part of their holding for the limited purpose of eligibility under Section 244(1)(a).

NCLT referred to the test in the Appellate Tribunal decision in Cyrus Investments Private Limited & Anr. vs. Tata Sons Limited & Ors. (2017), NCLT noted that the former SEBI-recognized commodity exchange functions without oversight and faces persistent financial distress; and the promoters have demonstrated prima facie oppression and mismanagement.

Finding that the case merited further scrutiny, the NCLT allowed the waiver application, directing that the main company petition be maintained and proceed on its merits. Notices were issued to all respondents, and the matter was listed for further hearing on December 4, 2025.

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