Non-declaration of dividend and appointment/ removal of directors cannot be treated as act of Oppression and Mismanagement | Only being of family-controlled companies cannot be a ground to treat these as quasi-partnership | If Chairman uses the Casting Vote not in the interest of the Company, the members can challenge the same – Venus Petrochemicals (Bombay) Pvt. Ltd. and Ors. Vs. Sunil M. Thakkar and Ors. – NCLAT New Delhi
In this important judgment, Hon’ble NCLAT held that:
(i) The term “oppressive” is no where defined in the companies act and what is required to be looked into the intention of action taken by the majority of shareholder.
(ii) Technically and legally speaking the appointment and removal of directors cannot be treated as act of “oppression and mismanagement”.
(iii) The distribution of dividend or otherwise, is the financial and the corporate decision of the company and cannot be treated as oppressive act.
(iv) Only being of family controlled companies cannot be a ground to treat these as quasi-partnership and the intent and understanding, whether explicit or implicit, or by acts or by deeds, of the concerned parties would be and should be the relevant factors.
(v) If the chairman uses the casting vote not in the interest of the company, perhaps the members of the company can challenge the same which has been done in the present case by the Respondents.
