Applicable Act: The Companies Act, 1956 (The Act)
ALLEGATIONS
The informant alleged the defendant of an act of oppression under Section 397 and 398 of the Act with respect to the issue of preferential allotment of convertible warrants at Rs. 90 to other person against its offer of Rs. 120.
BRIEF OF FACTS
The securities market regulator, SEBI and the Securities Appellate Tribunal (SAT) refused to intervene in the above matter since the said allotment was made with the voting of majority shareholders. SEBI held that it would intervene only when the interests of the shareholders, in any manner are adversely affected because of the act of the company and since the shareholders had voted in majority, SEBI would have no adverse remarks on the mode adopted by the company for mobilising capital for the working needs. Both the authorities were of the view that an action could lie before the Company Law Board (CLB) on the grounds of oppression.
The informant preferred an appeal to the Supreme Court against the order of (SAT).
CONCLUSION
Even though SEBI and SAT had approved the allotment and declined to interfere with the matter, the same lacked honesty and integrity and amounted to an act of oppression. The jurisdictions under which SEBI / SAT and CLB operate are distinct and not overlapping.
DECISION
The application was dismissed and it was held that a petition lied before the CLB for an act of oppression under Section 397 and 398 of the Act.
BRIEF OF FACTS
The securities market regulator, SEBI and the Securities Appellate Tribunal (SAT) refused to intervene in the above matter since the said allotment was made with the voting of majority shareholders. SEBI held that it would intervene only when the interests of the shareholders, in any manner are adversely affected because of the act of the company and since the shareholders had voted in majority, SEBI would have no adverse remarks on the mode adopted by the company for mobilising capital for the working needs. Both the authorities were of the view that an action could lie before the Company Law Board (CLB) on the grounds of oppression.
The informant preferred an appeal to the Supreme Court against the order of (SAT).
CONCLUSION
Even though SEBI and SAT had approved the allotment and declined to interfere with the matter, the same lacked honesty and integrity and amounted to an act of oppression. The jurisdictions under which SEBI / SAT and CLB operate are distinct and not overlapping.
DECISION
The application was dismissed and it was held that a petition lied before the CLB for an act of oppression under Section 397 and 398 of the Act.
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