Non-Declaration Of Beneficial Ownership U/S 9 Companies Act Does Not Amount To Oppression & Mismanagement: NCLAT New Delhi

The appeal was filed under section 421 of the Companies Act, 2013, against the order of the NCLT Jaipur. The application was dismissed at its threshold.

It was the case of the appellant that he is the beneficial owner of the 5000 equity shares in the Respondent No. 1 Company. Respondent No. 3 has wrongly acquired its 50% shares, which has been unequivocally acknowledged by both respondents under an MoU. However, both the respondents are now attempting to take undue advantage. Appellant alleged the wrongful acquisition and non-declaration of beneficial ownership by the respondents under section 89 of the Companies Act, 2013.

The company's record reflected that, admittedly, the appellant had himself transferred the shares. The MoU executed between the parties indicates that the appellant had borrowed money and the properties were transferred as securities to Respondents No. 2 and 3. As per the MoU the respondents were required to re-transfer the shares back to the appellant. However, the appellant didn't make any such payment to the respondents.

A civil suit was also filed by the appellant for the case wherein the court ruled that the disputed property belongs to the respondent company.

The respondents contended the maintainability of the petition, arguing that the appellant is neither a member nor a shareholder of Respondent No. 1 company and the petition was never filed qua the affairs of the company and rather was filed to execute the MoU between private parties.

Respondents also submitted that the appellant didn't make any payment towards the amount of the loan and interest; therefore, it cannot seek status quo on the sale of property. The respondents assured that the appellant would obtain his share from the sale proceeds after deducting the loan liabilities.

The NCLAT observed that the NCLT has rightly held that the non-adherence of Section 89 cannot be considered as an act of oppression and mismanagement.

The tribunal observed that section 89 casts a duty upon the appellant to make the declaration under section 89, and avoiding such a declaration makes the appellant himself liable for penalties; therefore, it cannot be treated as an act of oppression and mismanagement.

Accordingly, the appeal was dismissed.

Case Name: Satyanarayan Gupta Appellant Vs Shivangan Realestate Pvt Ltd & Ors

Case No.: COMPANY APPEAL (AT) No.228 of 2025

Coram: Justice Yogesh Khanna (Member-Judicial) and Mr. Ajai Das Mehrotra (Member-Technical)

Order Date: 09.10.2025