NCLT Ahmedabad dismisses oppression plea, citing insufficient grounds for compulsory share purchase despite inter-shareholder conflict.
Shareholder Disputes Alone Don’t Warrant Buy-Out: NCLT
The National Company Law Tribunal (NCLT), Ahmedabad, dismissed a petition under Section 241/242 of the Companies Act, 2013 alleging oppression, holding that mere issuance of director removal notices and fears of future share dilution did not constitute oppressive conduct.
The tribunal reiterated that not every dispute between shareholders amounts to oppression under the Act. The threshold requires a persistent course of conduct that unfairly prejudices minority interests. Isolated management decisions or procedural disagreements, absent mala fide intent, fall short of triggering a compulsory buy-out.
Implications for Practitioners
Practitioners must carefully evaluate whether shareholder grievances meet the statutory standard of oppression before filing. The decision emphasizes the need to prove substantive unfairness, not just procedural discomfort or business strategy disagreements.
