Introduction

The National Company Law Tribunal (“NCLT”) has frequently been scrutinized with respect to the precise scope of its powers. Although the statute entrusts the NCLT with authority over specific company-related disputes, it is not a conventional civil court. This distinction has led to recurring debates on whether the NCLT can decide issues involving broader civil or contractual elements. In Mrs. Shailja Krishna v. Satori Global Limited & Ors., the Supreme Court examined one such issue—whether the NCLT can consider allegations of fraud, coercion, and undue influence while deciding oppression and mismanagement petitions. The Court concluded that where such allegations are integral to the dispute, the NCLT has full jurisdiction to adjudicate them.

Background

The dispute centred around Sargam Exim Private Limited, later renamed Satori Global Limited (the “Company”), which was promoted by Mrs. Shailja Krishna and her husband, Mr. Ved Krishna. Over the years, Mrs. Krishna acquired an almost complete shareholding—39,500 of 40,000 shares— thereby rendering her, in effect, the sole shareholder of the Company.

In December 2010, two key events occurred on the same day: her resignation as director was recorded, and her entire shareholding was shown as transferred to her mother-in-law, Mrs. Manjula Jhunjhunwala, purportedly through a gift deed. At that time, Mrs. Krishna’s marriage had already broken down, and divorce proceedings were underway. She later asserted that she had been compelled to sign blank papers, which were subsequently converted into share-transfer documents without her consent.

Challenging the share-transfer and her alleged forced resignation, she lodged police complaints and eventually approached the Company Law Board (whose jurisdiction was later transferred to the NCLT) under the oppression and mismanagement provisions. The NCLT ruled in her favour—reinstating her as executive director and declaring her the lawful owner of the 39,500 shares. The NCLAT reversed this decision, holding that the NCLT could not examine allegations of fraud or coercion. Mrs. Krishna appealed to the Supreme Court.

Legal Framework

The dispute arose under Sections 397 and 398 of the Companies Act, 1956, which allowed members to challenge oppressive conduct or mismanagement. Their modern counterparts under the Companies Act, 2013, are Sections 241 and 242. Section 241 enables members to complain about conduct prejudicial to the company, the public interest, or any member, while Section 242 grants the NCLT extensive remedial powers to bring an end to such grievances.

These provisions are intentionally broad, giving the Tribunal wide discretion both in deciding disputes and in shaping appropriate relief. The core question before the Supreme Court was whether this broad remit includes the authority to rule on issues of fraud and coercion when they form the foundation of the oppression and mismanagement claims.

Court’s Findings

1. On Maintainability

The respondents argued that the petition was barred under Section 399 of the 1956 Act because Mrs. Krishna did not meet the minimum shareholding threshold. The Supreme Court dismissed this objection, noting that the very subject of challenge was the validity of the share transfer itself. If the transfer was fraudulent, she remained the majority shareholder; thus, she could not be denied access to the statutory remedy.

2. On the NCLT’s Jurisdiction

The Court affirmed that the NCLT’s jurisdiction is sufficiently expansive to decide all issues that are inseparable from oppression and mismanagement proceedings. Where allegations of fraud, coercion, or manipulation are fundamental to resolving the dispute, the NCLT cannot sidestep them. The Court referred to earlier judgments, including Tata Consultancy Services Ltd. v. Cyrus Investments, to reiterate that the Tribunal’s function is not mechanistic but remedial—designed to provide meaningful and effective relief. Accordingly, assessing the validity of the gift deed was well within its authority.

3. On the Share Transfer and Gift Deed

The Supreme Court upheld the NCLT’s decision on the ground that the Tribunal possesses wide and comprehensive jurisdiction under the statutory scheme governing oppression and mismanagement. Relying on the principles laid down in Radharamanan vs Chandrasekara Raja, Kamal Kumar Dutta vs Ruby General Hospital Ltd., and Tata Consultancy Services Ltd. v. Cyrus Investments (P) Ltd., the Court reaffirmed that the NCLT, as the successor to the CLB, functions as an original quasi-judicial authority empowered to decide all issues that are incidental or integral to the allegations of oppression and mismanagement. Since the validity of the gift deed lay at the heart of the dispute and directly impacted the rights and management structure of the company, the NCLT was fully competent to examine its legality. In the absence of any statutory bar restricting such adjudication, the Supreme Court held that the NCLT had correctly exercised its jurisdiction, and therefore its decision warranted affirmation. On this basis, the Court held the gift deed and the resulting share transfer to be null and void.

Conclusion

The Supreme Court’s ruling in Shailja Krishna v. Satori Global Limited clarifies and reinforces the breadth of the NCLT’s jurisdiction by affirming its competence to adjudicate allegations of fraud when such issues lie at the core of oppression and mismanagement proceedings. The decision marks a significant advancement in the protection of shareholder rights, ensuring that attempts to dilute or undermine a shareholder’s participation through coercion, fraudulent conduct, or procedural subterfuge fall squarely within the Tribunal’s scrutiny. By recognizing that inquiries into fraud are permissible where they are integral to the matters complained of, the Court has strengthened the NCLT’s position as a singular and efficacious forum for resolving complex corporate disputes. Consequently, the ruling reduces the necessity for parallel civil actions and promotes expeditious and coherent adjudication within the specialized corporate law framework.

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