Skip to main content

NCLAT junks plea of Liberty Shoes’s former CEO seeking ease of norms to sue firm

He was removed as an executive director of Liberty Shoes on September 30, 2023, and ceased to be the chief executive officer (CEO) of the company

New Delhi: Appellate tribunal NCLAT has dismissed the petition of Adesh Kumar Gupta, former CEO and Executive Director of Liberty Shoes, seeking an exemption from minimum shareholding norm to file a case of oppression and mismanagement against the company.

Gupta has a 5.83% shareholding in Liberty Shoes.

He was removed as an executive director of Liberty Shoes on September 30, 2023, and ceased to be the chief executive officer (CEO) of the company.

However, the company informed the stock exchange about his removal from the board on November 21, a day after the Chandigarh bench of the National Company Law Tribunal (NCLT), on November 20 last year, dismissed his earlier plea.

Gupta then moved NCLAT and sought a waiver under section 244 of the Companies Act to file a petition under Section 241, alleging oppression and mismanagement against him by the majority promoter block on the board.

As per norms, a plea alleging oppression and mismanagement under Section 241 should be backed by at least one-tenth of the total number of the issued share capital of the company.

The National Company Law Appellate Tribunal (NCLAT) in its latest order upheld the NCLT’s decision and said Gupta’s argument that this case presents exceptional circumstances meriting the grant of a waiver is “not convincing”.

Perusal of the materials on record and the circumstances of the petition and the appeal “do not indicate any exceptional circumstances” in which such a waiver could be granted, the appellate tribunal noted.

“We conclude that the NCLT acted within its jurisdiction and by the principles of law while denying the waiver under Section 244 of the Companies Act, 2013,” the NCLAT said.

The appellate tribunal also rejected Gupta’s contentions that waiver had been given earlier to two firms of the late Cyrus Mistry in a similar case against Tata Sons, and said they “do not sufficiently undermine the validity of the NCLT’s decision”.

“We do not find any infirmity in the orders of the NCLT. The appeal along with the IA is therefore dismissed, and the impugned order dated November 20, 2023,” said a two-member bench comprising Justices Yogesh Khanna and Arun Baroka in its 61-page-long order.

NCLAT also observed that the NCLT has the power to waive the requirement of minimum shareholding in special circumstances. Besides, the threshold for granting a waiver under Section 244 is high and is intended to be an exception rather than the rule.

“The Petition, as highlighted in the impugned order, revolves significantly around the appellant’s removal as a director and the related grievances. Section 241 is not intended to address such personal grievances, but is meant to protect the interests of the company and its shareholders against genuine acts of oppression and mismanagement,” said NCLAT.

The NCLT was, therefore, correct in refusing the waiver based on its assessment that the petition does not substantiate a case of oppression and mismanagement as envisaged under the Companies Act, it said.

“We find that the appellant’s allegations of oppression and mismanagement are closely tied to personal grievances regarding directorial disputes, which are not intended to be addressed under Section 241,” it said.

Liberty Shoes was started by P D Gupta (father of Adesh Kumar Gupta) along with his brother D P Gupta. Later, their nephew Raj Kumar Bansal was added to the business. Mother of Raj Kumar Bansal was the sister of P D Gupta and D P Gupta.

Thus, there are three promoter families in Liberty Shoes which was incorporated in 1986. In 1995, Liberty Shoes was listed on the BSE. P D Gupta remained Chairman till his death in 2003.

In 2004, Adesh Kumar Gupta was appointed as CEO of the company. He along with about 10 family members of the second generation of the founders took active roles in the company. However, disputes arose among shareholders and directors essentially between PD Group, DP Group, and Bansal Group.

The post NCLAT junks plea of Liberty Shoes’s former CEO seeking ease of norms to sue firm appeared first on India Retailing.



from India Retailing https://ift.tt/9yRKN5b
via IFTTT
Labels:

Comments

Post a Comment

Popular posts from this blog

Eagle Labs launches impirica CBD brand

ST. PETERSBURG, Fla. — Eagle Labs has launched impirica, a new brand of CBD intended to eliminate consumer fear, and increase confidence, in trying the exciting new cannabidiol category. Michael Law Although most Americans have now heard about CBD, many are very confused and concerned about product quality. This is inhibiting trial in the category and holding back conversion into sales. In fact, a 2017 study by Johns Hopkins University found that two out of three CBD products on the shelf did not contain the amount of CBD reflected on the label. Furthermore, in 2018 and 2019, the FDA sent notices to a substantial number of CBD manufacturers advising them of serious concerns about product quality or egregious medical claims. The impirica brand looks different than most CBD brands — the brand name itself connotes testing and trust, says Eagle Labs chief commercial officer Michael Law. “It doesn’t use the traditional category colors of browns and greens, and you won’t find a hemp...
70 comments
Read more

Sagar Daryani, CEO and Co-founder – Wow! Momo & Saga: From a Kiosk to a Kingdom

Sagar Daryani’s entrepreneurial odyssey from humble beginnings to pioneering success has redefined the landscape of food startups in India. Co-founding Wow! Momo, he has spearheaded the growth of the largest indigenous QSR chain in the country, crafting a remarkable saga of triumph The Genesis: A Visionary Venture Takes Root In 2008, armed with a mere Rs. 30,000 and boundless ambition, Sagar Daryani and Binod Homagai embarked on their entrepreneurial journey while still pursuing their graduation in B.Com Hons from St. Xavier’s College, Kolkata, even before their college results were out. They knew the value for money and boot-strapped to plough back profits and grow their venture. Sagar spearheaded brand expansion, brand creation, and marketing and retail operations. Grew across the city with a strong consumer focus. The early days were hard but keeping track of the money flow was even harder. Believing in the concept of ‘1 rupee saved is 5 rupees earned’, and the lessons they lear...
1 comment
Read more

Homegrown ice cream chain HOCCO to open 250 stores, eyes Rs 400 crore by FY26

Ankit Chona, Founder and Managing Director of HOCCO, delves into the company’s revenue model, growth strategies, and vision for the future… Bengaluru: HOCCO (House of Chonas Collaborative) , the Ahmedabad-based ice cream and quick-service restaurant (QSR) chain, boasts a rich legacy spanning over 70 years, with roots tracing back to pre-independence India. The Chona family has been deeply entrenched in the food industry since 1944, originally operating in undivided Pakistan. Following the Partition, Satish Chona , an engineer with British Overseas Airways Corporation, relocated from Karachi to India. After journeying through multiple cities, he ultimately settled in Ahmedabad, where he established his first QSR outlet in 1953. Three decades later, he expanded into the casual dining segment, launching a restaurant in Baroda while continuing the family’s ice cream manufacturing business. However, in 2017, the company sold its ice cream division to a South Korean firm, shifting its fo...
Post a Comment
Read more