Waiver Under Proviso to Section 244(1) Is Not a Routine Remedy: NCLT Mumbai Denies Relief to Minority Shareholder
Background
In Sudhir Thackersey v. Capricon Realty Pvt. Ltd. (I.A. 127 (MB)/2026 in C.P. 95 (MB)/2026), the Mumbai Bench of the National Company Law Tribunal considered the circumstances in which a minority shareholder may be exempted from the eligibility requirements for filing a petition alleging oppression and mismanagement.
The Applicant was a promoter-director of Capricon Realty and had served as its Chairman and Managing Director for several years. He held 122 shares, constituting approximately 1.37% of the company. He contended that the company was a closely held family business conducted on the basis of mutual trust, as reflected in family MoUs of 2011 and 2014. According to him, following the implementation of a 2020 MoU, Respondent No. 2, a member of the family, consolidated his shareholding and exercised majority control to exclude the Applicant from management, including by curtailing his tenure as Managing Director.
The Applicant sought to file a petition under Sections 241 and 242 of the Companies Act, 2013. Section 244(1) requires a petitioner to hold at least one-tenth of the issued share capital, or to have the support of one-tenth of the total number of members. As he did not satisfy this requirement, the Applicant sought a waiver under the proviso to Section 244(1). The Respondents opposed the application, contending that other eligible shareholders existed and that the disputes were already pending before the Bombay High Court.
Issue
Whether the Applicant had demonstrated an “exceptional circumstance” warranting waiver of the eligibility requirement under Section 244(1)(a) of the Companies Act, 2013?
Tribunal’s Analysis
The Tribunal’s analysis can be summarised as follows:
- Factors governing waiver: Relying on the NCLAT’s decision in Cyrus Investments v. Tata Sons, the Tribunal identified three factors relevant to granting a waiver: the applicant’s membership in the company, whether the grievances relate to oppression and mismanagement, and the existence of exceptional circumstances. It found the first two conditions satisfied, as the Applicant was a member and his grievances concerning exclusion from management prima facie related to oppression and mismanagement. The question, therefore, was whether exceptional circumstances existed.
- Availability of other shareholders and exceptional circumstances: The Tribunal noted that Capricon Realty had 109 shareholders, requiring at least 11 members to satisfy the one-tenth threshold. Excluding the Applicant and the family members and entities aligned with the Respondents, approximately 104 other shareholders held nearly 22% of the share capital. The Respondents also submitted that around 100 outside shareholders held 15%, which the Applicant did not rebut. Even if Bhishma Realty Limited, controlled by Respondent No. 2, were excluded from consideration, sufficient other shareholders remained. The Tribunal therefore held that, although the Applicant might find it difficult to meet the threshold individually, there was no evidence that obtaining the support of other shareholders was impossible.
- Distinction from Cyrus Investments and dismissal: The Tribunal acknowledged that the Applicant’s long association with the company, his subsequent exclusion from management, and the family MoUs could be relevant when examining the petition on merits. However, the MoUs were disputed and were already the subject of proceedings before the Bombay High Court. It also noted the Applicant’s materially different position before the High Court, where he had claimed the company’s shares and assets for his HUF. Further, unlike Cyrus Investments, the Applicant held only 1.37% of the share capital, other shareholders were available, and no structural restriction prevented him from seeking their support. The earlier NCLT orders relied upon by the Applicant were also held to be fact-specific. Accordingly, the Tribunal dismissed the waiver application and held the Company Petition to be not maintainable.
Significance for Practice
The order reiterates that the waiver under the proviso to Section 244(1) is not a routine remedy for minority shareholders. Holding a minority stake, or alleging that the majority exercises control over the company, is not sufficient. The applicant must demonstrate a genuine structural obstacle that prevents him from satisfying the statutory threshold, and the Tribunal will first examine whether he could have joined other shareholders. Applicants should also maintain consistency in the positions taken across different proceedings. Respondents, for their part, may defend such applications by establishing that other eligible shareholders exist and that the underlying disputes are already pending before other forums.
