Authority: National Company Law Tribunal, Bengaluru Bench

Order Date: 09.10.2026

Case Overview

The National Company Law Tribunal (NCLT), Bengaluru Bench, comprising Shri Sunil Kumar Aggarwal (Member Judicial) and Shri Radhakrishna Sreepada (Member Technical), heard Company Application No. 183/BB/2026. The application was filed by five petitioner firms (M/s Ambika Traders, M/s Kamala Agencies, Ms. Sathyanarayanasamy & Co., M/s Murugan Traders, and M/s Sri Venkateswara Agencies), all represented by their partner Mr. J. Senthil Kumar. The applicants are minority shareholders collectively holding approximately 22% of the paid-up share capital of Respondent No. 1, Shree Basaveshwar Sugars Limited.

The application was filed under Sections 241 and 242 of the Companies Act, 2013 read with Rule 81 of the NCLT Rules, 2016. The applicants sought leave to represent Shree Basaveshwar Sugars Ltd. in legal proceedings related to an Arbitral Award dated 07.08.2023. This award, along with an order dated 04.11.2024 from the LXXXV Additional City Civil and Sessions Judge in COM A.P. No. 34 of 2024, had imposed a liability of approximately ₹52.71 crores plus 12% annual interest and costs of ₹30 lakhs on the company. The liability arose from disputes under a Shareholders Agreement involving Respondent No. 6 (Shri A. Srinivasan) and one Mr. Mallanagouda Patil. The applicants contended that the company was merely a formal party to these proceedings and that the liability was incorrectly imposed, potentially violating Section 67(2) of the Companies Act, 2013.

The applicants alleged that the current management, controlled by an 'Investor Group,' had failed to effectively challenge this award to protect the company's assets. Although the management had indicated an intention to appeal under Section 37 of the Arbitration and Conciliation Act, 1996, no appeal was filed by the company. Consequently, the applicants themselves filed COM AP No. 452/2025 before the High Court of Karnataka as a derivative action. The High Court granted a stay on the award's operation concerning the company on 01.09.2025, but the company remained unrepresented in those proceedings. The applicants argued that without leave from the NCLT to represent the company, its assets remained at risk, and they had no other equally efficacious remedy.

The tribunal's analysis focused on the statutory provisions governing company representation. It noted that the applicants, while significant shareholders, were not members of the company's Board of Directors and had not been authorized by the company to represent it. The tribunal emphasized that mere shareholding does not confer an automatic right to represent the company in legal proceedings. It also noted that the main company petition (CP No. 56/BB/2025) alleging oppression and mismanagement was still pending adjudication, and there was no existing finding by the tribunal against the current management. The tribunal concluded that granting the applicants leave to represent the company would effectively supersede the current board, an action not contemplated under the Companies Act. It held that tribunals cannot create reliefs not provided for in the statute, even under inherent powers.

Final Outcome

The NCLT dismissed CA No. 183/BB/2026, ruling that the application was not maintainable. The tribunal refused to grant the applicants leave to represent Shree Basaveshwar Sugars Ltd. in the proceedings before the High Court of Karnataka. The main company petition (CP No. 56/BB/2025) remains pending and is listed for its next hearing on 02.12.2026.

Topics: NCLT Order, Shareholder Dispute, Corporate Representation