NCLT Orders ERP Access and Audit | Finds No Oppression in Management Dispute

Case Details: Ravi Arya v. Arya Iron and Steel Co. (P.) Ltd. - [2025] 176 taxmann.com 73 (NCLT-Mum.)

Judiciary and Counsel Details

• Virendra Singh G. Bisht, Judicial Member & Prabhat Kumar, Technical Member
• Sharan Jagtiani, Sr. Adv. & Ms Apurva Marwari, Oasia Counsel & Advisory for the Petitioner.
• Rohit Gupta, Adv., Mustafa Akshat Tiwari, Sr. Counsel, Vijay Singh & Diksha Sharma for the Respondent.

Facts of the Case

In the instant case, the petitioner and the respondent group were the promoter-directors of the company ‘A’. The petitioner group filed an instant petition alleging oppression and mismanagement against the respondent group.

It was noted that a dispute had arisen from the insistence to make available virtual access to the ERP software platform as was available to other directors. The respondent group had contended that such access could not be made available due to past instances of theft by one of its employees, who was now employed by the petitioner group, and the petitioner group’s involvement in competing businesses.

However, no such evidence had been placed on record by the respondent group. Aspects of confidentiality and theft were to be dealt with by framing a suitable policy in this respect and ensuring adherence to such policy by all who seek access to company information.

In view of this, the respondent group was directed to allow remote access to ERP to directors from the petitioner group, in case such access was available to other directors as well, or stop such remote access of all directors to ERP.

NCLT Held

The NCLT observed that as regards allegation of misappropriation of funds, respondent group was to engage a forensic audit firm to look into personal expenses of directors, not forming part of their emoluments as approved by board as director, payments made to promoters/directors/their related parties and any expenses, booked in company, incurred for purpose other than business of company, or appearing to be fictitious.

The NCLT held that, regarding the allegation of sidelining the petitioner group from the management of the company, it was noted that the petitioner group had failed to establish a case for lack of probity in the decision-making process, from which it alleged it had been sidelined.

Further, denial of the right to be a signatory in GST registration or a bank account could not be said to be based on a lack of probity. In view of the foregoing, the instant petition was to be disposed of in terms of the aforesaid directions.

List of Cases Reviewed

• Hind Overseas Pvt. Ltd. v. Raghunath Prasad Jhunjhunwala [1976] 3 SCC 259 (Para 26) followed

List of Cases Referred to

• Ram Parshotam Mittal v. Hotel Queen Road Pvt. Ltd. [2009] 94 SCL 120 (SC) (para 23)
• Badrinath Galhotra v. Aanaam (P.) Ltd [2007] 76 SCL 241 (CLB) (para 25)
• Ador-Samai Ltd. v. Indocan Engineering Systems Ltd. 1999 SCC OnLine CLB 26 (para 25)
• Jagjit Singh Chawla v. Tirath Ram Ahuja Ltd. [2002] 36 SCL 606 (CLB – New Delhi) (para 25)
• Hind Overseas Pvt. Ltd. v. Raghunath Prasad Jhunjhunwala [1976] 3 SCC 259 (para 26)
• Ebrahimi v. Westbourne Galleries Ltd. 1973 AC 360 (para 26)
• Yenidje Tobacco Co., In re [1916] 86 LJ Ch. 1 (para 27)
• Sangram Sinh P. Gaekwad v. Shanta Devi P. Gaekwad [2005] 11 SCC 314 (para 29)
• Tata Consultancy Services Ltd. v. Cyrus Investments (P.) Ltd. [2021] 125 taxmann.com 384 (SC) (para 31).