Disputes Over Oppressive Extraordinary General Meetings Lie Outside Civil Courts: Calcutta High Court

The Calcutta High Court has held that disputes alleging oppression of a member through an Extraordinary General Meeting are company law disputes that fall squarely within the jurisdiction of the National Company Law Tribunal. The court reiterated that these disputes cannot be examined by a civil court.

Bhaskar Gupta, a long-standing member of Calcutta Club Ltd for over four decades and a former chairman of the club's finance sub-committee, had challenged an EOGM convened by the club to consider disciplinary action against him. The meeting followed a forensic review into financial decisions taken during his tenure.

A division court of Justices Madhuresh Prasad and Supratim Bhattacharya, in an order dated December 12, dismissed Gupta's appeal and upheld the rejection of his civil suit against the club. The court clarified that when the core grievance is oppression of a member by the company, the remedy lies only before the NCLT.

Explaining its view, the court said the challenge to the EOGM itself revealed the true nature of the dispute. “The issue, viewed from the plaintiff's perception, without any doubt raises an issue of the EOGM being an act of alleged oppression of the plaintiff (member) by the company. Such issue also falls within the scope of the above noted provisions of the Companies Act 2013, for which jurisdiction lies exclusively under the NCLT.”

Gupta had questioned the legality of an EOGM held on December 12, 2020, and the disciplinary action that followed. It stemmed from a forensic review into financial decisions taken during his tenure as chairman of the club's finance sub-committee.

According to the club, Gupta had invested over Rs 2.62 crore in various banks without prior permission of the managing committee. A notice was issued to him on August 18, 2021, and his membership was suspended for one year on September 27, 2021.

In his suit, Gupta sought declarations that the EOGM and all actions stemming from it were illegal. He also asked for injunctions to stop the club from implementing certain resolutions passed at the meeting.

The trial court dismissed the suit as not maintainable. It held that jurisdiction was barred under Section 430 of the Companies Act, since the matter fell within the NCLT's domain.

Before the High Court, Gupta argued that the dispute touched on his personal civil rights. He added that not all reliefs he sought could be granted by the tribunal. The court rejected this. It held that the core grievance was that the EOGM itself amounted to oppression by the company, a matter squarely covered under Sections 241 and 242 of the Companies Act.

The court noted that once the primary relief was to set aside the EOGM on grounds of oppression, all other reliefs were merely incidental.

“We find from the plaint that the primary relief is setting aside of the EOGM. The other reliefs, being actions emanating therefrom are thus consequential in nature and are dependent upon setting aside of the EOGM. The setting aside is sought for substantially alleging oppression..”

Reiterating that civil courts are barred from entertaining matters which the NCLT is empowered to decide, the court upheld the trial court's view and held the suit to be non-maintainable, while leaving Gupta free to pursue appropriate remedies in accordance with law.

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