Oppression Claims Against Majority Shareholders Not Ground To Wind Up Company: NCLT Mumbai

The National Company Law Tribunal (NCLT) at Mumbai has dismissed a winding up plea against Nissan Motor India's former sales and distribution partner Hover Automotive India Pvt Ltd, holding that allegations of oppression by majority shareholders cannot justify liquidation when alternative remedies exist under the Companies Act. A coram of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar passed the order on December 11, 2025, while rejecting a petition filed by minority shareholder Gurinder Mohan Singh Nindrajog. The tribunal reiterated that winding up is a remedy of last resort and cannot be invoked to resolve shareholder disputes. The tribunal held that complaints of exclusion from management, deadlock and loss of confidence must be pursued under the statutory mechanism for oppression and mismanagement. “As regards contention that there is complete loss of trust, deadlock, lack of probity, and oppressive conduct by the Majority Shareholders, making it impossible for the partnership like relationship to continue, the provisions in relation to section 241-242 of the Companies Act, 2013 contain efficacious alternate remedy and this cannot be made ground to order winding up as in our considered view no dead lock can be said to exist in the present facts of the case. ,” the tribunal said. Hover Automotive was incorporated on April 3, 2008 as a joint venture between the Nindrajog and the majority shareholders, who together hold about 73 percent of the equity. He, a promoter and minority shareholder, holds around 27 percent. He alleged that he was forced to resign from management in February 2013 and was thereafter excluded from decision-making. He claimed that key decisions were taken unilaterally by the majority shareholders and that funds were siphoned off. The petitioner also argued that the company lost its business purpose after the termination of its Nissan distribution agreement in February 2014. On this basis, he contended that Hover Automotive had “lost its substratum” and could no longer function as a viable company. He further raised grievances relating to rights issues and the alleged diversion of proceeds arising from arbitration proceedings between Hover Automotive and Nissan. Opposing the plea, the company argued that winding up on "just and equitable” grounds was not maintainable where alternative remedies were available. It pointed out that disputes arising out of the shareholders' agreement were governed by an arbitration clause and could only be decided by an arbitral tribunal. The company also submitted that allegations of oppression and mismanagement cannot justify winding up when specific remedies are provided under Sections 241 and 242 of the Companies Act. It further told the tribunal that the Nindrajog had earlier initiated insolvency proceedings against the company, which were later withdrawn, a fact that was not disclosed in the winding up petition. Agreeing with the company, the tribunal relied on Section 273(2) of the Companies Act, which empowers it to refuse winding up where an alternative remedy exists and the petitioner acts unreasonably in seeking liquidation. The tribunal held that loss of trust or exclusion from management does not automatically warrant winding up, particularly when such an order would affect the company's assets and the interests of other stakeholders. It also noted that neither the company's memorandum of association nor the shareholders' agreement contained any clause requiring mandatory winding up upon termination of the Nissan distributorship. “A winding-up on 'just and equitable' grounds can be ordered only when keeping the Company alive would harm creditors, employees, regulators, or the public. No such harm has been proved here,” the tribunal observed. Holding that the dispute was essentially a private dispute between shareholders, the tribunal dismissed the winding up petition. Case Title: Gurinder Mohan Singh Nindrajog vs Hover Automotive India Private Limited Case Number: CP/213(MB)2017 For Petitioner: Advocate Manaswi Agrwal For Respondent: Sr. Advocate Soli Cooper a/w Advocates Angad Kochhar, Prachi Gupta, Vedant Kashyap, Sanjana Kattoor For ROC: Kinnari Mukadam, ICLS, AROC Click Here To Read/Download Order

Oppression Claims Against Majority Shareholders Not Ground To Wind Up Company: NCLT Mumbai

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Oppression Claims Against Majority Shareholders Not Ground To Wind Up Company: NCLT Mumbai

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