The National Company Law Appellate Tribunal (NCLAT) has rejected the petition of Adesh Kumar Gupta, former CEO and Executive Director of Liberty Shoes, seeking an exemption from the minimum shareholding requirement to file a case alleging oppression and mismanagement against the company. Gupta holds a 5.83% stake in Liberty Shoes and was removed from his position as executive director on September 30, 2023. The company officially notified the stock exchange of his removal on November 21, following the Chandigarh bench of the National Company Law Tribunal (NCLT) dismissing his previous plea on November 20, 2022.
Gupta appealed to the NCLAT for a waiver under Section 244 of the Companies Act, which would allow him to file a petition under Section 241 regarding alleged mismanagement by the majority shareholders. However, the tribunal noted that a claim of oppression and mismanagement under Section 241 must be supported by at least 10% of the total issued share capital.
In its ruling, the NCLAT upheld the NCLT’s decision, stating that Gupta’s claim of exceptional circumstances warranting a waiver was unconvincing. The tribunal found no evidence of extraordinary circumstances justifying such an exemption and affirmed that the NCLT acted within its legal authority.
Gupta argued that prior waivers had been granted in similar cases involving the late Cyrus Mistry against Tata Sons, but the NCLAT found these instances did not undermine the validity of the NCLT’s decision. The tribunal emphasized that the NCLT has the authority to grant waivers in special circumstances, but the threshold for such waivers is high, making them exceptions rather than the rule.
The NCLAT concluded that Gupta’s grievances were largely personal and related to his removal as a director, not legitimate claims of oppression or mismanagement aimed at protecting shareholder interests. The tribunal’s ruling highlighted that the allegations primarily stemmed from directorial disputes rather than systemic issues affecting the company as a whole.
Liberty Shoes, founded in 1986 by P.D. Gupta and his brother D.P. Gupta, has faced disputes among its three promoter families. Adesh Kumar Gupta became CEO in 2004, but conflicts have arisen among the PD Group, DP Group, and Bansal Group, complicating the company’s governance.
