Case Note & Summary
The proceedings arose from disputes between the shareholders of Enercon (India) Limited, now known as Wind World (India) Limited, a company engaged in the manufacturing and marketing of wind turbine generators. The majority shareholder, Enercon GmbH, a German company, held 56% equity shares, while the Mehra family, including Yogesh Mehra (Managing Director) and his relatives, held 44%. The company was originally incorporated as a joint venture, with a Shareholders' Agreement dated 12 January 1994 and a Technical Know-How Agreement between the parties. Allegations of oppression and mismanagement led to the filing of two company petitions before the Company Law Board, Mumbai. Enercon GmbH filed Company Petition No.82 of 2011 (originally 121 of 2007) against the Mehras and the company. The Mehra family filed Company Petition No.83 of 2011 (originally 74 of 2008) against Enercon GmbH and its directors, Dr. Aloys Wobben and Mr. Hans Dieter Kettwig. By a common order dated 14 December 2012, the Company Law Board dismissed Enercon GmbH's petition and allowed the Mehras' petition, finding that Enercon GmbH had oppressed the Mehras. The Board directed Enercon GmbH to sell its entire 56% shareholding to the Mehras, appointing a facilitator and valuer to effect the buyout, under Sections 397, 402 and 403 of the Companies Act, 1956. Aggrieved by this order, Enercon GmbH filed two company appeals before the Bombay High Court: Company Appeal No.42 of 2013 and Company Appeal No.43 of 2013. Both appeals were heard together. The High Court reserved judgment on 10 April 2015 and pronounced it on 20 August 2015. The appeals challenged the findings of oppression and the direction for forced sale of shares. The High Court's decision and reasoning are not contained in the provided excerpt.
Issue of Consideration
Whether the Company Law Board erred in dismissing the petition filed by the majority shareholder and allowing the petition by the minority shareholders, directing forced sale of shares under sections 397, 402 and 403 of the Companies Act, 1956.
Law Points
- Oppression and mismanagement
- buyout of shares under Section 402
- Section 397
- Section 403 of Companies Act
- 1956
Case Details
2015 LawText (BOM) (08) 63
Company Appeal No. 42 of 2013 along with Company Appeal No. 43 of 2013
S.U. Kamdar Senior Advocate, Sudipto Sarkar Senior Advocate, Navroz H. Seervai Senior Advocate, Zubin Behramkamdin, Jehangir Jejeebhoy, Vivek Vashi, Kanika Sharma, Hrushi Narvekar, Krishnendu Sayta, Shaheda Madraswala for Appellant; Fredun DeVitre Senior Advocate, Nikhil Sakhardande, Swagata Naik, Sonali Mathur, Priyanka A. Shetty for Respondent Nos. 2 to 8
Wind World (India) Limited, Yogesh J. Mehra, Ajay J. Mehra, Sudarshan Mehra, Minakshi Mehra, Radhika Mehra, Sitakshi Mehra, Siddharth Mehra, Dr. Aloys Wobben, Hans Dieter Kettwig
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Nature of Litigation
Oppression and mismanagement petitions under Sections 397-403 of the Companies Act, 1956, followed by appeals against the Company Law Board's order directing buyout of majority shares.
Remedy Sought
Enercon GmbH sought to set aside the Company Law Board's order dated 14 December 2012, which dismissed its petition (CP No.82/2011) and allowed the Mehras' petition (CP No.83/2011), and directed it to sell its 56% shareholding to the Mehras.
Filing Reason
Disputes between the majority and minority shareholders of Enercon (India) Limited regarding management and control, leading to cross allegations of oppression and mismanagement.
Previous Decisions
The Company Law Board, Mumbai Bench, by common order dated 14 December 2012, dismissed Company Petition No.82 of 2011 filed by Enercon GmbH and allowed Company Petition No.83 of 2011 filed by the Mehras, directing Enercon GmbH to sell its shares to the Mehras under Sections 397, 402 and 403 of the Companies Act, 1956.
Issues
Whether the Company Law Board was justified in dismissing Company Petition No.82 of 2011 filed by Enercon GmbH.
Whether the Company Law Board was justified in allowing Company Petition No.83 of 2011 filed by the Mehra family and directing Enercon GmbH to sell its shares to the Mehras under Sections 397, 402 and 403 of the Companies Act, 1956.
Judgment Excerpts
The Board has directed EG to sell it's share holding to Mehras, laying down certain modalities as regarding appointment of facilitator and for valuation.
The Board has held that a case of oppression made out by the Mehras against EG is proved and as per provisions of Section 397, 402 and 403 of the Companies Act, 1956 (the Act), buyout by Mehras of the share holding of EG is necessary.
Enercon GmbH holds 56% equity shares in Enercon India Ltd and 44% shareholding is by the Mehra family.
Procedural History
12 January 1994: Shareholders Agreement and Technical Know-How Agreement executed between Enercon GmbH and Mehras. Company Enercon India Limited (now Wind World India Limited) incorporated. 11 August 2007: Company Petition No.82 of 2011 (originally CP No.121 of 2007) filed by Enercon GmbH before Company Law Board against Mehras and company. 3 November 2008: Company Petition No.83 of 2011 (originally CP No.74 of 2008) filed by Mehras against Enercon GmbH and others. 14 December 2012: Company Law Board, Mumbai, passed common order dismissing CP No.82/2011 and allowing CP No.83/2011, directing buyout of Enercon GmbH's shares. Appeals filed by Enercon GmbH before Bombay High Court (Company Appeal Nos. 42 and 43 of 2013). 10 April 2015: Judgment reserved. 20 August 2015: Judgment pronounced.
Acts & Sections
- Companies Act, 1956: 397, 402, 403
