Administrator empowered to seek forensic examination of disputed receipts to resolve non-payment claims in management disputes.

J.B. Daruka Papers Ltd (Respondent No. 1), a family-run company originally managed by three groups: the Vishwanath Group (Appellants), the Jagdish Group (Respondents 2-7), and the Shambhoo Nath Group (Respondents 11-12)

In February 2008, following a bidding process mediated by a relative, the Appellants emerged as the highest bidders to take over the company

The Appellants claimed the Respondents exited the company after handing over resignation letters and receiving part payment via cheque and cash

The Respondents approached the court in 2009, alleging that their signatures on the resignation letters and the 2008 family settlement deed were forged, that the full bid amount was never paid, and that an increase in share capital/rights issue was conducted without notice to them

The NCLT Allahabad, via an order dated 30.09.2025, restored Respondents 2, 4, and 5 as directors and appointed an Administrator to run the company, which the Appellants challenged

1. Whether the Respondents had validly resigned from the directorship and exited the company pursuant to the 2008 bidding and settlement process

2. Whether the Appellants’ conduct, specifically the forgery of resignation letters and the issuance of rights shares without notice, constituted oppression and mismanagement

3. Whether the dispute regarding the quantum of payment under the settlement fell within the jurisdiction of the NCLT or a Civil Court

The Tribunal examined principles of oppression and mismanagement under the Companies Act.

It referenced the limitation of the Company Court’s jurisdiction regarding the specific performance of contracts, citing Pradeep R Kamdar & Others v. Rajiv Sanghvi & Others, which holds that a company court cannot pass a decree for specific performance

The court also scrutinized compliance with Section 192 of the Companies Act, 1956, regarding the increase of authorized share capital and the necessity of providing notice to all members/directors for Board and General Meetings

The Tribunal found that the 2008 oral settlement was never fully implemented.

Evidence indicated that the Jagdish Group was only partially paid, while the Shambhoo Nath Group received no payment at all

The Appellants admitted in correspondence that signatures on resignation letters and settlement deeds were forged

The Appellants failed to produce original documents despite NCLT orders, citing their possession by a mediator, which contradicted their other pleadings

The Shambhoo Nath Group’s personal bank guarantees were not released until 2023, undermining the claim that they had exited in 2008

The Tribunal determined that increasing authorized capital and conducting a rights issue without notice to the Respondents—on the false premise of their resignation—constituted an act of oppression

The claim of a ₹6 crore cash payment remained unsubstantiated as no proof was filed

The Tribunal modified the impugned order only to allow for a forensic examination of cash payment receipts: if the Appellants produce such receipts and the Respondents deny them, the Administrator may move the NCLT to send the documents for forensic analysis

All other reliefs sought by the Appellants were denied, and the appeal was disposed of accordingly