NCLT Vacates Status Quo Order in Sec. 241 Plea, Allows Tech-Driven Co. to Freely Raise Funds for Strategic Needs

Case Details: Vikash Kumar Mishra v. Karyan Global LLP - [2025] 170 taxmann.com 613 (NCLT-Allahabad)

Judiciary and Counsel Details

• Praveen Gupta, Judicial Member & Ashish Verma, Technical Member
• Dr Abhishek Manu Singhvi, Dr U.K. Chaudhary, Arvind Nayar, Sr. Advs., Ms Manisha Chaudhary, Mansumyer Singh, Ms Manisha Sharma, Misbahul Haque, Ms Priyansha Sharma, Avishkar Singhvi, Akshay Joshi, Shubham Pandey, Advs., Ravi Shankar Prasad, Vaibhav Gaggar, Abhijeet Sinha, Sr. Advs., Amit Prasad, Ms Ruchika Prasad, Anuj Tiwari, Ms Diksh Gupta & Amit Tiwari, Advs., for the Petitioner.
• Krishnendu Datta, Sr. Adv., Ms Smriti Churiwal, Dr Misha Kumar, Jaiveer Kant, Sanjeev Sahay, Rahul Gupta, Vansh Shrivastava, Dr Kapil Sankhla, Advs., Anand Chhibbar, Sr. Adv., Preet Singh Oberoi, Ms Ananttika Singh, Sitikanth Nayak & Krishna Dev Vyas, Advs. for the Respondent.

Facts of the Case

In the instant case, the applicants and respondents were the shareholders/directors of the company ‘R’. The Respondent filed a petition alleging oppression and mismanagement against the applicants on the ground that the applicants had attempted to illegally remove the Respondent from the company’s Board of Directors.

The NCLT by the impugned interim order adjourned matter for further hearing on 12.12.2024 and directed that any changes intended to be made in the constitution of the Board or shareholding, would not be affected without leave of the Tribunal.

Thereafter, the applicant filed an instant Interlocutory application seeking vacation of the impugned order on the ground that the interim order passed by the NCLT undermined the Company’s ability to fulfil commitments of paramount significance.

According to the applicant, any restraint would effectively paralyse the company’s ability to raise capital through equity which was a lifeline essential for its operations.

It was noted that company ‘R’ was a technology-driven company requiring constant financial impetus to meet timeline and strategic requirements. Thus, the company should enjoy full liberty in terms of making commercial decisions in raising funds in a manner suitable to its requirements and needs.

Such commercial decisions should be left to the wisdom of the company, which had a specialized business. Therefore, an embargo on raising equity-based borrowings and the resultant dilution of shareholdings would not be in the broader interests of the Company ‘R’.

NCLT Held

The NCLT held that it was a fit case for allowing vacation of ad-interim order, and consequently, the impugned order was to be vacated and the embargo imposed therein was to be lifted and permitted company ‘R’ to raise financial resources by way of loan or equity-based borrowings and accordingly permit alteration of shareholding or constitution/reconstitution of the Board of Directors.

List of Cases Referred to

• Asma Lateef v. Shabbir Ahmad (2024) 4 SCC 696 (para 17)
• Shazia Rehman v. Anwar Elahi 2023 SCC OnLine Del 4807 (para 18)
• Jai Mahal Hotels (P) Ltd. v. Devraj Singh (2016) 1 SCC 423 (para 18)
• V.B. Rangaraj v. V.B. Gopalakrishnan and Anr. (1992) 1 SCC 160 (para 21).