Introduction
In a decision that will reverberate through boardrooms and legal chambers alike, the Supreme Court of India in Mrs. Shailja Krishna v. Satori Global Ltd. & Ors. (2025 INSC 1065) has delivered a masterclass in judicial reasoning on the scope of oppression and mismanagement under the Companies Act, 1956. The judgment not only reaffirms the expansive jurisdiction of the National Company Law Tribunal (NCLT) but also underscores the judiciary’s commitment to protecting minority shareholders from corporate malfeasance.
Background: A Tale of Family, Fraud, and Corporate Control
The case centres around Mrs. Shailja Krishna, a founding shareholder and executive director of Satori Global Ltd. (formerly Sargam Exim Pvt. Ltd.), who held over 98% of the company’s equity. Following marital discord and alleged coercion, she purportedly resigned and transferred her entire shareholding to her mother-in-law via a gift deed. The company was subsequently converted into a public limited entity, and her name was removed from the register of members.
Mrs. Krishna challenged these actions before the NCLT, alleging fraud, manipulation, and exclusion from management. The NCLT ruled in her favour, reinstating her as director and shareholder. However, the NCLAT overturned this decision, citing lack of jurisdiction. The Supreme Court’s intervention was thus pivotal.
Key Legal Issues
1. Maintainability of the Petition under Sections 397 & 398 of the Companies Act, 1956
2. Jurisdiction of the NCLT to adjudicate fraud and coercion
3. Validity of the Gift Deed and Share Transfer Forms
4. Compliance with Articles of Association and Statutory Requirements
5. Determination of Oppression and Mismanagement
Supreme Court’s Findings
1. Maintainability of the Petition
The Court affirmed that the petition was maintainable, noting that the appellant remained a member at all material times. It rejected the technical argument that the alleged transfer divested her of locus standi, especially given the serious allegations of fraud.
“The findings returned by the NCLT… proved to its satisfaction by the Appellant, we record our concurrence… and hold the company petition to be maintainable.”
2. Jurisdiction of the NCLT
In a significant clarification, the Court held that the NCLT possesses wide jurisdiction under Sections 397 and 398 to adjudicate matters of fraud and coercion when they are integral to allegations of oppression and mismanagement.
“The NCLT/CLB possess a wide jurisdiction to decide all such matters that are incidental and/or integral to the complaint alleging oppression and mismanagement.”
This aligns with English jurisprudence, where courts routinely pierce the corporate veil to prevent injustice, as seen in Scottish Co-operative Wholesale Society v. Meyer and Needle Industries v. Needle Industries Newey.
3. Invalidity of Gift Deed and Share Transfers
The Court found the gift deed to be invalid on two grounds:
- It violated Clause 16 of the Articles of Association, which restricted gifts to specific relatives (excluding mother-in-law).
- It was executed under questionable circumstances, with evidence of coercion and manipulation.
Similarly, the share transfer forms were deemed invalid due to:
- Expiry of statutory validity under Section 108(1A)
- Overwriting and fabrication of dates
- Absence of proper execution and documentation
4. Board Meetings: Procedural Impropriety
The meetings held on 15.12.2010 and 17.12.2010 were declared invalid due to:
- Lack of quorum (only one valid director present)
- Absence of proper notice as mandated by Section 286 and AoA
- No minutes or proof of service
This mirrors the principle in Sri Parmeshwari Prasad Gupta v. Union of India, where absence of notice vitiated board proceedings.
5. Oppression and Mismanagement
The Court applied a cumulative test, holding that a series of wrongful acts—though individually defensible—collectively constituted oppression. This echoes the doctrine from Dale & Carrington v. P.K. Prathapan and Sangramsinh Gaekwad v. Shantadevi Gaekwad.
“Probity is lacking which is prejudicial to the appellant.”
Implications for Corporate India
This judgment is a clarion call for directors and promoters to uphold transparency, procedural integrity, and shareholder rights. Key takeaways include:
- NCLT’s jurisdiction is robust and extends to adjudicating fraud when linked to oppression.
- Articles of Association are sacrosanct and must be strictly followed.
- Procedural lapses in board meetings can invalidate corporate actions.
- Minority shareholders have enforceable rights even in closely held companies.
Conclusion
The Supreme Court’s ruling in Shailja Krishna is a watershed moment in Indian corporate jurisprudence. It harmonises statutory interpretation with equitable principles, ensuring that corporate governance does not become a casualty of familial or managerial intrigue.
At August Attorneys LLP, we believe this judgment will serve as a precedent for future disputes involving shareholder rights, directorial conduct, and tribunal jurisdiction. It is a testament to the evolving maturity of Indian company law—one that balances legal rigour with equitable justice.