NCLT Ahmedabad Grants Waiver to ICEX Promoters, Holds Attached Shares Count Toward 10% Threshold in Oppression Case

NCLT Ahmedabad Grants Waiver to ICEX Promoters, Holds Attached Shares Count Toward 10% Threshold in Oppression Case

Introduction

The National Company Law Tribunal (NCLT), Ahmedabad Bench, comprising Judicial Member Shammi Khan and Technical Member Sanjeev Sharma, has granted a waiver under Section 244(1)(a) of the Companies Act, 2013, permitting former promoters and shareholders of Indian Commodity Exchange Limited (ICEX) to maintain a petition alleging oppression and mismanagement. The Tribunal observed that exceptional circumstances warranted the relaxation, despite part of the petitioners’ shareholding being under attachment by the Enforcement Directorate (ED) in ongoing PMLA proceedings.

Factual Background

The applicants, Kailash Ramkishan Gupta and Neptune Overseas Limited, were former promoters and shareholders of ICEX, a de-recognised commodity derivatives exchange. They collectively held over 5.54 crore shares, amounting to more than 10% of ICEX’s issued share capital. However, 4.82 crore shares belonging to Neptune Overseas Limited were provisionally attached by the ED under the Prevention of Money Laundering Act (PMLA), 2002.

The applicants alleged that ICEX’s management engaged in acts of oppression and mismanagement, including undervalued sale of assets, payment of excessive managerial remuneration, and violations of provisions under the Companies Act, 2013.

Procedural Background

The applicants filed Company Petition No. 21 of 2024 before the NCLT, Ahmedabad, seeking a waiver under Section 244(1)(a) of the Companies Act to maintain their petition despite the ED’s attachment of their shares. The respondents, including ICEX and the ED, were issued notices. The matter was heard, and an order was passed on October 17, 2025.

Issues

1. Whether the shares attached by the Enforcement Directorate under PMLA can be counted toward the 10% shareholding threshold required under Section 244(1)(a) of the Companies Act.

2. Whether exceptional circumstances existed to justify a waiver of the shareholding requirement to allow the applicants to maintain a petition for oppression and mismanagement.

Contentions of the Parties

Applicants’ Contentions: The applicants argued that the ED’s attachment was provisional and did not divest them of ownership or voting rights. Hence, their shareholding should be considered for determining eligibility under Section 244(1)(a). They emphasized that the acts of oppression and mismanagement had adversely affected not only them but also over 2,400 other shareholders, warranting judicial intervention.

Respondents’ Contentions: The respondents, representing ICEX, contended that since a significant portion of the applicants’ shares was under ED attachment, they could not be counted toward the 10% threshold. They further argued that there were no exceptional circumstances that justified granting a waiver under Section 244. The ED clarified that the attachment was preventive and ownership remained with the applicants until final adjudication by the PMLA Court.

Reasoning and Analysis

The Tribunal observed that attachment under the PMLA is a preventive measure and does not divest ownership unless a final confiscation order is passed. Therefore, the applicants continued to retain proprietary rights over the attached shares. The NCLT held that “in the absence of any final order under PMLA divesting the Applicants of their proprietary rights, the attached shares must be considered as part of their holding for the limited purpose of eligibility under Section 244(1).”

The Tribunal also noted the existence of exceptional circumstances, as ICEX had been de-recognised by SEBI for regulatory violations and was showing signs of financial distress and poor governance. These factors, the Tribunal said, affected not only the applicants but also the larger body of shareholders, making it necessary to allow the petition to proceed on merits.

Implications

This decision reinforces the principle that provisional attachments under the PMLA do not extinguish ownership rights unless confirmed by final confiscation orders. It further clarifies that NCLT can exercise discretion under Section 244(1) to grant waivers in exceptional cases involving broader shareholder interests and corporate governance concerns. The order paves the way for greater judicial scrutiny of management conduct in entities facing regulatory or financial distress, even when part of the shareholding is encumbered by parallel proceedings.

In this case the appellant was represented by Mr. Tirth Nayak, Advocate.