NCLT Dismisses Petition For Being In The Nature Of Family Property Dispute; SC To Review A Parallel Petition

NCLT Dismisses Petition For Being In The Nature Of Family Property Dispute; SC To Review A Parallel Petition

The National Company Law Tribunal (NCLT) Mumbai bench has recently rendered a judgment dismissing a petition filed by Urvashi Khater, the petitioner in a tangled family dispute concerning the Khater family, sparking discussions about the potential misuse of legal channels for settling personal disagreements. At the core of the matter is a property dispute within the Khater family.

This intricate family conflict has now made its way to the Supreme Court, raising apprehensions regarding the potential exploitation of legal mechanisms to address private disputes. The focal point of the contention lies in an ongoing petition before the Supreme Court, where Mr. Ashwin Khater challenges the revocation of gift deeds under the Senior Citizens Act, alleging his mother's possible misuse of the legislation, akin to the allegations made in the NCLT petition.

Following the passing of the family patriarch, Mr. Bharat Khater, in 2016, a period of discord emerged within the Khater family. Ms. Urvashi Khater levied accusations against her younger son, Mr. Ashwin, of Oppression and mismanagement, unauthorized share transfers within family-owned businesses, In seeking legal recourse, Ms. Khater filed petitions under various legislative provisions, including Sections 241 and 242 of the Companies Act, 2013 (pertaining to oppression and mismanagement by controlling shareholders), and the Senior Citizens Act, 2007. She also challenged the validity of will of her late husband, Mr. Bharat Khater.

The Respondent countered the petitioner's assertions by submitting that Urvashi Khater has been acting against the company's interest by impeding its income and growth, preventing new business dealings and clients, and writing threatening /warning letters to prospective customers and licensees. They argued that since the petition lacked evidence regarding the alleged mismanagement, and coercive behavior, and failed to disclose the fact that Urvashi's signature appeared on the Deed of Transfer of Shares, it is not maintainable and did not meet the standard for oppression and mismanagement under the law.

After careful examination, the NCLT dismissed Urvashi's petition, citing her suppression of documents that indicated her consent for the transfer of shares to Ashwin. The bench concluded that the petition primarily revolved around a familial dispute regarding the ownership of properties held by the Company. It reasoned that the true nature of the dispute was primarily familial property disputes masquerading as concerns about corporate governance. The bench held that the petition did not involve genuine instances of corporate malpractice, making it unsuitable for its adjudication.

Ashwin Khater has filed a separate petition in the Supreme Court challenging the annulment of gift deeds in his favor under the Senior Citizens Act and has obtained a Status Quo order from the Apex Court. He accuses Urvashi Khater of potentially misusing the Act's provisions to gain control of the disputed gift deeds and undo the family settlement. Despite possessing substantial properties nationwide, bank balances, shares, debentures, and mutual funds, Urvashi allegedly utilized the Act to assert control over the disputed gift deeds.

Adding to the complexity of the case is the participation of Ashwin's elder brother, Avinash. Avinash has aligned himself with Urvashi, joining forces with her to contest Ashwin's financial stakes and impede legal proceedings. This intricate interplay of familial dynamics underscores the difficulties in deciphering authentic legal issues amid underlying family discord.

The Supreme Court now faces the critical task of discerning the true essence of the dispute, determining whether it revolves around familial conflicts or genuine concerns under the Senior Citizens Act.

The Supreme Court's decision will likely set a precedent for future cases, determining how courts handle situations where family disputes intersect with corporate governance issues and the potential misuse of legal avenues.