Case Summary: Mrs. Shailja Krishna v. Satori Global Limited & Ors. (2025) | NCLT’s Role in Protecting Shareholder Rights

Posted on By Legal 60

This case revolves around allegations of fraudulent transfer of shares, invalid resignation, and acts of oppression and mismanagement within Satori Global Limited (formerly Sargam Exim Private Limited). At the core is the appellant, Mrs. Shailja Krishna, who claimed that she was illegally ousted as a director and majority shareholder of the company through coercion, fraudulent execution of a gift deed, and manipulation of company records.

Case Title: Mrs. Shailja Krishna v. Satori Global Limited & Ors.

Court: Supreme Court of India – Civil Appellate Jurisdiction

Citation: Civil Appeal Nos. 6377–6378 of 2023

Bench: Justice Dipankar Datta and Justice K. Vinod Chandran

Date of Judgment: September 2, 2025

The case journeyed through the NCLT, NCLAT, and finally the Supreme Court, raising fundamental questions about:

  1. The jurisdiction of NCLT in cases involving fraud and manipulation.
  2. The validity of share transfer and gift deed executed under suspicious circumstances.
  3. The legal scope of oppression and mismanagement under Sections 397 and 398 of the Companies Act, 1956.
  4. The binding effect of Articles of Association (AoA) on share transfers.

The Supreme Court’s verdict restores the NCLT’s findings, reinforcing the wide jurisdiction of company law tribunals and protecting shareholders from oppressive tactics.

Factual Background

Incorporation and Early Shareholding

  • The company was incorporated on 13 April 2006 as Sargam Exim Private Limited (later renamed Satori Global Limited) with an authorised share capital of ₹2 crores.
  • Initial subscribed capital: ₹3 lakh (30,000 shares).
  • Shareholding:

Appellant (Shailja Krishna): 5,000 shares.

Her husband, Ved Krishna (Respondent No. 2): 25,000 shares.

  • Later transfers made the appellant the majority shareholder with 39,500 of 40,000 shares (98%).

Resignation and Share Transfer

  • On 1 February 2007, Ved Krishna resigned as Director.

In December 2010:

  • Appellant allegedly resigned on 17 December 2010.
  • On the same day, she purportedly executed a gift deed, transferring her entire shareholding to her mother-in-law (Respondent No. 4, Manjula Jhunjhunwala).

Marital Disputes and Police Complaints

  • By 2009–2010, the appellant’s relationship with her husband soured.
  • She lodged multiple police complaints in 2011 alleging she was coerced into signing blank documents.
  • Divorce proceedings were initiated in the USA.

Company Developments

  • On 20 June 2011, the company was converted into a public limited company and renamed Satori Global Limited.
  • Later, the Registrar of Companies (RoC) recorded transfer of shares in favour of the mother-in-law on 18 November 2011.

Litigation

  • Company Petition (2013) – Appellant challenged the transfer before the Company Law Board (later NCLT).
  • NCLT Order (2018) – Allowed her petition, restored her as director and shareholder, and declared the gift deed/share transfer void.
  • NCLAT Order (2023) – Set aside NCLT’s decision, holding that fraud allegations required civil court adjudication.
  • Supreme Court Appeal (2025) – Appellant challenged NCLAT’s ruling.

Submissions of Parties

Appellant (Mrs. Shailja Krishna)

Jurisdiction of NCLT:

  • Section 242 of the Companies Act, 2013 empowers NCLT to deal with acts of oppression/mismanagement, even when fraud is involved.
  • NCLAT wrongly limited its jurisdiction.

Maintainability:

  • Section 399 (10% shareholding requirement) not applicable since fraudulent divestment cannot deprive her of member status.

Gift Deed Invalid:

  • Against AoA, which only permitted transfer to specific relatives (not mother-in-law).
  • Obtained by fraud and coercion.

Board Meetings Invalid:

  • Held without proper notice and quorum.
  • No minutes produced.
  • Induction of new directors illegal.

Share Transfer Forms Fraudulent:

  • Dated beyond validity (expired 01.12.2010).
  • Alterations and overwriting of dates.
  • Extension granted by RoC illegal.
  • Documents fabricated as husband was abroad during the relevant period.

Respondents

Lack of Jurisdiction:

  • Allegations of fraud must be decided by civil courts under Specific Relief Act, 1963.

Validity of Gift Deed:

  • Properly executed and recorded.
  • Appellant’s resignation valid and effective.

Delay and Laches:

  • Appellant filed petition after two and half years, showing it was an afterthought.

Notice of Meetings:

  • Proper notice delivered at her registered address, received by security guard.

RoC Authority:

  • Validly extended share transfer form under Section 108(1D) of the 1956 Act.

Issues Before the Supreme Court

  • Maintainability of Company Petition: Was the petition under Sections 397–398 of the 1956 Act maintainable despite the 10% threshold?
  • Jurisdiction of NCLT: Could NCLT adjudicate on validity of the gift deed and allegations of fraud?
  • Validity of Gift Deed and Share Transfers: Were they legally enforceable?
  • Oppression and Mismanagement: Did the acts constitute oppression and mismanagement?

Analysis by the Supreme Court

1. Maintainability

  • Court upheld NCLT’s finding that the petition was maintainable.
  • Fraudulent transfer could not deprive appellant of her membership.
  • Section 399 must be interpreted liberally to avoid denying remedies to shareholders.

2. Jurisdiction of NCLT

  • Relied on Radharamanan v. Chandrasekara Raja (2008), Kamal Kumar Dutta v. Ruby General Hospital Ltd. (2006), and Tata Consultancy Services Ltd. v. Cyrus Investments Pvt. Ltd. (2021).
  • Held: NCLT/CLB has wide jurisdiction to decide issues integral to oppression/mismanagement, including fraud and invalid transfers.
  • Limiting jurisdiction would defeat the purpose of Sections 397–398.

3. Oppression and Mismanagement

  • Cited Shanti Prasad Jain v. Kalinga Tubes Ltd. (1965), Needle Industries v. Needle Industries Newey (1981), and others.

Found clear evidence of:

  • Illegal removal of appellant from management.
  • Manipulative board meetings without notice/quorum.
  • Fraudulent share transfers.

Concluded appellant was a victim of oppression and mismanagement.

4. Gift Deed and Share Transfer Forms

  • Invalid under AoA: Clause 16 restricted transfers to certain relatives; mother-in-law not included.
  • Suspicious Circumstances: Deed executed on day appellant allegedly resigned, inconsistent with FIR lodged by mother-in-law on same date.
  • Expired Forms: Transfers effected beyond validity period, with overwriting of dates.
  • Fabricated Documents: Husband shown as present in India despite being in the USA.

5. Board Meetings

  • No valid notice served; mandatory requirement under Section 286 of the 1956 Act violated.
  • Lack of quorum; induction of new director illegal.
  • Meetings on 15 and 17 December 2010 declared invalid.

Judgment

  • NCLAT’s decision set aside.
  • NCLT’s order restored.
  • Appellant declared lawful owner of 39,500 shares.
  • Gift deed and share transfer to Respondent No. 4 declared null and void.
  • Appellant reinstated as director of the company.
  • No costs awarded.

Significance of the Judgment

Reinforcement of NCLT’s Jurisdiction:

  • Confirms NCLT’s authority to adjudicate on fraud when it is incidental to oppression/mismanagement claims.

Shareholder Protection:

  • Prevents fraudulent transfers from stripping shareholders of rights.
  • Liberal interpretation of Section 399 ensures minority shareholders remain protected.

Articles of Association Binding:

  • Any transfer inconsistent with AoA cannot be upheld.

Corporate Governance Standards:

  • Emphasises probity, fair dealing, and adherence to statutory requirements in board functioning.

Precedent Value:

  • Strengthens jurisprudence on oppression/mismanagement.
  • Clarifies that tribunals cannot shirk responsibility by pushing matters to civil courts.

Conclusion

The Supreme Court’s ruling in Mrs. Shailja Krishna v. Satori Global Limited & Ors. is a landmark decision on corporate governance and shareholder rights. By restoring NCLT’s order, the Court underscored the duty of company law tribunals to address allegations of fraud when intertwined with oppression and mismanagement.

The judgment highlights that corporate democracy cannot be undermined through coercion, manipulation, or misuse of legal forms, and that probity and fairness are the bedrock of company law.

Click Here to Read the Official Judgment

Important Link

Law Library: Notes and Study Material for LLB, LLM, Judiciary, and Entrance Exams

Read More