Section 94 of the Companies Act, 2013, which corresponds to Section 163 of the
Companies Act, 1956, seeks to provide the members and debenture holders of the
company the right to the copies of the company’s documents and registers,
including the annual returns.
Sub-section (3) of this section reads as:
(3) Any such member, debenture-holder, other security holder or beneficial owner
or any other person may:
- Take extracts from any register, or index or return without payment of any fee;
- Require a copy of any such register or entries therein or return on
payment of such fees as may be prescribed.
The Proviso of Section 20 of the Companies Act, 2013 allows any member of the
company to request for the delivery of any document of the company for a certain
fee. On 16th April, 2015 the Mumbai Bench of the Company Law Board, in the case
of Anil Kumar Poddar v. Bonanza Industries Ltd., dismissed the application
made by a shareholder who demanded the copies of the registers and records of a
company for inspection, on the ground that such an application was frivolous and
made with a mala fide intent.
The Case of Anil Kumar Poddar v. Bonanza Industries Ltd.
Mr. Anil Kumar Poddar (herein referred to as the Applicant) is a shareholder in
Bonanza Industries Ltd. (herein referred to as the Respondent). On the 11th of
January, 2014 the applicant filed for inspection of the respondent company’s
statutory register and records. The respondent company denied the applicant the
said files as they claimed his actions was of vexatious nature and his intention
was to extract money from them.
As such this issue was brought up in front of
the Company Law Board by the applicant seeking to pass an order directing the
respondent company to allow the inspection of the statutory register and records
of the company and also to pass an order awarding the applicant exemplary
The Applicant’s Submission
The applicant appeared before the Mumbai Bench, in person, and argued that the
respondent company had made false allegations against him. He denied the
allegations made by the respondent company against him of blackmailing the
company and making illegal demands of money. He further stated that the
respondent company tried to malign his image and hence the intention of the
respondent company was mala fide. He demanded inspection of the statutory
register and records of the company in his capacity as a shareholder, as such a
right was vested in him by the statute.
The Respondent Company’s Submission
The respondent company claimed that the applicant was a professional investor
who acquired very nominal or negligible shareholding of various listed companies
purely to create nuisance and frighten the directors with criminal liability and
illegally extract money from them. The applicant in this current circumstance
had only acquired 10 shares of the respondent company to harass the company and
frighten the directors of criminal action and to illegally extract money.
Shareholders have various rights, which also include the right to obtain
statutory register and records maintained by companies and the right to seek
inspection of them. The applicant under Section 20 of the Companies Act, 2013
was seeking various records which included minutes, registers, annual returns
and financials of the companies against payment of charges for providing such
records. However, the intention of the applicant was never that of a genuine
shareholder who is concerned about the performance of the company.
had acquired a sum of 10 shares of the respondent company in June 2013 and ever
since had started frequently demanding copies of the registers and documents.
The modus operandi followed by the applicant was to send the requisition under
Section 163 of the Companies Act, 1956 followed by a hard copy and then
demanding inspection of the various registers and documents and copies of the
annual accounts for the past 5 years.
The case of Reliance lndustries Ltd, and Ors. v. Anil Kumar Poddar
that the applicant had approached the Company Law Board with a mala fide intent,
unclean hands, and to blackmail the company, due to which the applicant was
rejected. The respondent company cited this case and submitted that the
applicant had threatened and blackmailed them in case of non-fulfillment of his
The respondent company then drew the Bench’s attention towards the fact that the
applicant had 14 hearings in front of the Bench due for hearing on the same day
as the present one. This brought to light the fact that the applicant’s act was
frivolous in nature and held no substance. Therefore, the respondent company
made a request to the Company Law Board to quash the application.
The Decision by the Company Law Board
The Mumbai Bench of the Company Law Board acknowledged that approximately 150
applications pending were made against various companies by the applicant. They
also found that the information that the applicant was seeking could have been
easily obtained from the Ministry of Corporate Affairs portal and that there was
no real need to repeatedly pester the company.
The Bench further referred to the
case of Phillips Carbon Black Limited & Ors. v. Anil Kumar Poddar & Anr.
the applicants were barred from exercising their rights as shareholders as they
had approached the Board with unclean hands. Due to these reasons the Company
Law Board found the intention of the applicant to be mala fide and in an order
dated April 16, 2015 dismissed the application. They however clarified that this
order should not be interpreted as an applicant being prevented from approaching
the Board on bona fide grounds.
Background Information regarding Anil Kumar Poddar
The applicant had filed more than 100 criminal complaints against companies
situated in Kolkata, before the Court of the Metropolitan Magistrate. The
Khaitan & Co. team of the Kolkata office then filed a suit against Poddar and
Mahato, on behalf of these companies, under Order 1 Rule 8 of the Code of Civil
Procedure, 1908 preventing them from misusing their rights as a shareholder.
It was submitted that the suit had also been advertised in the Economic Times,
Kolkata Edition, on 31-3-2010, whereby several other companies had also jointed
as plaintiffs in the suit and had obtained similar orders. Further, it had also
been advertised in Sanmarg, Kolkata Edition, on 1-4-2010. The aggrieved
companies procured an interim order whereby Poddar and Mahato had been
restrained from exercising right as shareholders. The Calcutta High Court had
also observed that the rights of inspection of document should be exercised in
good faith, taking into consideration the company's best interests.
The Kolkata High Court passed an order restraining the applicants from
exercising their rights as shareholders. This seems to be the main reason for
the applicants to shift from Kolkata to Mumbai. Similarly, various judgments by
the Company Law Board has previously barred Anil Kumar Poddar from harassing
listed companies in India. 
The Nuisance Caused by Vexatious Shareholders
The shareholders own the corporation, including all the records and property
possessed by the corporation, while those in charge of the corporation are
merely agents of those shareholders. The shareholders are the real owners who
are entitled to information concerning the management of the property and
business while the corporation, acting as their agent, holds the legal title to
The intention of this concept was to facilitate transparency and good interest.
It was introduced to give the shareholders more control over the company as they
should have the right to obtain information on how their investments are being
used and whether they will get their desired returns from the company or
not. However, taking advantage of this right, some people acquire a small number
of shares and claim the privileges that are available to the shareholders. They
then cause hindrance to the companies by demanding registers and documents,
disrupting meetings, including the Annual General Meeting.
Often to stop causing hindrance in such meetings and to pass the accounts these
people demand costly gifts or money. When the companies are faced with vexatious
claims they find themselves in a difficult situation with no option but to
accept their request and act upon it. This is due to the shareholders being
vested with such rights while the companies have no rights. While there was a
draft in one of the Companies Bill to prohibit the giving of such gifts during
meetings, the later drafts and proposals do not contain this clause, without any
justification for such.
The Carve Out for Companies to Avoid such Vexatious Shareholders
With the digitization of all records and the increasing use of e-governance
everything can be found on the companies’ websites. Due to this there should be
a lesser need for demanding physical copies of the same documents from the
companies, as seen in the present case. With the Ministry of Corporate Affairs
also having a copy of the documents the shareholder can alternatively seek
information and copies from there.
While there is no specific carve out
available, the companies should try to discover the motive of the shareholder
who is seeking inspection and copies of the records. If an ulterior motive
appears to be seen then the companies should approach the Company Law Board.
What the Companies Act, 2013 should have added was the definition of a
shareholder with a minimum number of shares before being able to exercise the
right of inspection of documents and other similar rights. In absence of such a
provision there has been constant misuse of the right to inspection by some
shareholders to make vexatious demands and involving the companies in
unnecessary litigation matters.
Shareholder activism has gained popularity in the recent past. With no
requirement of the number of shares required to be called a shareholder and
benefit from all the rights, even holding one share in a company effectively
turns a person into a shareholder. These shareholders are seen to take
aggressive stances during the annual general meetings.
While there is a conflict
between shareholder activism and corporate governance on one hand there are
times when there are legitimate complaints of harassment of the corporate
sector. As such the entire issue falls in the grey area due to the fine
distinction between shareholder activism and harassment. Hopefully in due time
the distinction becomes more apparent and a reasonable balance between the two
can be found.
The Impact of the Judgment
The right to inspect the documents of the company is a mandatory provision and
there is no bar to a member or debenture holder seeking inspection of the
company’s documents. However the Company Law Board has ruled that the time
and charges for supplying such information to the members must be fixed in such
a way so as to not allow the company’s work to suffer and that too without
disclosing the reason for the same.
No doubt the applicant had the statutory
right to seek inspection of the company’s documents in his capacity as being a
shareholder of the company. However, the applicant used the provisions of the
Companies Act as a shield against the companies and made frivolous applications
for inspections of records.
It is quite common to see unscrupulous profession shareholders, like Anil Kumar
Poddar, harassing companies, not motivated by and public cause but, to serve
their personal interests and gain some profit. Due to corporate democracy each
and every shareholder, even a person with one share in the company, can avail
the provisions of Section 94 of the Companies Act, 2013 to solicit information
from the company.
One course of action that companies can take is to go along
the lines of the Anil Kumar Poddar v. Bonanza Industries
case and ask the
shareholders to acquire the information required from their company website or
the MCA website. If a further request is made by the shareholder, then depending
on the shareholder’s intention the company can decide not to accept the request
and use this case as a defence with a request to dismiss the application.
The decision of the Company Law Board in the instant case is well
appreciated. The judgment should send out a strong message of good corporate
governance and would act as a deterrent for all such frivolous and mala fide
applicants. This should be seen as a warning to all the shareholders who have
been vexing the companies with a mala fide intent. So as to avoid the wastage of
time of both the companies as well as the shareholders the inspection of
physical records and registers should only be used in exceptional circumstances
where the MCA and the company’s website does not give the entire information
Written By: Harsh Mahaseth
- Anil Kumar Poddar v. Bonanza Industries Ltd.,  132 SCL 47 (CLB –
- Phillips Carbon Black Ltd. & Ors. v. Anil Kumar Poddar & Anr., 
163 COMP CASE 181 (Calcutta)
- Supra 4; Anil Kumar Poddar v. Alka India Ltd., C.P. No. 79 of 2013; Re:
Reliance Industries Ltd., C.P. No. 83 of 2012; Wipro Limited v. Anil Kumar
Poddar,  3 CLONLINE 104 (CLB – Chennai)
- Johnson Ranch Royalty v. Hickey, 31 S.W.2d 150 (Tex. App. 1930)
- Rajendra G. Patel v. Sanghi Industries Ltd.,  176 COMP CASE 49 (CLB
- Fomento Resorts And Hotels Ltd. v. Mahendra G. Wadhwani,  85 COMP.
CAS. 1 (BOM.)
is an Assistant Lecturer at Jindal Global Law School, and a Research Analyst at the Center for Southeast Asian Studies, Jindal School of International Affairs, O.P. Jindal Global University.