NCLT Cuttack Quashes Illegal Director Removal and Appoints Administrator in Sparsh Multispeciality Hospital Oppression Case

The realm of corporate governance often witnesses intense battles between majority and minority shareholders, especially when the lines between management control and equitable participation are blurred. The National Company Law Tribunal (NCLT) serves as the ultimate adjudicatory authority in balancing these scales, ensuring that corporate democracy does not devolve into majority tyranny. A recent and highly significant judicial pronouncement by the NCLT, Cuttack Bench, has reinforced the protective mechanisms available to minority shareholders under the legislative framework of the Companies Act 2013.

In the landmark decision of Ajay Somani Vs Sparsh Multispeciality Hospital Private Limited (NCLT Cuttack), the Tribunal delivered a comprehensive order addressing severe allegations of financial mismanagement, statutory non-compliance, and the illegal ousting of directors. The judgment provides critical insights into the application of anti-oppression provisions and the Tribunal's discretionary power to appoint an independent administrator to salvage a company's operations.

Procedural Background and Statutory Invocation

The legal dispute was formally initiated through Company Petition No. 61/CB/2022, which was heard alongside interlocutory applications IA (Companies Act) No. 34/CB/2025 and CA No. 11/CB/2025. The aggrieved minority shareholders approached the Tribunal seeking immediate and sweeping reliefs under a battery of statutory provisions.

Specifically, the petition was instituted under Section 210(2), Section 213, Section 221, Section 241, and Section 242 of the Companies Act 2013, read harmoniously with Rule 11 of the NCLT Rules, 2016. The core grievance articulated by the petitioners, Ajay Somani and Pradeep Pal, centered on the allegedly fraudulent, unethical, and arbitrary manner in which Respondent Nos. 2 and 3—who held the majority shareholding and effective management control—were operating Sparsh Multispeciality Hospital Private Limited.

Core Allegations Leveled by the Minority Shareholders

The petitioners constructed a detailed factual matrix to demonstrate that the company's affairs were being conducted in a manner deeply prejudicial to the interests of the company, its shareholders, and the general public. The allegations spanned financial siphoning, regulatory breaches, and corporate malfeasance.

Arbitrary Billing and Financial Siphoning

According to the submissions made before the Tribunal, the hospital lacked a standardized billing mechanism. The petitioners argued that the absence of a fixed schedule of charges led to arbitrary billing practices, which ultimately caused massive financial hemorrhaging for the company. To substantiate these claims, the petitioners relied heavily on critical audit observations that were formally presented during the Annual General Meeting held on 27.09.2022.

Furthermore, the petitioners alleged that the majority shareholders were actively siphoning corporate funds by receiving cash payments entirely outside the official books of account. It was also contended that the management was making unauthorized withdrawals using the names of third-party medical practitioners, thereby diverting company resources for personal enrichment.

Violations of Government Healthcare Schemes

A particularly severe allegation involved gross irregularities in the administration of the Ayushman Bharat Scheme. The petitioners highlighted that the hospital management was illicitly collecting cash from scheme beneficiaries. This blatant violation attracted severe punitive action from the District Administration and Health Authorities.

The regulatory crackdown culminated in a specific order dated 06.11.2021, which mandated the hospital to issue a refund of ₹1,81,462 to the affected beneficiaries. While this amount was reportedly refunded, the incident, coupled with subsequent show-cause notices from the Chief Medical Officer regarding cash collections exceeding permissible Ayushman limits, painted a grim picture of regulatory defiance.