Table of Contents
- Tribunal Steps In
- Founders Allege Fund Diversion
- Mensa Pushes Back
- The Legal Battle Over Control
- What Comes Next
Tribunal Steps In
India’s corporate court has temporarily halted an attempt by Mensa Brand Technologies to acquire the remaining shares of the founders of MyFitness, the peanut butter brand that became part of its fast-growing portfolio.
In an interim order, the National Company Law Tribunal (NCLT), Chandigarh Bench, restrained Mensa from proceeding with steps to buy out the founders’ residual stake until further hearings. The matter arises from a petition filed under Sections 241 and 242 of the Companies Act, 2013 provisions dealing with allegations of oppression and mismanagement.
The dispute centers on MyFitness, a consumer brand that built a loyal following in India’s health food segment before Mensa acquired a controlling stake in 2022. What was once framed as a growth partnership has now devolved into competing accusations of financial impropriety and contractual breach.
The tribunal’s decision does not resolve the allegations but preserves the status quo until detailed arguments are examined. The next hearing is scheduled for March 19.
Founders Allege Fund Diversion
Mohammad Patel and Rahil Virani, founders and promoters of the company behind MyFitness, have accused Mensa of orchestrating what they describe as a “systematic scheme” to siphon off ₹40–50 crore through related-party transactions.
According to their petition, the alleged diversion took place through non-arm’s-length arrangements, including inflated warehousing fees and shared service payments to other group entities. The founders contend that these expenses far exceeded industry standards and shifted the company from profitability into losses despite sustained revenue growth.
They further allege serious governance lapses. Among the claims: fabrication or forgery of board minutes and shareholder consents, meetings conducted without quorum and denial of access to statutory records. The petition asserts that the founders were effectively sidelined from corporate decision-making following the acquisition.
Compounding tensions, the founders told the tribunal that Mensa issued an “event of default” notice on the eve of the hearing, which they say was aimed at triggering a contractual mechanism to buy out their remaining shares.
Mensa Pushes Back
Mensa has strongly rejected the allegations, describing the petition as a retaliatory move against enforcement actions already underway.
Founded by entrepreneur Ananth Narayanan, Mensa has positioned itself as a “house of brands,” acquiring and scaling digital-first consumer businesses. In its response before the tribunal, the company argued that the founders themselves had committed multiple defaults under the acquisition agreement.
These alleged breaches include setting up parallel or competing ventures after the investment, concealing ownership interests in related entities and violating warranties made at the time of the transaction. Mensa also contended that the founders resigned as employees in 2023 despite contractual commitments to remain involved in scaling the business.
On the financial transactions in question, Mensa maintained that the payments were commercially justified and part of a broader brand-building and operational strategy. The company has also initiated arbitration proceedings under the acquisition agreement and filed a petition before the Karnataka High Court, which recorded undertakings concerning shareholding earlier this month.
From Mensa’s perspective, the attempted buyout was a legitimate contractual right triggered by founder defaults.
The Legal Battle Over Control
At the heart of the case lies a familiar tension in India’s startup ecosystem: the balance between founder autonomy and investor control after majority acquisition.
Sections 241 and 242 of the Companies Act allow minority shareholders to seek relief if company affairs are conducted in a manner oppressive or prejudicial to their interests. The NCLT has wide powers under these provisions, including regulating future management or setting aside disputed transactions.
However, tribunals typically exercise caution at the interim stage, especially when parallel arbitration proceedings are underway. The current restraint order signals judicial prudence rather than a finding on the merits.
What Comes Next
For now, Mensa cannot proceed with the buyout. Detailed replies and evidence will shape the tribunal’s next steps.
The case is being closely watched as a test of governance standards in India’s acquisition-driven consumer sector. As investor-backed consolidators expand aggressively, disputes over integration, transparency and contractual obligations are increasingly surfacing in legal forums.
Whether this conflict ends in arbitration, settlement or a more sweeping tribunal intervention, it underscores a fundamental reality: in high-growth startups, control can be as contested as capital.
EDITED BY – SARTHAK MOOLCHANDANI
{ STUDENT OF MANAGEMENT STUDIES AND INTERN AT HOSTELBEE}
Leave a Reply