2. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
Oppression
Black Law Dictionary
‘oppression’ is defined as
‘the act or an instance of unjustly exercising power.’
It can also be viewed as an act or instance of oppression and the
feeling of being heavily burdened, mentally or physically, by
troubles, adverse conditions, and anxiety.
• According to Lord Keith,” Oppression means, lack of morality and
fair dealings in the affairs of the company which may be
prejudicial to some members of the company
• In short
Causing harm or injury , by unjust exercise of power or disc.
authority , with unjust motive , Depriving one or more SHs of
their legitimate expectations , Unfair treatment by controlling
SHs
3. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
Mismanagement
The term mismanagement refers to the process or
practise of managing ineptly, incompetently, or
dishonestly.
In short
Serious infighting
Illegally constituted Board Fund diversion
Erosion of company’s substratum
4. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
Application to Tribunal for relief in cases of oppression
[S. 241]
Any member, who complains that –
Affairs of the company are
prejudicial to public interest
prejudicial to company’s interest
Oppressive to him or members –
Material change in the management/SH may result
into manner prejudicial to his interest Provided that
such member has right to apply u/s 244
5. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
Application to Tribunal for relief in cases of
oppression, etc. [S. 241]
CG may also apply, if it is of the opinion that the
affairs of the company are being conducted in a
manner prejudicial to public interest.
6. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
Powers of Tribunal Se 242 (1)
Tribunal is of the opinion that
Co’s affairs are conducted prejudicial/ oppressive to
member
Winding up would prejudice such member
Just and equitable orde
7. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
Powers of Tribunal Se 242 (2)
Tribunal may order
Regulation of Co affairs
Buy Out
Cap Reduction
Terminate/ Modification agreement with managerial
personnel
Removal/ appointment of managerial personnel
Recovery of undue gains
Impose Costs
Such other just and equitable order
8. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
Powers of Tribunal Se 242
Tribunal may also pass interim order
On application
Just and equitable
Amend M/AoA
9. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
Consequence of termination or modification of
certain agreements Se 243
• No damage for loss of profit
• No re appointment for next 5 years
10. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
Right to apply under section 241 as per Se 244 (1)
In case of company having share capital,
not less than 100 members; or
1/10th of the number members of the company; or
member having not less than 1/10th of the issued
share capital In the case of company not having
share capital,
1/5th of the total number of its members.
11. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
Right to apply under section 241 as per Se 244 (1)
Can Tribunal waive off reqs of Se 244 (1) (a) & (b)?
The Tribunal suo motu can waive off all or any of the
requirements specified under clause (a) or clause (b) Hon.
National Company Law Tribunal in Church of South India Trust
Association V. John S Dorai Vimal Sukumar
Can Tribunal waive off reqs of Se 244 (1) (a) & (b)?
We are of the view that this is one of the exceptional and
compelling circumstances, which merit the application for
'waiver' subject to the question whether (proposed)
application under Section 241 relates to 'oppression and
mismanagement‘ Hon. National Company Law Appellate
Tribunal in Cyrus Investments (P.) Ltd. v.Tata Sons Ltd
12. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
LIMITATION Se 433
The provisions of the Limitation Act, 1963 shall, as far
as may be, apply to proceedings or appeals before
the Tribunal or the Appellate Tribunal , as the case
may be.
13. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
Class action Section 245
A class action is where number of claimants with
common grievance against the company are
allowed to file a lawsuit against the company.
The class action is a vehicle for securing judicial
review in India
Who can sue
Shareholders & Depositors
What can they claim
Compensation
14. OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
Compensation for What
Damages for any fraudulent, unlawful or wrongful act
or conduct or any likely act or conduct on his part
Compensation From –
Company
Directors
Experts
Advisors
