The document summarizes key aspects of company law relating to oppression and mismanagement under the Companies Act 2013. It discusses provisions under Section 241-246 dealing with application to the tribunal for relief in cases of oppression. It defines oppression and mismanagement and the powers of the tribunal. It also discusses public interest, the right to apply under Section 241, limitation periods, advocacy, pleading requirements including facts versus evidence, affidavits, authorized representatives and application/interlocutory applications.

1. NCLT Law & Practice
& Art of Advocacy
By CS Rahul Sahasrabuddhe
SPRS
AND CO.
MASTER CLASS ON COMPANY LAW
OPPRESSION & MISMANAGEMENT
UNDER COMPANIES ACT, 2013
WIRC of ICSI
TUESDAY, MARCH 27, 2018
By CS Rahul Sahasrabuddhe

2. 1
VIEWS EXPRESSED IN THIS
PRESENTATION ARE STRICTLY
PERSONAL AND NEED NOT
NECESSARILY BE VIEWS OF ANY OF
MY PAST OR PRESENT
ORGANISATIONS, I HAVE WORKED
OR AM WORKING WITH.
IN SHORT FORMAL OPINION MAY DIFFER
SPRS
AND CO.

3. 2
Chapter XVI
Prevention of Oppression and Mismgmt
Se 241-246
• Application to Tribunal for
relief in cases of oppression,
etc.
• Powers of Tribunal
• Consequence of termination
or modification of certain
agreements
• Right to apply under section
241
SPRS
AND CO.

4. 3
Se 241
Application to Tribunal for relief in
cases of oppression, etc
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
SPRS
AND CO.

5. 4
Se 241
Application to Tribunal for relief in
cases of oppression, etc
• 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.
SPRS
AND CO.

6. 5
Se 241
Application to Tribunal for relief in
cases of oppression, etc
What is Oppression?
• 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
SPRS
AND CO.

7. 6
Se 241
Application to Tribunal for relief in
cases of oppression, etc
What is Oppression?
• Oppression involves as least an
element of lack of probity or fair
dealing to a member in the matter of
his proprietary right as a shareholder.
–Kalinga Tubes Ltd. V Shanti Prasad
Jain
SPRS
AND CO.

8. 7
Se 241
Application to Tribunal for relief in
cases of oppression, etc
What is Oppression?
• The question sometimes arise as to
whether an action is contravention of
law is per se oppressive.
No.
Said Chadrachud CJ in Needle
Industries Ltd. V Needle Industry
Newey (India) Holding Ltd.
SPRS
AND CO.

9. 8
Se 241
Application to Tribunal for relief in
cases of oppression, etc
What about Past Oppressive Acts
• Have been
• Are being
SPRS
AND CO.

10. 9
Public Interest? The idea of public interest is a vague,
impalpable, but all controlling
considerations.
Frankfurter, J
Supreme Court US
SPRS
AND CO.

11. 10
Public Interest?
Black’s Law Dictionary
The welfare of the public as
compared to the welfare of a
private individual or company. All of
society has a stake in this interest and
the government recognises the
promotion of and protection of the
general public. This term is vague but
the government will only let the
public know what is in the public’s
best interest. It won’t
release information that could cause
riots and upheaval in the nation.
SPRS
AND CO.

12. 11
Se 241
Application to Tribunal for relief in
cases of oppression, etc
Public Interest can not be allowed to
be confused with public opinion
G Kasturi V. N Murali
*CG v. Richimen Silks Ltd. & odrs
SPRS
AND CO.

13. 12
Se 241
Application to Tribunal for relief in
cases of oppression, etc
MISMANAGEMENT
• Serious infighting
• Illegally constituted Board
• Fund diversion
• Erosion of company’s substratum
SPRS
AND CO.

14. 13
Se 242 (1)
Powers of Tribunal
Tribunal is of the opinion that
• Co’s affairs are conducted
prejudicial/ oppressive to member
• Winding up would prejudice such
member
• Just and equitable order
SPRS
AND CO.

15. 14
Se 242 (2)
Powers of Tribunal
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
SPRS
AND CO.

16. 15
Se 242
Powers of Tribunal
Tribunal may also pass interim order
• On application
• Just and equitable
• Amend M/AoA
SPRS
AND CO.

17. 16
Se 243
Consequence of termination or
modification of certain agreements
• No damage for loss of profit
• No re appointment for next 5 years
SPRS
AND CO.

18. 17
Se 244 (1)
Right to apply under section 241
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.
SPRS
AND CO.

19. 18
Se 244 (1)
Right to apply under section 241
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
SPRS
AND CO.

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Se 244 (1)
Right to apply under section 241
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
SPRS
AND CO.

21. 20
Se 433
LIMITATION
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.
SPRS
AND CO.

22. 21
Counsel

23. ADVOCACY
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AND CO.
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• The profession or work of a legal advocate
(/Authorized Representative)
• The Act of pleading for or actively
supporting a cause or proposal.

24. Court Vs. Tribunal
• Harinagar Sugar Mills Ltd. vs. Shyam Sunder
Jhunjhunwala
Jt. Hidayatullah “........By “Courts” is meant Courts of
civil judicature and by “tribunals”, those bodies of men
who are appointed to decide controversies arising
under certain special laws…..”
• Union of India vs. R Gandhi
“……The term “courts” refers to places where justice is
administered or refers to Judges who exercise judicial
functions……. “Tribunals” on the other hand are special
alternative institutional mechanisms, usually brought
into existence by or under a statute to decide disputes
arising with reference to that particular statute, or to
determine controversies arising out of any
administrative law.”
SPRS
AND CO.
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25. Court Vs. Tribunal
COURT TRIBUNAL
Established by State
and entrusted with
judicial power of
administration of
justice
Established under a
statute to adjudicate
specified disputes
arising under the said
statute.
Manned by Judges Judge as a Sole
Member or
combination of Judicial
and Technical Member
Governed by CPC,
Evidence Act
May have its own
procedure (*Inherent
Powers)SPRS
AND CO.
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26. 25
SPRS
AND CO.

27. PLEADING
SPRS
AND CO.
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Order 6, R. 1 -C.P.C.
Pleading means either a plaint or a written
statement.
R2(19) of NCLT Rules, 2016
“pleadings” means and includes
application including interlocutory
application, petition, appeal, revision,
reply, rejoinder, statement, counter
claim, additional statement
supplementing the original application
and reply statement under these rules
and as may be permitted by the
Tribunal;

28. PLEADING
SPRS
AND CO.
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Udhav Singh v. Madhava Rao Scindia
Justice Sarkaria, held: “A pleading has to
be read as a whole to ascertain its
import. It is not permissible to cull out a
sentence or a passage and to read it out
of the context in isolation. .......... the
pleading has to be construed as it stands
without addition or subtraction of
words, or change of its apparent
grammatical sense. The intention of the
party concerned is to be gathered,
primarily, from the tenor and term of his
pleading taken as a whole.

29. PLEADING
SPRS
AND CO.
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To Contain
• Material Facts
• Not Law
• Facts, not evidence*
Facts Probabanda Vs. Facts Probantia
• No case law
• No immaterial facts
• Precision and Certainty

30. PLEADING
SPRS
AND CO.
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Facts, not evidence *
P.Chidambaram vs. R.S.Raja Kannappan
There is distinction between facta probanda (the facts required
to be proved, i.e. material facts) and facta probantia (the facts
by means of which they are proved, i.e. particulars or
evidence). It is settled law that pleadings must contain
only facta probanda and not facta probantia. The material
facts on which the party relies for his claim are
called facta probanda and they must be stated in the
pleadings. But the facts or facts by means of
which facta probanda (material facts) are proved and which
are in the nature of facta probantia (particulars or evidence)
need not be set out in the pleadings. They are not facts in
issue, but only relevant facts required to be proved at the trial
in order to establish the fact in issue.

31. PETITION
R 2(17)
NCLT Rules, 2016
SPRS
AND CO.
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“petition” means a petition
or an application or an
appeal or a complaint in
pursuance of which any
proceeding is commenced
before the Tribunal;

32. • Sworn or affirmed before
Advocate/ Notary
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AND CO.
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AFFIDAVIT

33. AUTHORISED REPRESENTATIVE
–A person authorised in
writing by a party
–To present his case
–U/Se 432 of CoA
Se 432 of CoA-
• A party to any proceeding or appeal before the Tribunal
or the Appellate Tribunal, as the case may be, may
either appear in person or authorise one or more
chartered accountants or company secretaries or cost
accountants or legal practitioners or any other person
to present his case before the Tribunal or the Appellate
Tribunal, as the case may be.
SPRS
AND CO.
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34. Application/Interlocutory Application
R 2(5) & (15)
NCLT Rules, 2016
SPRS
AND CO.
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“application” means any application,
interlocutory application or proceedings
filed under the provisions of the Act,
including any transferred application or
transferred petition as defined under
sub-rule (29)
“interlocutory application” means an
application in any appeal or original
petition on proceeding already
instituted in the Tribunal, but not being
a proceeding for execution of the order
or direction of Tribunal;

35. Interim Relief/Ad Interim Relief
SPRS
AND CO.
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Rajendraprasad R. Singh vs The Municipal Corpn.
Of Gr. Bombay
“…. even after the reply is filed by the defendants the
court may grant ad-interim order of injunction if it
does not have time to hear the matter and feels that
it is necessary to grant injunction pending hearing to
protect the plaintiff pending hearing of the
application. The Court further observed that thus, ad
interim order of injunction may be ex parte or may
be passed even in the presence of the defendants.
There is no qualitative difference between an interim
and ad interim order except about the period for
which they operate and the stage at which they are
passed. If so the order refusing an ad interim
injunction is as much appealable as an order
refusing an interim injunction.”

36. SPRS
AND CO.
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REPLY

37. SPRS
AND CO.
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REJOINDER

38. SPRS
AND CO.
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SUR - REJOINDER

39. SPRS
AND CO.
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REVIEW

40. SPRS
AND CO.
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REVISION

41. CAUSE LIST • Daily Cause List
• Monthly Cause List
• Carry forward of
CL/Adjournment
SPRS
AND CO.
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42. SPRS
AND CO.
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MENTIONING THE MATTER

43. SPRS
AND CO.
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ARGUEMENTS

44. INHERENT POWERS OF
TRIBUNAL
• Rules not to restrict powers
of T/AT
• May issue necessary
directions to meet ends of
justice or to prevent abuses
of the process of the T/AT
SPRS
AND CO.
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45. * Manoharlal Chopra V. Seth Hiralal
Every court is constituted for the purpose of
administering justice between the parties and,
therefore, must be deemed to possess, as a
necessary corollary, all such powers as may be
necessary to do the right and to undo the wrong
in the course of administration of justice.
* Indian Bank Vs. Satyam Fibres (India) Pvt Ltd,
Pushpa Katoch Vs. Manu Maharani Hotels Pvt Ltd.
Recall a judgment obtained by fraud
* Gangabai Vs. Ratankumar
Every court has inherent power to correct own
mistakes.
SPRS
AND CO.
44
INHERENT POWERS OF
TRIBUNAL

46. • Enlargement of Time
• Payment of Court Fees
• Transfer of Business
• Power to exempt
From compliance with any rules.
• Power of Adjournment
• Delegation of Powers
SPRS
AND CO.
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INHERENT POWERS OF
TRIBUNAL

47. QUESTION OF FACT
•Point of fact
•Reference to facts
•Circumstances
•Factual situations
SPRS
AND CO.
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48. QUESTION OF LAW •Point of Law
•Legal Principles
•Interpretation of
Statutes
SPRS
AND CO.
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49. PRONOUNCEMENT OF ORDER
• Order – What follows
hearing
• Judgment – what follows
a trial
SPRS
AND CO.
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50. • Operative portion of the
Order –last para
• Format of Order
SPRS
AND CO.
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ORDER

51. 50

52. Contact Co-ordinates
CS Rahul P. Sahasrabuddhe
Founding Partner
SPRS And Co
Company Secretaries
Mobile No. 98 196 500 45
Email: RAHUL@SPRSCS.COM
THANK YOU 51

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