Introduction companies act 1956, under sections 397 and 398, provides company law tribunal clb the authority to deal with petitions pertaining to oppression and mismanagement. Prevention of oppression and mismanagement lawteacher. Minority rights on oppression and mismanagement under. Mca releases draft rules on nclt, schemes of compromises. Companies act provides for statutory reliefs in cases of oppression and. The section which covers oppression and mismanagement is 241 of companies act 20 and chapter xvi which corresponds to a clubbed section of 397 and 398 of the erstwhile companies act, 1956. Practical and procedural aspects of drafting, art of pleading and court craft. Provision of compromise and mismanagement dealing with companies act 1956 was section a. Oppression and mismanagement under companies act, 20. Mjk private limited has two group of shareholders, one foreign shareholders holding 55% and one indian. The bombay high court had, while interpreting section 397 to 399 of the companies act, 1956 the act of 1956, resorted to a wide interpretation by observing that the legislature intended to include both equity and preference capital under the definition of isc. Arbitrability of oppression and mismanagement in india. Oppression and mismanagement remedy us 241 with draft petition format new act has retained the remedy of oppression and mismanagement. This stance has been also affirmed by the supreme court.
Rejects arbitration route for disputes in petitioner cos affairs, upholds sec 397398 course delhi h dismisses writ petition challenging l order, whereby petitioners application us 8 of arbitration and onciliation act, 1996 was dismissed. This statutory protection for prevention of oppression and mismanagement is an alternative remedy for winding up of the affairs of the company. Oppression and mismanagement drafting of petitions. Ca 1956 provides for various provisions dealing with situations wherein rights of minority shareholders are affected and the same can be divided into two major heads, i. Pdf on feb 29, 2020, amit kumar and others published scope of sections 397 and 398 of companies act 1956. Classroom live lectures edited, enlarged and updated. Top 10 rulings delivered by high courts during 201416 on oppressionmismanagement h. However this time limit does not applicable to old matters filed under section 397 and 398 under the companies act 1956 and transferred from company law board. Prevention of oppression and mismanagement under the.
Companies declaration of beneficial interest in shares rules, 1975 view download. So the exception has been provided separately for prevention of oppression and mismanagement for protecting the rights of minority shareholders. Be it enacted by parliament in the sixth year of the republic of india as follows. Under the previous companies act, 1956 ca, 1956, this power was exercised by the company law board clb. Powers of government to prevent oppression or mismanagement. Law on oppression or mismanagement us 397, 398 companies. Application to company law board for relief in cases of oppression 398. A company is a legal or juristic person, apart from its members, capable of rights and duties of its own, and endowed with the potential or perpetual succession and a. Minority rights on oppression and mismanagement under companies act, 1956 and companies bill, 2011.
Oppression and mismanagement board of directors interest. These terms are not defined under the companies act 20 and are left. Section 241 of the act, which corresponds to section 397 of companies act, 1956 old act provides the circumstances in which any member of a company or the central government can apply to the national company law tribunal nclttribunal for relief in cases of oppression and mismanagement. I have earlier written articles on oppression and mismanagement under section 397398 of the companies act, 1956. Protection of minority shareholders in a company under. Mismanagement and oppression are covered under section 241, chapter xvi of the companies act, 20 which corresponds to section 397 and 398 of the earlier companies act, 1956. Secondly, section 406 of the companies act, 1956 read with section 543 of the act set forth in schedule xi enables company law board to book delinquent directors, managers and. Full text containing the act, companies act, 1956, with all the sections, schedules, short title, enactment date, and footnotes.
Prevention of oppression and mismanagement under the companies act, 1956, application to tribunal for relief in cases of. Moreover, there is a conscious departure in the legislative intent of companies act, 1956 which only addressed public interest or interest of the company while assessing a claim of oppression and mismanagement. The clb noted that its jurisdiction under section 397 and 398 of the act can be invoked. The tribunal justified the act under section 402 of the companies act, 1956 which.
Class action aims to prevent oppression and mismanagement in companies. The practical lawyer power of the company law board in. The companies act 1956, defines company as a company formed and registered under the companies act. Class action is one of the youngest additions to indian jurisprudence particularly, in indian corporate jurisprudence. Oppression and mismanagement does the law need a revamp. For instance, provisions have been made a for more powers to. Sections covered under prevention of oppression and management of companies act, 20. Companies act, 1956 bare acts law library advocatekhoj. Prevention of oppression and mismanagement legal bites. Of late, there is a change as to how a petition under section 397398 of the companies act, 1956 to be decided. In this article we have given all the reference books and book authors and topics and contents about the book the companies act 20. The constitutional courts have laiddown many important principles with regard to a proceeding of oppression and mismanagement under section 397398 of the companies act, 1956. Any such act, stands entirely outside the subscription share deed.
Maintainability of petition seeking relief in cases of. The companies act 20 pdf book is free and available here to download. Companies issue of share capital with differential voting rights rules, 2001 view download. Arbitrability of oppression and mismanagement petitions in. Oppression and mismanagement drafting of petitions, stages of cases, court crafts, case studies. While the companies act, 1956 deals with this topic in chapter vi. Arbitrability of oppression and mismanagement petitions in india arbitrability of oppression and mismanagement petitions in india kumar, avinash 20150601 00. The provisions relating to oppression and mismanagement are in chapter xvi of the. Section 397,398 and 401 of the companies act,1956 are merged and bought into companies act,20 with few changes to make it more effective. Prevention of oppression and mismanagement apowers of company law board. However, prevention of oppression and mismanagement is an exception to this rule. A petition under sections 397 and 398 of the companies act, 1956 always alleges to a patternseries of clandestine conduct or surreptitious actions that result in the mismanagement of the companys affairs or in the oppression of the minority shareholders, or both. As india is a democratic country, the companies being a legal citizen also bestows in.
Application to company law board for relief in cases of oppression. Books of account companies act, 1956 allegations of mismanagement and connected issues. In the latest companies act, 20 chapter xvi deals with the topic of prevention of oppression and mismanagement. I am of the strong opinion that than any provision of law under the companies act, 1956, the provisions dealing with oppression and mismanagement are very interesting and so. Companies bill 2012 became the companies act, 20 act 18 of 20. So any matter of oppression and mismanagement shall be disposed by nclt within a period of maximum six months. This protection to the oppressed minority is also statutorily provided under sections 241 and 242 of the companies act, 20. Top 10 rulings delivered by high courts during 201416 on.
Power of company law board to prevent change in board of directors likely to affect. In the companies act, 1956 this provision is discussed in two parts. Oppression and mismanagement under the companies act. Complaint against the director for oppression and mismanagement of co. Though it is settled that a petition under section 397398 of the companies act, 1956 alleging oppression and mismanagement in the company is not maintainable solely based on procedural irregularities, it is very difficult to.
1374 101 968 15 671 22 505 1302 1339 1122 1215 879 169 838 422 570 1494 1463 441 919 324 945 240 1051 1460 1136 914 387 651 301 723 1101 419 1407 980