Reassessing Locus Standi In Oppression And Mismanagement Petitions
- IJLLR Journal
- 5 days ago
- 2 min read
Aditya Vikram Sen, B.A. LL.B. (Hons.), Jindal Global Law School (O. P. Jindal Global University)
ABSTRACT
Corporate Governance, analogous to its parliamentary equivalent, entails the will of the majority as a key feature of a company’s decision-making process. Simultaneously, it also safeguards the interests of the minority members from unjust prejudice caused to their interests. Section 241 of the Companies Act, 2013 lays down the right for any member of a company to approach the National Company Law Tribunal ('NCLT/Tribunal') for redressal on the belief that the operations of the company are being carried out oppressively and is detrimental to public interest, contrary to the company’s own interests, oppressive to any member(s), or when substantial alterations are being brought about in the control and management of the company.
This right of the minority shareholders is based on the members meeting a numerical threshold, stipulated under Section 244. However, the Act also permits the tribunal to waive the locus requirement, enabling members who do not attain the numerical criterion to approach the tribunal for cases involving oppression and mismanagement.
With regard to the maintainability of the petition under Section 241, the position of the law is still uncertain. The courts have rendered conflicting views on the right of an individual who is not a member of the company to maintain a petition for redressal against oppression and mismanagement.
This paper seeks to examine the grounds for the grant of a waiver by the Tribunal, as well as the shift in the scheme of the Companies Act, 1956 and the 2013 Act in determining membership and the judicial confusion emanating from the latter due to an undue reliance upon the jurisprudence under the 1956 Act wherein the courts adopted a more flexible approach.
