Lawsikho Blog

Learn the substantive and procedural law aspects of applying for relief against oppression in companies. This article will benefit corporate litigation lawyers, law students, and anybody seeking to gain knowledge in company laws.

Introduction

I vividly remember the year 2016 when our nation’s strongest corporate powerhouse’s core was shaken. Yes! You guessed it right. I am talking about the Cyrus Mistry- Tata Sons feud. I was a law student then, and I remember my father asking me, “What’s happening here? Tell me by the book”. I then started to diligently read the newspapers, turned to the Company Law bare act and flipped a few pages of Ramaiyya– the holy grail for some law students.

Oppression and mismanagement- what a wildfire! 

Why did this topic garner so much attention after the Cyrus Mistry-Tata Sons feud? 

It felt as if this particular feud was a watershed moment for the provisions of oppression and mismanagement. All my peers, professors, and seniors at work started discussing (sometimes heated) about this topic. 

For the first time, I heard about “democracy in corporate governance”. Wow! Eureka! What a cool phrase for a then-budding lawyer to hear. 

In normal parlance, the expression “oppression” means causing harm or injury by an unjust exercise of power or discretionary authority, especially with unjust motives. 

In the context of a company, it means depriving minority shareholders of their legitimate expectations or meting out unfair treatment by the controlling shareholders (majority shareholders).  

But they aren’t left high and dry in such a situation— the Companies Act provides for suitable remedies in such a scenario. 

 In this article, we learn what acts amount to oppression, how to draft an application when there are incidents of oppression, and the procedure to file such an application. 

What is Oppression?

Let’s take an interesting analogy to make this concept clearer:

I am sure we have heard enough about patriarchy and have also seen several patriarchal households from closed quarters. Do you know what’s common between such households and control of the majority shareholder/members of a company? It is the concentration of power. 

Just like in a patriarchal set up, a male member of the family runs the show by exercising control over financial decisions, family resources and major life choices, often without consulting or considering the opinions of women and younger members. Similarly, in a company, majority shareholders dictate key business and strategic decisions, such as dividend distribution and executive salaries, often disregarding the interests of minority shareholders. 

In both scenarios, dissent is often silenced—family members who challenge the authority of the patriarch may face severe backlash or exclusion, just as minority shareholders who raise concerns may be ignored or removed or pressured to sell their shares. Ultimately, both structures imply how unrestrained control can lead to oppression and unfair treatment of those in the minority.

See, the exact definition of oppression is not given in the Act.  However, there is a plethora of Indian and English jurisprudence that has explained it 

It is more tersely articulated by Lord Cooper in the Scottish case of Elder v. Elder & Watson Ltd. [1952 SC 49 Scotland], the essence of the term “oppression” seems to be that the conduct complained of should, at the lowest, involve visible departure from the standards of their dealing, and violation of the condition of fair play on which every shareholder entrusts his money to the company is entitled to rely. This explanation was also relied upon and cited in approval by the Supreme Court of India in various judgments. 

To make this simpler for you, this para implies an act by which the majority shareholders in the management exercise their unchecked power in the conduct of affairs of a company, which harms both the minority and the company. 

To distinguish between what is acceptable and what is not and in what circumstances an application can be filed for obtaining necessary relief/s, let’s move on to the next topic. 

What does not constitute oppression? 

In my humble opinion, to understand what constitutes oppression, it is more important to understand what does not. This will offer more clarity and probably set the thinking wheels of your brain in motion. 

Below are stated some of the interesting instances which were not held as oppression and thus led to the rejection of the application:

1. In Needle Industries (India) Pvt. Ltd. v.  Needle Industries Newey (India) Holding Ltd., it was held that the unwise, inefficient and careless conduct of a director in the performance of his duties cannot give rise to a claim for relief. 
2. In Chander Krishan Gupta v. Pannalal Girdhari Lal Ltd. it was held that 

• where the company is making losses, not declaring a dividend;
• Non-maintenance of records;  

does not amount to oppression. 

3. In Maharani Lalita Rajya Lakshmi v. Indian Motor Company (Hazaribagh) Ltd., 

• denial of inspection of books to shareholder; 
• lack of details in notice of a meeting; 

does not amount to oppression. 

4. In Tata Consultancy Services Ltd. v. Cyrus Investments (P) Ltd. it was held by the Hon’ble Supreme Court of India that a mere lack of confidence of minority shareholders in relation to the majority in management would amount to oppression.

So what constitutes oppression? 

Upon referring to the various judicial pronouncements, the acts amounting to oppression may be summarized as follows:

1. In Hindustan Co-operative Insurance Society Ltd., the statutory acts of not calling the annual general meeting and keeping the shareholders in the dark were held to be oppressive. 
2. In Mohan Lal Chandu Mal v. Punjab Company Ltd., it was held that sabotaging the right of dividend of non-voting members, would amount to oppression. 
3. In Kumar Exporters (P.) Ltd. v. Naini Oxygen and Acetylene Gas Ltd., it was held that continuous refusal by the company to register shares with an ulterior motive of retaining control over affairs of the company was held to be oppressive.   
4. In Col. Kuldip Singh Dhillon v. Paragon Utility Financiers (P). Ltd., it was held that-

• transfer of shares held by a company to some shareholders without making an offer to all; 
• passing of resolution by directors of private company in which they are interested without disclosing the nature of their interest. 
• if a sale of its assets is made by a company to some of its directors and simultaneously loan is made to purchasers to finance this sale 

amounts to oppression. 

5. In Bina Chawda v. Rezcom Realty (P.) Ltd.– It was held that the sale of property made to a related entity at a throw away price, shall amount to oppression.  
6. In Sajal Dutta v. Ruby General Hospital Ltd., non-allotment of shares as per the promoters’ agreement was held to be oppressive. 

I went overboard with the instances here but believe me, it is the most intriguing topic of the entire legislation and worth understanding. I hope you all find it as interesting as I do as I break down each topic below. 

What are the circumstances under which an application may lie?

As we have read above, not every act of controlling shareholders would amount to oppression. To distinguish the decisions better, let us now look at the situations enumerated by the law which give rise to cause of action to file such an application. 

Remedy for oppressed minority [Section 241(1)] 

An application for reliefs may be filed before the National Company Law Tribunal (“the Tribunal” for short) when- 

• the affairs of a company have been or are being conducted in a manner prejudicial to the public interest or oppressive to any member;
• when material change has taken place in the management of or control of the company which is not in the interest of any creditors, debenture holders or class of shareholders of a company. 

The change may be due to an alteration in the board or manager or in the ownership of the company’s share or membership. 

Remedy for the Central Government [Sections 241 (2) and (3)]

The Central Government itself may approach the NCLT-

• if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest. 
• Initiating a case and referring the same to the NCLT with a request to inquire if, in its opinion, a person in charge of a company’s management has:

1. Committed fraud, misfeasance, persistent negligence, default in carrying out his obligations or breach of trust; 
2. Not followed sound business principles or prudent commercial practices;
3. Managed the company in a way that harms or causes serious injury to trade, industry, or business interests; and
4. Operated the company with fraudulent intent or for an unlawful purpose with an intent to defraud creditors, members, or defeat the public interest.

Eligibility to apply

1. For companies with share capital:

• At least 100 members or 10% of total members, whichever is lower, OR
• Any member(s) holding at least 10% of the issued share capital, 
  provided all dues on shares are paid.

2. For companies without share capital: At least 1/5th (20%) of the total members.
3. NCLT may exercise its discretion in waiving the eligibility criteria on application. 
4. For the sake of clarity, it is also stipulated that joint shareholders shall be counted as one. 
5. Eligible members can apply on behalf of other shareholders with their written consent for collective benefit.

For people who do not know, share capital is the total amount of money raised by a company by issuing shares. 

Now that we know the basics, let’s get to drafting the application when there’s a case of oppression. 

How do you draft an application?

We will take an example to learn how to do this. 

A minority shareholder, Mr. XYZ, holds 15% equity in Alliance Industries Ltd., a profitable company. The majority shareholders Mr. PQR, Mrs, TUV and Mr. LMN, who are also the directors, have:

• Consistently refused to declare dividends despite running profitable; 
• Approved excessive remuneration for themselves.
• Removed Mr. XYZ from the board merely because he dissented from some of the decisions of the majority shareholders.
• Diverted company funds to their personal businesses.

Hope you have understood the problem and are already thinking on the same lines as me. However, it is equally important to know the procedural aspect. For this, we refer to the National Company Law Tribunal Rules 2016 (“the Rules” for short). 

Before delving into drafting the averments, it is equally important to understand the format of the application. Failure to adhere to the prescribed format may render the application defective. 

Below mentioned are the prescribed rules for drafting- 

• Be in English, or if in another Indian language, include an English translation.
• Be typed in double spacing on standard petition paper.0
• Have specified margins: 4 cm (top), 5 cm (left), and 2.5 cm (right).
• Be duly paginated, indexed, and stitched in paper book form.

What is needed to be filed along with the application? Here are the necessary components of a paper form book. 

1. Index
2. Memo of Parties 
3. Synopsis 
4. List of Dates and Events  
5. Application under Section 241 (1) of the Companies Act 2023 read with Rule 81 of the National Company Law Tribunal Rules, 2016. 
6. Exhibits (List of documents and correspondence relied upon by the Applicant in support of his case).
7. Affidavit in support
8. Vakalatnama
9. Interlocutory Application, if any urgent interim reliefs are sought.  

 I. Memo of Parties

Explanation- This is to address service so a memorandum shall only contain the names, occupation, and registered address of the parties. 

MEMO OF PARTIES

Mr. XYZ, a shareholder of Alliance Industries Ltd. 

Residing at 97, Warden Road, 

Mumbai …Applicant 

Versus 

 1. Alliance Industries Ltd. 

Having its registered office address at

Nariman Point, Mumbai. 

2. Mr. PQR

 35, Sea Waves, Worli, 

Mumbai

Managing Director of Alliance Industries Ltd.

3.  Mrs. TUV

26, Sunrise, Worli, 

Mumbai

Director of Alliance Industries Ltd.

4. Mr. LMN 

9, Beach View, Haji Ali,

Mumbai

Director of Alliance Industries Ltd. ….Respondents 

II. Synopsis

Explanation- Though lawyers in practice call this an “ancillary document”. In my opinion, this is possibly the most important document as it forms a very good foundation of your application. A crisp and impactful summary goes a long way. 

Also, you may note that a synopsis must not exceed 2 pages. During my practice years, my applications were termed defective by the registrar in case it exceeded 2 pages. Here is how you avoid such a situation.

SYNOPSIS

1. The Applicant, holds 15% equity in Respondent No. 1 company thereby making him a minority shareholder. 
2. The Applicant states that the Respondent No. 2-4 have withheld his rightful profits by failing to declare dividend for 3 consecutive years that is since FY 2022 despite the company’s continued profitability. 
3. The Applicant further states that the Respondent Nos. 2-4 vide Ordinary Resolution dated 1st June 2023 and 6th June 2024 directors have approved disproportionate salaries and benefits for themselves, diverting company funds for personal gain while neglecting shareholder interests. 
4. The Applicant further states that when he objected to the disproportionate salaries, the Respondent Nos. 2-4, on 8th December 2024 arbitrarily removed him from the board without valid justification, eliminating his participation in company affairs and decision-making. 
5. In view of this, the Respondent Nos. 2-4 being majority shareholders have misused company resources by channeling funds into their personal businesses, harming the financial health of Alliance Industries Ltd. and undermining corporate governance.
6. Hence, this Application. 

III. List of Dates and Events

Explanation- After having written the Synopsis, List of Dates and Events is next in line which shall enumerate the history/root cause of the dispute. One needs to know that this has to be even shorter than a synopsis. Lets look at it- 

Sr. No.	Dates	List of Events
1.	FY 2022 – FY 2024	The Respondent No. 1 company failed to declared dividend for three consecutive financial years despite its profitability.
2.	1st June 2023	The majority shareholder i.e. Respondent Nos. 2 to 4 passed an ordinary Resolution approving a disproportionate increase in salaries and benefits.
3.	6th June 2024	Thereafter, the Respondent No. 2-4 vide another ordinary resolution approving further disproportionate salaries and benefits for directors.
4.	8th December 2024	Applicant arbitrarily removed from the Board without valid justification.

IV. Format of an application 

Lets now see how the cause title and party name appears in our application- 

Before the National Company Law Tribunal      

     Bench at Mumbai

In the matter of the Companies Act, 2013

     In the matter of 

Mr. XYZ, a shareholder of Alliance Industries Ltd. 

Residing at 97, Warden Road, 

Mumbai …..Applicant 

Versus

       1. Alliance Industries Ltd. 

Having its registered office address at

Nariman Point, Mumbai. 

     2. Mr. PQR

   Residing at 35, Sea Waves, Worli, 

   Mumbai

   Managing Director of Alliance Industries Ltd.

     3.    Mrs. TUV

    Residing at 26, Sunrise, Worli, 

    Mumbai

    Director of Alliance Industries Ltd.

     4.   Mr. LMN 

   Residing at 9, Beach View, Haji Ali,

    Mumbai

  Director of Alliance Industries Ltd.: ….Respondents 

Application for relief under Section 242 of the Companies Act, 2013

V. Averments in an application

At the outset, one needs to describe both the parties in the manner given below- 

A. Particulars of the Applicant 

The Applicant, XYZ, an Indian inhabitant, is a chartered accountant by profession and has been a shareholder of Alliance Industries Ltd., since 2020. A copy of the share certificate of XYZ and other minority shareholders are hereto attached and marked as Exhibit-”A”.  

To show his bonafide, the applicant must also state and declare that- 

The Applicant further states that he has paid all the calls and other sums due on his shares. 

B. Particulars of the Respondents

1. Respondent No. 1 is a company registered under the Companies Act, 1956 having CIN L2109KA2019OPC142333 and a registered office address at Nariman Point, Mumbai. It is involved in the business of software and communication.  
2. The Respondents No. 2 to 4, Mr. PQR, is an Indian inhabitant, is a managing director having DIN No. 980 and Mrs. TUV having DIN NO. 981 and Mr. LMN having DIN No. 896, Indian inhabitants are the directors of the Alliance Industries Ltd. 

C.  Jurisdiction

Explanation- This clause is to ensure that the application is filed before the appropriate forum. 

The Applicant states that this Hon’ble Tribunal has jurisdiction to hear and decide the present Application.   

D. Facts

Explanation- As per the Rules, only material facts must be stated, and they should be stated in a concise format. Each cause of action must be stated in a separate and distinct paragraph. 

We need to understand here that we are making grave allegations against the Respondents. Therefore, to substantiate our case, we need to have all the relevant documents which are in support of our averments. This is a non-negotiable. Failing to do so may firstly give an impression that you as an applicant are not bona fide and, secondly, that your application has no merit. Both are detrimental to your case. 

1. The Applicant, holds 15% equity in Respondent No. 1 company thereby making him a minority shareholder. 

Explanation- Here, we need to state the cause of action by stating how the Respondents have failed to declare dividends. 

2. The Applicant states that the Respondent No. 2-4 have withheld his rightful profits by failing to declare dividends for 3 consecutive years that is, since FY 2021 despite the Respondent Nos. 1’s continued profitability. A copy of the relevant financial documents are hereto annexed and marked as Exhibit-B. 

Explanation- Now, we move on to the next cause of action by stating how the directors have increased their remuneration disproportionately. 

3. The Applicant further states that the Respondent Nos. 2-4 vide Ordinary Resolution dated 1st June 2023 and 6th June 2024, the directors have approved a disproportionate increase in remuneration for themselves, diverting company funds for personal gain while neglecting the Applicant’s interests. A copy of the ordinary resolution dated 1st June 2023 and 6th June 2023 is hereto annexed and marked as Exhibit-C.

Explanation- The next paragraph shall categorically state the attempts made by the Applicant to protest against the actions of the directors and the response he met with. 

4. The Applicant further states that when he objected to the disproportionate increase in salaries, the Respondent Nos. 2-4, on 8th December 2024 arbitrarily removed him from the board without valid justification, eliminating his participation in company affairs and decision-making. A copy of the letter dated 8th December addressed to the Applicant by Respondent Nos. 2-4 is hereto annexed and marked as Exhibit- D.

Explanation- Then your application shall state how the Applicant was arbitrarily removed from the board without any explanation. 

5. In furtherance to the aforesaid, the Applicant states that despite addressing several correspondences seeking a legitimate reason for such an arbitrary removal, the Respondent Nos. 2-4 have blatantly ignored and chosen not to respond. Copies of emails and letters addressed to the Respondent Nos. 2-4 are hereto annexed and marked as Exhibit-E1 to E5.

Explanation- Simply sum up how the directors’ decisions and actions have worked to the detriment of the shareholders and the company. 

6. Given this, the Respondent Nos. 2-4, being majority shareholders have misused company resources by channeling funds for their personal gains, harming the financial health of Alliance Industries Ltd. and undermining corporate governance.

VI. Relief(s) sought

Explanation- Anyone who has ever aspired to practice before the prestigious Bombay High Court would have heard of Senior Advocate Mr. Janak Dwarkadas. I had the privilege of hearing him speak on the art of drafting, where he shared a valuable insight from his experience—when a judge takes a plaint or an application in hand, the first thing they read thoroughly is your prayer clause. That moment was enough to make me realize the importance of a well-drafted prayer clause.

It makes perfect sense. After all, a judge needs to know why you’re there and what you expect as a remedy.

PRAYER(S): 

In view of the facts mentioned above, the Applicant places reliance on Section 242 of the Act and prays for the following relief(s);

1. removal of Mr. PQR as the Managing Director and Mrs. TUV and Mr. LMN as Directors of the Respondent No. 1;
2. recovery of undue gains made by any managing director and directors during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims;
3. appointment of such number of persons as directors, who may be required by the NCLT to report to the NCLT on such matters as the NCLT may direct; 
4. imposition of costs as may be deemed fit by the NCLT;
5. For such other reliefs as the NCLT deems appropriate.   

VII. Payment of court fee

Explanation- Are you aware that non-payment of court fees may lead to rejection of your application?

Payment of adequate court fees primarily serves to prevent frivolous litigation and generate revenue for the judiciary. 

Clause

Particulars of bank draft evidencing payment of fee for the application made:

Branch of the Bank on which drawn: Bank of Bharat

Name of the issuing branch: Worli

Demand Draft No. 12345

Date. 24th February 2025

Amount Rs. 10,000/- (Rupees ten thousand)

VIII. Verification clause

Explanation- At the end of the application, there is an affirmation clause. This clause verifies the authenticity of the contents of the Application. 

Solemnly declared at Mumbai )

On this 12th day of February 2025 ) Before me, 

Advocate for the Application Mr. XYZ

(Applicant)

IX. Affidavit in support of the applicaiton

Explanation- How will the tribunal ensure that the authorised signatory who is deposing the application is well-versed and acquainted with the facts of the case? And that what he is saying before the tribunal is the ultimate truth? 

Well, that happens when you also include an affidavit in support of the application. Failure to affirm may label it as defective. Thus, an applicant must affirm that the facts of his case are true to his knowledge and general averments such as jurisdiction, court fees, etc. are based on the information given to him. 

AFFIDAVIT IN SUPPORT

I, Mr. XYZ, son of Mr. LOP, aged 56 residing at Warden Road, Mumbai, do solemnly affirm and say as follows:‐

1. I am a shareholder of the Respondent No. 1 company; 
2. The statements made in paragraphs 1 to 5 of the petition herein now shown to me are true to my knowledge, and the statements made in paragraphs 6 to 9 are based on information, and I believe them to be true.

Solemnly affirmed, etc.

sd/-

What is the procedure to file the application? 

1. The Rules mandate that an address for service must be provided with the application, including:

• Full address details (road, street, house number, town/village, postal code).
• Contact information (fax, mobile number, email).

  2. Presentation of application:

• Must be filed in triplicate by the applicant, authorized representative, or advocate.
• Must be accompanied by certified documents, an indexed list, and the prescribed fee.
• Sufficient copies must be provided for service to the opposite party.
• In pending matters, copies of applications must be served in advance to the opposite party.

  3. Scrutiny process of the application

1. Receipt and acknowledgment

• The filing counter in charge affixes a date stamp on the application. 
• An acknowledgment is issued to the filing party.
• The document is recorded in the register and assigned a diary number before being sent for scrutiny.

2. Scrutiny and compliance

• If defects are found, the document is returned for rectification with a notice to the party.
• The party must comply within seven days; failure to do so leads to Registrar review.

3. Registrar’s discretion –

• The Registrar may return the document for amendments and grant reasonable time for compliance.
• If defects are not corrected within the given time, the Registrar may refuse to register the document, recording the reasons in writing.

4. Scrutiny against Registrar’s decision:

If the application is rejected during scrutiny, an appeal must be filed within 15 days before the designated tribunal, whose decision shall be final.

   5. Registration of application

On admission of application, the same shall be numbered and registered in the appropriate register maintained in this behalf, and its number shall be entered therein.

Listing of cases

1. At first, the daily causelist is prepared and published 

• The Registry must prepare and display the cause list on the notice board before the end of each working day for the next working day.
• The President may issue directions on listing cases.

2. In the causelist, matters are listed in the following order of priority

• Pronouncement of orders.
• Cases requiring clarification.
• Admission cases.
• Cases for orders or directions.
• Part-heard cases (latest ones take precedence).
• Other cases in numerical order or as per Bench directions.

3. What are the contents of a cause list

• Case number, date, time, court hall, and names of presiding members (President, Judicial Member, and Technical Member).
• Names of legal practitioners and their party representation.
• Names of unrepresented parties with their ranks.
• Registry objections and special directions in the remarks column.

4. Carry forward and adjournment of cases

• If a bench does not function due to a holiday or unforeseen reason:
  The cause list for that day will be carried forward to the next working day unless directed otherwise.
• If a bench sitting is canceled due to a member’s unavailability:

The Registrar will adjourn the cases to a suitable date unless otherwise directed, and the new dates or directions will be posted on the Registry’s notice board.

5. Listing of urgent matters

An urgent matter filed before noon shall be listed before the NCLT on the following working day if it is complete in all respects. in exceptional cases, it may be received after noon but before 3.00 P.M. for listing on the following day, with the specific permission of the Bench.  

What happens when the matter gets listed?

When a case of oppression and mismanagement gets listed before the NCLT, the following procedure is usually followed:

1. Admission of the petition

• At the time of the first hearing, the NCLT verifies whether the petition is maintainable by checking if the petitioner meets the eligibility criteria (e.g., holding the required percentage of shares). Only if the petitioner meets the eligibility criteria is the petition admitted. 
• If the case is found prima facie valid, notices are issued to the Respondents for their reply.
• If a case is made out, the NCLT may grant interim relief such as restraining directors from acting, stopping asset transfers, etc.

2. Pleadings

• The Respondents are directed to file their reply (defending their actions or challenging the petition) within a specific time.
• The Petitioner submits a rejoinder to counter the reply.
• For the sake of clarity, the NCLT may seek further documents or submissions from both sides.

3. Arguments & evidence

• The matter proceeds for oral arguments, where both parties present their case through legal counsel.
• The NCLT examines the financial records and minutes of meetings to verify any alleged oppressive conduct.
• If needed, an expert opinion or forensic audit may be ordered.

4. Final decision & Orders

• The Tribunal either allows or dismisses the petition.
• If oppression/mismanagement is proven, it can pass orders such as the removal of directors responsible, the appointment of an administrator to manage affairs, the regulation of company conduct to safeguard minority shareholders, and the winding up of the company (if affairs cannot be rectified).

What are the orders that the NCLT may pass? 

In the foregoing paragraph, we have seen how the procedure is conducted. Now, let’s have a look at the reliefs/orders that the NCLT is empowered to grant/pass in case of relief against oppression and mismanagement.  

Section 242(2) of the Act provides for the following- 

1. the regulation of conduct of affairs of the company in future;
2. the purchase of shares or interests of any members of the company by other members or by the company;
3. in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital;
4. restrictions on the transfer or allotment of the shares of the company;
5. if the NCLT deems just and equitable, the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may; 
6. the termination, setting aside or modification of any agreement between the company and any person other than those referred to in point 5 above.
   Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned;
7. the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference;
8. removal of the managing director, manager or any of the Directors of the company;
9. recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims;
10. regulate how the managing director or manager of the company may be appointed after an order removing the existing managing director or manager of the company;
11. appointment of such number of persons as Directors, who may be required by the NCLT to report to the NCLT on such matters as the NCLT may direct;
12. imposition of costs as may be deemed fit by the NCLT;
13. any other matter for which, in the opinion of the NCLT, it is just and equitable that provision should be made.

Conclusion

The principles of corporate governance demand that the affairs of a company be conducted fairly, ensuring that the interests of all stakeholders—especially minority shareholders—are protected. The actions of the majority shareholders, including the denial of dividends, excessive remuneration, arbitrary removal of a board member, and diversion of company funds, clearly constitute oppression and mismanagement.

Through legal recourse before the NCLT, the aggrieved shareholder/s can seek appropriate remedies, including reinstatement, financial restitution, and corporate governance reforms. This article underscores the critical role of corporate democracy and reinforces the necessity of judicial intervention to maintain fairness and transparency in business operations. Ensuring that companies operate in the best interests of all shareholders—not just a privileged few—is fundamental to upholding trust and confidence in the corporate sector.

FAQs

1. What is the limitation period for applying for relief against oppression and mismanagement?

The Act does not specify a limitation period for applying oppression and mismanagement. However, the NCLT have time and again held that Article 137 of the Limitation Act, 1963 applies, which prescribed three years from the date the cause of action arises.

In cases of a continuous cause of action, this three-year limitation is not strictly enforced, as each instance of ongoing oppression or mismanagement creates a fresh cause of action, allowing the aggrieved party to seek relief at any time while the wrongful act persists.

2. Is there any timeline stipulated to complete the proceeding? 

As per Section 422 of the Companies Act, 2013, NCLT is required to dispose of cases as expeditiously as possible and endeavor should be made to decide them within 3 months from the date of filing, which is further extendable for 90 days. However, in reality, such cases easily take up to 1 to 2 years to conclude. 

3.  What renders the application defective? 

An application before the National Company Law Tribunal (NCLT) can be considered defective if it is in- 

1. Non-Compliance with procedural rules such as using an Incorrect format, non-payment of fees, jurisdictional error, time barred application. 
2. Deficiencies in documentation such as incomplete or missing affidavits, lack of supporting documents, and unsigned or improperly executed documents.
3. Non-Compliance with NCLT directions such as failure to rectify defects and non-service of notice. 

4. What is the quantum of court fee payable at the time of filing of the application?

As per the Rules, a court fee of Rs. 10,000/- (Rupees ten thousand) is required to be paid at the time of applying.

5. How can one withdraw the pending application? 

As per the Rules, the applicant must file an application seeking leave of the NCLT to withdraw. Such a leave application must be drafted as per the format prescribed under Form No. 9 of the Rules. 

6. Who is not eligible to make an application for relief against oppression and mismanagement? 

The following are disqualified from making an application: 

• Member /s whose calls are in arrears 
• A holder of a letter of allotment of a party paid share
• A holder of a share warrant 
• A holder of a share certificate to bearer 
• A transferee of shares who has not lodged the shares for transfer to the company.

7. Can a shareholder of a holding company apply for relief against oppression against a subsidiary company? OR Can the director of a holding company apply for relief against oppression against a subsidiary company? 

Generally, as the rights of shareholders/directors of a holding company do not get adversely affected on account of activities carried out by the subsidiary company, they do not have a locus standi to file such an application 

However, if the shareholder/director can establish that affairs of the subsidiary company are carried out in a way that is detrimental to the interest of the holding company, they may seek relief through the holding company or in certain exceptional cases, approach the NCLT.

8. Is there a way in which minority shareholders can come together and file such an application? 

When the issues in question are common to all affected, minority shareholders can join together and sue on behalf of a larger group of persons. This is known as a class action suit.

In such a situation, the application shall also contain a memo giving out names and addresses of the minority shareholders along with their consent in favour of the representative.  

9. Is there a recourse available for a person aggrieved by the order of the NCLT? 

Yes. An aggrieved person can approach the NCLAT within 30 days from the date of receipt of the order. An extension of 15 days may be given if he shows sufficient cause for delay. 

10. Can this application be filed online? 

Yes. The process of filing has now moved online. You may refer to the link here to understand the online e-filing process.