Unit 4 oppression & mismanagement

law

1. OPPRESSION & MISMANAGEMENT UNDER COMPANIES ACT, 2013 BY ANJALI DIXIT ASSISTANT PROFESSOR FACULTY OF JURIDICAL SCIENCES RAMA UNIVERSITY

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