Introduction
The National Company Law Tribunal (NCLT) is a quasi-judicial body in India that adjudicates issues relating to Indian companies. One of the key Powers of NCLT is to intervene when a company’s affairs are being conducted in a manner prejudicial or oppressive to any member or members, prejudicial to public interest, or prejudicial to the interests of the company.
Powers of NCLT under Section 241 and 242 of the Companies Act, 2013
1. Intervention in Company Affairs
Under Section 241 of the Companies Act, 2013, NCLT has the power to intervene when the affairs of a company are being conducted in a manner prejudicial or oppressive to any member or members, prejudicial to public interest, or prejudicial to the interests of the company.
2. Issuance of Orders
As per Section 242 of the Companies Act, 2013, if NCLT is of the opinion that a company’s affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members, prejudicial to public interest, or prejudicial to the interests of the company, it can make such orders as it thinks fit for regulating the conduct of the company’s affairs in future.
3. Alteration of Memorandum and Articles
Under Section 242(1)(b) of the Companies Act, 2013, NCLT has the power to direct alteration of the memorandum and articles of association.
4. Termination or Modification of Agreements
Under Section 242(2)(e) and (f) of the Companies Act, 2013, NCLT can terminate or modify any agreement between the company and its managing director, any other director or manager.
Relevant Judgments and Case Laws
Shri Kalu Masar & Anr v. Solanki Green Marble Pvt Ltd
In this case, allegations of oppression and mismanagement were made against the respondent. The National Company Law Tribunal (NCLT), New Delhi Bench dismissed these allegations as no case of oppression and mismanagement was made out by the petitioners. This case highlights that allegations of oppression and mismanagement need to be substantiated with evidence for NCLT to exercise its powers under Sections 241 and 242.
Elder v. Elder & Watson
This is a landmark case where the Supreme Court of India defined “oppression” as lack of probity and fair dealing in the affairs of the company to the prejudice of some portion of its members. This definition has been used as a benchmark in subsequent cases involving allegations of oppression.
Anupam Mittal vs People Interactive India Pvt Ltd
In this case, Hon’ble High Court of Bombay held that disputes pertaining to oppression and mismanagement under Indian law are not arbitrable and only NCLT has exclusive jurisdiction to decide such disputes. The court stated that when the subject matter of dispute is incapable of settlement through arbitration under Indian law, enforcement of such a foreign award becomes an impossibility. This case emphasizes that only NCLT has jurisdiction over matters related to oppression and mismanagement.
Conclusion of Powers of NCLT under Sections 241 and 242
The powers vested in NCLT under Sections 241 and 242 of the Companies Act, 2013 are extensive and crucial for maintaining corporate governance and protecting the interests of stakeholders. The tribunal plays a significant role in ensuring that companies adhere to legal provisions and operate in a manner that is fair and just. The cited case laws further illustrate how these powers are exercised by NCLT in real-world scenarios.
Please note that these are summaries and you should refer to each provision’s full text for complete understanding.
: Companies Act, 2013 : Shri Kalu Masar & Anr v. Solanki Green Marble Pvt Ltd : Anupam Mittal vs People Interactive India Pvt Ltd
