Section 241: Application to Tribunal for relief in cases of oppression, etc
This section allows company members or the Central Government to apply to the Tribunal for relief if a company's affairs are being conducted in a prejudicial or oppressive manner.
The section, clause by clause
What the section says
In plain terms
(1)Any member of a company who complains that—
A company member can apply to the Tribunal for relief if they think the company's affairs are being conducted in a way that is prejudicial to public interest or to them or other members, or if there has been a material change in the company's management or control that may harm the company's interests.
(1)(a)the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or
(1)(b)the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company’s shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter.
(2)The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter. 1[Provided that the applicants under this sub-section, in respect of such company or class of companies, as may be prescribed, shall be made before the Principal Bench of the Tribunal which shall be dealt with by such Bench.]
The Central Government can also apply to the Tribunal if it thinks the company's affairs are being conducted in a way that is prejudicial to public interest.
(3)Where in the opinion of the Central Government there exist circumstances suggesting that—
(3)(a)any person concerned in the conduct and management of the affairs of a company is or has been in connection therewith guilty of fraud, misfeasance, persistent negligence or default in carrying out his obligations and functions under the law or of breach of trust;
(3)(b)the business of a company is not or has not been conducted and managed by such person in accordance with sound business principle or prudent commercial practices;
(3)(c)a company is or has been conducted and managed by such person in a manner which likely to cause, or has caused, serious injury or damage to the interest of the trade, industry or business to which such company pertains; or
(3)(d)the business of a company is or has been conducted and managed by such person with intent to default its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose or in a manner prejudicial to public interest, the Central Government may intiate a case against such person and refer the same to the Tribunal with a request that the Tribunal may inquire into the case and record a decision as to whether or not such person is a fit and proper person to hold the officer of director or any other office connected with the conduct and management of any company.
(4)The person against whom a case is referred to the Tribunal under sub-section (3), shall be jointed as a respondent to the application.
The person against whom a case is referred to the Tribunal must be joined as a respondent to the application.
(5)Every application under sub-section (3)—
An application to the Tribunal must include a concise statement of the circumstances and materials relevant to the inquiry, and must be signed and verified in a specific manner.
(5)(a)shall contain a concise statement of such circumstances and materials as the Central Government may consider necessary for the purpose of the inquiry; and
(5)(b)shall be signed and verified in the manner laid down in the Code of Civil Procedure (5 of 1908), for the signature and verification of a plaint in a suit by the Central Government.]
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Subs. by Act 22 of 2019, s. 32, for “punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees” (w.e.f. 2-11-2018).
- 1. Ins. by Act 22 of 2019, s. 33 (w.e.f. 15-8-2019).
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Referred to by
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.