Megha Saraf


The Ministry of Corporate Affairs (hereinafter referred to as “MCA”) vide its Notification[1] dated 9th September, 2016, (hereinafter referred to as “the Notification”) has enforced few more sections of the Companies Act, 2013, (“hereinafter referred to as “the Act”). It is pertinent to note here that considering the MCA Notification dated 1st June, 2016[2], it seems that the current Notification has been brought in order to plug the missing gaps left after the June Notification. Further, the provisions that are being enforced are incidental to the Tribunal’s (NCLT) power of grant of relief in case of applications under Section 241 and 245 i.e. oppression and class action respectively. The brief of the provisions effective from 9th September, 2016 is provided in the table below-

Section enforced Corresponding Section under erstwhile Act Pertains to


227 251 Legal advisers and bankers not to disclose certain information


The section talks about that in case of investigation, inspection or inquiry against the affairs of the Company by the Registrar/ Tribunal/ Inspector appointed by the Central Government on various grounds, the legal advisers and bankers of such companies shall not require to disclose some information such as-

1. any privileged communication made to any legal advisers by virtue of being in that capacity;

2. any information related to other customers of the bankers of the company under the process of investigation etc.

242(1)(b) 397(2)(b) Powers of Tribunal in case of application w.r.t oppression, etc.


Section 241 of the Act w.r.t application to the Tribunal in case of oppression etc. has been notified w.e.f from 1st June, 2016. Further, clause (a) of Section 242(1) was also notified w.e.f the said date.

The clause (b) provides that the Tribunal may make such order, if on an application made u/s 241 i.e. for oppression etc., it is of the opinion that-

1. the winding up of the company would unfairly prejudice such member/ members,

2. but the facts otherwise would justify the making of an winding up order on the just and equitable ground.

242(2)(c) 402(c) Powers of Tribunal in case of application w.r.t oppression, etc.


The order of the Tribunal on an application made under Section 241 may inter alia include consequent reduction of the share capital of the company for which the Tribunal has ordered for purchase of shares or interest of any members of the company by the other members of the company or by the company itself.
242(2)(g) 402(e) Powers of Tribunal in case of application w.r.t oppression, etc.


The order of the Tribunal on an application made under Section 241 may inter alia include 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.
246 Applicability of the provisions of Sections 337 to 341 in relation to the applications made u/s 241 (Application to NCLT for relief in cases of oppression) and 245 (Class action)


Sections 337 to 341 per se have not yet been notified. However, the same are being provided in the notification in such a way that it is incidental to the Tribunal’s grant of relief in case of oppression/ class action u/s 241 and 245 of the Act.

Brief of the Sections are as follows-

1. 337- Penalty for frauds by officers

2. 338- Liability where proper accounts not kept

3. 339- Liability for fraudulent conduct of business

4. 340- Power of Tribunal to assess damages against delinquent directors, etc.

5. 341- Liability under sec 339 and 340 to extend to partners or directors in firms or companies



(Author is associated with Vinod Kothari & Company )

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