section 397

CLB’s power to set-aside Agreements/Contracts under section 397/398?

Company Law - There can be disputes between majority group and minority shareholders in any Company and these disputes come very frequently in closely held companies or Private Limited Companies. The Companies Act, 1956 provides certain rights to the shareholders ...

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CLB's power and responsibility under section 402 of Companies Act, 1956?

Company Law - In any litigation, the Court or the authority adjudicating the matter can pass interim orders and the matter will get finally disposed of. Once the matter is dispose of finally, there ends the litigation and the final order can be executed. If there is a provision for review having limited scope, the court can review its order. This is th...

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How to look at the issue of ‘membership’ under section 399 of Companies Act, 1956?

Company Law - Section 397/398 of the Companies Act, 1956 provides a relief to the minority against the majority if the majority indulges in the oppressive acts and the acts of mismanagement. It is not that every shareholder can avail the remedy available under section 397/398 of Companies Act, 1956 and section 399 specifically deals with the issue as q...

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How to ascertain 'oppression' under section 397 of Companies Act, 1956?

Company Law - The study of various judgments of High Court and Supreme Court under section 397/398 of Companies Act, 1956 speak volumes about the complications in dealing with the cases of ‘oppression and mismanagement’ under section 397/398 of Companies Act, 1956. There were many judgments under section 397/398 explaining the powers of Company Law...

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Minority Shareholders In A Company – the protection?

Company Law - I have been continuously focusing at the complications in the corporate world and especially about the protection to the shareholders in a Company. I have seen cases where the majority does everything in order to deny the rightful share of the minority shareholders or the group; or to make the company a shell company. ...

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Arbitrary valuation of shares not justified if shareholders succeeded in demonstrating oppression

Nagesh Kumar & Anr. Vs Nagesh Hosiery Exports Ltd. & Ors. (Delhi High Court) - It was observed by the CLB that if the Appellants failed to cooperate with NHEL for the determination of the value of the occupied premises, including land, plant and machinery and do not accept the fair value of the assets determined, the petition shall be deemed to have been dismissed. The impugne...

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Issue of shares to reduce shareholding of petitioner shareholder-company after removing its directors without any notice is per se oppressive

Daksha Infra Build (P.) Ltd. Vs Rochees Resorts (India) (P.) Ltd. (Delhi, Company Law Board) - The case of Chatterjee Petrochem (I) (P.) Ltd. v. Haldia Petrochemicals Ltd. [2011] 110 SCL 107 is clearly distinguishable as in that case when the company was in dire need of funds the Chatterjee Group had failed to keep its promise of providing funds as it obtained a loan raising the debt equity ...

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Petition U/s. 397 filed by Minors alleging oppression & Mismanagement is not maintainable

Aruna Hotels Ltd. Vs Kamal Babbar (Chennai, Company Law Board) - To file a petition u/s 397, 398 of the Act, one has to fulfil the requirement as contemplated under the above provision of law. Unless and until the above criterion is fulfilled, the petition is not maintainable. The persons who can qualify to file the petition are (i) in case the company is having ...

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Petition alleging oppression not maintainable if petitioner doesn’t have requisite qualification shares

Kailash Nath Roy Vs Bengal Bonded Warehouse Association (Kolkata Company Law Board) - Under section 399 of the Act, statute has made it clear that 10 per cent shareholding is requisite qualification to invoke jurisdiction under sections 397 and 398 of the Act. If the joint shareholding of first petitioner has become half, then certainly this petition is short of the requisite qualifi...

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To file petition U/s. 397/398 petitioner must be shareholder on the date of petition

K. Venkatachalam Vs Premier Roller Floor Mills Ltd. (Chennai Company Law Board) - The issues regarding genuineness of the sale deed, undervaluation, etc. are beyond the purview of instant CP, since a consideration of oppression and mismanagement arises only if the petitioners are found to be shareholders of the company. That issue being held against them the other issues pleaded ...

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Recent Posts in "section 397"

Arbitrary valuation of shares not justified if shareholders succeeded in demonstrating oppression

Nagesh Kumar & Anr. Vs Nagesh Hosiery Exports Ltd. & Ors. (Delhi High Court) - 

It was observed by the CLB that if the Appellants failed to cooperate with NHEL for the determination of the value of the occupied premises, including land, plant and machinery and do not accept the fair value of the assets determined, the petition shall be deemed to have been dismissed. The impugned order thus makes it impossible for the...

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Posted Under: Company Law | | ,

Issue of shares to reduce shareholding of petitioner shareholder-company after removing its directors without any notice is per se oppressive

Daksha Infra Build (P.) Ltd. Vs Rochees Resorts (India) (P.) Ltd. (Delhi, Company Law Board) - 

The case of Chatterjee Petrochem (I) (P.) Ltd. v. Haldia Petrochemicals Ltd. [2011] 110 SCL 107 is clearly distinguishable as in that case when the company was in dire need of funds the Chatterjee Group had failed to keep its promise of providing funds as it obtained a loan raising the debt equity ratio of the company. These circumstance...

Read More
Posted Under: Company Law | |

Petition U/s. 397 filed by Minors alleging oppression & Mismanagement is not maintainable

Aruna Hotels Ltd. Vs Kamal Babbar (Chennai, Company Law Board) - 

To file a petition u/s 397, 398 of the Act, one has to fulfil the requirement as contemplated under the above provision of law. Unless and until the above criterion is fulfilled, the petition is not maintainable. The persons who can qualify to file the petition are (i) in case the company is having a share capital, not less than 100 membe...

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Posted Under: Company Law | |

Petition alleging oppression not maintainable if petitioner doesn’t have requisite qualification shares

Kailash Nath Roy Vs Bengal Bonded Warehouse Association (Kolkata Company Law Board) - 

Under section 399 of the Act, statute has made it clear that 10 per cent shareholding is requisite qualification to invoke jurisdiction under sections 397 and 398 of the Act. If the joint shareholding of first petitioner has become half, then certainly this petition is short of the requisite qualification that is required under section 39...

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Posted Under: Company Law | |

To file petition U/s. 397/398 petitioner must be shareholder on the date of petition

K. Venkatachalam Vs Premier Roller Floor Mills Ltd. (Chennai Company Law Board) - 

The issues regarding genuineness of the sale deed, undervaluation, etc. are beyond the purview of instant CP, since a consideration of oppression and mismanagement arises only if the petitioners are found to be shareholders of the company. That issue being held against them the other issues pleaded in the CP do not arise. The petitioners ...

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Posted Under: Company Law |

CLB can allow amendment to petition filed u/s. 397 & 398, if it isn’t prejudicial to parties

Gharda Chemicals Ltd. Vs Jer Rutton Kavasmanek (Bombay High Court) - 

CLB has rendered a finding that the application for amendment was allowed for determination of the issues between the parties and for the purpose of framing issues for avoiding multiplicity of litigations. ...

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Posted Under: Company Law | | ,

Bona fide disputed debt cannot be adjudicated in winding up proceedings

Dr. Mangat Rai Goyal Vs Moraj Finanz Pvt. Ltd. (Bombay High Court) - 

The appellant may have a very good case on merits and would possibly be able to establish in an appropriate proceeding that the respondent have acted in a fraudulent manner and defrauded him to Rs. 2 crore. However, in proceedings for winding up the company, the Court cannot adjudicate upon a bona fide disputed debt. It is well settled ...

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Posted Under: Company Law | | ,

Share qualification required to maintain petition u/s. 397 & 398

ABA Builders Ltd. Vs Smt. Anjula Nagpal (Calcutta High Court) - 

Unfortunately, this court has failed to engage the respondents' attention on such aspect of the matter despite several reminders in course of the hearing. Instead, the respondents have veered off course to emphasise on single-line orders of adjournment to impress that the settlement had never been worked out. But the settlement or the ade...

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Posted Under: Company Law | , | ,

HC may sanction non tax neutral demerger

The contention urged by the Applicant that the Scheme of Demerger must necessarily comply with Section 2(19AA) which is meant for availing tax concession cannot be read as a mandatory requirement for all schemes of amalgamation / arrangement/de-merger under Sections 391/392/394 of 1956 Act . The said provision cannot be read and interpret...

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Posted Under: Company Law | ,

CLB’s power to set-aside Agreements/Contracts under section 397/398?

There can be disputes between majority group and minority shareholders in any Company and these disputes come very frequently in closely held companies or Private Limited Companies. The Companies Act, 1956 provides certain rights to the shareholders ...

Read More
Posted Under: Company Law |

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