PREVENTION OF OPPRESSION AND MISMANAGEMENT WITH MEMBERS :
397. Application of [Tribunal] for relief in Cases of Oppression.
1. Any company members who complain the company affairs are being conducted in the manner prejudicial to public interest or in a manner oppressive to any members or member may apply to the Tribunal under this section for an order, provided that members have a right so to apply of section 399 in virtue.
2. Under sub-section (1), if on any application the Tribunal is of opinion
a, that the company affairs are being conducted in a manner prejudicial to public interest or oppressive in a manner to members or member; and
b, To wind up the company would unfairly prejudice such members and member, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and valid in equity as distinct from law that the company should be wound up.
the Tribunal may, with a view to bringing the matters to an end complained of, make such order as it thinks fit.
398. APPLICATION TO TRIBUNAL FOR RELIEF IN MANAGEMENT CASES
1. Any company members who complain
a, that the company affairs are being conducted in a manner prejudicial to public interest or prejudicial to the company interests in the manner or,
b, that the material change (not being a change brought about by, or in the interests of, any creditors including companies any class of shareholders, debenture holders) has taken place in the company control and management whether by an alteration in its directors board or manager or in the company ownership’s shares, or if that has no share capital, in its membership, or in any manner whatsoever, and that by reason of such change, it is likely that the company affairs will be conducted in a prejudicial manner to public interest or in a manner prejudicial to company interests.
may apply for an order to the Tribunal under this section, provided such members have a right to apply in section virtue 399.
2, Under sub-section 1 if, on any application, the Tribunal is of opinion that the company affairs as aforesaid of being conducted or of any material change that by reason as aforesaid in the company control and management, it is likely that the company affairs will be conducted as aforesaid, the Tribunal may, with a view to bringing an end or preventing the matters apprehended or complained of, make such order as it thinks fit.
398. Application to Tribunal in mismanagement cases for relief
1. Any company members who complain
a, that the company affairs are being conducted in a manner prejudicial to public interest or prejudicial to the interests of the company in the manner or
b, that the material change (not being a change brought about by, or in the interests of, any creditors including debenture holders, or any shareholders class of the company has taken place in the control of the company or in the management, whether by an alteration in its directors board or manager or in the company’s ownership shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that of such change by reason, it is likely that the company affairs will be conducted in the manner prejudicial to the public interest or in the manner prejudicial to company interests.
may apply for an order to the Tribunal under this section, such members provided have a right in virtue of the section 399 to apply.
2. Under sub-section (1), if there was any application the Tribunal is of opinion that the company affairs as aforesaid are being conducted or of any material change that by reason as aforesaid in the management and the company control, it is likely that the company affairs as aforesaid will be conducted, the Tribunal may, with a view to bringing an end or complained of preventing the matters or apprehended, as it thinks fit make such order.
399.Right to apply under section 398 and 397
1. The following company members shall have the right to apply under section 397 or 398.
a, in the company case having a share capital, not less than one hundred company members or not less than one-tenth of its total members, whichever is or members or any member holding minimum one-tenth of the issued company share-capital provided that the applicants or applicant have paid other sums and all calls due on their shares.
b, in the company case not having a share-capital not less than one-fifth of the total number of its members.
2. For the purposes of sub-section (1), where any shares or share are held by two or more members jointly, they shall be counted only as one member.
3. Any company members are entitled to make an application in virtue of sub-section(1), any one or more of them having obtained the consent in rest of the writing, may make the application on behalf and for all of their benefits.
4. The Central Government may if in its opinion exist circumstances which make it just and equitable to do so, authorize any company members and member to apply to the Tribunal under
Section 397 or 398, notwithstanding that the requirement of clause (a) or clause (b), as the case may be, of sub-section (1) is not fulfilled.
5. Before authorizing any members as aforesaid or any member the Central government may deem for the reasonable payment of any costs which the [Tribunal] dealing with such member application or pay to any other person members or persons to the application who are parties.
401. Central Government Rights to apply under sections 397 and 398.
The Central Government may itself apply for an order to the Tribunal under section 397 or 398 or cause an application to be made for such an order to the tribunal by any person in this behalf authorized by it.
402. Tribunal Powers on an application under section 397 or 398.
Without prejudice to the generality of the powers under section 397 or 398, or cause an application to be made to the Tribunal under section 397 or section 398 any order under either section may provide for-
The regulation of the company’s conduct affair’s in the future.
b, The purchase of its shares or interests of any company members by other members thereof or by the company.
c, in the case of purchase of its shares by the company as aforesaid, the consequent share capital reduction,
d, The termination, modification of any agreement or setting aside, howsoever arrived at, between the company on one hand and any of the following persons, on the other namely:
1. the managing director,
2. any other director,
5. the manager.
upon such conditions and terms as may, in the opinion of the Tribunal be just and equitable of the case in all circumstances.
6. the termination, setting aside or any government modification between the company and any person not referred to in clause (d), provided that no such agreement shall be terminated, set aside or modified except after due notice to the concerned party provided further that without such agreement shall be modified except after obtaining the concerned party consent.
7. the setting aside of any transfer, goods delivery, payment, execution or other act made relating to property or done by or against the company within three months before the application date under section 397 or 398, which would, if made or done by or against the individual, in his insolvency be deemed to be a fraudulent preference;
8. Any other matter for which in the Tribunal opinion it is just and equitable that provision should be made.
403. Interim Order by Tribunal:
Pending the making by it of a final order under section 397 or 398 as the case may be, the Tribunal may, of any party to the proceeding application, make an interim order which it thinks fit for regulating the company’s affairs conduct, upon such terms and conditions as appear to it to be just and equitable.
404. Alteration Effects of Memorandum or Articles of Company by Order Under Section 397 or 398.
1. When an order under section 397 or 398 makes any alteration in the memorandum or company articles, then, notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any, permitted in the order, to make without the leave of the [ Tribunal ], any alteration whatsoever which is inconsistent within the order, either in the articles or in the memorandum.
2. Subject to the provisions of the sub-section (1) the modifications made by the order shall, in all respects, have the same effect as if they have been made duly by the company in accordance with the provisions of this Act; and told provisions shall apply accordingly to the memorandum or articles as so altered.
3. A certified copy of every altering order, or giving leave to alter, a company’s articles or memorandum shall within thirty days after the making thereof, be filed by the company who shall register the same with the registrar.
4. If default is made in complying with the sub-section (3) provisions, every officer and the company’s officer who is in default shall be punishable with fine which may exceed fifty thousand rupees.
406. Application of Sections 539 to 544 to Proceedings Under Section 397 and 398.
In relation to an application under section 397 and 398, sections 539 to 544, both inclusive, shall apply in the form set forth in Schedule X1.
407. Consequences of Termination or Certain Agreements Modifications
1. Where an order [***] made under section 397 or 398 terminates, modifies an agreement or set aside such as is referred to in clause (d) or (e) of section 402.
2. The order cannot give rise to any claim against the company whatever by any damages for the person or for compensation for loss of office or in any other respect, either in pursuance of the agreement or otherwise.
3. No managing or manager or other directors whose agreement is so terminated or set aside shall, for five years period from the terminating order date or setting aside the agreement, without the tribunal leave to be appointed, or act, as the managing director or other director or company manager.
2. Any person who knowingly act as a managing director or other director or company manager or other director or company manager.
c, Every director or every other director as the case may be, of the company who is knowingly a party to such contravention, shall be punishable with imprisonment which may extend to one year for a term, or with fine which may extend to fifty thousand rupees or with both.
3. Without leave shall be granted under clause (b) of sub-section (1) unless notice of the intention for leave to apply has served on the Central government and that Government has been given an opportunity of being heard in the manner.