NISHANT

Oppression/Mismanagement

NISHANT MEHROTRA 25 Jan 2018

Oppression/Mismanagement

Bombay High Court :: in Ravi Kiran Agarwal and another v. Moolchand Shah and others :: Companies Act, 1956 – Sections 397/398, 402 and 405 – Oppression/Mismanagement :: 


(A) The illustrations enumerated in clauses (a) to (g) of section 402 are but examples of the nature of reliefs that can be granted in a petition under section 397/398, and the same are not exhaustive of the reliefs that can be granted by the Company Law Board with a view to ameliorate a situation of oppression and mismanagement.


(B) The power of the Company Law Board under section 405 to implead any other person is a wide power which is conditioned, only by the satisfaction of the Company Law Board, that there is sufficient cause for doing so. Where the relief is sought in the application under section 397/398 is liable to affect the interest of a third party, an order of impleadment would be warranted. The impleadment of the party may be considered necessary or, in the facts of a case, proper to enable the Company Law Board to render a full, final and complete adjudication of the dispute. By its very nature, the power cannot be restricted to predefined categories and must be exercised in order to advance the underlying purpose and object of the provision of section 397/398.


(C) Words ‘any other person’ in section 405 are not restricted by stipulation that such person must have an agreement with the company and there is no justification for confining these words to those categories of persons who are elucidated in clause (e) of section 402. Therefore, words ‘any other person’ must be given their plain meaning so as to include any person whose interest would be affected by an order that is sought in the application under section 397/398. The principles of ejusdem generis can have no application in construing the words ‘any other person’ in section 405 which operates in a field untrammeled by section 402. 


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