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Relief Under Section 241,242,243 of The Companies Act 2013

The document discusses various sections of the Companies Act 2013 that provide relief for aggrieved parties, including Section 241 which allows parties to move to the tribunal for issues like mismanagement or oppression, Section 242 which gives the tribunal powers to provide relief like regulating company affairs or removing directors, and Section 243 which discusses consequences of terminating agreements like barring removed directors from future roles for 5 years.

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Arham Reza
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100 views2 pages

Relief Under Section 241,242,243 of The Companies Act 2013

The document discusses various sections of the Companies Act 2013 that provide relief for aggrieved parties, including Section 241 which allows parties to move to the tribunal for issues like mismanagement or oppression, Section 242 which gives the tribunal powers to provide relief like regulating company affairs or removing directors, and Section 243 which discusses consequences of terminating agreements like barring removed directors from future roles for 5 years.

Uploaded by

Arham Reza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Relief Under Section 241,242,243 of The Companies Act 2013

The first remedy available to an aggrieve party is to move to the tribunal under section 241 of the
Companies Act 2013
Under this section the NCLT has been empowered for trying of suits for mismanagement and
oppression.
The remedies available to an aggrieve party can be assumed from Section 242 of the Companies Act
2013 which states about the powers of the tribunal to provide relief.
Section 242. 
(1) If, on any application made under section 241, the Tribunal is of the opinion—
(a) that the company’s affairs have been or are being conducted in a manner prejudicial or
oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to
the interests of the company; and
(b) that to wind up the company would unfairly prejudice such member or members, but that
otherwise the facts would justify the making of a winding-up order on the ground that it was just
and equitable that the company should be wound up, the Tribunal may, with a view to bringing to an
end the matters complained of, make such order as it thinks fit.
(2)Without prejudice to the generality of the powers under sub-section (1), an order under that sub-
section may provide for—
(a) the regulation of conduct of affairs of the company in future;
(b) the purchase of shares or interests of any members of the company by other members thereof
or by the company;
(c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of
its share capital;
(d) restrictions on the transfer or allotment of the shares of the company;
(e) the termination, setting aside or modification, of any agreement, howsoever arrived at,
between the company and the managing director, any other director or manager, upon such terms
and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of
the case;
(f) the termination, setting aside or modification of any agreement between the company and any
person other than those referred to in clause (e):
Provided that no such agreement shall be terminated, set aside or modified except after due notice
and after obtaining the consent of the party concerned;
(g) the 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;
(h) removal of the managing director, manager or any of the directors of the company;
(i) recovery of undue gains made by any managing director, manager or director during the period
of his appointment as such and the manner of utilisation of the recovery including transfer to
Investor Education and Protection Fund or repayment to identifiable victims;
(j)the manner in which the managing director or manager of the company may be appointed
subsequent to an order removing the existing managing director or manager of the company made
under clause (h);
(k) appointment of such number of persons as directors, who may be required by the Tribunal to
report to the Tribunal on such matters as the Tribunal may direct;
(l)imposition of costs as may be deemed fit by the Tribunal;
(m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision
should be made.
(3) A certified copy of the order of the Tribunal under sub-section (1) shall be filed by the company
with the Registrar within thirty days of the order of the Tribunal.
(4) The Tribunal may, on the application of any party to the proceeding, make any interim order
which it thinks fit for regulating the conduct of the company’s affairs upon such terms and conditions
as appear to it to be just and equitable.
(5) Where an order of the Tribunal under sub-section (1)makes any alteration in the memorandum
or articles of a company, 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 with the order, either in the
memorandum or in the articles.
(6) Subject to the provisions of sub-section (1), the alterations made by the order in the
memorandum or articles of a company shall, in all respects, have the same effect as if they had been
duly made by the company in accordance with the provisions of this Act and the said provisions shall
apply accordingly to the memorandum or articles so altered.
(7) A certified copy of every order altering, or giving leave to alter, a company’s memorandum or
articles, shall within thirty days after the making thereof, be filed by the company with the Registrar
who shall register the same.
(8) If a company contravenes the provisions of sub-section (5), the company shall be punishable with
fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees
and every officer of the company who is in default shall be punishable with imprisonment for a term
which may extend to six months or with fine which shall not be less than twenty-five thousand
rupees but which may extend to one lakh rupees, or with both.

Section 243. Consequences of termination or modification of certain agreements. — (1) Where an


order made under section 242 terminates, sets aside or modifies an agreement such as is referred to
in subsection (2) of that section, —
(a) such order shall not give rise to any claims whatever against the company by any person for
damages or for compensation for loss of office or in any other respect either in pursuance of the
agreement or otherwise;
(b) no managing director or other director or manager whose agreement is so terminated or set
aside shall, for a period of five years from the date of the order terminating or setting aside the
agreement, without the leave of the Tribunal, be appointed, or act, as the managing director or
other director or manager of the company: Provided that the Tribunal shall not grant leave under
this clause unless notice of the intention to apply for leave has been served on the Central
Government and that Government has been given a reasonable opportunity of being heard in the
matter.
(2) Any person who knowingly acts as a managing director or other director or manager of a
company in contravention of clause (b) of sub-section (1), and every other director of the company
who is knowingly a party to such contravention, shall be punishable with imprisonment for a term
which may extend to six months or with fine which may extend to five lakh rupees, or with both.

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