SECTION 241 APPLICATION TO TRIBUNAL FOR RELIEF IN CASES OF OPPRESSION, ETC.
Updated: Oct 7, 2022
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01. Any employee who raises a grievance against (Refer to the 2016 National Company Law Tribunal Rules, Rules 81 and 82.)
The company's affairs have been or are being conducted in a way that is harmful to the public interest, harmful to him or any other member (meaning the person who signed the company's memorandum, who will be considered to have consented to join the business and who, upon the company's registration, will be listed as a member in its register of members; every other individual whose name is listed in the company's register of members and who formally accepts membership in writing; every shareholder listed as a beneficial owner in a depository's records who also holds shares of the company)[1]or members, or harmful to the interests of the company; or
The material change in the management or control of the company has occurred, whether through an alteration (includes making changes such as substitutions, exclusions, and additions.)[2] in the Board of Directors (signifies the entire board of directors for a firm when referring to it)[3], manager (includes a director or any other person holding the title of manager, by whatever name called, whether under a contract of service or not, and who has management of the entirety, or substantially the entirety, of a company's affairs under the supervision, control, and direction of the Board of Directors)[4], or ownership of the company's shares, and is not a change brought about by or in the interests of any creditors, including share(signifies a share in a company's share capital, which also includes stock)[5] holders or any class of shareholders of the company any other way, and that as a result of such change, it is likely that the company's affairs will be conducted in a manner prejudicial to its interests or those of its members or any class of members, may apply to the Tribunal (National Company Law NCLT- NCLT[6] is a quasi-judicial[7] body which is authorised for dealing with the corporate disputes which are civil and arising under the Companies Act) for an order under this Chapter, provided that such member has the right to do so under section 244.
02. The Central Government may submit its application to the Tribunal for an order under this Chapter if it believes that the company's business practices are contrary to the public interest (Refer to Rule 88 National Company law Tribunal Rules 2016)[8].
The applications under this subsection must be made before the Principal Bench of the Tribunal, and those applications must be made regarding the company or class of companies that may be prescribed.
03. [9]If, in the Central Government's opinion, there are indications that:
Any person involved in the conduct and management of a company's affairs is or has been connected therewith guilty of fraud, misfeasance, persistent negligence, default in carrying out his obligations and functions under the law, or breach of trust;
The company's business is not or has not been conducted and managed by such person by so and so's rules and regulations;
A business is or has been run and managed by that person in a way that is likely to cause, or has already caused, severe harm to the interests of the industry, trade, or business to which that business belongs; or
If a person has conducted or is conducting business for a company with the intent to defraud its creditors, members, or any other person, or for any other fraudulent or illegal purpose, or in a way that is detrimental to the public interest, the Central Government may bring a case against that person and refer it to the Tribunal with the request that the Tribunal investigate the case and decide regarding whether or not that person is a fit and proper person.
04. [10]The person who is named as a respondent to the application and who has a case referred to the Tribunal under subsection (3).