Section 242 Of Companies Act 2013: Powers Of Tribunal
Updated: Oct 7, 2022
Tribunals are special judicial bodies established to deal with matters related to company law in order to make effective and prompt decisions. Section 242 of the Companies Act 2013 relates to the powers of the Tribunal, which have been reviewed and explained for your kind review.
Powers of the Tribunal
The first power conferred upon him by law is to issue orders. Such orders may be issued when it is determined that the work of society has been harmed or is being done. Although the liquidation of the company will not be resolved drasticly, it has been pointed out that repression and poor management are what must be prevented.
The tribunal also has authority over three issues: 1) shareholders, 2) the company, and 3) others, according to the same provision.
A tribunal may mandate the acquisition of shares of participants by other participants or the corporation in the case of shareholders.
Considering authoritarianism and mismanagement are rooted in the consolidation of shares in the hands of individuals or a few members, a tribunal may mandate a decrease in share capital or even impose restrictions on share transfer.
A tribunal may suspend or alter agreements signed between the company and management, or agreements made between the business and any other person, in the case of the company's management, which is a critical element of the firm.
In the instance of a company's management, the tribunal has the power to dismiss the Managing Director, Manager, and Director, as well as recoup unjust gains and appoint a new MD, manager, and director.
In some circumstances, the tribunal may select a person to inform to the tribunal on management's oppressive and mismanaging acts in order to prevent additional oppression.
Finally, the tribunal has further rights, including the ability to regulate the conduct of the company's business, set aside transfers of the company's property, and even levy costs. The tribunal must transmit a copy of its order to the registrar, and if the order has not yet been finalised, the tribunal may issue an interim order to the registrar. The revised papers must be presented to the registrar in relation to modifications made in the MOA (Memorandum of Association) and AOA (Article of Association).
The penalty for breaking the rule is set at 1 lakh to 25 lakh for a firm and 25000 to 1 lakh for an official who breaks the law, with the latter also facing a 6-month jail sentence.