Section 241 of the Companies Act, 2013
Section 242 of the Companies Act, 2013 deals with the powers of the National Company Law Tribunal (NCLT) to provide relief in cases of oppression and mismanagement in a company.
🔹 Section 242 – Powers of Tribunal
This section comes into play after an application is filed under Section 241 (which allows members to apply to NCLT if they believe the company’s affairs are being conducted in a manner oppressive or prejudicial).
✅ Key Provisions:
🔸 1. NCLT May Grant Relief If:
The affairs of the company have been or are being conducted:
In a manner oppressive to any member(s), or
In a manner prejudicial to public interest or to the interests of the company
And winding up the company would unfairly prejudice such member(s), even if it otherwise seems just and equitable to wind up
🔸 2. Powers of NCLT (Relief Orders):
The Tribunal may make any order it deems fit, including:
Regulation of company affairs in the future
Purchase of shares from any member by other members or by the company itself
Restrictions on transfer or allotment of shares
Termination, setting aside, or modification of any agreement between the company and:
Directors
Managing director
Any other person
Note: If such agreements are modified/terminated, the person affected can be given compensation.
Removal of managing director, manager, or directors
Recovery of undue gains made by directors during the period of oppression/mismanagement
Appointment of new directors
Imposition of costs as the Tribunal may deem fit
🔸 3. Safeguards:
Tribunal must ensure that its order is in the public interest and beneficial to the company and its members.
📝 Purpose of Section 242:
To protect minority shareholders and stakeholders from unfair treatment by those in control of the company, and to restore fair management and governance.
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