. Section 399 of the Companies Act provides the right to apply to the Company Law Board for relief against oppression and mismanagement

prevented from doing so, despite the clear indication in the Articles that majority rule based on the right to demand poll should operate as a correcting influence, the majority becomes an artificial minority entitled to claim protection under Sections 397 and 398".

PRACTICAL PROBLEMS

P. 1. A group of shareholders consisting of 25 members decides to file a petition before the Company Law Board for relief against oppression and mismanagement by the Board of Directors of MIs Fly By Night Operators Ltd:-ihe com-parry has a total of 300 members and the group of 25 members hold" one-tenth of the total paid-up share capital accounting for one-fifteenth of the issued share capital. The main grievance of the group is that due to mismanagement by the Board of Directors, the company is incurring losses and the company has not declared any dividends even when profits were available in the past years for declaration of dividend. Advise the group of shareholders regarding the success of (i) getting the petition admitted and (ii) obtaining
relief from the Companies Law Board. [C.A. (Final) May, 1999]
.9Lns. Section 399 of the Companies Act provides the right to apply to the Company Law Board for relief against oppression and mismanagement. This right is available only when the petitioners hold the prescribed limit of shares as indicated below:
(i) In the case of company having a share capital, not less than 100 members of the Company or not less than one tenth of the total number of its members, whichever is less or any member or members holding not less than one tenth of the issued share capital of the company, provided that the applicant (s) have paid all calls and other dues on the shares.
(ii) In the case of company not having share capital not less than one-fifth of the
total number of its members.
Since the group of shareholders do not have number 100 or hold 1 /10th of the issued share capital or 1/10 of the total number of members, they have no right to approach the CLB for relief. However, the Central Government, if it is of the view that circumstances exist which make it just and equitable so to do, may authorise any member(s) to apply to the CLB [Section 399 (4)]. So, members may approach the Central Government to authorise them to approach CLB in spite of deficiency in numbers.
(Ui) As regards obtaining relief from CLB, continuous losses cannot, by itself, be
regarded as Oppression. (Ashok Bete/nut Co. (PJ Ltd. Vs. M.K. Chandrakanth).
Similarly, failure to declare dividen
P. 2. A group of shareholders of MIs. High Profile Engineering Company Ltd. has filed a petition before the Company Law Board alleging various acts of oppression and mismanagement by the majority shareholders. The petitioner group holds 15% of the issued share capital of the company. During the course of hearing before CLB, sr-..
of the petitioner group of shareholders holding about 6% of the issued share capiti