The word 'oppression' was dealt with Shanti Prasad Jain v. Kalinga Tubes.

It was held that "

The essence of the matter seems to be that the conduct complained of should, at the lowest,
involve a visible departure from the standards of their dealing, and a violation of the conditions
of fair play on which every shareholder who entrusts his money to the company is entitled to
rely"

Oppression of Majority Shareholder

In Sindhri Iron Foundry (P) Ltd., Re [1964] 34 Comp. Cas. 510 (Cal.), The Calcutta HC held that it
is nowhere prescribed that a majority shareholder cannot approach the court for oppression.

Similarly in Dr. V. Sebastian v. City Hospital Ltd. The Kerala HC observed that ' In ordinary cases
the majority will be able to protect itself by controlling the directors at general body meetings.
But, where the majority is prevented to do 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'

In Radhe Shyam Gupta v. Kamal Oil & Allied Industries Ltd, it was held by Delhi HC that a
petition against minority shareholders is maintainable depending upon facts and circumstances
of the case.
What amounts to Oppression & Mismanagement
1. People concerned with the management must in connection therewith be guilty of fraud,
misfeance and misconduct towards members

2. Not calling a GM and keeping shareholders in dark( Hindustan Co-operative Insurance Society
Ltd., In re[1961] 31 Comp. Cas. 193(Cal.) )

3. Not adhering to the statute( Bhajirao v. Bombay Docking)

4. Depriving a member of the right to dividend (Mohan Lal v. Punjab Company Ltd)

5. Transfer of shares held by a company to some members without offering them to all
members( Col. Kuldeep Singh v. Paragaon Utility)

6. Allotment of shares in a manner reducing the majority shareholder to minority ( Gluco Series,
In re [1987] 61 Comp. Cas. 984 (all.).

7. Continous refusal by company to register shares with an ulterior motive of retaining control
over affairs of the company (Kumar Exporters v. Naini Oxygen)

8. Failure to distribute the compensation where required to be distributed (Hindustan Co-

operative Insurance Society Ltd., In re[1961] 31 Comp. Cas. 193(Cal.))

9. Refusal to register transmission under will (Gujarabai Patny v. Patny Transport )

10. Issue of further shares benefitting a section of the shareholders to the detriment of others
(Piercy v. Mill)

11. Registration of transfer without fulfilling the requirements of the article( Bhubaneshwar
Singh v. Kanthal India )

12. Serious infighting between directors resulting in serious prejudice being caused to the
comopany( Suresh Kumar Sanghi v. Supreme Motors Ltd.)

13. Where Board of Directors is not legal and the illegality is being continued ( Shishu Ranjan v.
Bholanath Paper House)

14. Gross neglect of interest of the company by sale of its only assets and total inattention
thereafter to the affiars of the company ( M. Moorthy v. Drivers and Conductors Bus Service)

15. Diversion of funds of the company for the benefit of majority group (Bhaskar Stoneware
Pipes v Rajindernath Bhaskar)
16. Where directors take no serious action to recover money embezzled (Col. Kuldip Singh
Dhillon's case)

17. Continuation of office after expiry of term ( Sishu Ranjan Dutta v. Bhola Nath Paper House)

18. Where the majority shareholders caused the share to dip down and cause the business to
come to stand still (Scottish Society Wholesale Society Ltd. v Meyer)

19. The majority holder disregarded resolutions of the board of directors, assumed powers
which he did not possess and exercised them against the wishes of shareholders who were
directors as well (Re H.R.Harmer Ltd )

20. The petitioner did not receive notification of the meeting and allotted the entitlement of
the petitioner to others without due notice to him and consequently reducing his shareholding
from 20.95 per cent and removed him from directorship on unjustified grounds (Jaipal saini v.
Mes Switchgears P. Ltd. And others)

21. The main life insurance business of the company was acquired in 1956 by the L.I.C. of India
which paid compensation to the company for taking over its business. But the directors
retained the same without distributing it to shareholders who were entitled thereto. These
directors who had the majority did not call any general meeting ofthe company and kept the
shareholders in the dark. Finally, by their -esolutions, they tried to force accounts for the
relevant years on the minority and to change the principal object ofthe company and to use the
compensation money for the new object( Re Hindustan Cooperative Insurance Society Ltd)

22. appointment of additional directors without holding board meeting and notice to directors
amounts to violation of articles of association hence invalid under section 397 and 398(Dr. Mrs.
Usha Chopra v. Chopra Hospital P. Ltd)
What does not amount to oppression & mismanagement
1) It does not include mere domestic disputes b/w directors and member

2) lack of confidence between 1 section of members and another section in the matter of policy
or directors

3) Should not be one isolated incident, but have to be continous( Chatterjee Petrochem v.
Haldia Petrochemicals Ltd.)

4) Minor acts of mismanagement

5) An unwise, inefficient or careless conduct of a director ( Needle Industries v. Needle

Industries)

6)Not declaring dividends when company is making losses( Chander Krishan v. Pannalal Gridhari
Lal)

7) Denial of inspection of books to a shareholder ( Maharani lalita Rajya v. Indian Motor

Company)

8) Lack of 'explanatory statement' in a notice of a meeting

9) Non maintenance / non filing of records ( Chander Krishan Gupta v. Pannalal Girdhari Lal)

10) Increasing the voting rights of the shares held by the management ( Rights & Issues
Investment v. Style Shoes Ltd.)

11) Merely because company incurs loss( Chennabasappa Kothambari v. Multiplast Industries
Ltd)

12) Removal of secretary by decision of BOD unless it is shown that removal has prejudicially
affected the interest of the company or the public interest ( Dr. V. Sebastian v. City HOspital
Ltd)

13) The single act of letting out the premises ( Jaladhar Chakraborty v. Power Tools and
Appliances Co. Ltd. [1994] 79 Comp. Cas. 505 (Cal))

14) Where the directors of a company in financial difficulties arrange with the company's
creditors that the creditors may become shareholders and directors instead of remaining as
creditors (Suresh Chandra v. Lauls Ltd)

15) Changes brought about by, or in the interests of, any creditors including debenture holders
or any class of shareholders has been excepted.
16) Loss caused in a project if done with a bona fide intention ( Cyrus Investment Ltd v. Tata
Sons Ltd)

17) Acquiring a company at an inflated price with a bona fide intent ( Cyrus Investment Ltd v.
Tata Sons Ltd)

18) Personal favours if done with a bona fide intent ( Cyrus Investment Ltd v. Tata Sons Ltd)

19) Petition feeding the private grudges between the parties cannot be entertained under the
provisions of O&M (N.K.Mohapatra v State of Orissa)

20) When directors are removed and they are shareholders they cannot seek claim under O&M
as they should suffer loss in the capacity of a share holder (Elder v Elder and Watson)

21) Unwise , inefficient and careless in the performance of his duties as managing director and
chairman of board of the company (Harmer)

22) the minority shareholders are being out-voted or there is an attempt to acquire control
ofthe company’s affairs by purchasing large blocks ofshares will not constitute acts of
oppression (Nagarapu Krishna Prasad and another v. Andhra Bank Ltd)

23) Relief under ss. 397 and 398 would be refused if the alternate remedy of winding up the
company would serve the purpose better (Moti Films Ltd. v. Harish Bansal)

24) Valid debts have not been paid, questionable debts have been

25) The company failed to carry out its undertakings with petrol suppliers forcing them to
refuse supplies to the company

26) Inefficient staff was being maintained

27) Car washing machinery was ordered without testing( Five minute car wash Service ltd., re)

28) The decisions relating to a company's bank account fall under the managerial power of a
director. The mere fact that a director is not being associated with the operation of company's
bank account ( Sudha M Singh v. Eagle Cones Pvt. Ltd)

29) Claims under commercial contracts/private arrangements are outside the scope of
proceedings under Section 397 of the Companies Act, 1956. ( Chatterjee Petrochem Pvt. Ltd. v.
Haldia Petrochemicals Ltd)