What is oppression of a company.

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 What is oppression of a company.

Oppression would be made out : (a) where the conduct is harsh, burdensome and wrong, (b) where the conduct is mala fide and is for a collateral purpose where although the ultimate objective may be in the interest of the company, the immediate purpose would result in an advantage for some shareholders vis-a-vis the others, (c) the action is against probity and good conduct, (d) the oppressive act complained of may be fully permissible under law but may yet be oppressive and, therefore, the test as to whether an action is oppressive or not is not based on whether it is legally permissible or not since even if legally permissible, if the action is otherwise against probity, good conduct or is burdensome, harsh or wrong or is mala fide or for a collateral purpose, it would amount to oppression under sections 397 and 398, (e) once conduct is found to be oppressive under sections 397 and 398, the discretionary power given to the Company Law Board under section 402 to set right, remedy or put an end to such oppression is wide. (f) What facts would give rise to or constitute oppression is basically a question of fact and, therefore, whether an act is oppressive or not is basically a question of fact.

Section 10F of the Companies Act, 1956, permits an appeal to the High Court from an order of the Company Law Board only on a question of law, i.e., the Company Law Board is the final authority on the facts unless such findings are perverse, based on no evidence or otherwise arbitrary. The jurisdiction of the appellate court under section 10F is restricted to the question whether on the facts noticed by the Company Law Board and has placed before it, an inference could reasonably be arrived at that such conduct was against probity and good conduct or was mala fide or for a collateral purpose or was burdensome, harsh or wrongful. The only other basis on which the appellate court would interfere under section 10F is, if such conclusion was (a) against law or (b) arose from consideration of irrelevant material or (c) omission to construe relevant materials.
 

Your’s Sincerely,

Nilesh Shah