In order to promote private sector in defense, the Govt. of India have granted license to manufacture automatic light weight machine guns to Unique Guns Ltd. (UGL). UGL is a non-government public sector company and a lis

CS Professional · Resolution of Corporate Disputes, Non-Compliances & Remedies · PYQS · June 2023
In order to promote private sector in defense, the Govt. of India have granted license to manufacture automatic light weight machine guns to Unique Guns Ltd. (UGL). UGL is a non-government public sector company and a listed entity. The company has entered into an agreement with the Govt. of India to manufacture and supply the machine guns for an initial period of 5 years, subject to the condition that the company shall not supply the machine guns to any unauthorized persons and the number of items manufactured, month wise, shall be furnished to the Govt. of India. Harish, one of the employees, who is also a shareholder of the company (purchased shares in open market) came to know that company is secretly supplying the machine guns to some unscrupulous persons, who are supplying the machine guns to the terrorists which is against the public interest. Can Harish make a complaint to the National Company Law Tribunal (NCLT)? Can Govt. of India make a complaint to the NCLT if such malpractices come to its notice?

Answer & Explanation:

Can Harish make a complaint to NCLT? According to Section 241(1)(a) of the Companies Act, 2013 , any member of a company who complains that the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company may apply to the National Company Law Tribunal (NCLT), provided such member has a right to apply under Section 244, for an order under Chapter XVI. According to Section 244(1) of the Act , the following members of a company shall have the right to apply under Section 241: In the case of a company having a share capital, not less than one hundred 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, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares; In the case of a company not having a share capital, not less than one-fifth of the total number of its members. However, the NCLT may, on an application made to it in this behalf, waive all or any of the requirements specified in clause (a) or clause (b) so as to enable the members to apply under Section 241. Hence, Harish can make a complaint before NCLT if he holds not less than one-tenth of the issued share capital of the company, or if he obtains a waiver from NCLT of the requirements provided under Section 244(1)(a) of the Act. Otherwise, he cannot make the complaint to NCLT. Can Govt. of India make a complaint to NCLT? Further, according to Section 241(2) of the Act , the Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to NCLT for an order under Chapter XVI. Therefore, if such malpractices come to the knowledge of the Government of India, it can make a complaint to NCLT.

Topics: Oppression and Mismanagement

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