'The words "oppression" and "mismanagement" are not defined in the Act. The meaning of these words for the purpose of Company Law should be used in broad generic sense and not in any strict literal sense' - Discuss citin

The words "oppression" and "mismanagement" are not defined in Companies Act, 2013. The meaning of these words for the purpose of Company Law may be used in a broad generic sense and not in any strict literal sense. The meaning of the term "oppression as explained by Lord Cooper in the Scottish case of Elder v. Elder & Western Ltd., (1952) Scottish Cases 49, which has been cited with approval by Wanchoo, J (afterwards C.J.) of the Supreme Court in Shanti Prasad v. Kalinga Tubes, (1965) 1 Comp. L.J. 193 at 204 is as under: "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 fair dealing. on which every shareholder who entrusts his money to the company is entitled to rely." A similar relief was allowed by the House of Lord in Scottish Co-operative Wholesale Society v. Mayer (1959) AC 324. In this case, the society created a subsidiary company to enable it to enter in the rayon industry. Subsequently when the need for the subsidiary ceased to exist, the society adopted a policy of running down its business which depressed the value of its shares. The two petitioners who were managing directors and minority shareholders in the company successfully pleaded "oppression". The court ordered the society to purchase the minority shares at the value at which they stood before the oppressive policy started. This decision has also been followed in Re. H.R. Harmer Ltd., (1959) I WLR 62). Minor acts of mismanagement, however, are not to be regarded as oppression. As far as possible, shareholders should try to resolve their differences by mutual readjustment. Moreover, the courts will not allow these special remedies to become a vexatious source of litigation.