An appeal was filed by X, a minority shareholder against M/s XYZ & Sons Limited alleging oppression and mismanagement by majority shareholders. As per the shareholding pattern, X and another shareholder held less tha

The validity of the appeal can be seen with the decision of Appellate Tribunal in Cyrus Investment Pvt. Ltd. & Anr. Versus Tata Sons Ltd. & Ors., 2017 SCC OnLine NCLAT 261 . In the said case the Appellate Tribunal held that while considering the application for waiver under Proviso to Sub-section (1) of Section 244 of the Companies Act, 2013, the Tribunal may look into the proposed petition under Section 241 and 242 but cannot take into consideration the merit of the said petition to decide the application for waiver. It is only in application where cases of exceptional circumstances is made out by one of the member having less than 10% of shareholding, the Tribunal may allow petition for waiver. Normally, the following factors are required to be noticed by the Tribunal before forming its opinion as to whether the application merits 'waiver' of all or one or other requirement as specified in clauses (a) and (b) of sub-section (1) of Section 244: Whether the applicants are member(s) of the company in question? If the answer is in negative i.e. the applicant(s) are not member(s), the application is to be rejected outright, otherwise the Tribunal will look into the next factor. Whether (proposed) application under Section 241 pertains to 'oppression and mismanagement'? If the Tribunal on perusal of proposed application under Section 241 forms opinion that the application does not relate to 'oppression and mismanagement' of the company or its members and/or is frivolous, it will reject the application for 'waiver'. Otherwise, the Tribunal will proceed to notice the other factors. Whether similar allegation of 'oppression and mismanagement', was earlier made by any other member and stand decided and concluded? Whether there is an exceptional circumstance made out to grant 'waiver', so as to enable members to file application under Section 241, etc. Accordingly, if the X is able to make out some exceptional case for waiver of requirements of the minimum shareholding, the company may not be able to sustain the appeal before NCLAT.