Lord Cooper in the Scottish case of Elder vs Elder and Watson Ltd. cited that the behaviour complained should at least involve a visible deviation from the standard of dealing of the company, and violation of fair play condition where every shareholder who assigned their money to the company is eligible to rely. Moreover, the complaining member should show that he is facing oppression in his own capacity as a member but not in some other capacity.
To create oppression the persons who are involved in the affairs of the company must be found guilty of fraud, misconduct or misfeasance towards the other members of the company; or carrying out unfair treatment or harsh behaviour in other capacity.
Prevention of …show more content…
This is called the ‘corporation principle’.
• Secondly, there is another policy called the “partnership doctrine” that is held by the courts of equity in the early 19th century where the businesses between one partner and the other were out of limits for courts except when there were cases involved dissolution of partnership between companies.
Prevention of Oppression and mismanagement
Adequacy of legal and regulatory framework to address the issue
The general principal of Company law is that every member holding shares of a particular type is entitled to vote based on the number of shares that he/she holds. As a rule, the actions and decisions of the Company, as long as they are within the legal framework and articles of the Company, are decided by the decision of the majority.
However, number of instances has been observed where the majority is not conducting the affairs of the Company properly and is impartial.
Relief measures in Companies Act (India)
Application for relief in case of oppression
Section 241 of the Companies Act