OPPRESSION & MISMANAGEMENT IN INDIA: AN OUTLOOK IN THE LIGHT OF “TATA V. MISTRY CASE”

AUTHORS – ANANYA KASHYAP & ARRYAN MOHANTY, STUDENTS OF SYMBIOSIS LAW SCHOOL, NAGPUR

BEST CITATION – ANANYA KASHYAP & ARRYAN MOHANTY, OPPRESSION & MISMANAGEMENT IN INDIA: AN OUTLOOK IN THE LIGHT OF “TATA V. MISTRY CASE”, ILE INTELLECTUAL PROPERTY AND CORPORATE LAW REVIEW, 3 (1) OF 2024, PG. 80-93, APIS – 3920 – 0008 | ISSN – 2583–6153.

ABSTRACT

The business thrives when a company’s divisions work together to achieve the primary goal. The interests of every stakeholder in a company will be safeguarded if it runs efficiently. But, a company’s senior executives’ need for authority, control, and power may make it dysfunctional. The majority shareholders’ tactics of oppressing and abusing the minority shareholders to gain more shares and power in the corporation lead to mismanagement in the organisation. This poor management typically breeds mistrust among investors, ultimately harming a company’s development and reputation. Although the direction of a company is based on the wishes of the majority, the interests of the minority cannot entirely be ignored. We do not refer to a numerical majority or minority but rather the proportion of votes cast by each group when discussing majority and minority. This distinction is made possible by the possibility that a few shareholders may hold the majority shareholding, even while the majority may own a relatively tiny percentage of the share capital. While in charge, the majority is unrestricted in what they can do with the company since members will consistently prevail because of their more considerable voting power, even if they hold themselves responsible for their conduct in the general meeting. The Prevention of Oppression and Mismanagement clause within the Companies Act is crucial as it aims to safeguard the rights of minority shareholders and prevent abuse of power by company management. Despite its significance in the Companies Act, the terms “oppression” and “mismanagement” remain undefined. Due to the potential broadness of these terms, their interpretation must be context-specific. Mismanagement can be understood as actions that contradict the Memorandum of Association, Articles of Association, or relevant legal provisions, leading to disorder within the organisation. This paper explains the definition of oppression and mismanagement, how it is prevented by Indian law for companies, and how the Tata v. Mistry case sets precedents.