A company successfully runs when all its branches are working in a collaborative manner to achieve the main goal. An effective functioning of a company will also ensure protection of interests of all its stakeholders, but the greed of control, power, and authority by the top officials in any company may disrupt its functioning.

The tactics used by the majority shareholders to exploit and oppress the minority shareholders to gain more shares and power in the company causes mismanagement in the company. This mismanagement caused often results in distrust among the shareholders, which eventually affects the growth and goodwill of a company.

The Companies Act 2013 led to the formation of the National Company Law Tribunal (NCLT). Prior to the Formation of this Tribunal, Company Law Board (CLB) was formed under which majority of the cases were of Section 397-398 which deals with oppression and mismanagement in a company.

Similarly, in the new Act, section 241-242 deals with oppression and mismanagement, and majority of cases have been filed before the NCLT. The scope of remedies has also been expanded in the new Act, wherein the concept of prejudice caused to any member as an objectionable conduct have been introduced which is different from oppressive behaviour of any member. Therefore, this paper aims to analyse what is oppression, prejudice, and mismanagement in the affairs of a company, and what are the remedies available with the shareholders in such a case to protect the interest of all stakeholders.

Introduction
A company is a group of individuals or entities operating with a common objective of achieving the aim of the company's creation and gaining maximum benefit. There are variations in individual preferences and beliefs that contribute to the creation of a majority and a minority party in a company. Under strict judicial securitization, these groups need careful balance such that the status of any of the groups is not misused or abused.

The Corporate Governance Committee Report of the Securities and Exchange Board of India, popularly known as Uday Kotak Committee Report points out two different styles of running a company in India i.e., Raja (Monarch) and the Custodian (Trusteeship) model.[1] The Monarch model aims at advancing the interest of the promoters of the company even at the expense of stakeholders by utilizing the energies of the management, promoters, and the board.

In this model, it is observed very clearly that the board and the management personnel depend upon the promoters or majority shareholders of a company due to the existence of power with them. Whereas, in the Custodian model, the company aims to act in the interest of all stakeholders including investors, employees, customers, shareholders, etc. In India, most of the companies are seen to follow the Monarch model.

Therefore, it can be said that similar to sovereign democracy, corporate democracy also worked according to the rule of the majority. It is more vulnerable to corporate democracy because it is accounted for by the number of shares and not by the number of people involved. The majority rule has been made applicable to the administration of the company's affairs. On different topics, the representatives pass resolutions either by a simple or three-fourth vote.

When the resolution is adopted by a majority, all members are bound by it. As a consequence, the court would not necessarily interfere to protect the rights of the minority affected by the resolution. Then, how to avoid oppression by a majority dictatorship that steamrolls minority shareholders remains a big issue. Company law intervenes here to moderate the actions of dominant shareholders to ensure that the interests of the minority are not adversely affected.

There are various sections of Companies Act 2013 which talks about 3 major techniques to prevent oppression of minority shareholder:

1. Making it mandatory for some core decisions to be taken by super-majority i.e., ¾ votes to reduce oppression and unfairness against the minority[2];
2. Improving standards of corporate governance by providing safeguards and disclosures of party transactions[3], the composition and independence of the board of directors[4], independence of companies' auditors, and improving the quality of audit of its financial statements[5];
3. The decisions of the majority shareholders of the company to be reviewed by the Tribunals if they are oppressive to the interests of minority shareholders in the company.[6]

It puts out various remedies under Section 241-242 to restore the balance of power in the company for its smooth functioning which will benefit all the stakeholders. A conspectus of sections 241 and 242 of the 2013 Act leads us to their analysis through the lens of two principal questions, as the NCLAT outlined in Tata Sons[7]:

1. Whether the company’s affairs have been or are being conducted in a manner ‘prejudicial’ or oppressive to any member or members or prejudicial to the public interest or in a manner prejudicial to the interests of the company; and
2. If that be so, whether to wind up the company would unfairly prejudice such member or members, but that otherwise, the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up.

If the shareholders have to claim and obtain remedies under the Companies Act 2013 including oppression, prejudice, and mismanagement, it must satisfy both the provisions specified above.

In this background, the main aim of this paper is to analyze the remedies available of oppression, prejudice, and mismanagement for shareholders in a company under the Companies Act 2013 for saving their interest as well as protecting the public interest. The paper also talks about how the evolution of the law took place and how does the Indian judiciary look at the remedies available to the shareholders.

It also analyses the increased scope of the new Companies Act 2013 by introducing the word prejudice caused to a member due to the oppressive behavior in the company, but the act has lowered the standard of conduct that needs to be satisfied by the shareholder to invoke a remedy. This paper also suggests the changes that could be done to the Companies Act 2013 after comparing the similar section of remedies available to shareholders under the U.K. Companies Act.

Application for Remedies under the Companies Act 2013
In 1951, a major amendment was made in the UK Companies Act,1913, where remedies against mismanagement and oppression were introduced in India. These changes were bought to India after the recommendation of the Cohen Committee[8] which suggested changes in the UK Companies Act, 1948. The major challenge before the committee was to protect the interest of minority shareholders of a company that was constantly threatened by the majority shareholders, and the only remedy available was to wind-up the company.

Winding up of a company has seen a trend that the majority of shareholders took over the company without paying any penny to the minority shareholders.[9] This challenge was also highlighted in the Bhabha Committee Report.[10] The issues that were presented before the committee was restrictions on transferability of shares provided under the Article of Associations (AOA), and domination of directors who were mostly the majority shareholders, to use profits in such a way that only a few proportions is left for the stakeholders.[11]

 Therefore, section 241(1) of Companies Act, 2013, deals with the application of reliefs in cases where oppression, prejudice, and mismanagement in a company took place states that:
241. Application to Tribunal for relief in cases of oppression, etc

1. Any member of a company who complains that:
   
   1. the affairs of the company have been or are being conducted in a manner prejudicial to the 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; or
       
   2. the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company’s shares, or if it has no share capital, in its membership, or any other manner whatsoever, and that because of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter.[12]

Section 241 of the Companies Act, 2013, is in pari-materia to erstwhile section 397 of the Companies Act, 1956. The offending conduct of any shareholder can be viewed broadly under three categories (Oppression, Prejudice, and Mismanagement), out of which only one has to be successful to establish oppressive conduct.

1. Oppression
   As we look into the statute, we find that there is no exact definition that defines oppression in a company. Therefore, the courts have to read and expound the principles, based on facts and circumstances on a case to case basis.[13] The initial definition of this principle came to form the case of Elder v. Elder & Watson, where the court believed that loss of confidence or deadlock doesn’t come under the scope of oppression.[14] Whereas in the case of Scottish Co-operative Wholesale Society Ltd. v. Meyer,[15] the court stuck to the literal meaning of oppression i.e. harsh and wrongful acts, given in the Oxford Dictionary.
   
   The Supreme Court of India in the case of Rajahmundary Electric Company v. Nageshwara Rao defined the meaning of oppression stating lack of probity and fair dealing in the affairs of the company to the prejudice of some portion of its members.[16] The Indian courts have to deal with issues relating to oppression claims due to a lack of proper definition.[17] First, whether the act of any offending shareholder be considered as oppression if it is illegal?
   
   The Gujarat High Court was of the view that if any action by the majority shareholder is illegal and goes against any prevailing act but is in the best interest of the company, then such acts can’t be considered as oppressive. Whereas, if any act within the limits of the prevailing act may be oppressive if it is against the shareholders and prejudicial interest of the company.[18] Second, whether the time and frequency of offending act by shareholders be considered oppressive?
   
   The Supreme Court and the Company Law Board agreed that offending acts on part of majority shareholders should be continuous, especially up to the date when the petition is submitted in the court.[19] The National Company Law Appellate Tribunal (NCLAT) in the case of Power Finance Corporation Limited v. Shree Maheshwar Hydel Power Corporation Limited took a narrow approach and ruled that only offending acts which are continuous be brought before the court and not the acts which already came to an end before filing the petition.[20]
   
   Third, whether the oppression is available only to the petitioner who owns shares of a company, or to any other person of the company? In the case of re H.R. Harmer Ltd., the court was of the view that only members can claim oppressive acts but not directors.[21]
   
   The Supreme Court after looking into various judgments, set up some principles that define the scope of oppression in the case of V.S. Krishnan v. Westfort Hi-tech Hospital ltd.[22] The following points would make out under oppression:
   
   1. Where the act is wrong, harsh, or burdensome
   2. Where the act benefits some shareholders and even in the interest of the company, but the conduct is mala fide.
   3. The act is against good conduct.
   4. If an act is found to be oppressive, the remedy to put an end to it is very wide.
      
      Therefore, it can be said that the definition and of oppression have evolved over the years and the court has set a very high level of the bar for an act to be called oppressive. This leads to our next element i.e., prejudice, which has uncertainty in interpretation as it is a new concept that has been introduced in the Companies Act, 2013. Therefore, it imposes less burden on the petitioning shareholders to some extent, as compared to other elements.
       
2. Prejudice
   The new Companies Act of 2013 added a remedy that any company whose affairs are being conducted in a manner prejudicial to its shareholders or company itself, then, in that case, legal action can be initiated. This remedy was missing in the earlier act of 1956. This remedy was also put forward by the Jenkins Committee[23] in 1963, where he wrote about the inefficiencies of oppression and recommended a new unfair prejudice remedy.
   
   This was suggested for changes in the English law, but then the word unfair was dropped in India after the case of Re Saul D Harrison & Sons plc stated that The conduct must be both prejudicial (in the sense of causing prejudice or harm to the relevant interest) and also unfairly so; conduct may be unfair without being prejudicial or prejudicial without being unfair, and it is not sufficient if the conduct satisfies only one of these tests …[24]
   
   As it is a new concept which is also undefined, then it becomes important to understand the scope of this remedy. The Black’s Law Dictionary defines the word prejudice as damage or detriment to one’s legal rights or claims and defines prejudicial as unfairly disadvantageous; inequitably detrimental.[25] Therefore, Black Dictionary interprets it and tells that it is not restricted to unfairness to the victim but also like the conduct of the alleged offender.
   
   Therefore, the Indian Courts have a much wider scope while interpreting with a minimum of three methods. First, adopting a literal meaning and interpretation of it by looking at the effect of the conduct on shareholders only.[26] Second, the courts may consider both i.e. the nature of the conduct and its impact on shareholders to determine whether an act falls within its purview.
   
   Third, courts could interpret the term by applying the rule of constructing of noscitur a sociis.[27] This Latin term means that the court should consider some related words or synonyms of any unclear or undefined word. Despite the fact on which method the court adopts, the decision has to be given on a case to case basis. The lack of guidance and novelty behind this remedy, a person has to wait till the rationalization of this principle by the judiciary.
    
3. Mismanagement
   This remedy was first introduced in the Companies Act, 1956, after the Bhabha Report who believed that the scope of oppression provision has to be enlarged because the current scope only covered oppression of minority shareholders, but not the gross mismanagement of the affairs of a company which can’t be put within the scope of oppression.[28] So, the mismanagement remedy was put in the Companies Act, 2013 in section 241.
   
   Two conditions are to be fulfilled for mismanagement remedy to apply.[29] First, there should be a change in control of the company, through alteration or addition of members, managers, etc of the company. Second, such changes should be reflected in the affairs that are prejudicial to the interests of the company. Therefore, mismanagement is considered as an extended remedy of oppression with a much wider scope.
   
   The new companies act has included a change that expands the mismanagement effect which is prejudicial to the company or its shareholders. The new act also subjected a conditional remedy to the earlier alone remedy by including the establishment of just and equitable grounds for winding up of a company.
    

Remedies available under the Companies Act 2013
The Companies Act, 2013 has established a special tribunal called the National Company Law Tribunal (NCLT) to deal with the matters of company disputes especially relating to section 241-242 of Companies Act, 2013. Therefore, it bars the jurisdiction of civil courts to entertain such suits, and if any matter has been taken up, then such matter to be referred to NCLT.

The majority of cases in the NCLT are on the issue of oppression and mismanagement of the companies. Section 242 (1) of Companies Act, 2013, which deals with the power of Tribunal to prevent and provide remedies in case of oppression and mismanagement was introduced to protect the interest of minority shareholders as well:
242. Powers of Tribunal:

1. If, on any application made under section 241, the Tribunal believes:
   
   1. that the company’s affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to the public interest or in a manner prejudicial to the interests of the company; and
   2. that to wind up the company would unfairly prejudice such member or members, but that otherwise, the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up, the Tribunal may, intending to bring to an end the matters complained of, make such order as it thinks fit.[30]

Section 242 of the Companies Act, 2013, is in pari-materia with the erstwhile section 398 of the Companies Act, 1956. Section 242 empowers the Tribunal to pass any order as they think is necessary while considering the interest of the company and its shareholders, mainly under two broad grounds, namely, Establishment of oppression and mismanagement in the affairs of the company, and Just and Equitable grounds for winding up.

1. Establishment of Oppression and Mismanagement claims under section 241 of Companies Act, 2013
   The Tribunal has enormous powers to grant relief after the question of oppression and mismanagement has been answered. The Companies Act, 2013 allows the tribunal to resolve a dispute and pass an order to end it on the terms of complete justice.
   
   The Justice Bhagwati in the case of Mohanlal Ganpatram observed that:
   The language of sections 397 and 398 leaves no doubt as to the true intendment of the legislature and it is transparent that the remedy provided by these sections is preventive to bring to end oppression or mismanagement on the part of the controlling shareholders and not to allow its continuance to the detriment of the aggrieved shareholders of the company. The remedy is not intended to enable the aggrieved shareholders to set at naught what has already been done by the controlling shareholders in the management of the affairs of the company.[31]
   
   Therefore, the order and relief must be such that it breaks the stalemate and stops it from perpetuating. In the case of Scottish Co-operative Wholesale Society Ltd. v. Meyer,[32] the House of Lord's order that the oppressor should buy the shares of the oppressed shareholders at the price when no oppression existed. Therefore, this will enable the company to run and will also give monetary compensation for the injury suffered by the oppressed shareholders.
   
   Such a solution is a wonderful answer to the problem of deadlock in a company when there is a loss of trust among the shareholders. In the same cases, the Tribunal also ordered that the minority shareholder should buy out the majority and run the company.[33] Therefore, it can be said that the judiciary needs to decide the merits of the facts and pass an order on a case-to-case basis.
    
2. Just and Equitable Grounds for Winding-Up
   In the early times, the only remedy that was available to shareholders for any offending act was to wind-up the company on just on equitable grounds. This was also considered a nuclear option.[34] Justice P.N. Bhagwati noted that:
   That remedy was however totally inadequate for it meant killing the company to put an end to the oppression and mismanagement. But killing the company would be a singularly clumsy method of ending oppression and mismanagement and such a course might well turn out to be against the interests of the minority shareholders.[35]
   
   This remedy was added as a conditional limb and it has to be satisfied if oppression is being claimed by the petitioning shareholders. A committee headed by Justice Rajinder Sachar stated that We are also of the opinion that [the conditional limb] impose[s] as an essential condition of intervention by the Court a state of facts often difficult to establish. We see no sufficient reason for making out a case of oppression that the facts should also justify the making of a winding-up order.[36]
   
   The Supreme Court in the case of Hind Overseas Pvt. Ltd. v. Raghunath Prasad Jhunjhunwalla,[37] relied upon the just and equitable test highlighted in the case of Ebrahimi v. Westbourne Galleries Limited.[38]
   
   The Lords noted that whenever a company was acting under the principles of commercial law but were in breach of the agreement between shareholders, then the order of winding up is justified. There are three major instances for passing an older or winding-up of a company on just and equitable grounds.[39]
   
   First, When the main objective of the company fails and it becomes impossible for the company to achieve it. Second, when a deadlock situation occurs in the company due to the dispute among its shareholders.
   
   Third, when there is a complete loss of confidence among the shareholders. This usually happens, when principles of the statute are disregarded and conflict arises among the majority and minority shareholders. Therefore, in such instances, the Tribunal can pass an order on Just and Equitable grounds.

Comparison of Indian and U.K. Companies Act on Remedies
The Origin of Indian Companies act was initially from the U.K. in 1913 when India was ruled by the Britishers. After independence, India adopted many old laws as they were and also amended some old laws that were on the same line with that of the U.K. The U.K. introduced a new company act in 1948, whereas India introduced it on similar terms in 1956. With the changing time, the need for change arose and the U.K. changed its act in 2006, whereas India changed its act in 2013.

Therefore, there is no much difference when it comes to remedies available to oppressed shareholders between the U.K. and India due to the same origin. But in the new law, two major differences have been noticed between both countries. First, the word unfair prejudice has been included in the U.K. Companies Act whereas only the word prejudice has been included in the Indian Companies Act. This shows the narrow approach in the U.K. and a very high burden on the petitioning shareholders to prove that the conduct was unfair too.

 Whereas in India, this scope is widened and less burden has been imposed to prove that conduct was prejudice to the interest of the company or its shareholders. Second, the English Companies Act eliminated the conditional limb, i.e., just and fair to wind-up a company, making the oppression remedy an independent remedy than an alternative one. Whereas, the Indian law was in opposite directions to it, where a conditional limb had to be satisfied for the petitioning shareholder. Therefore, the standards to prove oppression have been raised by the Indian law and therefore this remedy could not stand as an independent.

Conclusion
The reliance of petitioning shareholders on the remedies given under section 241 and 242 of Companies Act, 2013, constitutes a majority. Thus, reliance on other remedies like class actions or derivative actions is much ignored.[40] The legislation took a long way to shape and make proper law relating to oppression and mismanagement in India, but still, several concerns remain.

The U.K. has reformed the difficulties in its remedies by including prejudice and making the conditional limb an independent remedy. Whereas, the Indian legislation tries to widen the scope of remedy and makes it much easier for the petitioning shareholder to claim the remedy but still it lacks behind the U.K law in some key areas. It is very evident from the paper that India has a complex scenario to provide relief in case of oppression and mismanagement.

Several steps need to be satisfied for a claim to be successful against the offending shareholder. The legislation still is very unclear at various stages which increases the work of Tribunals to interpret the provisions and think of a worthy solution. This ultimately utilizes a lot of time of the Tribunals, and the motive to provide a speed justice is left behind. It has been observed that many courts hesitate to refer a dispute for arbitration or mediation, but doing so will not only benefit the parties but will also make courts effective.

Sometimes, mediation and arbitration are observed to be fruitful to end the dispute between the shareholders which merely arose due to lack of confidence. This creative solution also ensures to be in the best interest of the company and its shareholders, after properly analyzing everything which courts might not look into.

End-Notes:
[1] Securities And Exchange Board Of India, Report Of The Committee On Corporate Governance (October, 2017), Available At Https://Www.Sebi.Gov.In/Reports/Reports/Oct-2017/Report-Of-The-Committee-On-Corporate-Governance 36177.Html (Last Visited On Sept. 22, 2020)
[2] Companies Act, 2013, S. 5, S. 13, S. 48, S. 66.
[3] Companies Act, 2013, S. 188.
[4] Companies Act, 2013, S. 149, S. 151, S. 163, S. 164, S. 166.
[5] Companies Act, 2013, S. 139-148.
[6] Companies Act, 2013, S. 241-246.
[7] Cyrus Investment Pvt. Ltd. V. Tata Sons, [2020] 154 CLA 47.
[8] BOARD OF TRADE, Report Of The Committee On Company Law Amendment (1945), Available At Http:// Reports.Mca.Gov.In/Reports/ 17Justice%20 0Cohen% 20committee%20 Report%20 Of%20the%20 Committee % 2 0ono20company%/O201aw%/O20amendment% 201943.Pdf (Last Visited 10th October, 2020) ('Cohen Committee Report').
[9] Ibid.
[10] GOVERNMENT OF INDIA, Report Of The Company Law Committee, 199-203 (1952), Available At Http://Reports.Mca.Gov.In/Reports/22-Bhabha/ 2Ocommittee / 2report / 2Oon/ 2ocompany / 2O Law%20committee%201952.Pdf (Last Visited Oct. 8, 2020) ('Bhabha Committee Report').
[11] Ibid.
[12] Companies Act, 2013, S. 241 (1).
[13] Shanti Prasad Jain V. Kalinga Tubes Ltd., (1965) 35 Comp. Cas. 351 (SC), At Para. 15; Yashovardhan Saboo V. Groz-Beckert Saboo Ltd., (1995) 83 Comp. Cas. 371 (CLB), At Para. 68.
[14] 1952 S.C. 49.
[15] [1959] AC 324.
[16] 1955 SCR (2)1066.
[17]Varottil U., 'Unpacking The Scope Of Oppression, Prejudice And Mismanagement Under Company Law In India' (2020) SSRN Electronic Journal.
[18] Mohanlal Ganpatram V. Shri Sayaji Jubilee Cotton And Jute Mills Co. Ltd., (1964) 34 Comp. Cas. 777 (Guj).
[19] Sangramsingh P. Gaekwad V. Shantadevi P. Gaekwad (Dead), (2005) 11 SCC 314; Vikram Bakshi V. Connaught Plaza Restaurants Limited, (2017) 140 CLA 142 (NCLT).
[20] (2019) 213 Comp. Cas. 560.
[21] Re H.R. Harmer Ltd., [1951] 1 W.L.R. 62.
[22] (2008) 3 SCC 363.
[23] Board Of Trade, Report Of The Company Law Committee (June 1962).
[24] Re Saul D. Harrison & Sons Plc, [1994] BCC 475.
[25] Bryan A. Garner (Editor In Chief), Black’s Law Dictionary (11th Edn., 2019).
[26] Prateek Kumar Singh, Indian Company Law Making Way For Unfair Prejudice Remedy? RGNUL Financial And Mercantile Law Review (11 January 2020).
[27] Varottil (N 17).
[28] Bhabha (N 10).
[29] A. Ramaiya, Guide To The Companies Act (18th Edn, Lexisnexis, 2015) At P. 4006.
[30] Companies Act, 2013, S. 242 (1).
[31] Mohanlal (N 18).
[32] Scottish Co-Operative Wholesale Society Ltd. V. Meyer, [1959] A.C. 324 At 369.
[33] M. Rishi Kumar Dugar, Minority Shareholders Buying Out Majority Shareholders – An Analysis, (2010) 22 National Law School Of India Review 105.
[34] Varottil (N 17).
[35] Elder (N 14).
[36] Ministry Of Law, Justice & Company Affairs, Government Of India, Report Of The High-Powered Expert Committee In Companies And MRTP Acts (August 1978).
[37] Hind Overseas (P) Ltd. V. Raghunath Prasad Jhunjhunwalla, (1976) 3 SCC 259.
[38] Ebrahimi V. Westbourne Galleries Limited, 1973 AC 360.
[39] Shreyas Jayasimha And Rohan Tigadi, 'Arbitrability Of Oppression, Mismanagement And Prejudice Claims In India: Need For Re-Think' (2018) 11 NUJS L Rev 547.
[40] Vikramaditya Khanna & Umakanth Varottil, The Rarity Of Derivative Actions In India: Reasons And Consequences, In Dan W. Puchniak, Et Al. (Eds.), The Derivative Action In Asia: A Comparative And Functional Approach (Cambridge University Press, 2012) At Pp. 386- 388.