The Equitable Jurisdiction
The “just and equitable” phrase in Section 241 and Section 271(e) traces its origins to partnership law and to the English company law tradition. The NCLT exercises an equitable jurisdiction, but the jurisdiction is not at large. The petitioner must establish that the company’s affairs have been conducted in a manner that is not merely unfair but fundamentally inconsistent with the basis on which the members associated.
The Partnership Analogy
Where the company is a quasi-partnership—a small, closely held company where the members joined on the basis of mutual trust and confidence—the “just and equitable” ground may be invoked where that trust has broken down. The analogy is not available to a large public company where the members’ relationship is purely contractual.
The Limits
The NCLT has refused “just and equitable” relief where the petitioner’s complaints relate to commercial decisions that were within the board’s powers, or where the petitioner had acquiesced in the conduct for years. The equitable jurisdiction is discretionary, and delay, acquiescence, and the availability of an alternative remedy are relevant factors.
The Interaction with Section 242 Relief
A finding on the “just and equitable” ground does not automatically lead to a buyout. The NCLT must still consider the appropriate relief under Section 242(2), and the relief must be proportionate to the conduct found.
Call to Action: For “just and equitable” ground assessment, quasi-partnership oppression strategy, or Section 242 relief planning, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.