The Two Threshold Routes
Section 244(1) prescribes the eligibility threshold for a Section 241 petition. For a company with share capital, the petitioner must hold not less than one-tenth of the issued share capital, or the petition must be presented by at least one hundred members or members holding not less than one-tenth of the issued share capital, whichever is less. For a company without share capital, the petitioner must constitute at least one-fifth of the total number of members. The threshold is a maintainability condition, not a merits condition.
The “Whichever Is Less” Computation
The “whichever is less” formula is frequently misapplied. The petitioner must satisfy either the shareholding test or the numerical test, not both. A member holding 9% cannot rely on the numerical test unless the petition is supported by the requisite number of members. The computation should be supported by the register of members and the latest shareholding pattern.
The Waiver Power Under Section 244(2)
Section 244(2) empowers the NCLT to waive the threshold requirement if it is satisfied that the waiver is necessary to prevent oppression or mismanagement. The waiver application should be filed along with or before the main petition, and it should set out the reasons why the threshold cannot be met and why the waiver is necessary. The NCLT has clarified that a shareholder holding less than 10% is not barred from filing; the shareholder must seek exemption.
The Maintainability Challenge
A respondent may challenge the petition at the threshold stage. The NCLT has held that where the petitioner satisfies Section 244, the petition cannot be dismissed in limine unless there is suppression of material facts, concealment, forgery, or fraud. A maintainability challenge that does not identify a specific threshold defect is unlikely to succeed.
Call to Action: For Section 241/244 threshold assessment, waiver application drafting, or maintainability challenge, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.