The Statutory Discretion
Section 244(2) provides that the NCLT may waive the threshold requirement if it is satisfied that the waiver is necessary to prevent oppression or mismanagement. The power is discretionary, and the burden is on the applicant to demonstrate necessity. A bare assertion that the petitioner holds less than the threshold is not enough; the application must connect the waiver to the alleged oppression.
The Waiver Application
The waiver application should be filed before or along with the main petition. It should set out: the petitioner’s shareholding or membership; the reason the threshold cannot be met; the specific acts of oppression or mismanagement; the urgency; and the prejudice that would result if the waiver is refused. The application should be supported by the register of members, the shareholding pattern, and the documentary evidence of the alleged oppression.
The NCLT’s Approach
The NCLT has taken a pragmatic view: a shareholder holding less than 10% is not debarred from filing an oppression petition, but must seek exemption. The Tribunal has also clarified that the merits of the oppression plea are not to be examined at the waiver stage; the waiver application is concerned with the threshold, not with whether the oppression is proved. This distinction is important because respondents often attempt to argue the merits at the waiver stage.
The NCLAT’s Supervision
The NCLAT has upheld waiver orders where the NCLT has recorded reasons connecting the waiver to the prevention of oppression. The appellate tribunal has also set aside orders that granted relief without a finding of oppression, reinforcing the principle that the waiver does not dispense with the merits.
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