The Statutory Relief Menu
Section 245(1) permits the NCLT to grant relief including: restraining the company from committing an act that is prejudicial; restraining the company from acting on a resolution; declaring a resolution void; restraining the company from acting on a resolution or agreement; requiring the company to initiate action against the directors, auditors, or experts; and awarding damages or compensation. The relief is directed at the conduct that constitutes the prejudice.
The Damages Relief Under Section 245(1)(g)
The NCLAT in the Jindal Poly Films matter held that Section 245(1)(g) permits shareholders to claim damages or compensation from or against the company or its directors. The Tribunal rejected the argument that the relief is confined to the company’s benefit. The language is wide enough to permit a direct claim by the class, provided the prejudice and the loss are established.
The Past-Transaction Relief
The NCLAT upheld the maintainability of a class action challenging past and concluded transactions. The relief may include reversal of the transaction, restoration of the status quo, or compensation. A transaction that was completed and disclosed years earlier is not automatically outside the class-action reach; the question is whether the prejudice continues and whether the relief can be granted without disturbing third-party rights.
The Evidentiary Burden
A class action is not a substitute for a detailed evidentiary hearing. The applicant must establish the prejudice with documents, expert evidence where necessary, and a causal link to the loss. A class action that relies on generalised allegations of mismanagement without specific transactions and quantified loss is likely to fail at the merits stage.
The Interaction with Section 241
The NCLAT has clarified that the availability of a Section 241–242 remedy does not discredit a Section 245 petition if the parameters of Section 245 are met. The two remedies can coexist, but the relief and the class must be distinct. A petitioner cannot use Section 245 to circumvent the Section 244 threshold for a personal oppression claim.
Call to Action: For Section 245 relief strategy, damages quantification, or class action merits defence, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.