Chapter XVI - Prevention of Oppression and Mismanagement
Section 241
Section 241: application to the Tribunal for relief in cases of oppression
Section 241 is the gateway to Chapter XVI relief. A member with a right to apply under section 244 may complain to the Tribunal of oppressive or prejudicial conduct of the company’s affairs, or of a material change in management or control likely to cause prejudice.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Any member of a company who complains that—(a) the affairs of the company have been or are being conducted in a manner prejudicial to 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 (b) 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 in any other manner whatsoever, and that by reason 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. (2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter. Provided that the applications under this sub-section, in respect of such company or class of companies, as may be prescribed, shall be made before the Principal Bench of the Tribunal which shall be dealt with by such Bench. (3) Where in the opinion of the Central Government there exist circumstances suggesting that—(a) any person concerned in the conduct and management of the affairs of a company is or has been in connection therewith guilty of fraud, misfeasance, persistent negligence or default in carrying out his obligations and functions under the law or of breach of trust; (b) the business of a company is not or has not been conducted and managed by such person in accordance with sound business principles or prudent commercial practices; (c) a company is or has been conducted and managed by such person in a manner which is likely to cause, or has caused, serious injury or damage to the interest of the trade, industry or business to which such company pertains; or (d) the business of a company is or has been conducted and managed by such person with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose or in a manner prejudicial to public interest, the Central Government may initiate a case against such person and refer the same to the Tribunal with a request that the Tribunal may inquire into the case and record a decision as to whether or not such person is a fit and proper person to hold the office of director or any other office connected with the conduct and management of any company. (4) The person against whom a case is referred to the Tribunal under sub-section (3), shall be joined as a respondent to the application. (5) Every application under sub-section (3)—(a) shall contain a concise statement of such circumstances and materials as the Central Government may consider necessary for the purposes of the inquiry; and (b) shall be signed and verified in the manner laid down in the Code of Civil Procedure, 1908, for the signature and verification of a plaint in a suit by the Central Government.
Introduction
The Central Government may itself apply where it considers the affairs are being conducted in a manner prejudicial to public interest; for prescribed companies or classes, those applications go to the Principal Bench. It may also refer a case against a person to the Tribunal for a decision on whether that person is fit and proper to hold the office of director or any other office connected with company management.
Section 241 commenced on 1 June 2016 under S.O. 1934(E). The Principal Bench proviso and sub-sections (3) to (5) were inserted by the Companies (Amendment) Act, 2019, in force from 15 August 2019 under S.O. 2947(E).
Key takeaways
Two grounds for members
Oppressive or prejudicial conduct of affairs, or a material change in management or control likely to lead to prejudicial conduct.
Eligibility
The member must have a right to apply under section 244.
Fitness reference
The Central Government may ask the Tribunal to decide whether a person is fit and proper to hold office.
A member’s application
A member may apply if the company’s affairs have been or are being conducted in a manner prejudicial to public interest, oppressive or prejudicial to the member or other members, or prejudicial to the company’s interests. A member may also apply where a material change in management or control has taken place, by alteration of the Board or manager, change in ownership of shares or membership, or otherwise, and as a result the affairs are likely to be conducted in a manner prejudicial to the company or its members. A change brought about by, or in the interests of, creditors (including debenture holders) or any class of shareholders does not count under clause (b). The member must have a right to apply under section 244.
The Central Government’s application
If the Central Government is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under Chapter XVI. Its applications in respect of such company or class of companies as may be prescribed are made before, and dealt with by, the Principal Bench of the Tribunal.
Reference on fitness to hold office
Under sub-section (3), the Central Government may initiate a case against a person and refer it to the Tribunal for a decision on whether that person is fit and proper to hold the office of director or any other office connected with the conduct and management of any company. The circumstances are: fraud, misfeasance, persistent negligence or default, or breach of trust in managing the company; business not conducted on sound business principles or prudent commercial practices; management likely to cause, or causing, serious injury to the trade, industry or business concerned; or business conducted with intent to defraud creditors, members or others, for a fraudulent or unlawful purpose or prejudicially to public interest. The person is joined as a respondent, and the application must contain a concise statement of circumstances and materials and be signed and verified as a plaint under the Code of Civil Procedure, 1908.
Practical preparation
Check the member’s eligibility under section 244 before filing; identify which clause of sub-section (1) applies; document the conduct or the change in control and its likely prejudice; collect board minutes, shareholding records and correspondence; consider interim relief under section 242(4).
Practical checklist
Do
- Tie each complaint to the statutory grounds in sub-section (1).
- Confirm section 244 eligibility before filing.
Avoid
- Do not rely on a change in control brought about by creditors as a clause (b) ground.
- Do not treat a commercial disagreement alone as oppression without showing prejudice in the conduct of affairs.
Illustrative example
Hypothetical: minority shut out of management
A minority shareholder is removed as director and denied information, while the majority approves payments to its own concerns.
Eligibility
The shareholder checks that it meets section 244.
Grounds
The application pleads prejudicial and oppressive conduct under sub-section (1)(a).
Relief
It seeks orders under section 242, including interim relief.
Outcome
- The Tribunal decides on the evidence of how the affairs were conducted, applying the test in section 242(1).
Glossary
- Oppression
- Conduct of the company’s affairs in a manner oppressive to a member or members, a ground under clause (a).
- Principal Bench
- The bench of the Tribunal before which Central Government applications for prescribed companies are made.
Frequently asked questions
Who can apply under section 241?
A member who has a right to apply under section 244, and the Central Government on the public-interest ground.
Does a change of control caused by lenders count?
Not under clause (b). A change brought about by, or in the interests of, creditors (including debenture holders) or any class of shareholders is excluded.
What is a fitness reference?
A case referred by the Central Government under sub-section (3) asking the Tribunal to decide whether a person is fit and proper to hold the office of director or another management office. Section 242(4A) requires the Tribunal to record a specific decision.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026