Preface
For years, the precise authority of the National Company Law Tribunal (‘NCLT’), a specialized forum established under the Companies Act, 2013 (‘2013 Act’), has been a subject of debate. Since it is not a traditional civil court, its power to adjudicate disputes that intersect with broader civil or contractual issues, such as fraud and oppression, remained ambiguous. The recent Supreme Court of India judgment in Mrs. Shailja Krishna v. Satori Global Limited (‘Mrs Krishna Case’)[1] marks a significant development in Indian corporate law. This landmark ruling resolves the uncertainty, affirming that the NCLT is empowered to thoroughly examine complex questions of fact, including fraud, manipulation, and coercion, when addressing claims of oppression and mismanagement. This decision solidifies its role as a comprehensive body for resolving corporate disputes.
In recent times, the NCLT’s jurisdiction has been expanding through IBC amendments like the 2021 pre-pack process for MSMEs, proposed cross-border and group insolvency frameworks, and strengthened infrastructure with more benches and members, underscoring its central role in corporate and insolvency matters. This ruling strengthens shareholder protection by providing direct recourse to the NCLT and reinforces corporate governance by ensuring strict compliance. It further brings legal clarity by confirming the broad and remedial scope of NCLT jurisdiction under Sections 241–242 of the 2013 Act, including integral fraud allegations. Overall, it enhances transparency, accountability and shareholder empowerment.
Genesis of the Case
The case was relating to a transfer of shares of Satori Global Limited (‘Company’). The appellant, Mrs. Shailja Krishna, who was the Company’s promoter and held more than 98% of its share capital, contended that she was forced to sign blank documents amidst a period of marital conflict. These documents were then allegedly used to create a gift deed that transferred her entire shareholding in the Company to her mother-in-law. Upon review, the Supreme Court identified numerous fundamental defects in the transaction. First, the gift deed was deemed legally invalid because it directly violated the Company’s Articles of Association, which specifically prohibit share transfers by gift to relatives other than those set out therein, and it did not include a ‘mother-in-law’. Furthermore, the share transfer forms themselves were found to be compromised, showing evidence of overwriting and date manipulation, and had been executed after their statutory validity had expired. Compounding these issues, the NCLT invalidated a series of subsequent board meetings that followed the fraudulent transfer. These meetings, which had purportedly accepted Mrs. Krishna’s resignation and re-appointed her husband as a director, were conducted without the required notice or a valid quorum, rendering them procedurally invalid.
The jurisdictional journey of this case began when the NCLT, Allahabad Bench, allowed Mrs. Krishna’s petition and nullified the fraudulent share transfer, a decision that was subsequently reversed by the National Company Law Appellate Tribunal (‘NCLAT’) in New Delhi. The NCLAT contended that the NCLT lacked the authority to adjudicate complex issues of fraud and oppression, viewing such matters as the exclusive domain of civil courts. However, the Supreme Court decisively set aside the NCLAT’s order, establishing that the NCLT’s power is not merely for summary proceedings and it must be able to examine all issues integral to a complaint of oppression and mismanagement, including fraud, to prevent rendering shareholders remediless and defeating the tribunal’s foundational purpose. In doing so, the judgment reaffirmed several key principles:
- the NCLT’s jurisdiction under Section 242 of the Companies Act, 2013, unequivocally extends to fraudulent share transfers;
2. strict compliance with corporate governance for board meetings is mandatory; and
3. a shareholder fraudulently ousted from the register of members retains the right to seek relief against oppression.
Therefore, the NCLT, now is re-confirmed as a single, unified forum capable of providing holistic relief in cases of oppression and mismanagement.[2]
Deconstructing the Legal Framework
Chapter XV of the 2013 Actempowers the NCLT to protect minority shareholders through remedies against oppression, mismanagement, and by enabling class actions. Mrs Krishna Caserevolved around Sections 397 and 398 of the Companies Act, 1956 (‘1956 Act’) which dealt with oppression of members and mismanagement, respectively.[3] With the advent of Section 430 of the 2013 Act, it was provided that “civil court shall have no jurisdiction to entertain any suit or proceeding in respect of any matter which the National Company Law Tribunal (NCLT/Tribunal) or the Appellate Tribunal (NCLAT) is empowered to determine by or under this Act or any other law for the time being in force.” [4] The parent provision, Section 408 of the 2013 Act, confers powers upon the NCLT, while Sections 241 and 242 of the 2013 Act specifically vest jurisdiction in the NCLT to grant relief in cases of oppression. Notably, the language in the last segment of Section 397(2) of the 1956 Act; “the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit,” is replicated in Section 242(1) of the 2013 Act. The NCLT has been vested with wide powers over company management and administration, including regulating the conduct of affairs. Unlike the erstwhile Company Law Board, the NCLT functions as an exclusive tribunal for corporate governance and dispute resolution.[5]
Judicial Precedents
The contours of the law in the domain of captioned subject matter are far from straightforward. Sections 241 and 242 of the 2013 Act form the legal backbone, empowering the NCLT to tailor remedies, with the primary aim of ending disputes and preventing future harm. The term “oppression” under Section 397 of the 1956 Act [6] has not been statutorily defined and must be construed contextually in light of the facts of each case,[7] requiring conduct that is burdensome, harsh, and continuing up to the date of the petition. The purpose of orders under Indian law, whether for “oppressive,” “unfairly prejudicial,” or “prejudicial” conduct, is to end the matters complained of by providing a solution, not to harm the company or disregard other stakeholders.[8]
Hence, relief against oppression and mismanagement must demonstrate that the company’s affairs are being conducted oppressively, and isolated acts or general allegations are insufficient to prove oppression or mismanagement.[9] Additionally, a mere lack of confidence is insufficient because it must stem from oppressive conduct by the majority shareholders against the minority shareholders.[10] Lastly, the directors’ powers must be exercised fairly, and any mala fide act reducing a majority shareholder to a minority amounts to oppression.[11]
In Mrs Krishna’s Case, the Supreme Court underscored that the gift deed’s validity lay at the heart of the dispute and fell within the NCLT’s remit to test against law. It affirmed that the NCLT’s jurisdiction under Sections 397, 398, and 402 of the 2013 Act is deliberately expansive, permitting relief to ensure that the statute’s remedial purpose is not diluted.
Summation
Mrs. Krishna Case affirms that the NCLT has broad jurisdiction to adjudicate matters integral or incidental to complaints of oppression and mismanagement. A complainant/appellant must demonstrate conduct that is unfair, lacks probity, and prejudices their legal or proprietary rights as a shareholder. In Mrs Krishna Case, the appellant was found to be a victim of oppression and mismanagement, as the gift deed and subsequent share transfers were questionable, and board meetings were conducted mala fide, violating both statutory provisions and the company’s internal regulations.
In conclusion, the “integrality” test ensures that while the NCLT is not vested with unbridled authority to adjudicate every incidental or collateral allegation of fraud, it remains fully empowered to decide such issues where they form the very foundation of an oppression or mismanagement claim. The Mrs Krishna Case, by affirming this balance, dispels jurisdictional ambiguities, consolidates remedies within the company law framework, and fortifies the NCLT’s role as a central forum for corporate redress.
The case balances tribunal and civil court roles, restoring confidence in principled, purposive corporate governance adjudication. It breathes new life into the statutory remedies against oppression and mismanagement, ensuring that they remain potent weapons in the arsenal of the aggrieved shareholder.
Written By Nidhi Arora (Partner) and Rachi Gupta (Senior Associate)
[1] 2025 SCC OnLine SC 1889.
[2] Radharamanan v. Chandrasekara Raja, AIR 2008 SC 1738; Kamal Kumar Dutta v. Ruby General Hospital Ltd., (2006) 7 SCC 613.
[3] The 1956 Act has been replaced by the Companies Act, 2013, ss. 241& 242 (providing for member complaints against actions prejudicial to public interest, oppressive to members, or harmful to the company, and empowering the NCLT to issue appropriate remedies).
[4] Shashi Prakash Khemka (dead) through LR and another v NEPC Micon (now NEPC India Limited) and others, (2019) 18 SCC 569.
[5] AS Hospitality Pvt. Ltd. V Surya Construction Pvt. Ltd, CS (COMM) 1496/2016.
[6] Section 241 of the Companies Act, 2013.
[7] Chatterjee Petrochem (I) Pvt. Ltd. v. Haldia Petrochemicals Ltd., (2014) 14 SCC 574.
[8] Hungerford Investment Trust Limited, Re vs Turner Morrison & Co. Limited, ILR (1972) 1 Cal 286.
[9] Tata Consultancy Services Ltd. v. Cyrus Investments, (2021) 9 SCC 449; Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd., (1981) 3 SCC 333.
[10] Shanti Prasad Jain v. Kalinga Tubes Ltd.,1965 SCC OnLine SC 15.
[11] Dale & Carrington Invt. (P) Ltd. v. P.K. Prathapan, (2005) 1 SCC 212.
