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3. Contending oppression and mismanagement, petitioners approached the Company Law Board alleging that they have invested huge sum of money on the promise that they will be continued as directors, but, that promise was not honoured. It was further contended that notice to the annual general body meeting was not properly given. Special resolution was not passed regarding issue of shares. Issue of right shares was incorrect and removal of petitioners 1 to 4 and respondents 5 and 14 from the directorship and other acts done by the majority shareholders will amount to "oppression and mismanagement". It is also submitted that a special investigation center run by Chairman which was functioning in the Westfort Hi-tech Hospital on rent and profit, did not make due payment and since that was questioned, the Chairman was awaiting an opportunity to remove them from the directorship. In the petition, following reliefs were sought for:

In none of the appeals, the decision of the general body as approved by the Company Law Board were challenged and that part has become final.

5. Before dealing with grounds urged in the appeal and correctness of the order of the Board, we will consider the scope of section 397. Section 397 of the Companies Act reads as follows:

"397. Application to Tribunal for relief in cases of oppression:- (1) Any members of a company who complain that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members including any one or more of themselves may apply to the Tribunal for an order under this section, provided such members have a right so to apply in virtue of section 399.

324) and In Re Associated Tool Industries Ltd. ((1964) Argus LR 73), Jermyn Steel Turkish Baths Ltd. ((1971) 3 All ER 184) etc. the Apex Court in Shanti Prasad Jain v. Kalinga Tubes Ltd. ((1965) 35 Com Cases 351) held as follows:

"These observations from the four cases referred to above apply to section 397 also which is almost in the same words as section 210 of the English Act, and the question in each case is whether the conduct of the affairs of a company by the majority shareholders was oppressive to the minority shareholders and that depends upon the facts proved in a particular case. As has already been indicated, it is not enough to show that there is just and equitable cause for winding up the company, though that must be shown as preliminary to the application of section 397. It must further be shown that the conduct of the majority shareholders was oppressive to the minority as members and this requires that events have to be considered not in isolation but as a part of a consecutive story. There must be continuous acts on the part of the majority shareholders, continuing up to the date of petition, showing that the affairs of the company were being conducted in a manner oppressive to some part of the members. The conduct must be burdensome, harsh and wrongful and mere lack of confidence between the majority shareholders and the minority shareholders would not be enough unless the lack of confidence springs from oppression of a minority by a majority in the management of the company's affairs, and such oppression must involve at least an element of lack of probity or fair dealing to a member in the matter of his proprietary rights as a shareholder. It is in the light of these principles that we have to consider the facts ..... with reference to section

So, it is the party who files the petition to prove that the materials brought on record that the affairs of the company is such that it would be just and equitable to order winding up and there is oppression. Section 397 of the Companies Act is intended to avoid winding up and mitigate and alleviate oppression. Section 397 of the Act is geared to help the members who are oppressed whereas section 398 comes into play in case of 'mismanagement'. Relief under section 398 of the Act is to save the company if the affairs of the company are being conducted in a manner prejudicial to the company in the interest of the company as a whole and not to any particular member/members. To attract the section, there shall be continuing mismanagement. It is not necessary for the court to find out a case for winding up in case of mismanagement in order to grant relief. Under section 397, the power is of discretionary nature which enables the Company Law Board to make an order as it thinks fit with a view to bringing to an end the matter complained of as distinguished from the power granted under section 398 which enables the Board to pass an order with a view to bringing an end or preventing the matters complained of or apprehended. (See: Rajahmundry Electric Supply Corporation Ltd. v. A.Nageswara Rao - AIR 1956 SC 213; Palghat Exports (P) Ltd. v. T.V. Chandran and others - 1994 (79) Comp. Case 213 - Kerala). Very vast discretion is given under section 402 to the Company Law Board to pass orders in case sections 397 or 398 are alleged. (See: Cosmosteels Pvt. Ltd. and others v. Jairam Das Gupta and others - AIR 1978 SC 375).