The National Company Law Appellate Tribunal, Principal Bench, New Delhi, has upheld an NCLT order waiving the statutory one-fifth membership threshold under Section 244(1)(b) of the Companies Act, 2013, allowing 209 members of the Indian Motion Picture Producers' Association to pursue an oppression-and-mismanagement petition against the association's management.
The 209 petitioning members had alleged misuse and diversion of IMPPA's funds, non-disclosure of expenditure, irregularities in the circulation of notices and minutes, accounting discrepancies, the illegal appointment of two senior vice-presidents, and the illegal suspension or expulsion of members. IMPPA, a company without share capital, argued it had roughly 1,250 voting-eligible members, so that Section 244(1)(b) required the support of about 250 members (one-fifth of the total) before a petition could be maintained, a threshold the 209 petitioners fell short of.
The NCLT, Mumbai Bench, nonetheless waived the threshold requirement. On IMPPA's appeal, a bench of Justice Sharad Kumar Sharma and Technical Members Arun Baroka and Indevar Pandey upheld that waiver, holding that the NCLT had properly exercised its statutory discretion under the proviso to Section 244(1)(b) to permit members of a company without share capital to pursue an oppression-and-mismanagement petition notwithstanding the numerical shortfall, given the seriousness of the underlying allegations.