Section 398 - Application to Tribunal for relief in cases of mismanagement. - Companies Act, 1956

Application to [1] [Tribunal] for relief in cases of mismanagement. 398. (1) Any members of a company who complain: ___ (a) that the affairs of the company [2] [are being conducted in a manner prejudicial to public interest or] in a manner prejudicial to the interests of the company; or (b) that a 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 its Board of directors, [3] [* * *] [4] [or manager], [5] [* * *] 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 [6] [will be conducted in a manner prejudicial to public interest or] in a manner prejudicial to the interests of the company; may apply [7] to the [8] [Tribunal] for an order under this section, provided such members have a right so to apply in virtue of section 399. (2) If, on any application under sub-section (1), the [9] [Tribunal] is of opinion that the affairs of the company are being conducted as aforesaid or that by reason of any material change as aforesaid in the management or control of the company, it is likely that the affairs of the company will be conducted as aforesaid, the [10] [Tribunal] may, with a view to bringing to an end or preventing the matters complained of or apprehended, make such order as it thinks fit. ------------------------------------- Notes:- [1] Substituted for Company Law Board by the Companies (Second Amendment) Act, 2002, w.e.f. a date yet to be notified. Earlier the quoted words were substituted for Court by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991. [2] Substituted by the Companies (Amendment) Act, 1963, Act 53 of 1963, section 11, for "are being conducted", w.e.f. 1-1-1964. [3] Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000, as provisions relating to or of its managing agents, secretaries and treasures had become redundant after abolition of system by Act 17 of 1969. [4] Inserted by the Companies (Amendment) Act, 1960, Act 65 of 1960, section 153. [5] Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000, as provisions relating to managing agents, etc. had become redundant after abolition of system by Act 17 of 1969. [ For the words ,or in the constitution or control of the firm or body corporate acting as its managing agent or secretaries and treasures ]. [6] Substituted by the Companies (Amendment) Act, 1963, Act 53 of 1963, section 11, for "will be conducted" w.e.f. 1-1-1964. [7] Fees prescribed is Rs. 5000, w.e.f. 1-4-2000. On notification of the commencement of the amendment, power will be transferred to the National Company Law Tribunal. [8] Substituted for Company Law Board by the Companies (Second Amendment) Act, 2002, w.e.f. a date yet to be notified. Earlier the quoted words were substituted for Court by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991. [9] Substituted for Company Law Board by the Companies (Second Amendment) Act, 2002, w.e.f. a date yet to be notified. Earlier the quoted words were substituted for Court by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991. [10] Substituted for Company Law Board by the Companies (Second Amendment) Act, 2002, w.e.f. a date yet to be notified. Earlier the quoted words were substituted for Court by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.