Parallel remedy and uninformed shareholder consent can defeat an oppression and mismanagement petition; majority holding alone does not bar it.

A petition for oppression and mismanagement may fail where the same grievances are already being pursued in a parallel proceeding before the Company Law Board, because the extraordinary remedy is not meant to be duplicated. The required shareholder consent under the Companies (Court) Rules and section 399 must be informed and issue-specific, meaning consenting members must apply their minds to the particular allegations and reliefs in the petition; a blanket consent is insufficient. Majority shareholding, however, is not itself a bar, because section 399(1) prescribes only the minimum shareholding needed to maintain the petition and no maximum limit.

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Issues: (i) Whether the petition was not maintainable because the petitioners had already pursued a parallel remedy before the Company Law Board; (ii) Whether the petition was not maintainable for want of valid consent of shareholders under the Companies (Court) Rules and section 399; (iii) Whether majority shareholding barred the petition under sections 397 and 398 of the Companies Act, 1956.

Issue (i): Whether the petition was not maintainable because the petitioners had already pursued a parallel remedy before the Company Law Board.

Analysis: A prior petition on substantially the same allegations and prayers was already pending before the Company Law Board. The two proceedings were treated as substantially identical in substance and effect. The extraordinary jurisdiction under sections 397 and 398 was held not to be available when another remedy on the same grievance had already been pursued.

Conclusion: The issue was decided against the petitioners and the petition was held not maintainable on this ground.

Issue (ii): Whether the petition was not maintainable for want of valid consent of shareholders under the Companies (Court) Rules and section 399.

Analysis: The consent filed with the petition did not disclose that the consenting shareholders had applied their minds to the specific allegations and reliefs in the petition. The required consent was held to be an intelligent consent to a particular petition with particular allegations and reliefs, not a blanket authorization. The supporting affidavits filed with the rejoinder and interim application were also found defective, though the affidavits accompanying the petition itself were not.

Conclusion: The issue was decided against the petitioners and the petition was held not maintainable on this ground as well.

Issue (iii): Whether majority shareholding barred the petition under sections 397 and 398 of the Companies Act, 1956.

Analysis: Section 399(1) prescribes only the minimum shareholding required to maintain the petition and does not prescribe any maximum limit. Majority holding, by itself, was therefore not treated as a legal bar to invoking the remedy.

Conclusion: The issue was decided in favour of the petitioners.

Final Conclusion: The cumulative effect of the decided preliminary objections was that the petition could not proceed, even though majority shareholding was not in itself a disqualification.

Ratio Decidendi: In a petition for oppression and mismanagement, maintainability fails where the petitioner has already pursued an identical parallel remedy and where the shareholder consent relied upon does not amount to informed, issue-specific consent under the governing procedural requirements.

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