Membership threshold for oppression claims defeated where disputed share title could not confer standing in a public company.

Membership under Section 399 is a threshold condition for invoking oppression and mismanagement relief under Sections 397 and 398. Where only two petitioners were shown as members and the others relied on cancelled allotments and a claimed right to be entered in the register, the alleged share title could not be used to establish standing. In a public company, rectification was not available under Section 111 as then applicable, and Section 111A was confined to rectification arising from transfer of shares or debentures. The petitioners therefore could not bootstrap membership through the same proceeding, and the petition was held not maintainable.

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Issues: Whether a petition under Sections 397 and 398 of the Companies Act, 1956 was maintainable when the petitioners did not satisfy the membership requirement under Section 399 and the relief of rectification of the register of members in a public company did not lie under Section 111A.

Analysis: Membership under Section 399 is a threshold requirement for invoking relief against oppression and mismanagement. Only two petitioners were shown as members in the register, while the others claimed an entitlement to be entered as shareholders after cancellation of allotted shares. The cancelled allotments and refund of monies meant that the petitioners could not rely on the earlier share title position to establish membership for Section 399. The dispute over title to shares was inseparable from the question of membership, but in a public company the rectification jurisdiction was not available under Section 111 as it then stood, and Section 111A was confined to rectification arising from transfer of shares or debentures. As the claimed rectification ground lay outside that jurisdiction, the petitioners could not first secure membership through the present proceeding and then use that status to satisfy Section 399. The remaining petitioners, holding only about 2 per cent of the shares, were insufficient by themselves to qualify.

Conclusion: The petition was not maintainable under Section 399 and was dismissed.

Final Conclusion: The petitioners lacked the necessary statutory standing to pursue oppression and mismanagement relief, and the dispute over share title could not be entertained within the proceeding for a public company.

Ratio Decidendi: A petition under Sections 397 and 398 cannot be maintained unless the petitioners first satisfy the membership requirement in Section 399, and where rectification of the register in a public company is outside the tribunal's jurisdiction under Section 111A, disputed share title cannot be used to bootstrap standing for oppression and mismanagement relief.

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