Oppression and mismanagement petition need not fail for pleadings alone where allegations disclose a factual basis for relief.

A company petition under Sections 397 and 398 of the Companies Act, 1956 was not liable to be rejected at the threshold for want of detailed pleadings. The Board held that the petition had to be tested on the allegations pleaded as a whole, and that the statutory scheme did not require the same form of express averment as under Section 83 of the Representation of the People Act. Allegations of oppressive management, exclusion from control, misappropriation, diversion of business, and obstruction in running the company were sufficient to require factual examination. The objection could not be treated as a pure demurrer, and dismissal in limini was refused.

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Issues: Whether the company petition under Sections 397 and 398 of the Companies Act, 1956 was demurrable and liable to be dismissed in limini for want of necessary pleadings.

Analysis: The petition was required to be tested on the allegations pleaded, and the statutory scheme under Sections 397 and 398 did not mandate that the petition itself must contain an express averment in the same form as in a pleading governed by Section 83 of the Representation of the People Act. The crucial question under Section 397 was whether the facts alleged, if established, would enable the Company Law Board to form the requisite opinion that the affairs were being conducted oppressively and that a winding up order on just and equitable grounds would otherwise be justified but would unfairly prejudice the members. The allegations in the petition, read as a whole, disclosed disputes concerning management, exclusion from control, alleged misappropriation, diversion of business, and obstruction in the running of the company. Those allegations were not shown to be incapable of supporting relief under Sections 397 and 398 at the threshold stage. The objection therefore raised issues that could not be rejected as a pure demurrer without examining the factual foundation.

Conclusion: The petition was not demurrable, and dismissal in limini was refused.

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