Oppression and mismanagement remedies do not reopen concluded third-party transactions absent continuing prejudice.

Sections 397 and 398 of the Companies Act, 1956 are preventive remedies aimed at ending continuing oppression or prejudice in a company's affairs, and do not ordinarily permit reopening past and concluded transactions with third parties. On the facts, the sale deeds were executed pursuant to earlier agreements, possession had already been delivered, and the conveyance followed compromise of a civil dispute; the petitioners' long inaction also weakened their claim. The Board further treated the challenge to the Lok Adalat award as barred by its statutory finality under Section 21(2) of the Legal Services Authorities Act, 1987. Alleged defects in notice, quorum, special resolution, and circular resolution were found insufficient to justify relief.

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Issues: Whether the petitioners were entitled to relief under Sections 397 and 398 of the Companies Act, 1956 for setting aside the sale deeds executed in favour of third parties, and whether the alleged irregularities in the board meeting, extraordinary general meeting, circular resolution, and Lok Adalat compromise furnished a basis for such relief.

Analysis: The Company Law Board held that Sections 397 and 398 are preventive provisions intended to bring to an end existing oppression or prejudice in the conduct of the company's affairs, and are not meant to reopen past and concluded transactions with third parties. The impugned sale had been entered into pursuant to earlier agreements, followed by possession and later conveyance after compromise of the civil suit, and the petitioners had remained inactive for years despite being aware of the dispute. The Board further held that the challenge to the Lok Adalat award could not be adjudicated in the company petition in view of the finality attached to awards under Section 21(2) of the Legal Services Authorities Act, 1987. The additional complaints regarding absence of notice, quorum, special resolution, and circulation of the circular resolution were treated as insufficient to establish oppression or prejudice on the facts of the case.

Conclusion: The petitioners were not entitled to any relief under Sections 397 and 398 of the Companies Act, 1956, and the challenge to the sale deeds and connected acts was rejected.

Final Conclusion: The company petition failed on maintainability and merits, and the impugned sale transaction was left undisturbed.

Ratio Decidendi: Sections 397 and 398 do not ordinarily permit interference with a past and concluded transaction with third parties unless a continuing oppressive or prejudicial course of conduct is established on the facts.

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