Exceptional circumstances test for waiver under company law threshold determines maintainability of oppression and mismanagement petitions

Waiver under the proviso to Section 244 of the Companies Act, 2013 is available only on proof of exceptional circumstances, assessed from the proposed oppression and mismanagement petition without entering the merits. The text notes that where most members are individually eligible to sue under Sections 241 and 242, the shareholding pattern may not justify dispensing with the statutory threshold. On that factual matrix, no exceptional circumstance was found, the waiver was not sustained, and the petition was held not maintainable.

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Issues: Whether waiver under the proviso to sub-section (1) of Section 244 of the Companies Act, 2013 could be granted on the facts of the case and whether the petition under Sections 241 and 242 was maintainable.

Analysis: Waiver under the proviso to Section 244 requires the Tribunal to identify exceptional circumstances on the basis of the proposed oppression and mismanagement petition, without deciding the merits of the claim. The Tribunal found that the shareholding pattern in the company was a reversal of the exceptional situation recognised in earlier precedent, because almost all members other than two were individually eligible to maintain proceedings under Sections 241 and 242. On that factual matrix, no exceptional circumstance justified waiver, and the reasons recorded by the Tribunal did not amount to a valid basis for dispensing with the statutory requirement.

Conclusion: The waiver could not be sustained, the impugned order was set aside, and the petition under Sections 241 and 242 was held not maintainable.

Ratio Decidendi: Waiver under the proviso to sub-section (1) of Section 244 can be granted only on proof of exceptional circumstances, and where such circumstances are absent the statutory threshold for filing a petition under Sections 241 and 242 cannot be bypassed.

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