Membership for oppression and mismanagement proceedings can arise from substantive recognition, not just formal register entry.

For proceedings under Sections 397 and 398 of the Companies Act, 1956, membership is not confined to formal entry in the register of members. The expression "member" has a wider ambit, and equitable jurisdiction under these provisions allows maintainability to be assessed on substantive recognition of shareholder status and proprietary interest. Where the company accepted and used the person's investment, and contemporaneous correspondence and conciliation materials treated him as a stakeholder, he could be treated as a member despite the absence of formal registration. The person was therefore entitled to maintain the oppression and mismanagement proceedings.

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Issues: Whether a person can be treated as a member of a company for the purposes of Sections 397 and 398 of the Companies Act, 1956, despite the absence of formal entry of his name in the register of members.

Analysis: The expression "member" in Section 2(27) has a wider ambit, while Section 41 lays down the modes by which membership may arise. The jurisdiction under Sections 397 and 398 is equitable in nature and is intended to protect shareholders against oppression and mismanagement. Membership for the purpose of maintainability cannot be confined in a rigid or technical manner to formal entry in the register where the company's conduct and contemporaneous materials show that the person was treated as a stakeholder or shareholder. On the facts, the respondent's investment was accepted and utilised, contemporaneous correspondence and conciliation material recognised his proprietary interest, and the company's conduct supported the conclusion that he had been treated as a member.

Conclusion: The respondent was entitled to be treated as a member for the purpose of maintaining proceedings under Sections 397 and 398, notwithstanding the absence of formal entry in the register of members.

Ratio Decidendi: For proceedings under Sections 397 and 398 of the Companies Act, 1956, the term "member" is not restricted to formal registration alone and may be established by the company's recognition of the person's shareholder status and substantive proprietary interest.

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