Section 244, Companies Act, 2013 (india), Waiver of the 10% Threshold for Oppression & Mismanagement Petitions (2026 Update)

Section 244 Companies Act India is the statutory gatekeeper that determines who may bring a petition alleging oppression and mismanagement before the National Company Law Tribunal (NCLT). The provision fixes an eligibility threshold, broadly, members holding not less than one-tenth of the issued share capital in a company with share capital, and then grants the Tribunal a discretionary power to waive that threshold in appropriate cases. For 2026, waiver practice has become a live strategic battleground: with continued NCLT and NCLAT jurisprudence refining the tests and ongoing corporate-law reform commentary, general counsel, boards, company secretaries, minority investors and promoters all need a precise, practice-oriented understanding of when a waiver will be granted and how to prove it.

This guide sets out the statutory framework, the judicial tests, an evidence checklist, drafting points and tactical considerations for anyone deciding whether to seek, or oppose, a Section 244 waiver.

Who this is for: GCs, boards, company secretaries, minority investors, promoters and litigators deciding whether to bring or defend an oppression and mismanagement petition and whether to seek (or oppose) a Section 244 waiver.

What you will get: statutory text and intent, the waiver concept and its jurisprudential basis, the tests tribunals apply, an evidence and affidavit checklist, step-by-step application points, tactical do’s and don’ts, and a detailed FAQ.

Executive summary: What is Section 244 Companies Act India and why the 10% threshold matters (2026 update)

Section 244 of the Companies Act, 2013 governs the right to apply under Sections 241 and 242, the provisions that empower members to seek relief from conduct that is oppressive, prejudicial or amounts to mismanagement. In substance, the provision requires a petitioner in a company having a share capital to represent not less than one-tenth of the issued share capital (or to constitute not less than one-tenth of the total number of members, or one hundred members, whichever is less), subject to payment of all calls and other sums due on shares. For a company without share capital, the threshold is expressed in terms of members (not less than one-fifth of the total number of members).

Crucially, the proviso to Section 244 allows the Tribunal, on application, to waive all or any of those requirements so that an otherwise ineligible member may apply.

The threshold exists to filter out trivial or vexatious complaints and to ensure that corporate litigation is not weaponised by a single disgruntled shareholder with a negligible stake. The waiver power, by contrast, recognises that rigid arithmetic can defeat justice, for example where a minority has been diluted through the very conduct complained of. Understanding the interplay between the threshold and the waiver is the foundation of maintainability strategy under Section 244 Companies Act India in 2026.

Statutory framework: Sections 241–244 explained

Purpose of Sections 241 and 242

Sections 241 and 242 of the Companies Act, 2013 form the backbone of India’s oppression and mismanagement regime. Section 241 identifies who may complain and the grounds on which a complaint may rest, conduct of the affairs of the company in a manner prejudicial or oppressive to any member or members, or prejudicial to the public interest or to the interests of the company, and material changes in management or control that are likely to be prejudicial. Section 242 then arms the Tribunal with wide remedial powers once it is satisfied that the complaint is made out.

The reliefs available under Section 242 are deliberately broad and flexible, and typically include the following:

• Regulation of conduct. Orders regulating the future conduct of the company’s affairs.
• Purchase of shares. The purchase of the shares of any members by other members or by the company itself.
• Reduction of capital. Consequential reduction of the company’s share capital where a buy-out is ordered.
• Restrictions on transfer. Restrictions on the transfer or allotment of shares.
• Termination of agreements. Setting aside or modifying agreements between the company and managerial personnel or third parties.
• Removal and appointment. Removal of directors or managing directors and appointment of persons as directors.
• Recovery and compensation. Orders for recovery of undue gains and consequential relief.

The width of these reliefs is precisely why maintainability, the gateway controlled by Section 244, is contested so fiercely. A respondent who can defeat the petition at the threshold stage never has to contest the merits.

Text of Section 244 and legislative intent

Section 244 provides the right to apply under Sections 241 and 242 and sets the eligibility requirements described above. Its proviso confers on the Tribunal the discretion to waive those requirements to enable a member or members to apply. The legislative intent is twofold: first, to prevent abuse of the oppression jurisdiction by insubstantial complaints; and second, to preserve access to justice for genuine minorities who, for legitimate reasons, cannot satisfy the arithmetic. Practitioners should always cite the consolidated statutory text from the official repository when relying on the exact wording, because small drafting details, such as the “whichever is less” formulation and the “calls and other sums due” condition, frequently decide eligibility disputes.

Section 244 Companies Act India must therefore be read as a composite: threshold plus discretionary waiver.

When a waiver is necessary: waiver concept and jurisprudential basis

What is the 10% threshold and why tribunals require it

The one-tenth threshold is a quantitative proxy for seriousness and representativeness. A petitioner holding at least ten per cent of the issued share capital is presumed to have a stake substantial enough to justify the significant judicial and corporate resources that an oppression petition consumes. The threshold also protects companies and majority shareholders from the disruption and reputational damage that follow the mere filing of such a petition. Where a petitioner falls below the line, whether because of a small original holding, a subsequent dilution, or an inability to satisfy the “calls paid” condition, the petition is not maintainable unless the Tribunal grants a waiver under the proviso to Section 244.

Statutory versus equitable waiver: when the NCLT can relax thresholds

The waiver under Section 244 Companies Act India is a statutory discretion, but it is exercised on broadly equitable lines. The Tribunal does not grant waiver as a matter of course; nor does it treat the proviso as a rubber stamp. Instead, it undertakes a prima facie assessment of whether the applicant has made out a case that merits consideration on the merits, weighing the bona fides of the applicant, the seriousness and substance of the grievance, the existence of alternative remedies, and the broader interests of the company and the public. Importantly, the waiver stage is not a mini-trial.

The Tribunal looks at whether the allegations, if ultimately proved, could attract relief under Sections 241 and 242, not whether they are in fact proved. This distinction between a prima facie threshold inquiry and a full merits adjudication is central to drafting a persuasive waiver application and to resisting one.

Leading cases on Section 244 waivers (NCLT / NCLAT / SC), annotated principles

Because waiver is a discretionary jurisdiction, the governing principles are developed case by case. Rather than reproduce citations that cannot be verified against official judgment URLs, this section distils the principles that the NCLT and NCLAT consistently apply when deciding waiver applications, drawn from the body of appellate jurisprudence. Practitioners should obtain the current, official text of the leading decisions from the NCLAT and Supreme Court repositories before relying on any particular holding, and should note the exact paragraph in which the test is stated.

• Prima facie case, not proof. The settled approach is that at the waiver stage the Tribunal considers whether the applicant has demonstrated a prima facie case of oppression or mismanagement that deserves to be heard, without adjudicating the merits. A waiver is a procedural enabling order, not a finding on the substance.
• Bona fides of the applicant. Tribunals examine whether the application is made in good faith or whether it is a collateral device, for example, to pressure a buy-out, to disrupt legitimate corporate action, or to litigate a purely contractual grievance.
• Substance and seriousness of the grievance. Allegations of fraud, siphoning of funds, unauthorised allotments that dilute the minority, or exclusion from management carry greater weight than isolated procedural irregularities.
• Availability of an adequate alternative remedy. Where the complaint is essentially contractual and is governed by an arbitration clause or a shareholders’ agreement remedy, the Tribunal is less inclined to waive the threshold.
• Prejudice and proportionality. The Tribunal weighs the prejudice to the applicant if waiver is refused against the prejudice to the company and the majority if the petition proceeds.
• Public interest and risk of dissipation. Where there is a public-interest dimension, or a demonstrable risk that assets will be dissipated pending adjudication, the balance may tilt towards granting waiver.
• Dilution as a trigger. Where the very conduct complained of has reduced the applicant’s shareholding below ten per cent, tribunals may be more receptive to waiver, because otherwise the wrongdoer could benefit from its own wrong.
• Composite reading at the appellate stage. On appeal, the NCLAT typically defers to the discretion exercised by the Tribunal unless that discretion has been exercised on wrong principles, by ignoring relevant material, or by taking into account irrelevant considerations.

The practical takeaway for applicants is to frame the waiver application around the substance and bona fides of the grievance while explaining clearly why the threshold cannot be met. The practical takeaway for respondents is to recast the dispute as contractual, trivial, or appropriately resolved by an alternative remedy.

Tests applied by tribunals under Section 244 Companies Act India, practical checklist

Common judicial tests, bona fides, adequate remedy, prejudice, public interest

Distilling the jurisprudence, a waiver application under Section 244 Companies Act India should be constructed to satisfy a cluster of overlapping tests. First, bona fides: the applicant must present as a genuine minority pursuing a legitimate corporate grievance, not a litigant with ulterior commercial motives. Second, substance: the allegations must, taken at face value, be capable of attracting relief under Sections 241 and 242, isolated irregularities and accounting disputes rarely qualify. Third, adequacy of alternative remedy: the Tribunal will ask whether the matter is better addressed through arbitration, a contractual mechanism, or a different statutory proceeding. Fourth, prejudice and proportionality: the balance of hardship must favour permitting the petition to be heard.

Fifth, public interest and urgency: fraud, asset dissipation or a genuine public dimension strengthen the case for waiver.

A persuasive application addresses each test expressly, with evidence cross-referenced to the relevant limb. A persuasive opposition attacks each test in turn, questioning motive, minimising the grievance, pointing to an alternative forum, and asserting that the balance of convenience lies with refusing waiver.

Weighing-factor matrix, when to apply and when a full petition or alternative remedy is preferable

Evidence and affidavit drafting: how to prove each test at the NCLT

Documentary evidence matrix

Waiver succeeds or fails on the quality of the prima facie record. Because the Tribunal does not conduct a trial at this stage, the documents must do the work of persuasion. A well-constructed documentary bundle for a waiver application in an NCLT oppression and mismanagement matter typically includes the following, each tied to the test it supports:

• Shareholding records. The register of members, share certificates, and the company’s filings evidencing the applicant’s holding and any dilution, essential to explain why the threshold cannot be met.
• Board and general meeting minutes. Contemporaneous minutes showing exclusion, unauthorised decisions, or resolutions passed irregularly.
• Allotment and transfer documents. Records of allotments or transfers alleged to have diluted the minority or shifted control.
• Financial records. Bank statements, ledgers, audited accounts and related-party transaction disclosures supporting allegations of siphoning or mismanagement.
• Correspondence. Emails and letters demonstrating requests for information, denial of access, or notice of grievance.
• Valuation and expert material. Where a buy-out or asset stripping is alleged, an independent valuation report strengthens the prima facie case.
• Regulatory filings. Returns and filings that corroborate the chronology of the conduct complained of.

Each document should be indexed and cross-referenced in the petition so that the Tribunal can move quickly from allegation to proof. Gaps in the documentary record are the most common reason waiver applications falter.

Witness affidavits and expert evidence

Affidavits at the waiver stage should be focused and verifiable. The applicant’s affidavit must establish standing, explain the shareholding position and the reason for the shortfall, and set out the grievance with precision and dates. Avoid conclusory assertions; every material averment should point to an exhibited document. Where allegations involve financial irregularity, valuation or accounting, a short expert affidavit lends credibility to the prima facie case without turning the application into a trial. Supporting affidavits from other minority members can reinforce bona fides and representativeness. Respondents, in turn, use affidavits to rebut the factual premises, to assert the availability of an alternative remedy, and to demonstrate that the applicant’s conduct is itself tainted.

Chronology and trial bundle

A clear chronology is disproportionately persuasive. Prepare a dated timeline linking each event, dilution, exclusion, suspect transaction, to the corresponding exhibit. Organise the bundle under logical headings such as “Shareholding and threshold,” “Conduct complained of,” “Attempts to resolve,” and “Urgency and risk.” A disciplined bundle signals to the bench that the application is serious and well founded.

Procedure: filing the Section 244 waiver application in practice

Form, fee, tribunal registry practice, service and joinder

A waiver application is ordinarily made to the NCLT bench having jurisdiction over the registered office of the company, and in practice it is filed together with, or as a precursor to, the substantive petition under Sections 241 and 242. Applicants should verify the prescribed form, the applicable fee and the registry’s current filing requirements directly from the NCLT’s official resources and the National Company Law Tribunal Rules, because registry practice and formatting requirements are updated periodically. Proper service on the company and the proposed respondents, and correct joinder of necessary parties, are essential; defects in service are a frequent ground on which respondents seek adjournment or dismissal.

Because requirements evolve, always confirm the latest registry practice before filing rather than relying on precedent papers.

Interim relief and preservation steps

Where there is a risk of dissipation of assets, further dilution, or steps that would render the eventual relief nugatory, the applicant should seek interim relief from the NCLT contemporaneously with the waiver and petition. Typical interim orders include restraints on the allotment or transfer of shares, status quo on management decisions, preservation of assets and records, and restrictions on operating bank accounts beyond ordinary course. The grant of interim relief turns on a prima facie case, the balance of convenience and irreparable harm. Early, well-evidenced interim applications can be decisive in preserving the value that the petition ultimately seeks to protect.

Tactical considerations: when to seek waiver and when not to

Opposing waiver, how respondents defend

Respondents defending against a waiver application should focus their energy at the threshold, because success there avoids the merits entirely. The standard lines of defence are: challenging the applicant’s bona fides by pointing to collateral commercial motives; recharacterising the dispute as contractual and therefore suited to arbitration or a shareholders’-agreement remedy; minimising the allegations as isolated irregularities or accounting disputes that do not engage the oppression jurisdiction; demonstrating that the applicant could have maintained the threshold but chose not to; and establishing that the balance of convenience favours refusing waiver. Evidentiary rebuttal, through affidavits and contemporaneous records, is far more effective than bare denial.

Settlement versus forum selection

For both sides, the waiver stage is also a negotiation inflection point. Applicants with a strong prima facie record gain leverage for a buy-out or governance settlement; respondents facing credible fraud allegations and a real risk of interim orders may prefer an early commercial resolution. Where an arbitration clause or shareholders’ agreement provides a workable remedy, parties should weigh the cost, speed and confidentiality of arbitration against the broad statutory reliefs available only through the NCLT. The choice of forum is itself a strategic decision that should be made before, not after, the application is filed.

Sample skeleton points for a Section 244 waiver application (practical model)

The following skeleton is a drafting aid only and should be adapted to the facts and verified against current statute, rules and registry practice. It is not a substitute for tailored legal advice.

1. Parties and standing. Identify the applicant, the company and the respondents; state the applicant’s shareholding and the precise reason it falls below the one-tenth threshold.
2. Jurisdiction. State the basis for the NCLT’s jurisdiction and the applicability of the proviso to Section 244.
3. Brief facts and chronology. Set out the dated sequence of the conduct complained of, cross-referenced to exhibits.
4. Grounds of oppression and mismanagement. Articulate the grievance in terms capable of attracting relief under Sections 241 and 242.
5. Why waiver should be granted. Address each test, bona fides, substance, inadequacy of alternative remedy, prejudice, public interest and urgency.
6. Evidence relied upon. List the documentary and affidavit evidence supporting each ground.
7. Interim relief sought. Specify any urgent orders, status quo, restraint on allotment or transfer, asset and record preservation.
8. Relief sought. “The applicant respectfully prays that the Tribunal be pleased to waive the requirements of Section 244 so as to permit the applicant to maintain the accompanying petition under Sections 241 and 242, and to grant such further and other reliefs as the Tribunal deems fit.”

Where to get counsel and next steps

Deciding whether to bring or defend a petition, and whether to seek or oppose a waiver under Section 244 Companies Act India, turns on a careful, evidence-led assessment of maintainability. When selecting counsel for a high-value oppression and mismanagement matter, evaluate demonstrated expertise in shareholder disputes, a track record before the NCLT and NCLAT, the ability to assemble and present a persuasive prima facie record at speed, and the resources to run interim applications and appeals in parallel. For practice-area guidance, see Company law, India, and to identify suitable counsel, use Find a company law lawyer, India.

Related guides in this cluster include How to bring a Section 241/242 petition, NCLT vs Arbitration: jurisdictional issues in shareholder disputes, and Sections 241–242 petitions: grounds and interim relief at NCLT.

This article is general guidance on Section 244 Companies Act India and is not a substitute for tailored legal advice. Statutory text, rules, fees and registry practice change; verify the current position from official sources and consult qualified counsel before acting. Used well, the waiver power under Section 244 Companies Act India can open the door to the full suite of reliefs available under the oppression and mismanagement regime, and understanding its tests is the first, decisive step.

Sources

1. India Code (Ministry of Law & Justice), official statute repository
2. Ministry of Corporate Affairs (MCA), official site
3. National Company Law Tribunal (NCLT), official site
4. National Company Law Appellate Tribunal (NCLAT), official site
5. Supreme Court of India, official website
6. Bar Council of India