The National Company Law Appellate Tribunal (NCLAT) has reiterated that Section 98 can only be invoked after proving that convening an Extraordinary General Meeting (EGM) is impracticable.
NCLAT: Section 98 Cannot Be Invoked Without EGM Impracticability Proof
The National Company Law Appellate Tribunal (NCLAT) has set aside an order from the NCLT concerning Section 98 of the Companies Act, 2013. The ruling emphasized that an intervention under Section 98 is contingent upon establishing that the convening of an Extraordinary General Meeting (EGM) has become impracticable.
This landmark decision highlights the procedural requirement that must be satisfied before a company can invoke this section, reiterating the need for substantive evidence of impracticability. The tribunal's ruling aims at preventing the misuse of corporate provisions for circumvention of standard corporate governance practices.
Under Section 98, the courts and tribunals are provided the authority to call a company meeting if it is deemed impractical for the company to call it itself. However, this ruling clarifies the threshold that must be met to enable such intervention by NCLT or NCLAT, adding a layer of judicial scrutiny to corporate governance processes.
For legal professionals, this ruling reinforces the importance of meticulous documentation and evidentiary support when pursuing relief under Section 98, thereby influencing strategic decision-making in corporate governance matters.
