The Gatekeeper: Qualification Under Section 399
Oppression petition under 397/398 cannot be filed by anyone. Section 399 sets threshold. This avoids every small shareholder running to CLB. For share capital company: 100 members or 1/10th members, or 10% shareholding. For no share capital: 1/5th members. Paid-up condition also there.
Thus law allows both individual and representative action. But representative action needs safeguards.
"Consent In Writing" Means Conscious Approval
Word "consent" is not empty. Delhi HC in Omni India 1989 referred to dictionary and law dictionary. Consent presupposes physical power, mental power and free serious use.
Therefore "consent in writing" under s.399(3) must show: member knew allegations, knew reliefs under s.402, and still agreed. Writing should reflect application of mind. Mere blank paper with signature is not consent. Reason is simple. 397/398 relief can restructure Board, order buy-out, even restrict transfer. If 100 members can sign without reading, it becomes tool of blackmail. Parliament used "in writing" to ensure deliberation.
Family Companies Vs Large Shareholder Groups
In family disputes, leader explains and others consent. That usually works because understanding exists. Problem arises when 50-100 members from different places join. CLB must then check if consent is genuine. Petitioners should attach consent letters showing member is aware of petition. If respondents challenge, petitioners can file additional affidavits. CLB has discretion. It can ask for proof, or allow members to join individually to satisfy 399.
Locus Of Consenting Members: Can They Take Over Petition
Yes. Calcutta HC in Pramod Kumar Mittal 1985 said 397 application is representative of 10%. Consenting members are not mere witnesses. They have locus. If lead petitioner withdraws or stops opposing a transaction, other consenting members can apply to be added as parties. Court should allow. Otherwise representative action fails. This protects minority from lead petitioner selling out.
Stage Of Objection And CLB’s Approach
Objection to qualification can be raised at any stage because it goes to maintainability. But if raised at final stage, it may cause injustice. Best practice: raise in reply. Then CLB can direct petitioners to cure. CLB can also raise issue itself. It can allow amendment, additional consent, or impleadment. Technicalities should not defeat object of s.397/398 which is to remedy oppression.
Conclusion
Consent in writing section 399 397 398 is not formal requirement. Omni India makes clear it must reflect application of mind to case and relief. Pramod Kumar Mittal gives consenting members right to continue petition. Objection can come anytime but early stage is better. CLB should ensure genuine consent while avoiding hyper-technical approach. This way s.399 fulfills purpose: only serious and qualified minority can invoke 397/398, and once invoked, real grievance gets addressed.
