An NCLT order granting waiver under Section 244 of the Companies Act need not contain copious reasons; it is sufficient if it notes a prima facie case of oppression and mismanagement and finds exceptional circumstances.

Headnote:(A) Companies Act, 2013 - Section 421 - Appeal against order of NCLT granting waiver under Section 244 - Appeal dismissed.

(B) Companies Act, 2013 - Section 244 - Waiver of requirement of 1/5th members - Exceptional circumstances must be shown - Factors for grant of waiver include: (i) whether applicants are members; (ii) whether application pertains to oppression and mismanagement; (iii) whether similar allegations were previously decided; (iv) whether exceptional circumstances exist.

(C) Companies Act, 2013 - Sections 241 and 242 - Oppression and mismanagement - Act of oppression must be harsh, wrongful, and contrary to law - Allegation must be by generality, not by individual allegation.

(D) Companies Act, 2013 - Section 244 - Waiver - Reasoned order - NCLT need not give copious reasons; it is sufficient to note prima facie grounds.

Facts of the case:
The Appellant challenged an order of the NCLT, Kolkata Bench, which had granted waiver under Section 244 of the Companies Act, 2013 to the Respondent No. 1 to file a company petition under Sections 241 and 242. The Appellant argued that the waiver was granted without proper reasoning and that the Respondent No. 1, who had been terminated from membership, was fighting for his own cause. The Appellant also argued that 49 out of 80 original applicants had withdrawn, leaving only 36 members, below the 1/5th threshold. The Respondent No. 1 argued that he was a long-standing member (30 years), that his termination was illegal and during the pendency of the petition, and that the withdrawal of the 49 members was due to threats and intimidation by the Club, including a WhatsApp message threatening disciplinary action.

Findings of Court:
The NCLT, in its impugned order, found a prima facie case of continuing and systemic oppression and mismanagement, not merely a personal grievance. It noted that the termination/suspension of membership, constitution of committees, and disciplinary proceedings had a direct bearing on members' rights and Club governance. The NCLT also noted that the EOGM held on 17.01.2026, with the sole agenda of terminating Respondent No. 1, was conducted while the matter was sub judice and possibly in violation of the Club's Articles of Association. The court held that the NCLT's order contained sufficient reasoning, and that it is not expected to give copious reasons in multiple paragraphs. The court also noted the prima facie effect of the WhatsApp message on the members' withdrawal. The court found that the NCLT had considered the conduct of the Club's affairs, the illegal termination, violation of Articles, and the instances of mismanagement in para 58 of the petition, and found them prima facie sufficient for granting waiver.

Issues: The main issues were whether the NCLT had given sufficient reasons for granting the waiver under Section 244, and whether the facts constituted exceptional circumstances for such waiver.

Ratio Decidendi: The court held that the NCLT's order, which found a prima facie case of continuing oppression and mismanagement and noted the illegal termination and potential violation of the Club's Articles, contained sufficient reasoning to justify the waiver. The court emphasized that for an act to be an act of oppression, the basic elements must be satisfied by a prima facie interpretation of the allegations, not a detailed appreciation of evidence. The court also noted that the withdrawal of 49 members could be attributed to the Club's coercive WhatsApp message. Result : Appeal dismissed. Pending applications, if any, are also disposed of.

Table of Content
1. appeal against nclt order on waiver under section 244 filed. (Para 1)
2. appellant argues waiver granted without sufficient reasons and threshold not met. (Para 2 , 3 , 4 , 5)
3. appellant contends waiver invalid due to member withdrawal and personal cause. (Para 6 , 7 , 8)
4. respondent argues membership termination and urgency justify waiver. (Para 9 , 10)
5. respondent cites coercion and procedural violations in club actions. (Para 11 , 12 , 13)
6. respondent asserts cyrus test satisfied and waiver reasoning sufficient. (Para 14 , 15 , 16)
7. tribunal finds prima facie grounds for waiver were considered. (Para 17 , 18 , 19)
8. appeal dismissed for lack of legal infirmity. (Para 20)

ORDER

JUSTICE YOGESH KHANNA, MEMBR (JUDICIAL)

The present appeal is filed by the Appellant under Section 421 of the Companies Act, 2013 against an order dated 04.02.2026 passed by the Ld. NCLT Kolkata Bench in IA (CA) No.265/KB/2025 in CP(CA) No.183/KB/2025.

2. It is the argument of the learned senior counsel for the appellant while passing an order on waiver application, the Ld. NCLT, without any reason had given final relief to Respondent No.1 herein and the waiver was granted without any reason. It is argued waiver is an exception to filing of a petition under Section 242 of the Companies Act, 2013 and such exception can be allowed only under exceptional circumstances and not otherwise.

3. It is argued the threshold for filing of the petition in a company limited by guarantee is 1/5th of the total number of members; which number in the present case comes out to 150 approximately but whereas the company petition was filed only by 81 members of the Club, out of which 49 have walked away and now company petition is survived only with Respondent No.1 and 35 members and none of the other members, except the Respondent No.1 has a cause. It is argued the Respondent No.1 has since been removed from the membership because of the various charges against him. It is argued not only vide the impugned order the Ld. NCLT had granted waiver to the Respondent No.1 to continue with this company petition but his membership has also been restored. Reference was made to Ld. Col Sandeep Dewan Vs Ootacamund Club and Others CA(AT)CH 38/2024 wherein this Tribunal has held as follows: -

19. Though we are not required to, go into it because we are not dealing with the case under Section 241 or 242, but still for the purposes of getting a constructive interpretation, as to, whether a “waiver” under the proviso to Section 244 could be granted for the purposes of drawing the proceedings under section 241, we would need to outline what act of mismanagement and oppression is. It would literally mean, that, for the purposes of concluding an act as an act of oppression, it would mean to be an act which is exercised in such a manner, which creates a burden, which is harsh, wrongful and contrary to law. All these basic elements for determining an act of oppression for the purposes of proviso to Section 244 have to be specifically satisfied not by way of an intrinsic analysis or on an appreciation of allegations by going into the evidence but only by way of a prima facie interpretation of the set of allegations as to whether at all, the act complained of, is an act of oppression.

20. Particularly in the light of the instant case, if we see the controversy in its entirety of allegations, at the backdrop, it appears as if it is a personal act of vengeance due to discord amongst few members of the club of which the appellant was a member and under the aforesaid backdrop there happens to be some rift with regards to the contest in elections. If at all, these set of allegations could be contended to prevail, to merit proceeding under Section 241, then it should have been an allegation by generality and not by virtue of an individual allegation and that is why the law has provided that for invoking Section 241, the strength of 1/5th of the members is required.

4. Reference was also

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2026 Supreme(Online)(NCLAT) 527

NATIONAL COMPANY LAW APPELLATE TRIBUNALYogesh Khanna (Member(Judicial)) , Mr. Ajai Das Mehrotra (Member (Technical)) ,ASANSOL CLUB LIMITED – AppellantVersusSomnath Biswal and Ors. – Respondent85/ND/2026 COMPANY APPEAL(AT)

An NCLT order granting waiver under Section 244 of the Companies Act need not contain copious reasons; it is sufficient if it notes a prima facie case of oppression and mismanagement and finds exceptional circumstances.

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Yogesh Khanna (Member(Judicial)) , Mr. Ajai Das Mehrotra (Member (Technical)) ,
ASANSOL CLUB LIMITED – Appellant
Versus
Somnath Biswal and Ors. – Respondent
85/ND/2026 COMPANY APPEAL(AT)