Object of section 397 398
Section 397/398 is to protect minority from oppression and mismanagement. It is not for personal family disputes. Law has been interpreted widely by CLB, HC and SC. But that does not mean any allegation can survive. Essentials must exist: act of oppression, continuing nature, effect on company. Without this, petition is not maintainable.
Facts showing abuse of process
1992 family company. After partition and two wills, 2006 will gave 89% to "B". "A" challenged will in civil court but did not pursue. "B" runs company transparently. "A" with 11% files 397/398 with vague charges, never attends board. This looks like using CLB to settle will dispute. No specific act of oppression. No mismanagement in accounts. This is classic case where essentials are missing.
Why preliminary dismissal is important
If CLB insists on full reply and trial in every case, majority will suffer. Business gets distracted. Legal cost rises. In this case "B" did nothing wrong. He should not defend for years. Preliminary application on maintainability should be allowed where petition is baseless on face. Courts have said 397/398 is not for every grievance. It is for serious prejudice.
Practical difficulty in clb
But reality is different. CLB rarely decides maintainability early. It asks for reply, documents and then final hearing. Reason is fear of shutting genuine case. In family companies CLB also pushes settlement. This is good, but when settlement is impossible and case is frivolous, delay becomes punishment.
Conclusion
Oppression mismanagement maintainability 397 398 2010 needs clarity. Test should be: are essentials pleaded with specifics? Is there continuing act? Is dispute about company or outside? If no, dismiss early. This will stop abuse and keep 397/398 for real cases. Legislature and NCLT later must give power for early scrutiny.
