INTRODUCTION-
On September 2, 2025, the Supreme Court of India made a significant ruling in Mrs. Shailja Krishna v. Satori Global Limited & Ors.(MANU/SC/1223/2025; 2025 INSC 1065) affirming the wide jurisdiction of the National Company Law Tribunal (NCLT) in cases of oppression and mismanagement under the Companies Act, 2013. In particular, the Court held that the NCLT is not simply a court of narrowly defined company law disputes, but is also able to look into allegations of fraud, misappropriation of funds, and breaches of fiduciary duty when they are alleged in the context of disputes between shareholders. This case is an essential confirmation of the remedial nature of Sections 241 and 242 of the Companies Act, 2013 and makes it abundantly clear that the NCLT’s powers extend to providing very wide-ranging relief, including restoring money obtained by fraudulent means, appointing outside management, and protecting the interests of minority shareholders.
BACKGROUND-
The appellant, Mrs. Shailja Krishna, a minority shareholder in Satori Global Limited, made an application to the NCLT alleging largescale financial irregularities as well as oppression suffered at the hands of the majority shareholders. She alleged money belonging to the company was siphoned off through layers of transactions. She also alleged that major decisions were made by the company without giving her notice or seeking her approval. In its adjudication of the petition, the NCLT undertook an extensive enquiry into the allegations of mismanagement and the allegations sparked include, matters relating to fraud and diversion more generally. The respondents contended that matters of fraud sit beyond the jurisdiction of the NCLT. Mere issues of fraud would have to be resolved by the civil courts or the criminal forum. The NCLAT endorsed that narrow jurisdiction and found that while the NCLT can grant equitable reliefs in making orders in a dispute under sections 241-242, it could not involve itself and determine issues of fraud in exposure to criminal law. Mrs. Krishna was dissatisfied with those findings and appealed to the Supreme Court.
KEY POINTS-
1. The Scope of NCLT’s Powers Under Section 242
The Supreme Court confirmed that Sections 241 and 242 grant “plenary powers” to the NCLT to address situations of oppression and mismanagement. Based on the precedent of Tata Consultancy Services Ltd. v. Cyrus Investments Pvt. Ltd. (2021 SCC OnLine SC 117), the Court stated that the legislature designed the statute to allow tribunals to provide “appropriate and just” remedies to adapt to emerging situations in corporate disputes. Any restrictive interpretation of the provision would undermine its purpose.
- Fraud must be included as an example of Oppression and Mismanagement
Rejecting the respondents’ argument, the Court ruled that fraud could not be separated from NCLT’s remit. The Court explained that the types of oppression and mismanagement can frequently be characterized by fraudulent behaviour, e.g. siphoning funds, diverting assets, or window dressing the accounts, and that the exclusion of conduct that is fraudulent from oppression and mismanagement claims would render the jurisdiction of NCLT “hollow” and otherwise unworkable. To support this perspective, the Court relied on Arun Kumar Jagatramka v. Jindal Steel & Power Ltd. (2021SCC OnLine SC 220) where the Court reiterated that the company law tribunals can pierce the corporate veil and identify breaches of trust.
3. Collaboration, Rather than Conflict, with Civil/Criminal Courts
The Court explained that NCLT’s inquiry into fraud does not supplant civil suits or criminal investigations but rather supplements them. While criminal liability remains the responsibility of investigative agencies, the NCLT may undo fraudulent company action, protect shareholders and make good the governance of the company.
4. Increased Study in Minority Shareholders
The judgment reflected on the vulnerability of minority shareholders which often gets overlooked in closely-held companies. The court highlighted that the powers of oppression and mismanagement are not (even if sometimes they feel this way) punitive, but rather corrective to stop abuses of corporate power and ensure fairness in governance.
5. Scope of Reliefs
The Court agreed that sweeping remedies are permissible under section 242, taking note of, amongst other things:
i. Setting aside a resolution exceeded by fraud, ii. Restoring property misappropriated, iii. Moving management, and
iv. Appointing independent directors to ensure corporate governance.
RECENT DEVELOPMENT
The ruling is part of the Court’s ongoing trajectory of increasing the jurisdiction of NCLT/NCLAT: In Union of India v. Reliance Industries Ltd. (2018 10 SCC 1), the Court stated that specialised tribunals need to utilise the full powers in the field assigned to them. In Tata Consultancy Services v. Cyrus Mistry (2021 SCC OnLine SC 117), the Court held that Section 242 was intended to deal with equitable rather than legal technicalities.
In Arun Kumar Jagatramka (2021 SCC OnLine SC 220), the Court extended NCLT’s powers to oversee fraudulent backdoor entries into insolvency. And most recently, in Union of India v. Infrastructure Leasing and Financial Services Ltd. (2022 SCC OnLine SC 1157), the Supreme Court endorsed NCLT’s extraordinary powers to restructure governance in crises. As a group, these decisions help demonstrate the intention of the courts to build NCLT as a “one-stop forum” for full resolution of corporate-related disputes.
Conclusion:
The decision in Mrs. Shailja Krishna v. Satori Global Limited & Ors. done away with the uncertainty about fraud allegations being swept up in the question of NCLT jurisdiction in Indian corporate jurisprudence. By permitting the tribunal to account for fraudulent activities within its jurisdiction to adjudicate oppression and mismanagement petitions, the Supreme Court has also fortified the applicable remedy regime within the Companies Act, 2013. This is a victory of substance over form for minority shareholders in the corporate setting, confident their grievances can be addressed and not dismissed on vexatious jurisdictional grounds. It also sends a strong message to corporate governance that fraud and abuse of power will not be allowed to stand simply due to landing in the criminal components of the law. From a practical standpoint, this decision gives the NCLT jurisdiction to order holistic remedies to shareholding disputes and indicates the NCLT is the first stop to rectify corporate wrongs when fraud can be alleged and argued. It responds to empowering the NCLT to vacate fraud but not overstepping civil courts or criminal courts. In this regard, the Supreme Court retained its understanding of the NCLT as one of the most useful and realistic forums of discretion to resolve disputes, allowing effective corporate governance in India.
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Written by- Anwesha Anant
