Somebody starts a company with a friend, a cousin, a colleague. Years later the money has gone somewhere, the meetings stopped being called, and one of them is outside looking in. They arrive wanting to file a case, and the conversation stalls on a point nobody warned them about: in law the company is a separate person. The money that was taken was taken from it, not from you. The loss is its loss. Which means the ordinary answer — “I will sue him” — is not available, and what is available instead has a gate in front of it before anybody looks at the merits. This page is about that distinction, and about the other thing people get wrong here: insolvency is not a way to make somebody pay you.
It is the least intuitive idea in commercial law and everything on this page rests on it.
When a company is incorporated, the law treats it as a person in its own right. It owns its assets. It owes its debts. It makes its own contracts. And when something goes wrong inside it, it is the one injured. The people who own the shares own shares — a bundle of rights against the company — not the company’s bank balance.
That principle comes from Salomon v. Salomon and it has been living in every company dispute ever since. People accept it happily in one direction: it is the reason a failed business did not take the family house. They resist it entirely in the other: it is also the reason that money taken out of the company is not, in law, money taken from you.
A wrong to the company is the company’s wrong, not yours. What a member gets instead is Section 241, and Section 244 is a gate in front of it. Insolvency under the Code is not a way to recover a debt — there is a threshold, and a pre-existing dispute ends most attempts. And nearly every dispute here was preventable by an agreement written when everybody was still friendly.
What is deliberately not on this page because it belongs elsewhere: which court hears a dispute at all is on our Saket page, going up is on our Delhi High Court page, and a bank enforcing security against a company is on our DRT and SARFAESI page.
The consequence of separate personality has a name. The rule in Foss v. Harbottle is that where a wrong is done to a company, the proper plaintiff is the company itself, and the court will not ordinarily entertain a suit by individual members about it.
Now see the trap that creates, because it is the reason the Companies Act had to intervene. The company sues through its board. The board is controlled by the majority. The majority is the person you are complaining about. So the rule, applied literally, means the wrongdoer decides whether he gets sued.
That is precisely the hole that Section 241 fills. It is not a general right to sue your partner. It is a statutory route for a member to come to the Tribunal and say that the affairs of the company are being conducted in a manner that is oppressive or prejudicial — and it exists because the ordinary route is blocked by the very people complained about.
A member may apply to the Tribunal complaining that the affairs of the company are being conducted in a manner prejudicial or oppressive to him or to any other member or members, or in a manner prejudicial to the interests of the company or to public interest; or that a material change has taken place in the management or control of the company, otherwise than in the interests of its members, and that by reason of that change it is likely that the affairs will be so conducted.
Read the language and notice what it is about: conduct of the affairs of the company. Not a breach of a personal promise. Not a falling out. Not somebody being rude. The things that actually fit are structural.
| The kind of thing that fits | The kind of thing that usually does not |
|---|---|
| Shares issued so as to dilute a member, without a genuine need for funds | “He promised me half and gave me thirty per cent” — that is a contract question |
| A member excluded from management in a company run as a quasi-partnership | Disagreeing with a commercial decision that was properly taken |
| Company funds or opportunities diverted to a related entity | The business doing badly |
| Meetings not called, notices not given, accounts withheld | Being outvoted, fairly, on something |
| Removal of a director in a manner that breaks the arrangement the company was built on | Personal hostility with no effect on how the affairs are conducted |
| Siphoning through inflated payments to connected parties | A single irregularity long since corrected |
Section 242 then gives the Tribunal its powers, and they are unusually wide — regulating the conduct of the company’s affairs in future, the purchase of one member’s shares by another or by the company, setting aside transfers and transactions, removing or appointing people. In practice the relief most petitioners actually want is an exit at a fair value, and it is worth being honest with yourself early about whether that is what you want.
Before anybody looks at what happened, there is the question of whether you may be there at all.
In a company having a share capital, an application under Section 241 may be made by not less than one hundred members of the company, or not less than one-tenth of the total number of its members, whichever is less, or by any member or members holding not less than one-tenth of the issued share capital. The Tribunal may, on an application, waive any of those requirements to enable a member to apply.
For a small closely held company this is often easy — two shareholders, and one of them holds far more than a tenth. It becomes a real obstacle where somebody holds a very small stake, and then the waiver application is a proceeding of its own that has to be argued before the substantive case begins.
Practical consequence worth knowing before you spend anything: find out your exact shareholding from the company’s own filings, not from memory. People are frequently wrong about what they hold, particularly where shares were transferred or allotted in years when nobody was paying attention.
The cheapest and most useful first step in almost every company dispute, and the one people skip because it is unglamorous.
A great deal about a company is filed with the Registrar and available to anybody: the annual financial statements and annual return, the details of directors and their changes, charges registered against the company’s assets, and the incorporation documents. That tells you what the company has told the government — and any gap between that and what you were told is itself the beginning of a case.
Get the full set before you instruct anybody. It costs very little, it does not alert anybody, and it converts “I think something is going on” into dates and figures. Our ROC annual filing page explains what those filings are and what they contain.
The commonest single fact pattern that reaches this Tribunal, and the one where speed matters most.
The pattern is recognisable: a board meeting you were not properly told about, an allotment at a price nobody explained, a stated need for funds that does not match the company’s actual position, and a holding that was thirty per cent last year and eleven per cent now.
What decides it is documents and dates: the notice of the meeting and how it was sent, the minutes, the valuation relied on, the company’s cash position at the time, and where the money that came in actually went. Gather those.
And act quickly, for a practical reason rather than a legal one. Before allotment you are asking the Tribunal to prevent something; afterwards you are asking it to undo something that third parties may since have relied on. Those are very different applications.
A category worth naming because it decides many of these cases. Two or three people start a business together, incorporate it because their accountant said to, and run it as partners — everybody works in it, everybody expects to be in management, nobody thinks of themselves as a passive investor.
Where a company is in substance an arrangement of that kind, exclusion from management is treated much more seriously than it would be in a company where somebody simply bought shares. The understanding on which the company was formed becomes relevant, even where it was never written down.
Which leads to the practical instruction: collect the evidence of that understanding. The original messages and emails, how salaries and signing authority were arranged, who signed what, how decisions were actually taken over the years, and anything showing that all of you were expected to run it. That material is what turns “he pushed me out” into a case.
A Section 241 petition takes a long time. What the company does while it is pending often matters more than the eventual order, and petitioners who think only about the final relief find that there is not much left to win by the time it comes.
So the interim application is not an afterthought. The things worth asking about at the first meeting with counsel — not the fifth — are the ones that freeze the position:
| What is at risk while you wait | What to raise with counsel at once |
|---|---|
| Further shares being issued, reducing you again | Restraining any further allotment or alteration of the shareholding |
| The company’s main asset being sold or mortgaged | Restraining dealings with specified assets outside the ordinary course |
| Money continuing to move to related parties | Disclosure of related-party transactions, and restrictions on them |
| Records being altered or lost | Preservation of the books, registers and minutes |
| Meetings being held without you | Directions about notice, and in some cases about who chairs |
| You having no information at all | Inspection, or periodic disclosure to the Tribunal |
An interim application is only as good as what is annexed to it. A general allegation that money is being moved achieves nothing; a bank statement, a ledger entry or a filing that shows a payment to a connected entity achieves a great deal. Which is one more reason to collect the record before anybody knows you are coming.
Everything above is the Companies Act side. The Insolvency and Bankruptcy Code, 2016 also sits with this Tribunal, and it is a different world with a different purpose.
A company insolvency proceeding is not a dispute between two parties that ends in one of them being ordered to pay. It is a collective process: the company’s management is displaced, all creditors come in together, and the objective is a resolution plan for the company — or, failing that, liquidation.
Once you see it that way, the most common misconception falls apart on its own, and it is the subject of the next section.
Somebody owes your company money. A consultant suggests filing at the NCLT because “they will settle immediately, nobody wants insolvency”. It is common advice and it is usually wrong, for three separate reasons.
If what you want is your money, the honest answer is usually a different forum — a civil recovery suit, or a summary suit, or the consumer route where it fits. A legal notice properly drawn, with the figures and the dates, does more work in these situations than most people expect and costs a fraction of the alternative.
| Who applies | What it needs | |
|---|---|---|
| Section 7 | A financial creditor — somebody who lent money | Proof of the debt and of default |
| Section 9 | An operational creditor — somebody owed for goods or services supplied | A demand notice under Section 8 first, with ten days for the debtor to respond — and no pre-existing dispute |
| Section 10 | The corporate debtor itself | Its own default, and the authority to apply |
The operational creditor route is the one most small businesses are pointed at, and it is also the most easily defeated. Which is the next section, and it deserves its own.
An application by an operational creditor follows a demand notice under Section 8. The corporate debtor then has ten days to respond, and the response that ends the matter is not payment — it is showing that a dispute already existed before the notice arrived.
In Mobilox Innovations v. Kirusa Software the Supreme Court held that the definition of dispute is an inclusive one and is not confined to a suit or arbitration already pending. The Tribunal’s task at that stage is narrow: to see whether there is a plausible contention that requires further investigation, and whether the defence is a patently feeble argument or an assertion unsupported by evidence. It does not decide who is right.
| If you are owed money | If you are being pressed |
|---|---|
| Check, before spending anything, whether the other side ever complained in writing — about quality, delay, quantity, anything | Find every written complaint you made, with its date. A quality complaint sent last year is worth more than any argument now |
| An objection raised only after your notice is a different thing from one raised before it | Raise genuine objections when they happen, in writing. Not when a notice arrives |
| If there is a real dispute, this is not your route. Choose a forum that decides disputes | Keep the correspondence complete rather than in extracts — the dates carry the weight |
The instruction that comes out of this is the same for every business reading the page and it costs nothing: when something goes wrong with a supplier or a customer, put it in writing that week. Not to be difficult — to have a dated record of what was said when it was said.
If an application is admitted, the process starts and it is not a proceeding anybody controls from outside. For a promoter or a director, the sentence that matters is this: from admission, you are no longer running your company.
Section 12 sets one hundred and eighty days for the process, extendable by up to ninety, with an outer limit of three hundred and thirty days including time taken in legal proceedings. This page prints no view about how long matters actually take, because it varies enormously and a figure would mislead.
The Code provides that its provisions have effect notwithstanding anything inconsistent contained in any other law in force. That is a strong overriding clause and it has a very practical consequence for anybody with more than one thing running.
A recovery suit progressing comfortably, an arbitration part-heard, a bank enforcing security under SARFAESI — all of these are affected once insolvency is admitted, and what governs is the sequence of dates rather than which proceeding feels more important.
So if your company has proceedings in more than one forum, the single most useful thing you can prepare is a dated timeline: what was filed where, on what date, and what happened in each. Take that to counsel. It is the first thing they will build and you are the only person who can supply it quickly.
Listed alphabetically. We do not rank, rate or feature advocates, and nobody pays for a position here — the reason is on our Find an Advocate page. Neither reading a profile nor writing to somebody through it costs anything.
One of the most searched questions about this Tribunal, and one where half the internet gives an answer that stopped being complete some years ago.
It is correct that a person who has paid a builder for a flat is treated as a financial creditor under the Code — amounts raised from an allottee under a real estate project are deemed to have the commercial effect of a borrowing. That was the 2018 change and it was genuinely significant: it put home buyers in the committee of creditors rather than at the back of the queue.
Then came the part people quote less often. An application by allottees has to be filed jointly by not less than one hundred allottees of the same real estate project, or ten per cent of the total allottees of that project, whichever is less. A single buyer cannot file. That requirement was introduced in 2020 and its validity has been considered and upheld.
The honest advice that follows is not what an angry buyer wants to hear. Insolvency puts the project into a collective process whose outcome is a resolution plan — it is not a route to your refund, and it is slow. If what you want is possession, a refund with interest, or compensation, look first at RERA and at the consumer commissions, which exist for exactly that. Come here when the builder has genuinely collapsed and a collective process is the only thing left.
A part of this that promoters routinely do not know until it is on them, and it deserves to be said plainly.
When a company borrows, the bank almost always takes personal guarantees from the promoters. For years those guarantees felt theoretical. They are not. Insolvency proceedings against a personal guarantor to a corporate debtor are now provided for, and where the corporate insolvency of the company is pending, an application relating to the personal guarantor is filed before the same Tribunal — so the company’s insolvency and the guarantor’s can end up in the same room.
Two practical consequences. First, a promoter cannot treat the company’s insolvency as the end of their own exposure; it may be the beginning of it. Second, this makes personal advice, separate from the company’s advice, necessary rather than cautious — because the company’s interests and the guarantor’s stopped being identical the moment it started.
If you signed a guarantee years ago and cannot now remember its terms, get the document. People are frequently wrong about what they guaranteed, for how much, and whether it was limited in any way.
Separate personality protects a director from the company’s debts as a general matter. It is not an unlimited shield, and it is worth knowing where the edges are rather than discovering them.
Liability can attach where a statute fastens it on persons in charge of and responsible to the company for the conduct of its business, where specific duties are placed on particular officers, and where conduct in the period before insolvency is examined. Independent and non-executive directors are in a different position from executive ones, and a person who was a director only on paper is in a different position again — but that position has to be established from the company’s own records rather than asserted.
A surprising share of people who arrive here belong somewhere else, and finding that out after filing is expensive.
| Your situation | Where it actually goes |
|---|---|
| A dispute between partners in an ordinary partnership firm | Civil court — the NCLT deals with companies and LLPs. See our Saket page |
| You want your money from a company, and it is a real debt with no insolvency in sight | A recovery suit, or a summary suit. See our Dwarka page on what has to be proved |
| You bought something defective from a company | Consumer commission |
| Your flat is delayed by a builder | RERA or the consumer route, depending on what you want |
| An employment dispute with a company | The labour forums, not this one |
| A cheque issued by a company bounced | The criminal complaint route under the Negotiable Instruments Act |
| A bank is enforcing security against the company | DRT and SARFAESI — unless insolvency has been admitted, which changes it |
A distinction worth setting out, because the word “partner” hides it.
An ordinary partnership firm is not a separate person from its partners in the way a company is, and a dispute between its partners goes to the civil court. A limited liability partnership is different: it is a body corporate with its own legal personality, and matters concerning it — including winding up — come to this Tribunal rather than to a civil court.
So two people who describe themselves identically as “business partners” can be in completely different forums depending on a decision somebody made at registration, possibly years ago and possibly on an accountant’s advice.
Find out which you actually are before anything is drafted. It takes five minutes on the public record and it decides where you file. And if it is an LLP, the agreement between the partners does a great deal of work here, exactly as a shareholders agreement does for a company — which is the section further down that costs the least and saves the most.
The Companies Act also provides for a class action — a proceeding brought by a group of members or depositors where the affairs of the company are being conducted in a manner prejudicial to their interests, against the company, its directors, its auditors and others.
On paper it is a powerful thing. In practice it is used far less than the provision suggests, because assembling a qualifying group, funding a long proceeding collectively and holding the group together through it are hard in a way the statute does not help with.
Worth knowing it exists, and worth asking about where a genuine group of small shareholders or depositors has been affected by the same conduct — which is a different and stronger situation than one person’s grievance. For a single member, Section 241 remains the route.
Strip away the pleadings and a very large share of Section 241 petitions are about one thing: the petitioner wants out, at a price that is not an insult.
Section 242 allows the Tribunal to order the purchase of the shares of any members by other members or by the company itself, so the relief exists. What people underestimate is that the fight then moves to valuation, and valuation is a battle of material rather than of argument.
Two things to do early. Collect the accounts for every year you can get, not just the recent ones. And be clear with your own advocate about what outcome you actually want — a fair exit or control of the company — because petitions drafted for one and argued for the other take years and satisfy nobody.
A quieter but very common piece of the Tribunal’s work. A company stops filing, the Registrar strikes it off, and two years later somebody discovers the bank account is frozen or a property cannot be dealt with because the owner no longer legally exists.
Section 252 provides for an appeal against the striking off and for restoration where the Tribunal is satisfied that the company was carrying on business or that it is otherwise just to restore it.
The practical part is the backlog. Restoration does not forgive the returns that were not filed; they still have to be filed, with whatever follows from having filed them late. Budget for that alongside the application — our ROC annual filing and strike off pages set out the filings involved.
Not everything here is a fight. Schemes of compromise, arrangement, merger and amalgamation come before this Tribunal, along with reductions of capital and other corporate steps that need approval.
These are process matters rather than disputes — meetings to be convened, notices to be given to members and creditors and to the authorities, objections to be dealt with, and approvals obtained in sequence. They are decided on whether every step was done correctly, which is why they are almost entirely a documentation exercise, and why they go wrong on notices rather than on substance.
Under the Companies Act, Section 421 gives an appeal to the National Company Law
Appellate Tribunal within forty-five days.
Under the Insolvency Code, Section 61 gives thirty days, which the Appellate
Tribunal may extend by up to a further fifteen days on sufficient cause being shown.
Two different statutes, two different periods, one tribunal. So the question to put to counsel on the day any order comes is not “should we appeal” but “which of the two periods applies, and what is the last date”. Write the answer down.
Apply for the certified copy the same week — we obtain certified true copies — and we draw appeal papers and the applications that accompany them, on counsel’s instructions.
We see the same dispute repeatedly and it is nearly always the same omission. Two or three people start a company on trust and never write down what happens when the trust runs out.
A shareholders agreement, drawn before anything goes wrong, deals with exactly the things that otherwise end up before this Tribunal:
We draft shareholders agreements, share purchase agreements, share transfer documentation and partnership deeds. This is genuinely the cheapest paragraph on the page: a properly drawn agreement costs a small fraction of one Tribunal petition, and the right time for it is while everybody is still getting on.
Worth saying once, plainly, because nobody says it at the start.
A contested company petition is long. It is also, unusually, a proceeding in which the other side is spending the company’s money on lawyers while you are spending your own. That asymmetry is real, it is felt most at about month eighteen, and it is the single biggest reason petitioners settle for less than they should.
Two ways to answer it. Decide early what outcome you actually want, and price it — a fair exit is a number, and knowing your number makes a settlement offer something you can evaluate instead of something you react to. And where more than one member has the same grievance, come together: the cost is shared, the standing question gets easier, and a pattern across several members is far harder to explain away than one person’s account.
None of that is a reason not to bring a genuine case. It is a reason to go in with the arithmetic done rather than discovering it in year two.
The National Company Law Tribunal has benches in New Delhi, and the Appellate Tribunal sits here too. It is a tribunal, not a civil court: it moves faster, it runs on documents, and it is far less forgiving about the papers than an ordinary court would be.
No addresses, bench allocation or timings appear here, for the reason none do anywhere on this site — they are administrative and they change. Confirm from the current official source or from your advocate’s clerk.
Allow for security screening apart from the journey and carry government photo identity. Bring your own full set of papers even when everything has been filed electronically.
One thing peculiar to this tribunal: matters here turn on what a specific board resolution said on a specific date, or what was filed with the Registrar in a particular year. Bring the corporate record itself, indexed, rather than a summary of it. Being able to open the right page while standing there is worth a hearing.
They exist, and they matter less here than on most of our pages — a company dispute is rarely a matter where a person qualifies, and a company as such is a different question. Where it does apply is the individual: a small shareholder who has been pushed out and has nothing left is an individual, whatever the dispute is about.
Entitlement comes from the Legal Services Authorities Act, 1987, a woman qualifies whatever her income, and the court complexes keep a legal services desk. The numbers are 1516 in Delhi and 15100 across the country. Ask rather than assume the answer is no.
In a company matter, the file is not evidence about the case. It very nearly is the case.
Assemble: the certificate of incorporation, the memorandum and articles, every shareholders or joint venture agreement and every amendment, the share certificates and the register of members, every allotment and transfer, board and general meeting notices and minutes, the annual filings, the audited accounts, the bank mandates and signing authorities, every related-party transaction you know of, and the full correspondence.
At the front, one page in date order: what happened, what was filed, what you received or did not receive. Scan everything as you collect it. In a matter where the other side controls the company’s records, the documents you hold are disproportionately valuable — so collect them before anybody knows you are going to.
| What people do | What it produces |
|---|---|
| Frame a wrong to the company as a wrong to themselves | A petition that fails on standing before anybody reads the facts |
| Never check their actual shareholding | A Section 244 problem discovered after filing |
| Wait to see what happens after a dilutive allotment | Asking to undo instead of asking to prevent |
| File insolvency to force payment of a small invoice | Below the threshold, or defeated by a pre-existing dispute — and possibly costs |
| Raise a quality complaint only after receiving a demand notice | A dispute that looks manufactured rather than pre-existing |
| Take a partnership-firm dispute to the NCLT | Wrong forum, weeks lost |
| Rely on memory for what was agreed at the start | A quasi-partnership argument with nothing to support it |
| Leave the company’s records with the other side and collect nothing | A case about documents, run by the person who holds them |
| Assume the same appeal period applies to every NCLT order | Thirty days treated as forty-five, and an appeal out of time |
| Start a company with friends and no written agreement | Everything above |
Incorporation certificate, memorandum and articles. Every agreement between the shareholders, and every amendment. Your share certificates and whatever you have of the register of members. Board and general meeting notices, agendas and minutes for the relevant period. The annual filings and audited accounts from the Registrar. Bank mandates and signing authority. Correspondence, in full. And your own dated note of what was agreed when the company was formed.
Add affidavits sworn before an oath commissioner, translations of anything not in the language of the proceeding, and one consistent spelling of every name and entity across the whole bundle — in company matters, where the same person appears in filings, agreements and minutes, mismatches are common and each one invites a question.
Documentation and filing support, nothing beyond. Nobody here is an advocate, nobody appears before any tribunal, and nobody advises on whether you have a case. Our work is the petition and applications typed and drawn to counsel’s instructions, the reply, the corporate record assembled, indexed and paginated so a tribunal can follow it, the affidavits and their swearing, board resolutions and share transmission papers where they are needed, translations, and certified copies when orders come.
What is argued belongs to your advocate. Court work is for your advocate, whose fee is engaged and paid by you directly; we do not quote, collect or share it. On this subject we would add one thing: the useful conversation is usually earlier than people think — at the shareholders agreement, not at the petition. The directory is free to open and free to write through, it runs A to Z, and no listing on it was bought.
Each document carries its own figure on its own service page, readable before you order anything at all. Tribunal fees and whatever a government office levies appear separately from ours, because that money belongs to them and we never handle it.
You are told the whole amount before work starts and none of it is taken in advance. And on a company matter we will often say something that costs us the job: if what you actually need is a shareholders agreement rather than a petition, that is what we will tell you on the call.
Send the incorporation documents, whatever agreement exists, and the filings you can get. We will tell you what the record actually shows, what is missing from it, and what a complete set of papers would contain — and put the directory in front of you, because whether the wrong is yours or the company's is the question that decides everything and it is not one to settle from a web page. Searching it is free and no commission from anybody on it reaches us.
Demand pehle se lagi hui hai — appeal karne se wo rukti NAHI, rukwani padti hai alag se (s.220(6)). 30 din CIT(A), phir ITAT. Aur ITAT aakhri jagah hai jahan TATHYA dekhe jaate hain.
ReadYahan koi aapko BULATA nahi — bank bina adalat ke kabza leta hai. s.13(2) ke 60 din, phir s.13(4) par **45 din** me khud DRT jaana padta hai. Civil court band hai (s.34). Appeal par 50% jama.
ReadYe adalat jaan-boojh kar alag banayi gayi — s.13 kehti hai advocate rakhna aapka HAQ tak nahi, s.9 pehle samjhauta karana adalat ka kartavya hai, s.14 me saboot ke niyam dheele hain, aur CONSENT wale decree par appeal HOTI HI NAHI.
ReadMuawza dalil se nahi, HISAAB se banta hai — aur 2019 ke baad s.166(3) ne sirf CHHE MAHINE de rakhe hain (pehle koi seema thi hi nahi). Do raaste, income proof, disability, hit-and-run, award ki vasooli.
ReadYe ek hi forum hai jo jaan-boojh kar banaya gaya hai ki aap KHUD lad sakein — aur isi wajah se log haarte hain. Commercial purpose ka jaal, 2 saal ki seema, ab apne sheher me file karo, aur appeal par 50% jama.
ReadHigh Court koi “agli upar wali adalat” nahi — uske TEEN alag darwaze hain: appeal, Article 226 ka writ, aur original side. Alternative remedy, deri, certified copy, s.528 BNSS quashing, Division Bench appeal.
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