#Section 397

The Supreme Court ruled that a person can qualify as a deemed member under Sections 397-398 of the Companies Act, 1956, even without formal registration, if their financial contribution and the company’s conduct demonstrate a proprietary interest. This expands access to equitable remedies for investors and stakeholders whose rights are ignored through technical non-registration.

NCLAT rules that shareholders who actively consent to private placements or share sales cannot later challenge the same transactions as oppressive under Sections 397-398 of the Companies Act, 1956. The judgment reinforces estoppel as a bar to oppression claims where parties have knowingly participated in the impugned transactions.