Dr. Bais Surgical and Medical Institute Pvt. Ltd & Ors. v. Dhananjay Pande

Held: The statutory framework under the Act, 1956 draws a clear distinction between the inclusive definition of the term “member” contained in s.2(27) and the provisions governing acquisition of membership set out in s.41 – s.2(27) employs language of wide amplitude and, in relation to a company, embraces every category of member, subject only to the limited exclusion of a bearer of a share-warrant issued u/s.114 of the Act – Whereas, s.41 operates in a different sphere and prescribes the recognised modes by which membership may arise – It contemplates, first, deemed membership in the case of subscribers to the memorandum; secondly, persons Supreme Court Reports [2026] 5 S.C.R. 349 who agree in writing to become members; thirdly, entry of a person’s name in the register of members, which ordinarily constitutes conclusive evidence of membership; and lastly, persons reflected as beneficial owners in the records of a depository – The requirement that an agreement to become a member be “in writing”, introduced by the Amendment Act of 1960, was intended to ensure reliable proof of consent and to prevent fraudulent inclusion of names in the register, and not to impose entry in the register as the sole or exclusive mode of acquiring membership – A more fundamental consideration arises from the nature of jurisdiction conferred u/ ss.397 and 398, which has consistently been recognised as equitable in character – These provisions, situated in Chapter VI, are designed to afford remedies to minority shareholders against acts of oppression and mismanagement – The entitlement to invoke such jurisdiction is regulated by s.399, which prescribes the eligibility criteria for maintaining an application u/ss.397 and 398 – Accordingly, the relevant enquiry, while determining maintainability, must center on whether the applicant satisfies the conditions prescribed u/s.399, rather than on a mechanical application of the procedural requirements found in s.41(2) – The equitable foundation of ss.397 and 398 must be a guiding factor to not construe the expression “member” in an unduly restrictive or technical manner confined solely to formal entry in the register, thereby frustrating the remedial purpose underlying the legislative scheme. [Paras 21, 22] Case Law Cited