NCLAT Clarifies Scope of Section 98: EGM via Tribunal Without First Using Section 100(4)

The decision of the NCLAT, Chennai Bench in M/s. Pearl City Marine Products Pvt. Ltd. & Ors. v. Hiras K. & Ors., Company Appeal (AT) (CH) No. 76/2026, judgment dated 17.08.2026 offers important guidance on how Section 98 and Section 100(4) of the Companies Act 2013 operate in relation to convening an Extraordinary General Meeting (EGM).

The ruling addresses two practical questions that often arise for shareholders seeking to call an EGM when the Board is resistant or divided:

  • Must the assessee-shareholder first utilize the remedy under Section 100(4) before approaching the Tribunal under Section 98?
  • Is refusal by the Board to call an EGM sufficient, by itself, to justify an order under Section 98?

The NCLAT answered both in the negative, but with crucial nuances. While it held that Section 100(4) need not be exhausted before invoking Section 98, it simultaneously stressed that Section 98 is an exceptional remedy which requires proof of “impracticability” in convening or conducting the meeting in the usual statutory or Articles-based manner.

The judgment relies, among others, on:

  • Invesco Developing Markets Fund and Other Vs Zee Entertainment Enterprises Limited and Others
  • In Re: Ruttonjee and Co. Ltd.

and carefully applies those principles to the specific factual matrix involving a divided Board and a larger body of shareholders.

Key Issues Considered by NCLAT

Central Questions

The NCLAT effectively examined two core legal questions arising out of the appeal:

  1. Whether a shareholder is required to first pursue and exhaust the remedy under Section 100(4) before invoking Section 98 of the Companies Act 2013.
  2. Whether the Board’s rejection of a requisition to convene an EGM is, by itself, adequate to demonstrate “impracticability” so as to justify exercise of powers under Section 98.

The Tribunal held:

  • Section 98 and Section 100(4) are distinct and mutually exclusive mechanisms; the availability of one does not make the other conditional or sequential.
  • However, “impracticability” is a substantive and demanding requirement, and an assessee-shareholder cannot secure an order under Section 98 merely because the Board has refused to call a requisitioned meeting.

Statutory Framework: Section 98 vs Section 100(2) and Section 100(4)

Rights of Requisitioning Members Under Section 100

Under Section 100(2) of the Companies Act 2013, shareholders holding the requisite threshold of share capital or voting power can requisition the Board to call an EGM. This is the standard statutory route:

  • Eligible members submit a valid requisition to the Board.
  • The Board is expected to proceed and convene the EGM within the statutory timelines.

Where the Board does not act on such requisition, Section 100(4) steps in. It empowers the requisitioning members themselves to call and hold the EGM, provided the statutory conditions are satisfied. This is a direct shareholder-driven remedy that functions within the company’s own governance framework, without court or Tribunal intervention.

Tribunal’s Power Under Section 98

Section 98 of the Companies Act 2013 vests the Tribunal with power to call or direct the calling, holding and conducting of a general meeting when it has become impracticable to do so in the manner prescribed by the Act or the Articles of Association.

Key features of Section 98 include:

  • It applies to general meetings (including EGMs) where normal procedures laid down in the Act or Articles cannot reasonably be followed.
  • It is rooted in the principle that, in exceptional circumstances, external intervention is justified to protect corporate democracy and break deadlocks.
  • The jurisdiction is discretionary and exceptional, not routine or automatic.

In M/s. Pearl City Marine Products Pvt. Ltd. & Ors. v. Hiras K. & Ors., the controversy arose because the first respondent directly invoked Section 98 without first attempting to convene the EGM under Section 100(4), and the NCLT had granted relief. The NCLAT was called upon to examine the correctness of that approach.

NCLAT on Mutual Exclusivity of Section 98 and Section 100(4)

Reliance on Invesco Developing Markets Fund

The NCLAT closely referred to the decision of the Bombay High Court in Invesco Developing Markets Fund and Other Vs Zee Entertainment Enterprises Limited and Others. Based on that precedent, the NCLAT concluded:

  • The mechanism under Section 100(4) (members themselves calling the EGM) and the remedy under Section 98 (Tribunal-directed meeting) are mutually exclusive alternatives.
  • The availability or use of one is not a legal prerequisite for invoking the other.

In other words, an assessee-shareholder is not required to first attempt to call the meeting under Section 100(4) before approaching the Tribunal under Section 98.