CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Stakeholders Rights
Kaveri Foods Ltd's Stakeholders Relationship Committee tried in good faith to settle a debenture-holder's grievance over a delayed interest warrant, but the debenture-holder rejected the proposed settlement and the grievance remained unresolved. Under Section 178, what is the position?
There is no contravention. The proviso to Section 178(8) states that a Stakeholders Relationship Committee's inability to resolve or consider a grievance in good faith is not a contravention of the section. Good-faith effort protects the company and its officers even though the grievance remains unresolved.
- AThe company is automatically liable to the minimum fine because the grievance is unresolved
- BOnly the committee chairperson is liable to a penalty
- CThe committee must be dissolved and reconstituted
- DInability to resolve or consider the grievance in good faith is not a contraventionCorrect
Explanation
The proviso to Section 178(8) says that inability to resolve or consider any grievance by the committee in good faith does not constitute a contravention. The committee acted in good faith, so no fine or penalty follows merely because the grievance stays unresolved.
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