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CS Executive · Company Law and Practice · Meetings of Board and its Committees

The Stakeholders Relationship Committee of Aarav Steels Ltd considered a debenture-holder's grievance in good faith but could not resolve it. The holder alleges contravention of Section 178. What is the correct position?

There is no contravention. The proviso to Section 178(8) provides that inability of the Stakeholders Relationship Committee to resolve or consider a grievance, when acting in good faith, is not a contravention of the section, and no time limit is attached.

  1. AContravention occurs, with a fine of at least one lakh rupees
  2. BContravention occurs, but only the chairperson is penalised
  3. CNo contravention, since inability to resolve or consider a grievance in good faith is not a contraventionCorrect
  4. DNo contravention only if the Board resolves the grievance within 30 days

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. No time condition is stated, so the 30-day option is wrong.

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