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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board Committees

The Stakeholders Relationship Committee of Ganga Steels Ltd considered a debenture-holder's grievance in good faith but could not resolve it. A shareholder alleges contravention of section 178 and seeks penalty. Which view is correct?

There is no contravention. The proviso to section 178(8) states that inability by the Stakeholders Relationship Committee to resolve or consider a grievance in good faith does not constitute a contravention, so the fine and penalty provisions are not attracted.

  1. AContravention occurs, and the company is liable to a fine of one lakh to five lakh rupees
  2. BNo contravention, because inability to resolve or consider a grievance in good faith is not a contraventionCorrect
  3. CContravention occurs, but only the committee chairperson is liable
  4. DNo contravention only if the Board resolves the grievance within thirty days

Explanation

The proviso to section 178(8) says inability to resolve or consider any grievance by the committee in good faith does not constitute a contravention. The fine range applies only to actual contraventions. No thirty-day condition appears in the text.

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