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

The Stakeholders Relationship Committee of Himalaya Foods Ltd considered a debenture-holder's complaint about non-receipt of interest warrants. Despite good-faith efforts, it could not resolve the grievance within the year. Under section 178, what is the consequence for the company?

There is no contravention. The proviso to section 178(8) says that inability to resolve or consider any grievance by the Stakeholders Relationship Committee in good faith is not a contravention, so the fine for the company and the penalty on officers do not apply.

  1. AAutomatic contravention attracting a fine of one lakh to five lakh rupees
  2. BContravention, 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. DContravention unless the grievance is referred to the Tribunal

Explanation

The proviso to section 178(8) states 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 the penalty provisions are not triggered.

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