IMPORTANT POINT
Family arrangements can take precedence over statutory provisions in the context of family-run businesses, provided they do not conflict with the Companies Act, and equitable considerations must be taken into account when assessing the validity of corporate actions.

JUDGMENT

S. M. Modak, J. - The only issue arisen in this Interim Application is whether the 'Family Arrangement' will prevail over the provisions of Companies Act, 2013 and the statutory documents. The Plaintiff No.1 / Applicant No.1 contended that he has got a protection to hold the post of a director in Defendant No.4 Company, whereas Defendant Nos.1 to 4 contend that he can be removed from the post as per the provisions of the said Act. The issue has arisen on the background of his removal from the post as per the resolution dated 27th May 2023 passed by Defendant No.4. In fact, this happened when Commercial Intellectual Property Suit No.177 of 2023 was pending.

2. This was a suit filed by Defendant No.4 - Company against present two Plaintiffs and their Company by name Absolink Enterprises Pvt. Ltd. It was a suit for taking action for the acts committed by the present Plaintiff's through their Company for selling their products under the trade name of Defendant No.4. There was ex-parte injunction granted on 5th April 2023 and it was vacated on 3rd July 2023. The Plaintiffs grievance is removal of Plaintiff No.1 from the post of director by taking disadvantage of the situation created as per the order dated 5th April 2023.

Present Suit

3. That is why the present suit for declaration about 'Family Arrangement', mandatory and prohibitory injunction and other reliefs is filed. As such, the main relief is sought by Plaintiff No.1, whereas reliefs sought by him and his son Plaintiff No.2 are in the form of their reinstatement with Defendant No.4. No doubt, it is true that as per the law which exists today, a director cannot claim any protection dehors the provisions of Company Act, 2013. No doubt, if the Company is run as family business concern, there are certain equities which can be claimed by the members of the family who are the directors. After considering the submissions and going through the documents and the interpretation of the judgments, I am of the considered opinion that Plaintiff No.1 is entitled for ad-interim relief in terms of prayer clause (a) of the Application . Though not both the Plaintiff's on the basis of their claim about employment with Defendant No.4. I will give reasons for the said decision hereinafter.

4. On this background, I have heard learned Senior Advocate Mr.Dhond for Plaintiffs and Mr.Andhyarujina, for Defendant No.4, Mr.Tamboly for Defendant Nos.1 to 3 and Mr.Arpit Solanki for Defendant Nos.11, 16 and 17.

Law on Family arrangement

5. It is true that in case of Kale and Others v/s. Deputy Director of Consolidation and Others, (1976) 3 Supreme Court Cases 119 (relied upon by Mr.Dhond), the Hon'ble Supreme Court has dealt with the issue of consideration of 'Family Arrangement' in a matter involving the land dispute. It stands on higher pedestal than any other agreement. Ultimately, the purpose of such arrangement is to resolve the dispute and to bring peace and harmony in the family. No doubt, it is true that there was no occasion for Hon'ble Supreme Court to deal with the provisions of 2013 Act.

6. Whereas, in case of Dinesh Gupta and Others v/s. Rajesh Gupta & Others, 2018 SCC OnLine Del 12387,High Court of Delhi has recognised the family settlement and deprecated the conduct of the party who on one hand violated the terms of family settlement, whereas on the other hand, took benefits from few of the terms of 'Family Arrangement'.

7. Whereas, in case of Invesco Developing Markets Fund, through the Constituted Attorney and Another v/s. Zee Entertainment Enterprises Limited and Another, 2022 SCC OnLine Bom 630 (relied upon by MrAndhyarujina) there was an issue of calling extraordinary general meeting by the shareholders. While upholding the rights of shareholder to call a meeting, Division Bench has recognized the principle of corporate democracy. At the same time, it is true that the shareholder was not a member of the family and Division Bench has not considered the provisions of 2013 Act vis-a-vis t