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IN THE HIGH COURT OF DELHI AT NEW DELHI
SANJEEV SACHDEVA, J.
Chhaya Devi & Anr. – Plaintiff
Versus
Rukmini Devi & Ors. – Defendants
CS(OS) 285 of 2017
Decided On : 11-09-2017
Companies Act, 2013 - Removal of Director - Section 115, Section 169, Section 100 - The court restrained the defendants from acting upon the notice dated 08.08.2017 and the resolutions passed in the consequential meeting dated 26.08.2017. The court found that the notice dated 08.07.2017, issued under Section 115 of the Companies Act, 2013, did not comply with the requirements of Section 169, as it did not provide reasonable opportunity of hearing and failed to communicate the grounds for removal of the director. The court also noted that the notice dated 08.08.2017, issued by the directors, was not a valid requisition under Section 100(2) of the Act, and the defendants had not applied their minds to the requisition notice. The court held that the plaintiffs had shown a strong prima facie case for grant of an ad-interim injunction, as the defendants' actions would cause irreparable loss and injury to the plaintiff no.1.
Fact of the Case:
Plaintiff no.1 sought a restraint on the defendants from acting upon notices dated 08.07.2017 and 08.08.2017, which sought the removal of plaintiff no.1 from the office of Director of the plaintiff no.2 company. The plaintiffs contended that the notices were in contravention of the provisions of Section 169 of the Companies Act, 2013, as they did not provide a reasonable opportunity of hearing and failed to communicate the grounds for removal of the director.
Finding of the Court:
The court found that the defendants' actions were in violation of Section 169 of the Companies Act, 2013, and restrained them from acting upon the notices and resolutions.
Issues: The issues revolved around the compliance with the provisions of Section 169 of the Companies Act, 2013, in the issuance of notices seeking the removal of a director from the company.
Ratio Decidendi: The court held that the notices did not comply with the requirements of Section 169, as they did not provide a reasonable opportunity of hearing and failed to communicate the grounds for removal of the director. The court also found that the notice issued by the directors was not a valid requisition under Section 100(2) of the Act.
Final Decision: The court granted an ad-interim injunction restraining the defendants from acting upon the notices and resolutions.
SANJEEV SACHDEVA, J.
I.A. 7854/2017 (filed by plaintiffs under Order VI Rule 17 CPC)
Issue notice.
Notice is accepted by the learned counsel for the defendants who prays for time to file reply.
Let reply be filed within two weeks. Rejoinder, if any, be filed within one week thereafter.
I.A. No.9618/2017 (under Order 39 Rules 1 & 2 CPC)
1. Plaintiff no.1 by this application seeks a restraint on the defendants from acting upon notice dated 08.07.2017 and 08.08.2017.
2. By notice dated 08.07.2017 some of the share-holders of plaintiff no.2 company have issued notice under Section 115 of the Companies Act, 2013 (hereinafter referred to as ‘the Act’) to the Directors of the said company giving notice pursuant to the provisions of Section 169 (2) read with Section 115 of the Act of their intention to move an ordinary resolution, at the Extraordinary General Meeting (to be convened), seeking removal of the plaintiff no.1 from the Office of Director of the Plaintiff No. 2/Company.
3. By notice dated 08.08.2017, 6 (six) out of (9) nine Directors of plaintiff no.2 company had proposed to convene an Extraordinary General Meeting of the Board of Directors on 26.08.2017.
4. The plaintiffs have impugned the said notices dated 08.07.2017 and 08.08.2017, inter alia, on the ground that the same are in contravention to the provisions of Section 169 of the Act.
5. It is contended that under Section 169 of the Act, if a Director is sought to be removed from the Board of Directors, then reasonable opportunity of hearing is to be granted to such Director and the said Director is also entitled to submit a representation and make a representation before the Board of Directors opposing his or her removal.
6. It is further contended that the notice dated 08.07.2017 is bereft of any reasons as to why plaintiff no.1 is sought to be removed from the office of Director. It is contended that the notice merely states that plaintiff no.1 has been acting against the company’s interests. Whereas, no instances, details or clarifications are mentioned in the said notice as to what actions of the plaintiff no.1 are against the company’s interests.
7. It is further contended that since the letter/notice dated 08.07.2017 was bereft of any reasons or grounds, the 6 (six) Directors of the company who have issued the consequent notice dated 08.08.2017 have acted mechanically and issued the said notice without application of mind.
8. It is further contended that though the letter dated 08.08.2017 talks of the notice dated 08.07.2017 as a requisition, however, a reading of the notice shows that it is not a requisition but a mere statement of fact.
9. It is contended that since the notice dated 08.07.2017 did not satisfy the requirements of Section 100(2) of the Act the Members of the Board of the company could not have acted upon it and requisitioned a meeting by notice dated 08.08.2017.
10. It is further contended that the defendants have contravened the secretarial standards; in particular secretarial standard numbers 1.1.1 and 1.3.8 which mandate that any Meeting of the Board of Directors has to be called in consultation with the Managing Director of such company.
11. Per Contra, learned counsel for the defendants submits that the plaintiff no.1 is not entitled to any relief inasmuch as applicant/plaintiff no.1 has concealed material facts and has not disclosed that the plaintiff was served with the notice dated 08.08.2017 by speed post.
12. Further, it is contended that the plaintiff was served on 11.08.2017 and chose to wait till 24.08.2017 when the Extraordinary General Meeting of the Board of Directors was scheduled to be held on 26.08.2017.
13. Further it is contended by the learned counsel for the defendants that under Section 100(1) of the Act, a Board can convene an Extraordinary General Meeting even without any requisition as contemplated by Section 100(2) of the Act.
14. It is further contended that the notice dated 08.07.2017 was a special notice as contemplated und
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