A nominee director who acts against the interests of the nominating group can be removed, and their participation in a petition against the group's interests can be denied.

JUDGMENT

Sanjeev Narula, J.

1. The present appeal under Section 10F of the Companies Act, 1956 [hereinafter "the Act"] is directed against order dated 23rd September, 2015 [hereinafter "Impugned Order"], whereby Appellant's application bearing C.A. No. 79/2015 for impleadment to an oppression and mismanagement petition¹ [C.P. No. 108/ND/2014] pertaining to Respondent No. 3-Eden Park Hotels Pvt. Ltd., has been rejected by the Company Law Board [hereinafter "CLB"].² [Presently pending before the National Company Law Tribunal, New Delhi (hereinafter "NCLT.")]

2. For convenience, parties to the present appeal, their status before the CLB and their inter se relationship, is depicted as follows:

3. The Impugned Order captures the backdrop of Appellant's grievance, rendering reiteration of facts superfluous; however, a concise overview is presented below for contextual clarity.

3.1. There are two groups of shareholders in Respondent No. 3. Respondents No. 1 and 2, who hold 50% of the equity share capital, constitute the "DKJ Group" and Respondents No. 4 to 6, holding the remaining 50% of the equity share capital are the "SKG Group".

3.2. Mr. D.K. Jain deceased on 18th March, 2014 and is survived by three daughters and one son. Given the internal differences within the family, post the demise of Mr. D.K Jain, his widow, Ms. Usha Jain, and daughter, Ms. Puja Jain, have been running their family businesses.

3.3. During the lifetime of D.K Jain, his youngest daughter, the Appellant, was appointed in Respondent No. 3, as a nominee director on behalf of DKJ Group.

3.4. Company petition was filed by DKJ Group under Sections 111, 397, 398, 399, 402 and 403 of the Act claiming that SKG Group had been engaging in acts of oppression and mismanagement concerning Respondent No. 3.

3.5. On account of lack of representation on the Board of Directors, DKJ Group filed an application [C.A. No. 155/2014] praying for, among other things, directions to prevent action in furtherance of the minutes of the Board of Directors meetings of Respondent No. 3 held on 22nd September and 22nd November, 2014. It was contended that Appellant had been removed as nominee director and one Mr. Rajan Sharma along with Mr. Mahesh Gupta (in place of Late Mr. D.K. Jain) were appointed on the Board of Directors.

3.6. On 18th December, 2014, the CLB issued several directions, including instructions to Respondent No. 3 not to implement the decisions taken in the afore-said board meetings. The CLB also directed the SKG Group to take two nominee directors of the DKJ Group on the Board of Respondent No. 3. With respect to the prayer for not treating Appellant as the nominee director of DKJ Group, the CLB ruled that since a company petition has been filed concerning the transfer of Appellant's entire shareholding (a mere 0.5%), her involvement in Respondent No. 3 could not be perceived as representing the DKJ Group. Consequently, Appellant's directorship was ordered to be kept in abeyance until further orders.

3.7. Subsequently, Appellant filed an application [C.A. No. 79/2015] seeking impleadment and permission to file a counter affidavit to oppose the petition. This request was turned down in the Impugned Order.

APPELLANT'S SUBMISSIONS

4. Mr. Harish Malho