Back
2023 Supreme(J&K) 334
IN THE HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT JAMMU
SANJAY DHAR, J.
Naveen Bhatnagar – Appellant
Versus
M/s Sudarsham Consolidated Limited – Respondent
CP No. 3 of 2013
Decided on : 20-10-2023
Advocate Appeared:
For the Appellant : Mr. Ajay Abrol, Adv.
For the Respondent: Mr. C. S. Gupta, Adv.
The resignation of a Director takes effect only upon acceptance by the Board of Directors, as provided in the Articles of Association.
Headnote:
resignation - Directorship - Companies Act, 1956, Section 283(1)(g) - Section 283(1)(g) - Section 10F of the Companies Act, 1956 - Section 283(1) in The Companies Act, 1956 - Section 284 of the Companies Act - Articles of Association, Clause 95 and 96
Fact of the Case:
The appellant challenged an order by the Company Law Board, which held that the appellant automatically ceased to be the Director of the respondent-Company in terms of Section 283(1)(g) of the Companies Act, 1956. The appellant tendered his resignation, which was acknowledged, but the Board did not accept it. The appellant sought a direction to file Form 32, which was declined by the Company Law Board.
Finding of the Court:
The court found that the resignation of the appellant would take effect only if his letter of resignation is considered and accepted by the Board of Directors, which had not been done. The court dismissed the appeal, stating that the resignation lacked merit.
Issues: The main issue was when the resignation tendered by a Director would take effect.
Ratio Decidendi: The resignation of a Director would take effect only if it is accepted by the Board of Directors, as provided in the Articles of Association.
Final Decision: The appeal was dismissed as the court found no ground to interfere with the order passed by the Company Law Board.
JUDGMENT :
1. The appellant has filed the instant appeal under section 10F of the Companies Act, 1956(hereinafter to be referred as the Act of 1956) challenging order dated 12.09.2013 passed by the Company Law Board, Northern Region Bench, New Delhi.
2. Vide the impugned order dated 12.09.2013, the Company Law Board on an application filed by the appellant seeking a direction upon the respondent-Company to file Form 32 of the appellant with effect from 17.09.2010, the date he had tendered his resignation as Director of the respondent-Company. The Company Law Board has, while declining the prayer of the appellant, held that the appellant has automatically ceased to be the Director of the respondent-Company in terms of Section 283(1)(g) of the Act of 1956 on and from 01.07.2011 on the ground that he has not attended the Board meetings subsequent to September, 2010. Accordingly, a direction was issued to the respondent-Company to file Form 32 in respect of cessation of the Directorship of the appellant with effect from 01.07.2011 within thirty days and make necessary corrections in the statutory records.
3. It appears that the appellant was appointed as a Director of the respondent-Company on 06.02.2009 and on 17.09.2010, he addressed a resignation letter to the Board of Directors of the respondent-Company, which was duly received and acknowledged by the respondent-Company. On 21.09.2010, a communication was addressed by one of the Directors of the respondent-Company, namely, S. M. Z. Naqvi to the appellant informing him that his resignation as on 17.09.2010 has been noted in the records of the Company and that he has been relieved with effect from 21.09.2010. The appellant was also informed that his Form 32 will be filed with the Registrar of the Companies accordingly. It seems that when the respondent-Company did not submit Form 32 with the Registrar of the Companies, the appellant made various representations to the respondent-Company as well as to the Registrar of the Companies in this regard but no action was taken in the matter. Ultimately the appellant approached the Company Law Board seeking a direction upon respondent-Company to submit Form 32 of the appellant with the Registrar of the Companies, which prayer was declined by the Company Law Board vide the impugned order and instead it was held that the appellant has automatically ceased to be the Director with effect from 01.07.2011.
4. The appellant has thrown challenge to the impugned order passed by the Company Law Board on the ground that once the respondent-Company admitted the receipt of resignation letter from the appellant and conveyed to him its acceptance vide letter dated 21.09.2010, there was no reason for the respondent-Company not to submit Form 32 in due course of time. It has been contended that the Company Law Board has failed to take note of the resignation letter dated 17.09.2010 and the acceptance letter issued by the respondent-Company on 21.09.2010.
5. Heard learned counsel for the parties and perused record of the case.
6. Section 10F of the Companies Act of 1956 vests appellate powers with the High Court against the orders of the Company Law Board. The scope of interference by the High Court in an appeal under section 10F of the Act is limited to examining substantial questions of law that arise from the order of the Company Law Board. The basis on which the appellate court would interfere under section 10F of the Act of 1956 is if the conclusion of the Company Law Board was against law or it arose from consideration of irrelevant material or there was any omission to consider the relevant material.
7. In light of the afore-stated legal position, let us now proceed to determine the merits of the grounds urged by the appellant in this case. The only question of law that arises for determination in this case is as to when resignation tendered by a Director would take effect.
8. In the Companies Act of 1956 there was no provision relating to resignation of t
