JUDGMENT

A.M. Ahmadi, CJI. -

This appeal arises from the order dated 8-6-1994/9-6-1994 of the Division Bench of the Bombay High Court rendered in Appeal No. 684 of 1992 against an order dated 17-8-1992 passed by the learned Single Judge making absolute the Notice of Motion No. 1593 of 1992 taken out by the appellant Rama Narang and Respondents 4 and 5, namely, Narang International Hotels Private Limited and Arvind Ghei. The two reliefs granted by the learned Single Judge were to restrain Respondents 1 and 2 from (a) acting upon, implementing, circulating, or taking any steps in furtherance of any decision purported to have been taken at the Board meeting alleged to have been held on 13-7-1992 and from (b) obstructing or interfering with the petitioners functioning as Chairman and Managing Director of the respondent-Company. By the impugned judgment, the Division Bench partly allowed the appeal by setting aside the order of the learned Single Judge in respect of grant of prayer (b) of the motion while keeping the relief in terms of prayer (a) of the notice of motion undisturbed.

2. M/s Narang International Hotels Private Limited is a deemed Public Limited Company under Section 42(a) of the Companies Act engaged in the business of the hoteliering and flight-catering. The members of the Narang family have shareholding in this Company. Rama Narang, the appellant before us is the founder and the largest shareholder of the Company. Respondents 1 and 2 are the sons of the appellant. Respondent 3 Kantilal Sethia and Respondent 5 Arvind Ghei were the Secretary and Director of the Company, respectively.

3. In a general meeting of 25-6-1990, the appellant was appointed the Managing Director of the Company and his wife Mrs Mona Rama Narang was appointed whole-time Additional Director. On 29-6-1990 in an extraordinary general meeting of the Company, the Articles of Association were amended and the appellant was appointed as the Chairman and Director for life of the Company.

4. On 14-11-1990 Respondent 1 Ramesh Narang filed a Company Petition No. 681 of 1990 before the Company Judge in the High Court of Bombay under Sections 397 and 398 of the Companies Act challenging the validity of the Board meeting of 25-6-1990 on the ground that the appellant being convicted for an offence involving moral turpitude could not hold office of the Managing Director in view of the provisions of Section 267 of the Companies Act. That section lays down that no company shall appoint or employ, or continue the appointment or employment of any person as its managing or whole-time Director, who is, or has at any time been convicted by a court of an offence involving moral turpitude. The appellant was tried by the Additional Sessions Judge, Delhi in Case No. 134 of 1985 (State v. Ram Lal Narang) and was convicted on 22-12-1986 for having committed offences punishable under Section 120-B and Section 420 read with Section 114 of the Indian Penal Code. He was sentenced to rigorous imprisonment for three months on the first count and rigorous imprisonment of two and a half years and a fine of Rs 5000 on the second count. On appeal, Criminal Appeal No. 17 of 1987; the High Court of Delhi released the appellant on bail and directed stay of the operation of the impugned order.

5. The High Court of Bombay by an order dated 6-12-1990 restrained the Company for holding any Board meeting or general body meeting. Subsequently, on 5-7-1991, Respondent 1 unconditionally withdrew the Company Petition with the permission of the Company Judge. On 12-7-1991, Sanjay Narang, nephew of the appellant, preferred Petition No. 10 of 1991 before the Company Law Board under Sections 397 and 398 of the Companies Act challenging the appellants appointment as Managing Director of the Company on the same ground as in the Company Petition No. 681 of 1990. During the pendency of the said petition before the Company Law Board, some family settlement was arrived at on 30-1-1992 between the members of t