1993 (11) TMI 182 - HC - Companies Law

Directors - Right of person other than retiring director to stand for directorship, Removal of director

Summary

Issues Involved:
1. Maintainability of the suit in the trial court.
2. Whether the trial court's order was a speaking order.

Issue-wise Detailed Analysis:

Re. Contention No. 1:

The defendants contended that the trial court's order was not a speaking order, asserting that no detailed order was made on September 29, 1993, except the one in the order sheet. The trial court's order sheet stated, "Order on I. A. Nos. 1 to 3: Pronounced in open court," and mentioned a detailed order allowing I. A. Nos. 1 and 2 and rejecting I. A. No. 3. The defendants argued that they were not provided with a certified copy of the detailed order. However, the plaintiff's counsel produced a certified copy of the detailed order during the appeals. The court noted that the defendants did not specifically challenge the trial court's statement about a detailed order in their grounds of appeal. The court emphasized the presumption that statements of fact in judgments and orders are correctly recorded and that the legal requirements have been complied with by those discharging public functions. The court concluded that the trial judge had indeed made a detailed speaking order on September 29, 1993.

Re. Contention No. 2:

The defendants argued that the suit was not maintainable in the trial court and that the plaintiff should have invoked the jurisdiction of the Company Law Board under sections 10 and 10E of the Companies Act. They contended that the plaintiff's grievances related to the removal and election of directors, which are matters specifically provided for under the Act and should be addressed through the forum created by the Act. The court examined whether the right to elect or remove directors is a special right created by the statute or an inherent right of shareholders. It concluded that the right to participate in the election or removal of directors is an inherent right of shareholders and not a special right created by the statute. The court noted that sections 257 and 284 of the Act regulate the exercise of this right but do not provide an exclusive jurisdiction for its enforcement. The court referred to various precedents, including the Supreme Court's decision in Life Insurance Corporation of India v. Escorts Ltd., which affirmed that every shareholder has the right to call an extraordinary general meeting and move resolutions for the removal or appointment of directors. The court concluded that the civil suit filed by the plaintiff to enforce his individual right as a shareholder was maintainable and that the jurisdiction of civil courts was not excluded by the Companies Act.

Conclusion:

The court affirmed the trial court's order, holding that the trial court had made a detailed speaking order and that the civil suit filed by the plaintiff was maintainable. The civil revision petition was dismissed.