2015 (3) TMI 1298 - HC - Companies Law

Exclusive employment in a company - petitioner no.2 s application to continue to hold an office or a place of profit at an increased remuneration for a period of 5 years with effect from 01.10.2013 to 30.09.2018 was rejected - Rejection is based on the fact that the petitioner no.2 was working as a Director in other companies, and thus, was not in exclusive employment of petitioner no.1 company - Mr. Kapur s contention that neither petitioner no.2 was getting remuneration from the companies referred to in Annexure VII nor, was he spending any time qua management of the said companies. Held that - What would have to be ascertained by the concerned authority is as to whether the submissions made hereinabove, on behalf of petitioner no.2, were grounded in facts. The impugned order, as indicated above, was passed without hearing the petitioners, and therefore, the aforementioned aspect as well as other aspects raised in the petition were obviously not noticed by the concerned officer, who passed the impugned order. The consequences of assertions made in Annexure VII of the application are not noticed in the impugned order, leading to a very unsatisfactory state of affairs. This error could have occurred, possibly, for two reasons. First, prolixity of the record. Second, on account of failure of the respondents to seek participation of the petitioners in the proceedings. Therefore, the impugned order is set aside having regard to the peculiar facts and circumstances of this case. The respondents will, thus, issue a notice to the petitioners fixing a date on which they can present themselves for hearing in the matter.

Summary

Issues:
Challenge to rejection of application for holding an office at increased remuneration based on Director's Relatives (Office or Place of Profit) Rules, 2011 without a hearing.

Analysis:
The judgment pertains to a writ petition challenging the rejection of an application to continue holding an office at increased remuneration for five years. The rejection was based on the petitioner not being in exclusive employment of the company due to working as a Director in other companies, which was deemed a statutory requirement under the Director's Relatives (Office or Place of Profit) Rules, 2011. The court noted the absence of a hearing before passing the impugned order, which was acknowledged by the respondents. The petitioner's counsel argued that the petitioner had previously been granted permission on the same grounds in 2005 and 2008 and contended that the petitioner was not receiving remuneration from the referenced companies nor involved in their management, as indicated in the application.

The court emphasized the need to verify the submissions made by the petitioner regarding their employment status, which were not considered due to the lack of a hearing. The court attributed the error in the impugned order to the failure to notice crucial aspects raised in the petition, possibly due to the extensive record or the failure to involve the petitioners in the proceedings. Consequently, the court set aside the impugned order considering the peculiar facts and circumstances of the case, directing the respondents to issue a notice to the petitioners for a hearing.

The judgment concluded by disposing of the petition and the pending application, emphasizing that no opinion on the merits of the case was expressed. The previously scheduled date for the matter was canceled, and the court ordered the judgment to be issued promptly to the concerned parties.