2011 (6) TMI 669 - HC - Companies Law

EGM - prayer that was sought for in the application and considered by the Company Law Board in the impugned order was to restrain holding of the EGM and to prevent Respondents 2 and 3 from removing the appellant from the Board of Directors of Respondent No. 1-Company under section 284(3) of the Companies Act Held that - no exceptional ground is made out and the Company Law Board has observed that convening of EGM and decision taken therein shall be subject to the outcome of the Company Petition. it is necessary to issue directions to the Company Law Board to expedite the decision of the petition. Learned Senior counsel appearing for the appellant submits that appellant has to file rejoinder in the main petition. Appeal disposed of

Summary

Issues:
1. Company Application seeking to restrain removal of petitioner as Director.
2. Allegation of illegal process to remove minority shareholder's rights.
3. Appeal against Company Law Board's order declining interim prayer.
4. Request for interim order to prevent removal from Board of Directors.
5. Discretionary power of Company Law Board in granting interim orders.
6. Direction to expedite decision on the main petition.

Analysis:
The appeal was filed by the petitioner in Company Application No. 107/2011 before the Company Law Board, Chennai Bench, challenging the order dated 11-5-2011 which refused to grant the interim prayer sought by the appellant. The application sought to restrain the respondents from removing the petitioner as a Director in the proposed Extraordinary General Meeting (EGM) under section 284(3) of the Companies Act, alleging an illegal process to remove the minority shareholder's rights. The Company Law Board found that notice of requisite time had been issued for the EGM and declined to grant the interim order, stating that the decision in the EGM would be subject to the outcome of the Company Petition.

The appellant contended that an attempt was made to remove them from the Board of Directors and sought an interim order to prevent this action. The Court noted that it would be slow to interfere with the Company Law Board's discretion in granting or rejecting interim applications unless exceptional grounds were shown. As no exceptional grounds were found, the Company Law Board's decision was upheld, with the observation that the EGM's convening and decision would be subject to the Company Petition's outcome.

Considering the points in dispute, the Court directed the Company Law Board to expedite the decision on the main petition. The appellant was given one week to file a rejoinder, and the Company Law Board was instructed to dispose of the main petition within two months from the date of receipt of the order or production of a certified copy, whichever was earlier. The appeal was disposed of, and a miscellaneous civil application was dismissed as unnecessary in light of the main appeal's disposal.