2012 (10) TMI 650 - Board - Companies Law

Whether applicant ceased to have been a director of the company alleged that respondents claimed to have convened the meeting of the board of directors on June 9, 2011 and September 29, 2011, though no notice of meeting of June 9, 2011, was ever given to the applicant - petitioner has challenged the validity of the board meeting dated March 31, 2011 - respondents did not deny the receipt of the request letter from the petitioner. There is no response from the respondents to that letter Held that - Not treating the said letter as leave of absence and not responding to the said letter is a negligence on the part of the respondents. Treating the petitioner as vacating the office of director is completely against the principles of natural justice respondent restrained from holding that the applicant vacated the office of director of the company - applicant is deemed not to have vacated the office under section 283(1)(g) of the Companies Act

Summary

Issues:
1. Alleged cessation of directorship under section 283(g) of the Companies Act, 1956.
2. Challenge to the validity of board meetings and notices.
3. Jurisdictional interference by respondents.
4. Interpretation of section 283(1)(g) regarding vacation of office by directors.

Analysis:
1. The petitioner sought to restrain the respondents from contending that the applicant ceased to be a director under section 283(g) of the Companies Act, 1956. The respondents claimed the applicant vacated the office due to continuous absence from board meetings. The petitioner challenged the validity of notices and meetings, alleging mala fide intentions by the respondents.

2. The respondents maintained that the board meetings were held as scheduled, with notices duly served. The petitioner's continuous absence was cited as grounds for vacation of directorship. The High Court upheld the status quo order regarding shareholding patterns but did not grant immunity to the petitioner from legal provisions governing directorial duties.

3. Both parties presented conflicting accounts of meeting notices and the petitioner's absence. The petitioner's request to postpone a meeting was not responded to by the respondents, leading to a dispute over leave of absence. The Board restrained the respondents from declaring the petitioner's vacation of office, emphasizing principles of natural justice.

4. The judgment analyzed section 283(1)(g) concerning the vacation of office by directors due to continuous absence from board meetings. The Board ruled in favor of the petitioner, highlighting the need for proper treatment of leave requests and adherence to natural justice principles in determining directorial status. The application was posted for further proceedings with the main petition.