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2019 (7) TMI 1600 - HC - Indian LawsSuspension of respondent no. 1 (plaintiff) from his post of Secretary of the appellant Association - respondent sought a restraint order - HELD THAT - Section 169 requires that a director of a company be removed only by an ordinary resolution of the company (general body of shareholders) for the specific purpose. When a statute specifically mandates that the director shall be removed by the company, i.e. the shareholders/general body of the company, then the statutory scheme would have to be followed in letter and spirit. Article 5(c) may well be applicable apropos an ordinary Member, but the Secretary (i.e. the Director) of the Association is in a different position, and he can be removed from that post only by the General Body which had appointed him. The underlying principle being that only the appointing authority can be the dismissing/removing authority and not the peers of the Apex Council, who are collectively chosen and entrusted with the administration of the DDCA by its General Body. Members of the Apex Council are equal to each other in terms of their appointment and cannot be removed by a peer. Although the position and functions of the members of the Apex Council are defined in terms of the AOA, nevertheless they being appointed by the General Body can only be removed by the latter, higher authority. There is no answer forthcoming to the query as to whether this issue was examined earlier apropos the exercise undertaken for the amendment of Articles of Association, so as to bring the structure and administration of the appellant in consonance with the administrative structure of BCCI, as proposed by the Justice Lodha Committee Report. What clearly emanates from the above discussion is that only the company i.e. General Body can remove a director, because anything other than that would be in derogation of the statutory provisions. In view of the above, there is no reason to interfere with the impugned order - Petition dismissed.
Issues Involved:
1. Legality of the suspension of the Secretary by the Apex Council of the Association. 2. Authority of the Apex Council versus the General Body in removing a member or director. 3. Applicability of Section 169 of the Companies Act, 2013 versus Section 284 of the Companies Act, 1956. 4. Interpretation of Article 5(c) of the Articles of Association (AOA) of the Association. Detailed Analysis: 1. Legality of the Suspension of the Secretary by the Apex Council: The appeal challenges an order dated 02.02.2019 by the Learned Addl. District Judge, which injuncted the appellant from suspending respondent no. 1 from his post of Secretary of the appellant Association. The appellant had suspended respondent no.1 on 14.08.2018, pending adjudication before the learned Ombudsman regarding alleged indiscipline and misconduct. The Ombudsman found respondent no.1 guilty of actions that were detrimental to the interests of the Association and the game of cricket. 2. Authority of the Apex Council versus the General Body in Removing a Member or Director: The appellant argued that the Apex Council, similar to a Board of Directors, had the power to remove a member under Article 5(c) of the AOA. However, the respondent contended that only the General Body (shareholders) could remove the Secretary, as per Section 169 of the Companies Act, 2013. The court held that the Apex Council cannot usurp the powers of the General Body, which is the appointing authority and, therefore, the removing authority. 3. Applicability of Section 169 of the Companies Act, 2013 versus Section 284 of the Companies Act, 1956: The appellant cited previous judgments under Section 284 of the Companies Act, 1956, to support their position. However, the respondent argued that Section 169 of the 2013 Act, which replaced Section 284, mandates that a director can be removed only by the company (General Body) and not by the Board of Directors. The court agreed with the respondent, noting that Section 169 of the 2013 Act requires removal by ordinary resolution by the General Body, thus overriding any contrary provisions in the AOA. 4. Interpretation of Article 5(c) of the Articles of Association (AOA) of the Association: Article 5(c) of the AOA allows the Apex Council to expel a member for conduct likely to endanger the harmony or interests of the Association. The court, however, held that while this article might apply to ordinary members, it does not extend to the Secretary, who is akin to a director and can only be removed by the General Body. The court emphasized that the statutory scheme under the Companies Act, 2013, must be followed, which requires the General Body to make such decisions. Conclusion: The court dismissed the appeal, affirming that only the General Body of the Association has the authority to remove the Secretary. The court directed that the matter be resolved by placing it before the General Body within four weeks, considering the Ombudsman's findings. The decision underscores the paramountcy of the statutory provisions under the Companies Act, 2013, over any conflicting provisions in the Articles of Association.
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