2021 (7) TMI 1290 - Tri - Companies Law

Validity of resolution passed in EOGM - petitioner was removed as Director, by the said resolution - HELD THAT - The removal of directorship of the Petitioner is inconsistent with the restriction provided under the Articles of Association. Therefore, the Petitioner has made prima facie case for grant of interim stay of resolution passed in EOGM dated 31.05.2021. It is observed that Respondent No.2 has acted ultra vires of the powers conferred under Articles of Association. Therefore, this Bench is of the considered view that the implementation of the Resolutions passed in the board meetings on 12.03.2021, 31.03.2021, 06.05.2021 31.05.2021 have also been consequently stayed pending final disposal of the Company Petition - List this matter on 21.10.2021.

Summary

Issues:
1. Interpretation of clause 26 of the Articles of Association regarding director retirement.
2. Validity of the resolution removing the petitioner as Director.
3. Ultra vires actions of Respondent No.2 under the Articles of Association.

Analysis:
Issue 1: The Petitioner challenged the resolution removing him as Director, citing clause 26 of the Articles of Association which states that the first Directors appointed shall not be liable to retire unless certain conditions are met. The Petitioner argued that the removal was inconsistent with this clause, making a prima facie case for an interim stay of the resolution.

Issue 2: The Tribunal found that Respondent No.2 had acted ultra vires of the powers conferred under the Articles of Association by removing the Petitioner as Director. Consequently, the Tribunal stayed the implementation of the resolutions passed in various board meetings pending final disposal of the Company Petition.

Issue 3: In light of the above findings, the Respondent was directed to file a reply within six weeks, with the Petitioner given the opportunity to file a rejoinder within two weeks thereafter. The matter was listed for further hearing on 21.10.2021 to address the issues raised and provide a platform for both parties to present their arguments effectively.