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TMI Blog2017 (11) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... to be taken, this way or that, at the meeting to be held on 26th August 2017. The interests of Plaintiff No.1 were not, therefore, in any way prejudiced by the notice dated 8th August 2017, so that the very maintainability of the application for ad interim injunction filed by her was questionable. As such, the notice dated 8th August 2017, in our opinion, was not a notice under Section 100 of the Act at all, and the learned Single Judge has, therefore, clearly fallen in error in regarding as it one. No occasion, therefore, for granting any protection against such notice could be said to have existed. The notice, which was innocuous in terms, did not pose any threat, by itself, to Plaintiff No.1 as would justify ad interim protection from the Court. Nothing really turns on the issue of whether the communication dated 8th July 2017 was a Special Notice or a Requisition, as the decision to convene the EGM would be relatable to sub-clause (1) rather than sub-clause (2) of Section 100 of the Act. We may, however, in passing, note that no specific form or format of a “requisition” is prescribed in the Act, or in any cognate legislation, so that any document issued by the requisite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (hereinafter referred to as Jyoti ), Pradeep Kumar Arya (hereinafter referred to as Pradeep ) and Vijay Kumar Arya (hereinafter referred to as Vijay ). 5. Jyoti was married to Malti Devi. The couple had three sons, namely Jai Kumar Arya (hereinafter referred to as Jai ), Ujjwal Kumar Arya (hereinafter referred to as Ujjwal ) and Gaurav Kumar Arya (hereinafter referred to as Gaurav ). 6. Pradeep was married to Manju Devi, and had only one son, Purushottam Kumar Arya (hereinafter referred to as Purushottam ). 7. Vijay married Chhaya Devi. Their children, if any, have no part to play herein. 8. The relative positions of the above listed members of the PZF family tree, in CS (OS) 285/2017, and in the present appeal, with their respective shareholdings in PZFIPL, may be tabulated thus: In CS (OS) 285/2017 In the present appeal Shareholding Chhaya Devi Plaintiff No. 1 Respondent No. 1 30.4% PZFIPL Plaintiff No. 2 Respondent No. 2 N.A. Rukmini Devi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to as the NCLT ), alleging oppression and mismanagement, of the affairs of the Company, by Plaintiff No. 1. The said petition is still pending before the NCLT, and the issues involved therein do not impact the adjudication of the present appeal in any manner. 13 On 24th April 2017, the Company received a requisition, from its shareholders, for convening of an Extra Ordinary General Meeting (hereinafter referred to as EGM ) on 26th May 2017, with the following proposals: (i) removal of the plaintiff (Chhaya Devi) as Director/Managing Director of the Company, (ii) setting aside a notice, earlier issued, for approval of an agenda item, dated 31st of May 2014, to terminate the directorship of the defendants, and (iii) appointment of Defendant No 1 (Rukmini Devi) as Managing Director of the Company. 14. On receiving the said requisition, the plaintiff (Chhaya Devi) responded, on 25thApril 2017, alleging that the requisition was not in accordance with Section 169, read with Section 115 of the Companies Act, 2013 (hereinafter referred to as the Act ), inasmuch as no Special Notice had been served, by the shareholders, on the Company and, instead, the Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he representation is not sent as aforesaid due to insufficient time or for the company s default, the director may without prejudice to his right to be heard orally require that the representation shall be read out at the meeting: Provided that copy of the representation need not be sent out and the representation need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the Tribunal is satisfied that the rights conferred by this sub-section are being abused to secure needless publicity for defamatory matter; and the Tribunal may order the company s costs on the application to be paid in whole or in part by the director notwithstanding that he is not a party to it. (5) A vacancy created by the removal of a director under this section may, if he had been appointed by the company in general meeting or by the Board, be filled by the appointment of another director in his place at the meeting at which he is removed, provided special notice of the intended appointment has been given under subsection (2). (6) A director so appointed shall hold office till the date up to which his predecessor would ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dinary general meeting of the company. (2) The Board shall, at the requisition made by,- (a) in the case of a company having a share capital, such number of members who hold, on the date of the receipt of the requisition, not less than one-tenth of such of the paid-up share capital of the company as on that date carries the right of voting; (b) in the case of a company not having a share capital, such number of members who have, on the date of receipt of the requisition, not less than one-tenth of the total voting power of all the members having on the said date a right to vote, call an extraordinary general meeting of the company within the period specified in sub-section (4). (3) The requisition made under sub-section (2) shall set out the matters for the consideration of which the meeting is to be called and shall be signed by the requisitionists and sent to the registered office of the company. (4) If the Board does not, within twenty-one days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than forty-five days from the date of receipt of such requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arda Factory (India) Private Ltd; (c) Injunction be passed restraining the company from holding its Extraordinary Meeting on May 26, 2017 or any time thereafter till the disposal of the company petition; (d) Injunction be passed restraining Prabhat Zarda Delhi (India) Private Limited (respondent no 1) from acting in terms of the purported communication/request dated April 24, 2017 or any other notice of like nature; (e) Status quo be passed in respect of the Board of directors of the respondent no 1 i.e. Prabhat Zarda Factory (India) Private Ltd; (f) Declaration that the purported notice dated April 24, 2017 allegedly issued under section 100 of the Companies Act, 2013 is illegal, null and void and not binding upon the company, its shareholders, directors and all concerned; (h) Declaration that the communication dated May 2, 2017 purportedly issued by one Shanker Prasad (respondent no 4) claiming himself to be a director is illegal and bad and has been issued without any authority and is not binding on the company, its board, the shareholders of the company and/or concerned; (i) injunction be passed restraining the company from convening any Extraordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforementioned order, dated 18th May 2017, of the NCLT, was carried further, by way of appeal or any other proceedings, before any forum. It appears, therefore, to have been accepted by all parties. 26. CS (OS) 225/2017 came up for hearing, before a learned Single Judge of this court, on 19th May 2017, along with the application for stay filed therewith. The following order was passed by the learned Single Judge, thereon: CS (OS) 225/2017 IA Nos. 6236/2017 6238/2017: Issue notice to the defendant by speed post as well as one of the approved couriers, returnable on 24.05.2017. Dasti in addition. Dasti notices shall be collected on or before 20.05.2017. The affidavit of service shall be filed prior to the next date of hearing. 27. The plaintiffs proceeded, on 22ndMay 2017, to file yet another suit, i.e. CS (OS) 233/2017, this time against Defendants Nos 2 to 9 (which includes the present appellants), praying for a decree of permanent injunction in favour of the Plaintiffs and against the Defendants restraining them, their agents, servants, representatives and/or anyone acting on their behalf from threatening and/or harming and/or harassing the Plaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said application for 22.05.2017. A copy of the stay application filed by the Plaintiff No 1 in Co P No. 136 of 2014 is annexed and marked as Annexure-P/14. (Emphasis supplied) 29. CS (OS) 233/2017 and IA 6382/2017, filed therein, came up for hearing before a learned Single Judge, of this court, on 23rd May 2017. Significantly, once again, the order did not record any appearance, on the part of the defendants, so that the plaintiffs alone were represented during the hearing. The learned Single Judge who, apparently, was kept innocent regarding the order, dated 18thMay 2017 supra of the NCLT, as well as all proceedings relating to CS (OS) 225/2017, went on to pass the following order, on IA 6382/2017: Present suit is a suit for permanent and mandatory injunction. Plaintiff No 1 is the managing director of plaintiff No 2 which is a company duly incorporated under the Companies Act. Plaintiff No 1has 30.4% shareholding in plaintiff No. 2. Defendant No 1 is the brother-in-law of plaintiff No 1 and the brother of her deceased husband. The grievance of the plaintiff is that the defendants are proposing to hold an Extra-Ordinary General Meeting (EGM) which is schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ek to place reliance on the aforementioned affidavit filed by them, in CS (OS) 233/2017 at 2:19 PM on 23rd of May 2017. 31. It is also relevant to draw attention, here, to the averment, in sub-para w) of the same para 3, that the pendency of CS (OS) 225/2017 was, in fact, brought to the notice of the learned Single Judge on 23rd May 2017, during hearing of IA 6382/2017 in CS (OS) 233/2017. There is, however, not an iota of material to support this submission, which does not find support from the order, dated 23rd May 2017, of the learned Single Judge, either. 32. On 24th May 2017, the plaintiffs condescended to place, on the record of CS (OS) 233/2017, a copy of the order, dated 18th May 2017 supra passed by the NCLT. 33. The above situation resulted in Defendant No 2 (Jyoti, who is Applicant No 4 in the present appeal) moving IA 6537/2017 in CS (OS) 233/2017, under Order XXXIX Rule 4 of the CPC, for vacation of the stay granted by the learned Single Judge on 23rd May 2017. The said application came up before the learned Single Judge on 25th May 2017, on which occasion notice was issued thereon, returnable on 11th July 2017. Simultaneously, the learned Single Judge cancell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, in the following terms: Heard learned senior counsel for the petitioners. These special leave petitions have been filed against an interim order dated 30th May, 2017 passed by the Division Bench of the High Court in FAO (OS) No 179/2017. Learned senior counsel for the petitioners submitted that the observations made by the Division Bench while issuing notice and granting interim order may be prejudicial to the interest of the petitioners and the order passed by the High Court is an ex parte interim order. Learned senior counsel further states that with regard to the subsequent meeting scheduled to be held on 12thJune, 2017, he is taking appropriate steps. It shall be open to the petitioners to take such steps, as may be admissible, in accordance with law since in this case we are not concerned with the meeting which is going to be held on 12thJune, 2017. With the above observation, the specially petitions are dismissed. Pending application, if any, also stands disposed of. (Emphasis supplied) 38. On the basis the liberty granted, by the Supreme Court, in the aforementioned order dated 9th June 2017, the plaintiffs moved the Original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of the plaintiffs, that a decision to remove a Director from the Company had necessarily to be taken at an Annual General Meeting or at an EGM and that, therefore, the impugned notice, dated 2nd June 2017 was illegal. Holding that the plaintiffs had made out a prima facie case in their favour, the learned Vacation Judge granted ex parte ad interim stay of the meeting of the Board of the Company, to be held on 12th June 2017, and further ordered that, if the said meeting had already been held, no effect be given to the decisions taken therein till the next date of hearing. 40. Defendant No. 2 (Jyoti), thereupon, filed IA 7150/2017 (under Order XXXIX Rule 4) and IA 7151/2017 (under Order XXXIX Rules 1 2) in CS (OS) 285/2017. These applications need not, however, detain us as, when they were listed before the learned Single Judge on 4th July 2017, it was submitted, on behalf of Defendants 2 to 10 (which include the present appellants before us), that the Board was proposing to convene an EGM, in terms of Section 100 of the Act, independent of the Resolution passed on 12th June 2017, which stood interdicted by the learned Single Judge. On the submission, the Single Judge noted, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ediate effect. GROUNDS OF REMOVAL The Actions of the director, under proposed removal, are against the companies interest. The company is requested that this special notice be circulated to all the directors and shareholders and auditors of the company and a copy be also served on Mrs Triad Devi, the director under proposed removal, with a request to make further representation, if she desire, in accordance with the provisions of the companies act. Yours faithfully 1. Rukmani Devi 2. Jyoti Kumar Arya 3. Jyoti Kumar Arya HUF 4. Malti Devi 5. Jai Kumar Arya 6. Ujjwal Arya 7. Gaurav Kumar Arya 8. Manju Devi 9. Purushottam Kumar Arya 42. Shankar Prasad, one of the Directors in the Company, also issued a Notice, dated 10thJuly 2017, of the meeting of the Board having been scheduled on 18th July 2017, and calling on Plaintiff No 1 to attend the said meeting. Nothing, however, turns thereon, as the said notice was, subsequently, withdrawn before court on 26th July 2017, with liberty to issue a fresh notice in accordance with law. 43. The plaintiffs (Chhaya Devi and the Company), thereupon, moved IA 7854/2017 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 08.07.2017 and/or calling/sending any notice for convening any Extraordinary General Meeting of Plaintiff No 2 and from attending/convening the meeting of the Board of Directors scheduled for 18.07.2017 and also from giving effect to any resolution passed Board Meeting of Plaintiff No 2 on 18.07.2017, if convened; (ii) Pass and ad interim ex parte injunction against the Defendants restraining them, their agents, servants, representatives and/or anyone acting on their behalf from convening any Board Meeting and/or Extraordinary General Meeting and/or such other meeting of the Plaintiff No 2 without the leave of this Hon ble Court; 46. IA 7854/2017 and IA 7856/2017came up for hearing, before the learned Single Judge, on 17th July 2017, whereupon notice was issued on the said applications, and was accepted by the defendants. Learned counsel appearing for the defendants submitted, to this Court, that, without prejudice to the defendants defence, it had been decided to defer the meeting, scheduled for 18th July 2017, to 28thJuly 2017. The proceedings were, therefore, renotified for 26th of July 2017. 47. On 26th of July 2017, the learned single Judge noted that no venue, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... add paras 12A to 12I. These paras went on to challenge the notice, dated 8thAugust 2017 supra as being in complete violation of the Companies Act, 2013, the Companies (Management and Administration) Rules, 2014 and the Secretarial Standards on Meetings of the Board of Directors and, consequently, incapable of being acted upon. It was also contended that the said notice was against the Articles of Association of the company . The following prayers were also sought to be added, in the plaint: ii) A decree of permanent mandatory injunction against the Defendants restraining them, their agents, servants, representatives and/or anyone acting on their behalf from acting upon the notice dated 08.08.2017, notice dated 08.07.2017 and notice dated 21.08.2017 and/or calling/sending any notice for convening any Extraordinary General Meeting of Plaintiff No 2 and from attending/convening the Meeting of the Board of Directors scheduled for 26.08.2017 and also from giving effect to any resolution passed in the Board Meeting of Plaintiff No 2 on 26.08.2017, if convened; iii) A decree of permanent mandatory injunction against the Defendants restraining them, their agents, servants, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. (ii) The Notice, dated 8 August 2017, was against the Articles of Association of the company . (iii) Section 173(3) of the Act mandatorily required that every Director be given at least 7 days notice before the date of meeting. This condition was also violated, insofar as Plaintiff No 1 was concerned, as the notice had been sent to an e-mail address, of Plaintiff No 1 which, however, was not her registered e-mail address. Such service did not, therefore, amount to valid delivery of the notice. That apart, in the case of delivery through registered post, two additional days were required to be added. (iv) Standard 1.1.1 of the Secretarial Standards on Meetings of the Board of Directors (hereinafter referred to as the Secretarial Standards ) stipulated that the Board meeting could be convened only by the Directors of the Company in consultation with the Chairman and Managing Director thereof. The notice, dated 8thAugust 2017 had, however, been sent by the defendants without consultation with Plaintiff No 1 who was the MD-cum-Chairman of the Company. (v) The basis of the notice dated 8thAugust 2017 was the earlier notice dated 8thJuly 2017 which, however, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) The learned counsel for the defendants himself contended that the letter, dated 8thJuly 2017, was not a requisition. It was not possible, therefore, to understand how the Board exercised power to convene an EGM under Section 100 (1) of the Act, in view of the statutory position, admitted by learned counsel for the defendants, that an EGM could be convened only on a requisition. (vi) Even while convening an EGM on the basis of a requisition of the shareholders, it was necessary for the Board to apply its mind to consider whether the requisition was appropriate and in accordance with law. (vii) The notice dated 8thJuly 2017 was bereft of any reasons or grounds, and contained only a bald averment that Plaintiff No 1 was acting against the company s interests. Communication of the grounds on which she was being proposed to be removed, to Plaintiff No 1, was mandatory, as he was entitled to represent thereagainst. (viii) Curtailment of the statutory rights already enured in favour of Plaintiff No 1, who had been appointed as a whole time Director for a period of 10 years in 2008, required compliance with Section 169 of the Act. In the absence of any reasons, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt, having elected to submit to the jurisdiction of the NCLT, while challenging the notice dated 24th April 2017. Reliance was placed, for this proposition, on the judgement of this Court in H. B. Stockholdings v D.C.M. Shriram Industries Ltd, 163 (2009) DLT 443. (iii) The plaintiffs filed CS (OS) 225/2017 and CS (OS) 233/2017, seeking the same reliefs as had been sought from the NCLT. While doing so, however, the plaintiffs intentionally suppressed the order, dated the 18th of May 2017, passed by the NCLT, from this Court. Moreover, in CS (OS) 233/2017, the plaintiffs misrepresented the facts, by stating that the NCLT had reserved orders on IA 17/KB/2017, for 22nd May 2017. The order, dated 23rd May 2015, in CS (OS) 233/2017was, therefore, obtained by fraud. This was also borne out from the fact that the said order was stayed by the Division Bench of this Court vide its order dated 30th of May 2017 in FAO (OS) 179/2017 and FAO (OS) 180/2017. The SLP, preferred thereagainst, was also dismissed by the Supreme Court or 9th of June 2017. (iv) The learned Single Judge erred in granting ad interim relief, as sought in IA 9618/2017, when IA 9617/2017, for amendment of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eholders [under sub-section (2)]. In the present case, it was an admitted position, as recorded in para 3 of the impugned order, that 6, out of 9 Directors of the Company had proposed the convening of the EGM. As such, the EGM had been called by the Board under Section 100 (1), and not under Section 100 (2), as erroneously held by the learned Single Judge. (ix) The contention, of the respondents (i.e. the plaintiffs), that the issue had become infructuous in view of Section 100 (4) of the Act, which specified that the Special Notice remain valid only for 3 months from the date of its issue and had, therefore, expired on 7th October 2017, was misplaced, in view of the law laid down by the Supreme Court in Shree Chamundi Mopeds v Church of South India Trust Association, AIR 1992 SC 1439 , which holds the quashing of an order results in restoration of the position as it stood on the date of passing of the order thus quashed. 60. Mr Chandhiok highlights the following, as irrefutable evidence of the fact that the plaintiffs have been economical with the truth and have, thereby, disentitled themselves to any relief from a constitutional court: (i) There is no whisper, any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than that before whom CS (OS) 225/2017, was listed. (viii) It was not possible to believe, either, the assertion, in the affidavit filed by Plaintiff No 1, in CS (OS) 233/2017 at 2:19 PM on 23rd May 2017, as also in sub-paras v) and x) of para 3 of CS (OS) 285/2017, that the plaintiffs became aware, of the order dated 18th May 2017, passed by the NCLT, only on 22nd May 2017, when they received a copy thereof. 61. Per contra, Mr. Anil Sapra, learned Senior Counsel appearing on behalf of the plaintiffs (respondents) contends thus: (i) There is no universal principle that, till IA 9617/2017 was allowed, CS (OS) 285/2017 was amended, and the amended plaint taken on record, interim relief, as prayed in IA 9618/2017, could not be granted. While it could, perhaps, be argued that the learned Single Judge ought not to have finally disposed of IA 9618/2017, when IA 9617/2017 was still pending before him, the relief granted by the impugned order could legally have been granted on an ad interim basis, while issuing notice on IA 9618/2017. (ii) Section 169 (2) of the Act required issuance of special notice, under Section 115, of the resolution to remove the Director, before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred power on the NCLT with respect to any specific purpose. No such specific power was conferred, on the NCLT, by Section 169 of the Act. 62. Responding in rejoinder, Mr. Chandhiok submits as under: (i) The issue has not become infructuous as, in computing the period of 3 months specified in Rule 23(1) of the Companies (Management and Administration) Rules, 2014, the period during which the stay, granted by the order, dated 25th August 2017 supra, passed by this Court, continues to operate, would stand excluded. (ii) Section 430 of the Act applies, as the proviso to Section 169 (4) specifically refers to the NCLT. Because recourse, to the NCLT, was also available, to the plaintiff, by virtue of Section 241 (1)(a) of the Act. Reliance was also placed, in this regard, on the words either expressly or impliedly barred , figuring in Section 9 the CPC. (iii) That the plaintiffs were forum shopping was also clear from the fact that, having elected to submit to the jurisdiction of the NCLT, they approached this Court, while seeking the challenge a later notice. (iv) There was no justification for passing the impugned order, as the interim relief, which was finally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cially in view of the rival contentions advanced at the bar before us. These may be enumerated thus: (i) Has the entire controversy become infructuous, in view of Section 100 (4) of the Act or Rule 23 (1) of the Companies (Management and Administration) Rules, 2014 (hereinafter referred to as the 2014 Rules )? (ii) Was the learned Single Judge barred, by Section 430, read with Section 169 (4), of the Act, from passing the impugned order? (iii) Were the plaintiffs estopped, or otherwise barred, from invoking the ordinary jurisdiction of this Court, on account of their having elected to submit to the jurisdiction of the NCLT, while challenging the notice dated 24th of April 2017? (iv) Were the plaintiffs guilty of concealment of facts, so as to disentitle them from any relief of injunction, as claimed by them in IA 9618/2017? (v) Has the learned Single Judge erred in allowing IA 9618/2017, even when notice is yet to be issued on IA 9617/2017? The contention, of MrSapra, that this mistake was only technical, as the relief, which stands granted, by the impugned order, by way of final disposal of IA 9618/2017, could as well have been granted by way of interim re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eading of the notice, dated 8th August 2017, reveals that it was essentially a sequel to the earlier notice dated 10th July 2017 issued by Shankar Prasad.The said notice, dated 10thJuly 2017, issued by Shankar Prasad, was challenged, by Plaintiff No 1 (Chhaya Devi), in CS (OS) 285/2017, on the ground that the notice of convening of the Board meeting could only be issued either by the Company Secretary, or by a Director of the Company. In the circumstances, the notice, dated 10th July 2017, was withdrawn. Vide letter dated 28thJuly 2017, Ajay Kumar, a practising Company Secretary, was requested to convene the Board meeting, pursuant to the requisition, dated 8thJuly 2017, received from the shareholders. Ajay Kumar, however, responded that he was not employed with the Company and could not, therefore, issue the notice for convening of the Board meeting, which would have to be issued by the Directors thereof. It was in these circumstances that the notice, dated 8thAugust 2017 came to be jointly issued, by 6, out of 9 Directors of the Company, for convening of the Board Meeting on 26th August 2017 at 11 AM. The agenda set out for the said Meeting was only to discuss whether to issue no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be sent by members to the company not earlier than three months but at least fourteen days before the date of the meeting at which the resolution is to be moved, exclusive of the day on which the notice is given and the day of the meeting. 67.8 Mr. Chandhiok refutes the submission of Mr. Sapra, essentially by contending that, in view of the interim stay granted by the learned Single Judge on 25th August 2017, which continued from time to time and has been made absolute by the impugned order dated 11th September 2017, if the present appeal were to be allowed, the period from 25th August 2017 till the date when the present appeal is allowed, would merit exclusion while computing the periods specified in Section 100 (4) of the Act, or, for that matter, Rule 23 of the 2014 Rules. Alternatively, he submits, the period stipulated in the said provisions would stand extended by the period during which the interim stay, granted by the learned Single Judge on 25th August 2017, has continued and would continue to remain in operation. He relies, for this proposition, on Shree Chamundi Mopeds (supra). 67.9 We feel that the submission, of Mr Chandhiok, is well-taken, though th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application was rejected by the Additional Small Causes Judge, who, consequently allowed the eviction petition filed by the Church. Revision petition, preferred thereagainst by SCM, was dismissed by the learned Single Judge of the Karnataka High Court on the ground of non deposit, by SCM, of the amount claimed against it. The learned Single Judge observed that the grant of stay, by this Court, on 21st February 1991, did not operate to revive the appeal of SCM before the AAIFR, which stood dismissed on 7th January 1991. 67.15 In these circumstances, two questions were framed by the Supreme Court, of which the second is not relevant for our purposes. The first question framed by the Supreme Court read thus: What is the effect of the order passed by Delhi High Court dated February 21, 1991 staying the operation of the order dated January 7, 1991 passed by the Appellate Authority? Does it mean that after the passing of the said order by the High Court, the proceedings under the Act should be treated as pending and, if so, before which authority? 67.16 On the issue thus framed, the Supreme Court held as under : (i) Section 22 of the SICAordained that winding up proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, of the opinion that the passing of the interim order dated February 21, 1991 by the Delhi High Court staying the operation of the order of the Appellate Authority dated January 7, 1991 and it cannot be said that after February 21, 1991, the said appeal stood revived and was pending before the Appellate Authority. (Emphasis supplied) (iv) As, therefore, no proceedings, under the SICA were pending, it was held that there was no impediment, on the learned Single Judge, in dealing with the winding up petition filed by the Church. 67.17 The question before the Supreme Court, in Shree Chamundi Mopeds (supra) was whether the stay, by the High Court, of the order of the AIIFR dismissing SCM s appeal would result in the proceedings before the AIIFR continuing to be deemed as pending during the currency of the stay order of the High Court The question was answered, in the negative, by the Supreme Court. However, the judgment does contain an observation (underscored hereinabove), to the effect that, if the order of the AIIFR were to be quashed and the matter remanded, the appeal would stand restored and could be said to be pending before the AIIFR after quashing of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being, in force, by the Tribunal or the Appellate Tribunal. 68.2 Parallelly, of course, Section 9 of the CPC postulates that the Courts shall (subject to the provisions herein contained) have jurisdiction to try all sorts of possible nature excepting suits of which the cognizance is either expressly or impliedly barred. 68.3 Clearly, Section 430 bars the Civil Court from entertaining any suit or proceeding, in respect of any matter which the NCLT is empowered to determine by or under this Act or any other law for time being in force . 68.4 Mr. Sapra emphatically submits that words is empowered to determine are applicable only in a case where there is a specific statutory empowerment, in other words, where one or other provisions of the Act expressly empowered the NCLT to exercise a particular jurisdiction. He contends that it is only such jurisdiction, which stands specifically conferred on the NCLT, by some provision of the Act, which has been excluded from the jurisdiction of the Civil Court. He has drawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the exclusion of the jurisdiction of the Civil Courts is not to be readily inferred, but that such exclusion must either be explicitly expressed or clearly implied. It is also well settled that even if jurisdiction is so excluded, the Civil Courts have jurisdiction to examine into cases where the provisions of the Act have not been complied with, or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure. (Emphasis supplied) 68.7 We may also note that U.O.I. v Tarachand Gupta Bros, (1971) 1 SCC 486 , which cited Mask (supra), worded the principle a tad differently (in para 22 of the report): The principle thus is that exclusion of the jurisdiction of the civil courts is not to be readily inferred. Such exclusion, however, is inferred where the statute gives finality to the order of the tribunal on which it confers jurisdiction and provides for adequate remedy to do what the courts would normally do in such a proceeding before it. Even where a statute gives finality, such a provision does not exclude cases where the provisions of the particular statute have not been complied with or the tribunal has not acted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegality collected a suit lies. (6) Questions of the correctness of the assessment apart from its constitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case the scheme of the particular Act must be examined because it is a relevant enquiry. (7) An exclusion of the jurisdiction of the civil court is not readily to be inferred unless the conditions above set down apply. (Emphasis supplied) 68.9 From the above authorities, the primary indicia, which would govern determination of the question of whether the jurisdiction of civil courts is, in any particular case, ousted, or not, would appear to be (i) whether the decision of the tribunal, on which jurisdiction is conferred, is also attributed finality by the statute, and (ii) whether such tribunal can do what the civil court would be able to do and is, therefore, an efficacious alternative to the civil court. Even when these two indicia stand sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication therefrom. The words under the Act would, in that context, signify what is not directly to be found in the statute itself but is conferred or imposed by virtue of powers enabling this to be done; in other words, bye-laws made by a subordinate law-making authority which is empowered to do so by the parent Act. The distinction is thus between what is directly done by the enactment and what is done indirectly by rule-making authorities which are vested with powers in that behalf by the Act. (Emphasis supplied) 68.12 Nearly a hundred years ago, a Division Bench of the High Court of Bombayexpressed the same sentiment, equally felicitously (in Manibhai Govindbhai Patel v The Nadiad City Municipality, AIR 1927 Bom 55 ), thus: In this view, the main question is whether it is a duty imposed under the Act. I think it is obvious that the Legislature in using the expression by or under this Act did not use the word under simply to repeat what would he expressed by the word by. The word under must have been intended to include some duties which would not be covered by the words duty imposed by the Act. In its primary meaning the word under does, I th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany s costs, on an application, moved by the Company or any other aggrieved person, to be borne by the Director of the Company, where the Tribunal is satisfied that the facts disclosed abuse of the rights conferred by Section 169 (4). 68.17 Adverting, now to Section 241 of the Act, clause (a) thereof could, alone, be said to be of relevance. The said clause may, for ready reference, be reproduced as under: 241. Application to Tribunal for relief in cases of oppression, etc. - (1) Any member of a company who complains that (a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; (b) xxxxx may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter. 68.18 The amplitude of the words used in Clause (a) of Section 241(1) of the Act are undoubtedly wide and expansive. They cover all cases, where a complaint that the affairs of a company being conducted in a manner prejudicial to public interest, or in a ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification of any agreement between the company and any person other than those referred to in clause (e); Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned; (g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating the property made or done by or against the company within 3 months before the date of the application under this section, which would, it made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (h) removal of the managing director, manager or any of the directors of the company; (i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilization of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims; (j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause (h); (k) appointmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be, by implication, brought into clause (m). Any attempt to do so may amount to doing violence to the legislative intent. 68.24 We are constrained, therefore, to observe that it is not possible to accept Mr Chandhiok s submission that the reliefs claimed by the plaintiffs in CS (OS) 285/2017 fall, statutorily, within the purview of jurisdiction of the NCLT. 68.25 There is, in fact, no provision, in the Act, whereunder the claim contained in CS (OS) 285/2017, as made by the plaintiffs irrespective of the merit or demerit thereof could have been preferred before the NCLT. No case of exclusion of the jurisdiction of the Civil Court, under Section 430 of the Act or, consequently, under section 9 of the CPC can, therefore, be said to have been made out. 68.26 As it happens, we are not alone in the view we are taking. 68.27 K. Shivshankar Bhat, J., as a learned Single Judge of the Karnataka High Court, was, in Prakash Roadlines Ltd v Vijaya Kumar Narang, (1995) 83 Comp Cas 569, concerned with a claim, legally similar to that of the present plaintiffs, to remove certain directors from the company and appoint a director in their place. As in the present case, it was soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts from interfering with the management of the company, or for allowing Mr Kaushik to act as director, was also sought. An application for interim relief, under Order XXXIX of the CPC, was also filed therewith. The company (who was the revision petitioner before the High Court) raiseda preliminary objection to the effect that the jurisdiction of the civil court, to adjudicate on the matter, stood ousted by Section 9 of the CPC read with Sections 398 and 402 of the Act. These provisions, it may be noted here, were somewhat parallel to Section 241 and 242 (2) of the present Act. Consequent on a detailed discussion, the learned judge held that the civil court had jurisdiction to try the suit. Significantly, in the course of such discussion, reliance was placed on the following aphorism, from the judgement of a Division Bench of the Calcutta High Court in Sarat Chandra Chakravarti v Tarak Chandra Chatterjee, AIR 1924 Cal 282: An injunction may be granted on the application of a director restraining the plaintiffs co-directors from wrongful excluding him from acting as a director; there is nothing excluding the jurisdiction of the court from entertaining such a suit. Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Together they constitute one remedy and, therefore, the doctrine of election does not apply. Even according to Snell's Principles of Equity (31st Edn., p. 119), the doctrine of election of remedies is applicable only when there are two or more co-existent remedies available to the litigants at the time of election which are repugnant and inconsistent. In any event, there is no repugnancy nor inconsistency between the two remedies, therefore, the doctrine of election has no application. (Emphasis supplied) The doctrine of election, therefore, applies only where there exists more than one alternative remedy, and the litigant elects to choose one of them. In view of our finding, hereinabove, that the dispute raised in CS (OS) 285/2017does not appropriately fall within the purview of jurisdiction of the NCLT, the first of these three essential pre-requisites, for the doctrine of election to apply, is absent. Per sequitur, the doctrine does not call for invocation in the present case. 69.2 That apart, in view of our above finding that CS (OS) 285/2017 was competent and maintainable, the plaintiffs, quite obviously, could not be foreclosed from maintaining it mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the company from convening or holding any extra ordinary general or board meeting of the respondent no. 1 company i.e Prabhat Zarda Factory (India) Private Limited, without leave of the Hon ble Tribunal; 70.2 Clearly, therefore, the relief sought, by the plaintiffs, from the NCLT, was not restricted to the notice dated 24th April, 2017 and the consequent meeting to be held on 26th May, 2017, but also encompassed any future EGM, which might be held on the basis of any other notice of like nature till the disposal of the Company Petition . The said Company Petition, i.e. Company Petition No. 136/2014, as well as IA 217/KB/2017, continue to remain pending in the NCLT even as on date. It was, therefore, incumbent on the defendants to disclose, before this Court, in IA 9618/2017, the pendency of IA 217/KB/2017, moved by them before the NCLT, as well the nature of the prayers made in. The suppression, by the defendants, of this vital fact, appears ex facie, to have been deliberate, and we find considerable substance in the grievance voiced by Mr. Chandhiok on this score. 70.3 We are constrained to observe, therefore, that, even on account of their having approached this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CS (OS) 285/2017. Injunction under Order XXXIX Rules 1 and 2, CPC, Mr.Chandhiok points out, could not be granted, of something which was not subject matter of the plaint. 71.2 Per contra, Mr. Sapra, would contend that the CPC does not contain any such absolute prohibition. He submits that it was always open to the learned Single Judge to protect his clients, by way of temporary ad interim injunction, during the pendency of the application for amendment. Else, he submits, the application for amendment would itself possibly be rendered infructuous. In an emergent situation, he submits, the power of the Court to pass appropriate orders in the interests of justice would be available for invocation, and there was no gainsaying this proposition. 71.3 The necessity of grappling with these rival points of view was, we are glad to say, obviated by the graceful acknowledgement, of Mr.Chandhiok, that, de hors his objection premised on Order XXXIX Rules 1 and 2 of the CPC, the power to do complete justice undoubtedly inheres in this Court by virtue of various other provisions in the CPC such as Sections 94, 141 and 151. 71.4 In view of the frank acknowledgement, by Mr. Chandhiok, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viduals of Indian origin. They held 61.6% shares in a foreign company, known as Caparo Group Ltd (hereinafter referred to as Caparo ) which, in turn, held 100% shares in 12 foreign companies and 98% shares in a 13th foreign company. These 13 foreign companies desired to invest in the shares of Escorts Ltd, taking advantage of the Scheme. They designated the Punjab National Bank (PNB) as their authorized dealerbanker. The PNB wrote to the Reserve Bank of India ( RBI ), for permission to open Non-resident External (NRE) accounts, in the name of each of the 13 companies, for the purposes of investment in Escorts Ltd (hereinafter referred to as Escorts ). In the meanwhile, investments commenced, and Caparo started sending remittances. Though this fact was brought to the notice of the RBI, by the PNB, the PNB did not disclose the fact that Swaraj Paul had separately remitted, to it, 1,30,000 for the purpose of opening an NRE account. 73.1 Escorts, by a resolution of its Board of Directors, refused to register the transfer of shares, and wrote, to the RBI, to consider whether the Scheme contemplated circumvention, of the 1% ceiling stipulated therein, by a single foreign company c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al institutions, which had a majority stake holding in Escorts, were aggrieved by the fact that the management of Escorts did not even choose to consult or inform them before filing the writ petition. (ii) As the management of Escorts was disinclined to withdraw the writ petition, the LIC felt that it had no option but to seek removal of the non-executive Directors and have a new Board, to reconsider the decision. (iii) The members of the Company, in the EGM, and the Directors, were comparable to the legislative and executive organs of a parliamentary democracy, in which legislative sovereignty rested with the Parliament whereas administration was left to the executive government, subject to a measure of control by the Parliament through its power to force a change of government. Another view was that it was more akin to the division of powers between the Federal and State Legislature under the Federal Constitution. (iv) As it would be impracticable, for day-to-day administration of the Company, to be undertaken by the EGM, the modern practice was to confirm, on the Directors, the right to exercise all the company s powers except those which, by law, were expressly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut practically in haecverba to Section 169 the Act. While it is true that the words after giving him a reasonable opportunity of being heard , which figure in Section 169 (1) of the present Act, were absent in Section 284 (1) of the Companies Act, 1956, the substantive provision permitting such hearing, i.e. sub-section (3), was identical in the erstwhile Section 284 and the present Section 169, and reads thus: (3) On receipt of notice of a resolution to remove a director under this section, the company shall forthwith send a copy thereof to the Director concerned, and the director, whether or not is a member of the company, shall be entitled to be heard on the resolution at the meeting. In that view of the matter, it is obvious that the opportunity of hearing referred to in sub-section (1) of Section 169 is not an opportunity sui generis, distinct and different from the opportunity of hearing referred to in sub-section (3) of the same Section. The reasonable opportunity of being heard contemplated by sub-section (1) of Section 169 is only required to be afforded prior to removal of the director concerned. Such opportunity is also contemplated by sub-section (3). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restrain the holding of the EGM, for the said purpose. (iii) The notice, dated 8th August 2017, was not required to disclose the reasons for the proposed resolution to remove Plaintiff No 1 from directorship of the Company. (iv) All that was required was that the management had to disclose, in an explanatory note, all material facts relating to the resolution coming up before the EGM, to enable the shareholders to form a judgement on the business before them. The shareholders were not required to disclose the said reasons in advance. (v) The said reasons were not subject to judicial review. 73.10 A case, involving a dispute facially similar to that with which we are seized, is to be found in S. Varadarajan v Venkateswara Solvent Extraction (P) Ltd, (1994) 80 Com Cas 693 (Mad), decided by A.R. Lakshmanan, J. (as he then was), sitting singly in the Madras High Court. The petitioner, in that case, moved an application seeking an injunction restraining the second respondent from convening the EGM. The High Court decided the case after a thorough appreciation of Sections 169, 173 and 284 of the Companies Act, 1956, which correspond to Sections 115, 100 and 169 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notice dated March 28, 1992, and the said meeting was convened on April 23, 1992, at 4 p.m. at No. 1, South Street, Annavasal, Pudukkottai. It is significant to notice that the aforesaid notice dated March 28, 1992, clearly sets out the business proposed to be transacted at the extraordinary general meeting convened on April 23, 1992. Hence, the notice dated March 28, 1992, has been issued in accordance with sub-section (6) of section 169. The meeting was convened on April 23, 1992, which is well within the period of three months from February 8, 1992, that is the date of deposit of requisition. 18. xxxxxxxxx 19. Thus it is clear that the obligation to annex an explanatory statement to the notice of the meeting is only on the company when it calls for a meeting to transact special business. When a requisitionist calls for an extraordinary general meeting under section 169, there is no obligation on the requisitionist to annex an explanatory statements to the notice of the meeting. There is in my view no warrant for imposing such an obligation on the requisitionists. Therefore, I am of the view that there is no merit in the contention of Mr. A. K. Mylsamy, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be convened for consideration of the proposal to remove Plaintiff No 1. It may be that the inevitable outcome of such a meeting would be that a decision would be taken to convene the EGM for the said purpose; that, however, cannot invalidate the notice calling for a meeting of the Board for deciding on convening of the EGM. Due process as its own ebb and flow, and judicial interdiction midstream is to be eschewed, save where considerations of irreparable prejudice and the like mandate otherwise. 74.2 What Section 169 guarantees to the Director, who is on the threshold of removal, is a reasonable opportunity of being heard . Unquestionably, this opportunity connotes, and denotes, a right which is equally valuable and inviolable. It, however, denotes only so much, and no more. The words reasonable opportunity of being heard have been explained, by the Supreme Court, thus, in Fedo (P) Ltd v S. N. Bilgrami, AIR 1960 SC 415: The requirement that a reasonable opportunity of being heard must be given has two elements. The first is that an opportunity to be heard must be given; the second is that this opportunity must be reasonable. Both these matters are just conceivable an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re unable to subscribe to the view, expressed by the Kerala High Court in Queens Kuries (supra), that the reasons for the proposal to remove the director from the Company had necessarily to be spelt out in the Special Notice issued under Section 115 of the Act. In this context, reference may usefully be made to a judgement of a learned Single Judge of the High Court of Karnataka in Sri B. G. Somayaji v Karnataka Bank Ltd, AIR 1995 Kant 344, which was carried in appeal to the Supreme Court. In that case, the Karnataka bank Ltd (hereinafter referred to as the Bank ), by notice dated 27th January 1995, convened an EGM, scheduled for 2nd March 1995. The appellants before the High Court (who were two of the Directors of the Bank) moved the trial court on the ground, inter alia, that the convening of the said meeting had to be accompanied by an explanatory statement, as provided in Section 173 of the Companies Act, 1956 (corresponding to Section 100 of the present Act). As in the present case, the contention, of the said aggrieved Directors, was that a very cryptic explanatory statement has been annexed to the notice which states that the other directors have no interest in the item of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and against the respondents. 75. Issue No. (viii) - Whether the notice, dated 8th August 2017 was issued under sub Section (1) or sub-Section (2) of Section 100 of the Act? Was the learned Single Judge wrong in treating the same having been issued under sub-Section (2) thereof? 75.1 Sub-section (1) of Section 100 confers absolute power on the Board to call an EGM, whenever it deems fit. Sub-section (2) deals with a specific situation in which the Board is in receipt of a requisition made by the members, of sufficient strength as stipulated therein. It requires the Board, on receipt of such requisition, to necessarily call an EGM of the Company, within 21 days of receipt of such requisition, to be convened not later than 45 days from the date of such receipt. 75.2 The notice, dated 8th August 2017, issued by six out of nine directors of the Company, states that the company was in receipt of a requisition, dated 8th July 2017, from the share holders of the company, seeking removal of Plaintiff No.1 from her office as Director thereof. It is apparent, at first glance, that the notice, dated 8th August 2017, is neither relatable to subsection (1) nor to sub-Section (2) of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or granting any protection against such notice could be said to have existed. The notice, which was innocuous in terms, did not pose any threat, by itself, to Plaintiff No.1 as would justify ad interim protection from the Court. 76. Issue No. (ix)- Whether the notice dated 8th August 2017 was violative of Section 179 (1) of the Act, read with the Articles of Association of the company? 76.1 In view of our opinion, expressed above, that the notice dated 8th August 2017 was not, in fact, a notice under Section 100 of the Act at all, no question of any infraction, in issuance of such notice, of Section 179 (1) of the Act, could be said to exist. No proscription, against issuance of such notice, is to be found in the Act or any cognate legislation, plenary or subordinate. It cannot, therefore, be said that the notice was illegal in any manner. 77. Issue No. (x)- Whether the notice, dated 8th July, 2017, was a requisition for convening of an EGM and whether the subsequent notice dated 8th August 2017 erred in treating as one? 77.1 Inasmuch as the notice, dated 8th August 2017, was itself only a notice for fixing a meeting of the Board of the Company, to decide whether an EGM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. We may, however, in passing, note that no specific form or format of a requisition is prescribed in the Act, or in any cognate legislation, so that any document issued by the requisite member of Directors as specified in Section 100(2) of the Act (which calls for convening of an EGM) would be eligible to be styled as a requisition . It does not appear to us, that the expression requisition is a term of art, as used in Section 100 of the Act. 78. Issue No (xi) - Whether the learned Single Judge was unjustified in granting interim relief, as granted by the impugned order in view of the earlier order dated 25th August 2017, already passed by him? In view of our finding hereinabove that the impugned order is unsustainable as it was not open to the learned Single Judge to injunct or interdict, even at any interlocutory stage, the notice dated 8th August 2017 or the decision to be taken at the meeting, dated 26th August 2017, to be convened pursuant thereto, this issue does not survive for consideration. 79. Conclusion In view of the above discussion, we allow the present appeal, and set aside the impugned order, dated 11th September 2013, of the learned Single ..... X X X X Extracts X X X X X X X X Extracts X X X X
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