Case Law - CHAPTER 19 – GENERAL MEETINGS

CHAPTER 19 – GENERAL MEETINGS

07.11.2017

Jai Kumar Arya (Petitioner) vs. Chhaya Devi (Respondent)

Delhi High Court

Facts of the case

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.”

On receiving the said requisition, the plaintiff (Chhaya Devi) responded, on 25th April 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”), in as much as no Special

Notice had been served, by the shareholders, on the Company and, instead, the Company had

simply been requested to serve notice under Section 169.

This Appeal is against order of restraining other directors from acting upon notice and for

convening Board meeting for removal of managing director.

Notice only called for a meeting of Board to decide whether an EGM should be convened or

not--Where managing director filed an interlocutory application for restraining other directors

of the company from acting upon notice dated 8-8-2017 for convening board meeting on 26-

8-2017 for her removal, and the same was allowed by Single Judge on the ground that there

was no proper requisition of shareholders for holding EGM for removal of the MD, but the

said notice did not itself convene an EGM, it only called for a meeting of the Board to de-

cide whether an EGM should be convened or not, therefore, the impugned order was to be

set aside and the notice dated 8-8-2017 would stand revived.

The court observed that 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".

Judgement

The court held that there was no obligation to disclose the reasons for removing a person

from the directorship of the company prior to the EGM where such proposal was to be con-

sidered. Further that, the notice dated 8-8-2017 was itself only a notice for fixing a meeting

of the Board of the company. It did not itself convene an EGM, but only calls for a meeting

of the Board to decide whether an EGM should be convened or not.

Therefore, question of requisition of the shareholders for holding the EGM would not arise.

Further that, in the proposed Board meeting, no decision of removal of the MD from the

company was to be taken. Hence, the impugned order was to be set aside and the notice

dated 8-8-2017 would stand revived.