Court denies interim injunction, rules no prima facie case. Plaintiff loses directorship under Companies Act.

The court dismissed the plaintiff's application for an interim injunction, ruling that the plaintiff did not establish a prima facie case and was not entitled to the relief sought. The court found that the plaintiff had automatically vacated his directorship under section 283(1)(g) of the Companies Act for missing three consecutive board meetings without leave. Additionally, the court noted that the plaintiff lacked the authority to nominate directors as he did not hold the required 10% share capital. The decision was made without prejudice to the final merits of the case.

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Issues Involved:
1. Whether the plaintiff continues to be a director of the defendant-company.
2. Whether the plaintiff incurred disqualification u/s 283(1)(g) of the Companies Act.
3. Whether the plaintiff is entitled to an interim injunction.

Summary:

1. Continuation as Director:
The plaintiff sought a declaration that he continues to be a director of the defendant-company and has not incurred any disqualification u/s 283(1)(g) of the Companies Act. The plaintiff also sought a perpetual injunction to restrain the defendant from obstructing him from discharging his duties as a director. The plaintiff argued that he did not receive any written notice regarding the board meetings after October 1989 and thus could not attend them. The defendant contended that the plaintiff and his son deliberately absented themselves from three consecutive board meetings, thereby incurring disqualification under the Companies Act and the company's memorandum and articles of association.

2. Disqualification u/s 283(1)(g):
The court examined whether the plaintiff had incurred disqualification u/s 283(1)(g) for not attending three consecutive board meetings. The plaintiff argued that no written notices were served on him, and he was not given a show-cause notice to explain his absence. The defendant maintained that notices were duly served, and the plaintiff was aware of the meetings. The court held that u/s 283(1)(g), the vacation of office is automatic upon a director's absence from three consecutive meetings without obtaining leave of absence from the board. The court found no requirement for a show-cause notice before deeming the office vacated. The court agreed with the precedent set in Shekhar Mehra v. Kilpest (P.) Ltd., which held that no hearing is required under section 283(1)(g) as the vacation of office is automatic if absence is proved.

3. Interim Injunction:
The plaintiff sought an interim injunction to restrain the defendant from declaring that he had vacated the office of director. The court found no prima facie case in favor of the plaintiff, noting that he did not attend the annual general meeting and remained silent from October 1989 onwards, indicating a lack of interest in the company's affairs. The court also examined article 104B of the memorandum and articles of association, which allows the nomination of directors by those holding not less than 10% of the paid-up equity capital. The court held that the plaintiff alone did not have the authority to nominate directors as he and his associates did not hold the requisite 10% share capital. Consequently, the court dismissed the application for an interim injunction, stating that the plaintiff is not entitled to such relief.

Conclusion:
The court dismissed the plaintiff's application for an interim injunction, holding that the plaintiff did not have a prima facie case and had not demonstrated entitlement to the relief sought. The court's findings were made without prejudice to the final merits of the case, which are yet to be decided.

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