Special notice for removal of directors is an independent statutory procedure; interim restraints on shareholder action were unjustified.

A special notice for removal of directors under section 284 of the Companies Act, 1956 operates as an independent statutory procedure and is not controlled by section 188. It requires special notice and gives the concerned director a right to be heard, but does not require disclosure of reasons for removal. The notice convening the annual general meeting was not invalid merely because earlier board minutes had not been confirmed, as the Act does not make later confirmation a condition precedent. Findings of mala fides in proxy collection and reliance on alleged contempt in another proceeding were not sustainable at the interlocutory stage, and the interim injunctions restraining implementation of shareholder resolutions were liable to be set aside.

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Issues: (i) whether the appeals by the company were maintainable and the company was an aggrieved party; (ii) whether the notice convening the annual general meeting was illegal for want of confirmation of the earlier board minutes; (iii) whether the special notices for removal of directors were invalid for non-compliance with sections 188 and 190 of the Companies Act, 1956, and whether reasons for removal had to be disclosed; (iv) whether the finding of mala fides in collecting proxies was sustainable; (v) whether alleged contempt in another proceeding barred the appellant from being heard; and (vi) whether the interim injunction orders were liable to be set aside.

Issue (i): whether the appeals by the company were maintainable and the company was an aggrieved party.

Analysis: The company acts through its board and general body, and an order preventing effect being given to resolutions passed by the shareholders directly affects the company's legal rights and management. Orders passed on applications under Order 39, Rules 1 and 2 of the Code of Civil Procedure, 1908, are appealable under Order 43, Rule 1(r) of the Code of Civil Procedure, 1908.

Conclusion: The appeals were maintainable and the company was an aggrieved party.

Issue (ii): whether the notice convening the annual general meeting was illegal for want of confirmation of the earlier board minutes.

Analysis: The Companies Act, 1956 contains no provision requiring confirmation of the minutes of a prior board meeting before the decisions taken therein can be acted upon. Sections 193, 194 and 195 govern recording, evidentiary value and presumptions relating to minutes, and they do not make later confirmation a condition precedent to validity of the earlier decision. The notice of meeting was issued pursuant to the board's decision and the objection based on alleged non-confirmation of minutes was unsustainable.

Conclusion: The notice convening the annual general meeting was not invalid on the ground that the earlier minutes had not been confirmed.

Issue (iii): whether the special notices for removal of directors were invalid for non-compliance with sections 188 and 190 of the Companies Act, 1956, and whether reasons for removal had to be disclosed.

Analysis: Section 284 of the Companies Act, 1956 is a self-contained provision governing removal of directors by ordinary resolution on special notice. Its scheme requires special notice of the proposed resolution and gives the concerned director a right to be heard and to make representations, but it does not incorporate section 188 or require the shareholder giving special notice to satisfy the requisition requirements for circulation of members' resolutions. The statutory framework also does not require the shareholder proposing removal to disclose reasons for the proposal. Publication of the notice in a newspaper with sufficient circulation satisfied the requirement under section 190(2) where individual circulation was not practicable.

Conclusion: The special notices were valid and section 188 did not control a special notice under section 284; no disclosure of reasons was required.

Issue (iv): whether the finding of mala fides in collecting proxies was sustainable.

Analysis: Allegations of mala fides, fraud and bad faith ordinarily require trial and are not safely decided on interlocutory affidavits alone. The material relied upon for the adverse finding did not adequately meet the counter-affidavit denying the allegations, and the inference drawn at the interim stage was not justified on the record.

Conclusion: The finding of mala fides in collecting proxies was not sustainable.

Issue (v): whether alleged contempt in another proceeding barred the appellant from being heard.

Analysis: Any alleged breach of an injunction passed in a different suit had to be pursued in that same cause and before the court that granted it. The alleged contempt arose in a separate proceeding and could not be used to deny the appellant audience in the present appeals.

Conclusion: The appellant was not barred from being heard in these appeals on the basis of the alleged contempt.

Issue (vi): whether the interim injunction orders were liable to be set aside.

Analysis: In light of the legality of the meeting notice and special notices, the absence of a requirement for prior confirmation of minutes, and the unsustainable findings on mala fides and contempt, the foundations for granting temporary injunction were absent. The trial court's orders restoring the position of directors also went beyond the proper interlocutory relief and were inconsistent with the statutory scheme and the shareholders' democratic power to remove directors.

Conclusion: The interim injunction orders were unsustainable and liable to be set aside.

Final Conclusion: The judgment upheld the company's right to proceed with shareholder consideration of removal resolutions and rejected the restraints placed on implementation of the general body's decision.

Ratio Decidendi: A special notice for removal of a director under section 284 of the Companies Act, 1956 is an independent statutory procedure not controlled by section 188, and a court should not grant interim injunction to restrain a shareholders' meeting for such removal or deny hearing on the basis of alleged contempt arising in a different cause.

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