Improper Director Removal Notice Invalidated by Company Law Board, Statutory Criteria Must Be Met

The Company Law Board held that the respondents' notice dated 2-4-2010, seeking the removal of a director, was invalid and void as they did not meet the numerical requirements under section 188 of the Companies Act, 1956. The respondents were prohibited from issuing similar notices in the future without meeting statutory criteria. The petitioner's request for exemption from the notice and declaration of its invalidity were granted, rendering the notice for the removal of the director null and void.

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Issues Involved:
1. Validity of the notice dated 2-4-2010 issued by the respondents under sections 188 and 284 of the Companies Act, 1956.
2. Compliance with the numerical requirements under section 188 of the Companies Act, 1956.
3. Allegations of abuse of the process of law by the respondents.
4. Previous legal actions and judgments related to similar notices issued by the respondents.

Detailed Analysis:

1. Validity of the Notice Dated 2-4-2010:
The petitioner-company sought exemption from publication, circulation, or reading out the notice dated 2-4-2010 issued by the respondents at the forthcoming annual general meeting. The petitioner also sought a declaration that the notice does not comply with the numerical requirements under section 188 of the Companies Act, 1956, and is therefore invalid and void. The respondents held only 360 equity shares, representing 0.0001% of the total issued and paid-up share capital, which is below the statutory requirement under section 188.

2. Compliance with Numerical Requirements Under Section 188:
As per section 188 of the Companies Act, 1956, a valid requisition requires members representing not less than one-twentieth of the total voting power or not less than one hundred members holding shares with an aggregate paid-up sum of not less than one lakh rupees. The respondents, holding only 360 equity shares, did not meet these criteria. Therefore, the notice for the removal of Mr. Keki M. Mistry was deemed invalid and void ab initio.

3. Allegations of Abuse of the Process of Law:
The petitioner argued that the respondents had a history of issuing frivolous and vexatious notices, primarily for the removal of directors, including Mr. Deepak S. Parekh, on similar grounds. The respondents' actions were seen as an abuse of the process of law, aimed at securing needless publicity and defaming the petitioner-company. The petitioner-company had previously sought relief from the Company Law Board against such notices, which were found to be baseless and defamatory.

4. Previous Legal Actions and Judgments:
The petitioner-company had filed a criminal complaint against the respondents for cheating, impersonation, forgery, and dishonest intentions. The Bombay High Court and the Metropolitan Magistrate had found prima facie cases against the respondents. Additionally, the respondents had issued several notices under sections 284 and 190 of the Act for the removal of directors, which were dismissed by various courts, including the Gujarat High Court. The Gujarat High Court had specifically directed that the respondents could not issue notices on the same grounds as previous notices.

Conclusion:
The Company Law Board found that the respondents did not meet the numerical requirements under section 188 of the Companies Act, 1956, and their notice dated 2-4-2010 was deemed invalid and void. The respondents were directed not to issue similar notices in the future unless they met the statutory requirements. The petition by the petitioner-company was allowed, and the notice for the removal of Mr. Keki M. Mistry was declared null and void.

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