Director removed from company for misconduct; entitled to financial discussions for interests protection.

The Tribunal dismissed the Company Petition, ruling that the petitioner was not entitled to continue as a Director for life in a Private Limited Company. It was determined that the petitioner received proper notices for meetings where his removal as Director was discussed, and the removal process was conducted in accordance with the law. The Tribunal found that the petitioner did not approach the Tribunal with clean hands due to actions disrupting the Company's operations. Despite the dismissal of the petition, the petitioner was granted special invitee status for financial discussions to safeguard his interests.

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Issues Involved:
1. Entitlement of the petitioner to be continued as Director for life based on the contention that the Company is a quasi-partnership firm.
2. Whether the petitioner was given due notices for meetings which culminated in passing the impugned resolutions dated 11.03.2011 and 05.04.2011.
3. Whether the petitioner approached the Tribunal with clean hands.
4. Whether the removal of the petitioner from the Directorship was illegal.

Issue-wise Detailed Analysis:

1. Entitlement to be Continued as Director for Life:
The petitioner contended that the Company was a quasi-partnership concern and thus, his directorship should be linked with his shareholding. However, the Tribunal noted that Breezy Farms and Resorts Limited was registered as a Private Limited Company under the Companies Act, 1956. As per Article 3 of the Articles of Association, the Company is a Private Limited Company within the meaning of Section 3(1)(iii) of the Companies Act, 1956. Therefore, it cannot be called a quasi-partnership concern. Consequently, the petitioner is not entitled to be continued as a Director for life.

2. Due Notices for Meetings:
The Tribunal examined whether the petitioner was given due notices for the meetings held on 11.03.2011 and 05.04.2011. The Company had issued a notice dated 28.02.2011 for a Board Meeting on 11.03.2011, which included "Any other business with the permission of the Chair" as an agenda item. All Directors, including the petitioner, attended this meeting. During this meeting, a notice dated 08.03.2011 from Respondent No. 5 proposing the removal of the petitioner as Director was discussed. Subsequently, a notice dated 22.03.2011 was issued for an Extraordinary General Meeting (EGM) on 05.04.2011 to consider the petitioner's removal. The petitioner attended both meetings and was aware of the agenda. Therefore, the Tribunal found that the petitioner was given proper notice and the meetings were conducted in accordance with the law.

3. Clean Hands:
The Tribunal assessed whether the petitioner approached the Tribunal with clean hands. It was noted that the petitioner had issued legal notices to prospective buyers of the Company's plots, threatening them with legal consequences due to pending litigation. Additionally, the petitioner had filed an IA No. 90 of 2011 seeking an interim injunction to restrain the respondents from alienating or creating third-party interests in the Company's properties, which was dismissed by the Civil Court. These actions indicated that the petitioner was attempting to disturb the Company's functioning for selfish ends without a legal basis. Therefore, the Tribunal concluded that the petitioner did not approach the Tribunal with clean hands.

4. Legality of Removal from Directorship:
The Tribunal examined whether the removal of the petitioner from the Directorship was illegal. The removal was based on a notice/complaint dated 08.03.2011 from Respondent No. 5 and was discussed in the Board Meeting on 11.03.2011. The EGM held on 05.04.2011 approved the resolution to remove the petitioner with 80% shareholder approval. The Tribunal found that the removal process followed the relevant provisions of the Companies Act, 1956, and the Articles of Association. The petitioner was given proper notice, had the opportunity to respond, and attended the meetings. Therefore, the removal was held to be in order.

Conclusion:
The Tribunal dismissed the Company Petition No. 59 of 2011, finding that the petitioner failed to make out a case for relief. However, considering the petitioner's 20% shareholding and his financial investment in the Company, the Tribunal directed the Company to invite the petitioner as a Special Invitee for all Board Meetings discussing financial implications to protect his interests. No order as to costs was made.

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