Special notice for removal of a director need not give detailed reasons; disclosure is required at the meeting stage.

An interim restraint against steps for removal of a director was held unsustainable because the statutory period was not treated as exhausted during the stay, the civil suit was not barred by Section 430 of the Companies Act, 2013, and prior resort to the NCLT did not trigger election since that forum could not grant the relevant relief. The court also held that suppression of prior NCLT proceedings disentitled the plaintiffs to equitable injunction. A special notice for removal need not state detailed reasons; disclosure is required at the meeting stage through the explanatory statement. A notice calling the board to consider whether to convene an EGM was not a Section 100 notice and did not infringe Section 179(1). The restraint was set aside.

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Issues: (i) Whether the controversy had become infructuous under the statutory time limits governing special notice and requisition. (ii) Whether the civil court's jurisdiction was barred by Section 430 of the Companies Act, 2013. (iii) Whether the plaintiffs were barred by election after approaching the NCLT. (iv) Whether suppression of prior proceedings disentitled the plaintiffs to injunctive relief. (v) Whether the special notice dated 8 July 2017 was invalid for want of detailed reasons and at what stage the reasons for removal of a director had to be disclosed. (vi) Whether the notice dated 8 August 2017 was a notice under Section 100 and whether it offended Section 179(1) of the Companies Act, 2013. (vii) Whether the earlier interim order justified the final restraint granted by the learned Single Judge.

Issue (i): Whether the controversy had become infructuous under the statutory time limits governing special notice and requisition.

Analysis: The validity of the impugned restraint had to be tested on the footing that the appeal, if successful, would restore the position as it existed before the interim restraint. An interim stay does not wipe out the order under challenge or render the underlying controversy extinct. The statutory period could not be treated as having run out merely because the proceedings remained stayed during the pendency of the appeal.

Conclusion: The controversy had not become infructuous.

Issue (ii): Whether the civil court's jurisdiction was barred by Section 430 of the Companies Act, 2013.

Analysis: The bar under Section 430 applies only where the Tribunal is empowered to determine the matter under the Act. The dispute before the Court concerned the legality of steps taken toward convening a meeting to consider removal of a director, but the Act did not confer on the NCLT power to grant the reliefs sought in the suit. The limited reference to the Tribunal in the proviso to Section 169(4) did not create a general adjudicatory power over such disputes, and the oppression and mismanagement provisions were also inapplicable to the pleaded cause.

Conclusion: The civil suit was not barred by Section 430.

Issue (iii): Whether the plaintiffs were barred by election after approaching the NCLT.

Analysis: The doctrine of election requires the existence of two co-existent and inconsistent remedies. Since the dispute was not one for which the NCLT afforded the relevant relief, the foundational requirement for the doctrine was absent. The prior resort to the NCLT in connected proceedings did not foreclose recourse to the civil court for a distinct and competent remedy.

Conclusion: The plaintiffs were not barred by election.

Issue (iv): Whether suppression of prior proceedings disentitled the plaintiffs to injunctive relief.

Analysis: The prior NCLT proceedings and the reliefs sought there were material facts. Their omission from the proceedings before the civil court amounted to suppression of vital facts. A party seeking discretionary equitable relief must approach the court with full candour, and concealment of such material circumstances defeats entitlement to injunction.

Conclusion: The plaintiffs were disentitled to equitable relief on account of suppression.

Issue (v): Whether the special notice dated 8 July 2017 was invalid for want of detailed reasons and at what stage the reasons for removal of a director had to be disclosed.

Analysis: The governing law permitted removal of a director by ordinary resolution after special notice and an opportunity of being heard. The special notice itself was not required to set out the detailed grounds of removal. The shareholder's right was to move the resolution, while the management's explanatory statement at the meeting was the stage at which material facts were to be disclosed to enable consideration of the proposal. The notice could therefore not be invalidated merely because it did not spell out particulars of the alleged conduct.

Conclusion: The special notice was not invalid for want of detailed reasons, and disclosure was required at the meeting stage, not in the special notice.

Issue (vi): Whether the notice dated 8 August 2017 was a notice under Section 100 and whether it offended Section 179(1) of the Companies Act, 2013.

Analysis: The notice dated 8 August 2017 did not itself convene an extraordinary general meeting. It merely called a meeting of the Board to decide whether an extraordinary general meeting should be convened. On its true character, it was not a notice under Section 100 at all, and consequently no infraction of Section 179(1) arose from its issuance.

Conclusion: The notice dated 8 August 2017 was not a Section 100 notice and did not violate Section 179(1).

Issue (vii): Whether the earlier interim order justified the final restraint granted by the learned Single Judge.

Analysis: Once the notice dated 8 August 2017 was found to be innocuous and the Board was competent to decide whether to convene an EGM, there was no basis to make the earlier ad interim protection absolute. The final restraint impermissibly interdicted a lawful corporate process at a premature stage.

Conclusion: The final restraint was not justified.

Final Conclusion: The appeal succeeded and the restraint order was set aside, restoring the parties to the position where the Board could consider whether to convene an EGM for the proposed removal of the director, without the Court expressing any view on the merits of that proposal.

Ratio Decidendi: A special notice for removal of a director need not disclose detailed reasons; those reasons are to be placed at the stage of the meeting through the explanatory statement, and a court cannot restrain shareholders or directors from taking lawful steps to initiate that process unless the statute clearly confers such power on the Tribunal or the civil court's jurisdiction is otherwise expressly barred.

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