Mandatory board notice, conflict-free participation, and compliant share transfers can sustain oppression and mismanagement findings.

Board resolutions are liable to be invalidated where a meeting is held without notice to a director, interested directors participate in decisions affecting their own interests, and share transfers do not comply with statutory transfer formalities. Those repeated breaches can justify relief for oppression and mismanagement, and interim prima facie observations do not bind the final merits determination. The challenge to the resolutions therefore failed, while the separate direction to prosecute the appellant was set aside.

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Issues: Whether the impugned board resolutions were invalid for want of notice to a director, participation of interested directors, and non-compliance with transfer requirements; whether the conduct amounted to oppression and mismanagement warranting interference; and whether the direction to prosecute the appellant could stand.

Analysis: The Board meetings were held without notice to one of the directors, attracting the mandatory requirement of notice to every director. The resolutions were also examined on the footing that interested directors had participated in decisions concerning allotment and transfer of shares in which they had a direct interest, offending the rule against participation by an interested director. The transfer of shares was further found to suffer from non-compliance with the statutory requirements governing registration of share transfers. In the overall factual matrix, these repeated breaches were treated as sufficient to sustain the finding of oppression and mismanagement and to uphold the invalidation of the impugned resolutions. The Court also declined to treat earlier prima facie observations in interim proceedings as binding on the merits. However, the direction to prosecute the appellant was separately considered.

Conclusion: The challenge to the impugned resolutions failed and the High Court's interference was left undisturbed, but the direction to prosecute the appellant was set aside.

Final Conclusion: The appeals did not result in interference with the substantive findings on invalidity of the resolutions and oppression, though the criminal direction was deleted.

Ratio Decidendi: A board resolution passed in breach of mandatory notice requirements, with participation of interested directors in matters affecting their own interest, and in violation of statutory transfer formalities, is liable to be invalidated and may support relief for oppression and mismanagement.

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