Petitioner's Directorship Removal Upheld as Lawful: Company Petition Dismissed

The Tribunal found that the removal of the Petitioner from Directorship was lawful and not oppressive or prejudicial. As a result, the Company Petition was dismissed without costs, and related applications were disposed of.

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Issues Involved:
1. Eligibility of the Petitioner to maintain the Petition under Section 241-242.
2. Legality of the removal of the Petitioner from Directorship.
3. Whether the removal of the Petitioner from Directorship is oppressive or prejudicial under Section 241-242 of the Companies Act.

Issue-wise Detailed Analysis:

1. Eligibility of the Petitioner to Maintain the Petition under Section 241-242:

The Petitioner obtained the consent of 56 shareholders constituting 13.21% of the total number of shareholders of the Company, holding about 20% of the paid-up capital, to file this company petition under Section 241-242 of the Companies Act, 2013. The consenters were aware that their consent was for the purpose of filing a petition before the Tribunal questioning the actions taken by the Respondents. Hence, the consent provided by the shareholders to the Petitioner for filing a petition is sufficient and the same can be accepted. Therefore, the Petitioner is eligible to file a Company Petition under Section 241-242 of the Companies Act, 2013.

2. Legality of the Removal of the Petitioner from Directorship:

Section 169 of the Companies Act, 2013, allows a company to remove a director by ordinary resolution before the expiry of the period of his office after giving him a reasonable opportunity of being heard. The Requisitionists Shareholders convened an Extraordinary General Meeting (EGM) on 3rd March 2020 to remove seven out of twelve existing directors of the Respondent Company. The act of the shareholders in appointing or removing directors from the Board cannot be a subject matter of judicial scrutiny since the right to appoint or remove directors is supreme as a part of corporate democracy. The Tribunal found that the removal of the Petitioner from the Directorship of the Respondent Company was done following all the mandatory requirements in accordance with law.

3. Whether the Removal of the Petitioner from Directorship is Oppressive or Prejudicial:

The Tribunal referred to the decision of the Hon'ble Supreme Court in TATA Consultancy Services Limited Vs. Cyrus Investments Pvt. Ltd. and Ors., which states that the Tribunal cannot grant relief under Section 242 unless the removal was oppressive or prejudicial. Even if the removal of a Director was not in accordance with law or was not justified on facts, the Tribunal cannot grant relief under Section 242 unless the removal was oppressive or prejudicial. The Tribunal found no evidence of oppression or mismanagement in the Company while removing the Petitioner. Therefore, the removal of the Petitioner from the Directorship is not an illegal act and the Petitioner failed to prove any continuing oppressive acts on the part of the Company or its management.

Conclusion:

The Tribunal concluded that the removal of the Petitioner from the Directorship is not an illegal act and does not constitute oppression or mismanagement. The Company Petition No. 16/KOB/2020 is dismissed without costs. Consequently, the Interlocutory Applications IA/91/KOB/2020, IA/126/KOB/2020, IA/127/KOB/2020, IA/128/KOB/2020, and Contempt Petition/06/KOB/2020 pending stand disposed of.

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