Tribunal orders re-election, AGM, and EC meeting; Justice Sathyanarayana to oversee. Compensation to be paid.

The petition was allowed, and the Tribunal directed that all four regions nominate their members for the Executive Committee afresh within 7 days. An Annual General Meeting (AGM) of FHRAI is to be held within 30 days, followed by an EC meeting to elect the President from the Eastern Region for the term 2022-2023. The Tribunal ordered Hon'ble Justice Retd. M. Sathyanarayana to oversee the AGM and EC meeting, assisted by designated Advocates. Compensation is to be paid to the overseers by FHRAI.

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Issues Involved:
1. Maintainability of the petition under Section 244(1)(b) of the Companies Act, 2013.
2. Interpretation and implementation of Article 52 of the Articles of Association (AOA) of FHRAI regarding the election of the President.
3. Conduct and validity of the Executive Committee (EC) meeting held on 30.10.2018.
4. Allegations of oppression, prejudice, and mismanagement by the Respondents.

Detailed Analysis:

1. Maintainability of the Petition:
The Respondents argued that the petition is not maintainable as the Petitioners do not meet the qualification criteria stipulated in Section 244(1)(b) of the Companies Act, 2013, which requires one-fifth of the total membership. The Petitioners, representing the interests of several hundred hotels and restaurants in East India, sought a waiver of this requirement. The Tribunal referred to the judgment in Cyrus Investments Pvt. Ltd. & Anr. vs. Tata Sons Ltd., which outlines factors for granting a waiver. The Tribunal found that the Petitioners made a fair case for waiver, considering the interest of numerous hotels and restaurants in the Eastern Region and previous litigation indicating a long-standing conflict between the Eastern Region and other regions.

2. Interpretation and Implementation of Article 52 of AOA:
Article 52 of the AOA states that the President shall be elected by the Members of the Executive Committee region-wise, by rotation, for one term. The Petitioners contended that the Eastern Region had unanimously nominated Petitioner No. 11 as their Presidential candidate, and the EC cannot replace this nomination with their own choice. The Respondents argued that the President should be selected by the EC and not solely by the members of the region. The Tribunal found that the established practice was for the region whose turn it was to nominate the President. The deviation from this practice in the 2018-2019 term was unjustified and amounted to oppression.

3. Conduct and Validity of the EC Meeting on 30.10.2018:
The Petitioners argued that the meeting held on 30.10.2018 was void ab initio as it was chaired by Mr. Garish Oberoi, who had retired. The Tribunal noted that the outgoing President and members of other regions arbitrarily proposed names of unwilling members from the Eastern Region, which was against the established practice and Article 52 of the AOA. The Tribunal declared the EC meeting held on 30.10.2018 as null and void and contrary to the AOA.

4. Allegations of Oppression, Prejudice, and Mismanagement:
The Petitioners alleged that the Respondents' actions, including proposing random names for the President and attempting to amend the AOA, were oppressive and prejudicial. The Tribunal found that the conduct of the Respondents, including the arbitrary nomination process and the election of office bearers in the absence of a newly appointed President, amounted to oppression and mismanagement. The Tribunal directed the Ministry of Corporate Affairs to look into the affairs of FHRAI.

Order:
The Tribunal directed that:
1. All four regions nominate their members for the EC afresh within 7 days.
2. The AGM of FHRAI be held within 30 days, followed by an EC meeting to elect the President from the Eastern Region.
3. The newly constituted EC hold the election of the President for the term 2022-2023, as per Article 52 of the AOA.
4. Hon'ble Justice Retd. M. Sathyanarayana oversee the AGM and EC meeting, assisted by Mr. Piyush Singh and Mr. B. Karunakaran, Advocates.
5. Compensation be paid to the appointed overseers by FHRAI.

The petition was allowed, and all connected applications were disposed of accordingly.

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