TaxTMI 
TaxTMI 
2022 (1) TMI 463
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....Director Board of Kerala Chamber of Commerce and Industry, the R1 Company U/S. 242(2)(h) of Companies Act 2013. ii. Order declaring the office of director of Mr. Shibu Prabhakaran (R10), as vacant U/S. 167(1)(c) & (d) and of Mr. Mathew George-R4 & Ahamed Iqbal-R15, U/S. 283(1)(h) of the Act 1956 and order prosecution against them U/S. 167(2), of Companies Act 2013 for continuing as Director even after knowing the office of director held by them is vacant. iii. Order declaring the continuation of MS Nimmi John R-11 as Director of R1 Company after having resigned on 26-06-2018 as illegal U/S. 268 and remove her as Director U/S. 242(2)(h) and initiate prosecution against her U/S. 447 & 448 of Companies Act 2013 for giving false affidavits and statement as Director of R1 Company before this Learned Tribunal. iv. Order to keep the Director Board of the KCCI in abeyance or suspended and Supersede the Board of Directors of the R1 Company by the NCLT appointed Chairman until the 61st, 62nd & 63rd AGM are held and new Board assume charge in office. 2. The applicants submitted that presently the conduct of the management of the Company is all the more prejudicia....
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....that a casual vacancy is said to have occurred in the Board when the office of a Director appointed by the shareholders is vacated before the expiry of his term. Although the Companies Act, 2013 does not define what constitutes this vacancy, it would mean vacancy arising due to death of the Director, his resignation, or insolvency and not by efflux of time or retirement by rotation. Failure of an elected Director to accept the office may also constitute a casual vacancy. However, no such vacancies were existing in the Board of Directors of R1 Company when R7, R8 & R9 were appointed by the Board as Directors of R1 Company on 13-12-2107. Hence these appointments were ultra-vires to the Articles of Association of the Company and therefore, illegal. In this regard, they referred to the decision of Srinivasan M.K. v. Subrahmanya Aiyer {W.S.} (1932) 2 Comp Case 147. 6. The learned counsel for the applicants submitted that the ROC had conducted a hearing as per judgment of Hon'ble High Court of Kerala dated 01.08.2019 in WP (C) No. 18865 of 2019 on the issue of illegal appointment of Directors by the Board and passed an Order No. ROC/4271/2019-20 dated 26.11.2019 and submitted befo....
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....so heard on the issue of vacation of office of director by Mr. Shibu Prabhakaran and vide Order No. ROC//4271/2019-20, dated 26-11-2019 stated that he has initiated enquiry against Company and already recommended in violation of Section 167 of Companies Act 2013 and the said enquiry report is pending for approval. 10. It is also stated that the company is presently controlled by R4, R7-R18. The R8 is acting as Chairman and R9 & R10 as Vice Chairmen and R11-Nimmy John Chakola is as Finance Director. Thus all the four Officer Directors are not competent to be in the respective offices. R14, R16, R17 & R18 are Directors passive to the irregularities going on in the R1 without discharging their duties as Directors as envisaged U/S. 166 of Companies Act 2013. Thus they owe collective responsibility to all the mismanagement and oppression continuously going on in the Company. The term of the present Board expired on 30.09.2018 and the ROC had refused to allow extension of AGM. 11. The Respondents 1, 7, 10 & 11 in their reply submitted that the Company Petition was initially filed by the Applicants/Petitioners for 16 different reliefs. The 5th relief sought is removal of Respondents....
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....1956. It is also stated that R11 tendered her resignation, and the same was placed before the Board of Directors. The learned counsel argued that the resignation or relinquishment of one's own right to an office, may take different forms or assume a unilateral or bilateral character, depending on nature and the circumstances. After a detailed discussion with R11, she withdrew her resignation and the Board of Directors accordingly rejected the resignation and hence R11 continued as a duly authorized office bearer as per Item No. 6 in Board Meeting dated 13th September 2018. The learned counsel referred to the decision of Supreme Court in Union of India V. Gopal Chandra Mishra, AIR (1978) SC 694. 16. Their final submission is that every effort legally possible has been made to conduct the AGM of the 1st Respondent Company. However, this could not materialize due to non-cooperation from the applicants. 17. The respondents 8, 9, 12, 14, 15, 17 & 18 in their counter stated that this application is barred by res-judicata, because for the very same relief these applicants have approached the Munsiff Courts Ernakulam in O.S. 774/2014 and it was dismissed by the Munsiff court and ....
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....r the respondents argued that after hearing these respondents in a detailed manner the Honourable NCLAT granted a stay against the appointment of Retired Justice K. Narayana kurupu in conducting the AGM. It is further submitted that the petitioner suggested retired justice PS Antony as Chairman of KCCI, who after his appointment resigned due to the personal interference of the petitioners. It is their contention that NCLT appointed Chairman was meant only for conducting the AGM and not meant for the day to day affairs of the company. 23. The learned counsel for the respondents further argued that the appointment of Directors was done for the smooth functioning of KCCI. Respondent No. 7, 8 and 9 are validly elected Board members in the meeting held on 13.12.2017 of the first respondent company and continuing as care takers until the next validly held AGM as per Article 43 of the Articles of Association of the first respondent company. Respondent R-7, R-10 are in office in legal compliance of the applicable statutes. So the non-compliance to Section 152(5), Rule 8 of companies (appointment and disqualification of directors) will not effect this R1 company. 24. The respondents a....
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.... dated 13.12.2017, 4 members were appointed as Additional Directors of the Chamber till the date of the next the AGM. No records were available with this IA to show that 3 more Directors were appointed against one casual vacancy in the Board Meeting dated 06.02.2019. The same was not refuted by the respondent in the counter statement and stated that R7, R8 and R9 were duly appointed to discharge the roles as caretakers. It was incumbent on the part of each of the applicants to place on record the full and correct facts necessary for deciding the issue involved. The argument against the validity of the appointment is that the Articles of Association of the company gave the power to the Board of directors for appointment of additional directors, is to be dealt in details to consider the first allegation. In this connection, the relevant portion of the Articles of Association of the Respondent Company is reproduced: 43. "The Official Director and other Directors of the Director Board shall hold office till another Board is elected to office, in accordance with Section 255 of the Companies Act 1956." 51. Any casual vacancy occurring in the Director Board may be fil....
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.... Meeting is vacated before his term of office expires in the normal course, the resulting vacancy may, in default of and subject to any regulations in the Articles of the company, be filled by the Board of Directors at a meeting of the Board which shall be subsequently approved by members in the immediate next General Meeting. Any person so appointed shall hold office only up to the date up to which the Director in whose place he is appointed would have held office if it had not been vacated. As per Section 149(1) of Companies Act, 2013, every company shall have a Board of Directors consisting of individuals as directors and shall have a minimum number of three directors in the case of a public company. However, there may be instances where the company during the course of business fails to meet the statutory limit. This also shall amount to casual vacancy in the office of director. In the present case, we could not find any records showing that the office of Director who was appointed by an AGM is vacated either due to unforeseen reasons or due to any reasons by which the company fails to meet the statutory obligation. It is clear that the appointment of 4 Additional Directo....
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....ed number of directors who shall hold office till the directors are appointed by the company in general meeting. A director who is retiring, required to file intimation of his retirement with ROC, with reason of his retirement, within prescribed period. The resignation should be in writing and oral resignation will not do. The Hon'ble Supreme Court of India in Moti Ram Vs. Param Dev AIR 1993 SC 1662 set out meaning of resignation as: "Resignation means the spontaneous relinquishment of one's own right and in relation to an office, it connotes the act of giving up or relinquishing the office. It has been held that in general juristic sense, in order to constitute a complete and operative resignation there must be the intention to give up or relinquish the office and the concomitant act of relinquishment. It has also been observed that the act of relinquishment may take different forms or assume a unilateral or bilateral character, depending on nature of the offence and conditions governing it." We have further referred to the decision of Hon'ble submitted by the applicant in J.S. Gambhir V. Millenium Health Institute & Diagnostics Pvt. Ltd. [2014]....
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....after the resignation by a Director has become effective. Even the resignation of R11 has not been informed to the ROC within the stipulated period. No reason has been adduced for such non filing. Instead almost 3 months later, the Board of Directors in their meeting dated 13.09.2018 resolved that the resignation shall not be recommended to the Registrar of Companies and R11 would continue as Director. Such a decision is not valid in the eye of law for the above mentioned reasons. Mere reason that the R1 Company did not submit the Form DIR 12 within the stipulated time period does not invalidate the resignation of R11. Thus, having regard to the letter of resignation in the present case, there can be no doubt that Smt. Nimmi J. Chakola (R11) had in her letter dated 26th June, 2018 indicated her unequivocal intention to the Chairman & Board of Directors to resign with effect from the date of letter and the letter having been communicated to the Board of Directors and it is received, it was not open to R11 to withdraw or revoke that letter. Moreover, no letter addressed to the Chairman & Board of Directors by R11 revoking-her resignation was submitted by the said Respondent and th....
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....Hon'ble NCLAT in Company Appeal (AT) (CH) No. 04 of 2021. ORDER: In view of the aforesaid findings by this Tribunal, we dispose of this IA with the following: i. The appointment of Directors by the Board, under the pretext to fill up the casual vacancies as caretakers, is against the provisions of law, as there were no casual vacancies existing on the date of their appointment. Therefore, the appointments of Respondents No. 7, 8 and 9 in the Board of Directors are invalid and they are liable to be removed from the Board of Directors of KCCI with immediate effect. Ordered so. With regard to Respondent Nos. 12 & 13, since, no minutes of the Board Meeting has been produced in this IA; no order is passed against them. ii. With regard to relief (b), the declaration sought against Respondent No. 10 cannot be granted now as the Registrar of Companies has not filed the report regarding the inquiry conducted against him. In view of the report of ROC dated 03.10.2019, Respondent No. 4 and Respondent No. 15 shall vacate the office as per Section 283(1)(h) of the 1956 Act with immediate effect. iii. Since the resignation of R11 took effect from 26th June, 2....