TaxTMI 
TaxTMI 
2026 (5) TMI 1746
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....shek Iyer, Ms Aayushi Khurana, Ms Angolika Awasthi, Mr Manish Barua, Ms A.M. Mathew, Advocates for R1 to 3. ORDER HYBRID MODE This appeal challenges the order dated 23.04.2026 passed by the Ld. NCLT, Allahabad in CA No.5/2026 in CP No.64/2023 to the extent the impugned order dismissed the application C A No.5/2026 filed by the appellant. 2. The appellant company is a prominent public listed company engaged in the business of printing and publishing newspapers, magazines, journals and is listed on National Stock Exchange and Bombay Stock Exchange and has more than 70000 public shareholders, who hold roughly 31% of its paid-up share capital. M/s Jagran Media Network Investment Pvt Ltd. (JMNIPL) is a holding company of the appellant and holds 67.97% of appellants paid up equity share capital. It is submitted the JMNIPL is a family owned investment vehicle comprising six branches of Gupta family. Presently the appellant has 18 directors including 9 independent directors, 8 promoter directors and one employee posted as whole-time director. 3. The Respondent No.1 was the Chairman and Managing Director of the appellant company from 01.01.2005 till 30.09.2023 and the dispute....
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....dent No.1's authority to represent JMNIPL at the appellant's meeting was revoked and instead Mr. Dhirender Mohan Gupta and Mr. Sanjay Gupta were appointed as authorised representatives on behalf of JMNIPL. 6. The validity of Resolution dated 14.07.2023 was challenged by Respondent No.1 and 2 in CA No.30/2023 before Ld. NCLT which application is still pending disposal. Another application CA No.58/2023 was filed challenging the proposed amendment to the Articles of Association of JMNIPL particularly the proposed deletion/dilution of Article 4.1 which vests irrevocable authority in Respondent No.1 to exercise voting rights on behalf of JMNIPL at the general meeting of JPL. By an interim order dated 08.12.2023 the Ld. NCLT had directed that the proposed amendment to the Articles shall not be given effect to till further orders. The Respondents on the other hand sought clarification/direction to enforce the resolution dated 14.07.2023 vide CA No.6/2024, which was later not pressed in view of the final hearing. 7. It was also argued that on application CA 47/2023 seeking urgent directions regarding management of its affairs, through orders dated 27.09.2023 and 04.10.2023, a NCLT m....
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....emoval proceedings against 7 independent directors and one whole time director notwithstanding the very voting authority under Article 4.1 proposed removal both continue to remain sub-judice. 12. The Ld. senior counsel for the appellant has shown us correspondence issued by Mr. Sanjay Gupta to show the only ground to challenge the appointment of independent directors is the lack of authority of Respondent No.1 in the voting of resolutions appointing/reappointing such directors. 13. Reference was made to Section 178(2) of the Companies Act, 2013 which as under: - "178. Nomination and Remuneration Committee and Stakeholders Relationship Committee.- (1) XXXX (2) The Nomination and Remuneration Committee shall identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and shall specify the manner for effective evaluation of performance of Board, its committees and individual directors to be carried out either by the Board, by the Nomination and Remuneration Committee or by an independent external agency and review its....
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....all vote on behalf of JMNIPL in the EOGM as it is for the said company to choose its representative for voting. No individual shareholder, either Mr. Sanjay Gupta or Mr. M.M. Gupta can challenge the holding of EOGM. 17. It is their submission, the JMNIPL who holds approximately 68% shares in JPL had requisitioned the EOGM meeting and it shows the appellant had rather accepted the impugned order and like any other shareholder, JMNIPL is also entitled to vote by authorising any person on its behalf to vote in the meeting. It is argued the impugned order is now fully implemented and this appeal has become infructuous on account of the fact the appellant company itself had issued a notice dated 02.05.2026 for an EOGM to be held on 29.05.2026. Further notice dated 05.05.2026 was also served upon Bombay Stock Exchange and National Stock Exchange of India qua the holding of the EOGM on 29.05.2026. Then a Board Circular Resolution No.1/26-27 was signed by the Company Secretary giving procedure for voting. Admittedly all these actions are in the knowledge and with the consent of the appellant company who has now appeared and have challenged the requisition dated 12.02.2026 of JMNIPL. It ....
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....us it is argued a) Article 4.1 does not apply to the appellant company; b) the resolution dated 14.07.2023 is not stayed and none of the directors either Mr. M.M. Gupta or Mr. Sanjay Gujpta or Mr. Dhirender Gupta have come in appeal against the impugned order dated 23.04.2026 qua holding of the EOGM. Reference was also made to Section 169(1) and (4) of the Companies Act, 2013. It is argued per Section 169 of the Companies Act, 2013 a company may remove a director by ordinary resolution after giving an opportunity of being heard. As per proviso an independent director re-appointed for the second term can also be removed by passing a special resolution after giving opportunity of being heard. Admittedly representations have been made under Section 169(4) of the Companies Act, 2013, duly signed by all 7 independent directors, annexed at Page 41-44 of the Appeal Paper Book and these independent directors have accepted their participation. It is further argued JMNIPL is owned by Gupta Family, in which 84% is held by the Respondents and whereas only 16% is held by Respondent No.1's group and if the EOGM is stayed it will be against the corporate democracy. Moreso it is argued the comp....
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....se representation would be considered in EOGM. It was argued even the compliance of Section 100 is done since JMNIPL has already appointed the authorised person other than Mr. M.M. Gupta, hence the meeting should be allowed to be held on the date fixed. It is submitted it is the will of the majority which must prevail in the working of the company. Reference was also made to the minutes of meeting dated September, 2024 and 5th September, 2025 wherein Mr. M.M. Gupta was directed to vote in a particular manner but has rather voted against the wishes of the shareholders of JMNIPL. Qua requirement of Section 178(2) of the Companies Act, it was argued it is not a pre-requisite for calling meeting under Section 169 of the Companies Act, 2013 and that Section 169 is not subject to Section 178 as it is a stand alone provision. Reference was made to Regulation 17(1) of SEBI LODR Regulations, 2015 wherein any vacancy in the office of director shall be filled by the listed entity not later than three months and hence it was argued the company would take care of the appointment of director within such period. Further it was argued the meeting is for removal of 7 independent directors and NRC c....
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....rectors of the company, and its officers do not take responsibility for the same. The issue of removal of directors was agitated in CA No. 5 of 2026, which was denied as the said CA No. 5 of 2026 was dismissed by the impugned order. The company also is concerned about 72,000 public minority shareholders whose interests, the independent directors are duty bound to represent. The independent directors are also chairperson or members of several committees, like, audit committee, CSR, NRC etc. The company is aggrieved since by way of this EOGM virtually the entire board is being dismantled/reconstituted which undermined the perception in the eyes of public. Further since 7 out of 9 independent directors are being removed, the board of directors will be skewed in favour of the promoters. The appeal has been filed by Mr. Amit Jaiswal, CS and CFO, who was authorised to represent the company by virtue of board resolution dated 24.09.2023 and is thus validly filed. It is again reiterated Section 178 of the Companies Act requires mandatory recommendation of NRC for removal of director and applies to special class of companies which are public listed, the appellant being one of them. 30. W....