Pearl City Marine Products Private Limited Vs Hiras K & Ors. (NCLAT Chennai)
Summary: The National Company Law Appellate Tribunal, Chennai Bench, considered Company Appeal (AT) (CH) No.76/2026 filed by three members of M/s. Pearl City Marine Products Private Limited challenging the order dated 22.06.2026 passed by the NCLT, Kochi Bench in C.P. No.04/KOB/2026. The original petition had been instituted by the first respondent under Section 98 of the Companies Act, 2013 seeking intervention for convening an Extraordinary General Meeting.
The appellants stated that the company’s board originally comprised appellants 2 to 4 along with respondents 1 to 4. According to their submissions, respondents 3 and 4 had been removed from the board pursuant to a resolution passed at an Extraordinary General Meeting held on 10.11.2025, with the first respondent also being a party to that resolution.
Thereafter, according to the appellants, the alignment between the first respondent and appellants 2 to 4 changed. The first respondent issued a notice dated 20.01.2026 under Section 100 of the Companies Act, 2013 seeking an Extraordinary General Meeting for re-inducting respondents 3 and 4 onto the Board. The Board rejected the request by a 3:2 majority through its resolution dated 09.02.2026.
Before the Section 98 petition was filed, respondents 3 and 4 had instituted C.P. No.37/2026 before the NCLT under Sections 241 and 242 of the Companies Act, 2013. That petition was subsequently withdrawn when the first respondent moved the NCLT under Section 98 on 05.03.2026.
Before the NCLAT, the appellants contended that Section 100(4) provides the statutory mechanism under which requisitioning members may themselves convene an Extraordinary General Meeting where the Board fails to convene it pursuant to a valid requisition. They argued that Section 98 could be invoked only where it had become “impracticable” to hold or conduct the meeting in the manner prescribed by the Act or the company’s Articles, and that the first respondent had not demonstrated such impracticability.
The appellants also submitted that the proposed meeting concerned the re-induction of respondents 3 and 4 as directors shortly after their removal from the Board.
The first respondent, on the other hand, submitted that Section 100(4) merely provides an alternative option and does not exclude the independent right to invoke Section 98. Reliance was placed on Invesco Developing Markets Fund and Other Vs Zee Entertainment Enterprises Limited and Others and In Re: Ruttonjee and Co. Ltd. The first respondent further contended that the Board was not entitled to decide the nature of the agenda proposed in a valid requisition. It was also submitted that, after the NCLT’s order, the appellants had themselves convened a Board meeting on 08.07.2026 and resolved to call a meeting, inter alia, for inducting two additional directors. The respondents further argued that the appellants, having failed to convene the General Meeting despite the requisition, lacked locus standi to maintain the appeal.
The NCLAT identified two issues. The first was whether Section 100(4) provides an exclusive remedy to a person aggrieved by the Board’s failure to convene an Extraordinary General Meeting pursuant to a requisition under Section 100(2), or whether it is merely an alternative remedy such that Section 98 can be invoked without first exhausting Section 100(4). The second concerned whether, on the facts of the case, the Tribunal ought to exercise its Section 98 powers to direct that the requested meeting be convened.
On the first issue, the NCLAT considered the Bombay High Court’s decision in Invesco Developing Markets Fund and Other Vs Zee Entertainment Enterprises Limited and Others. The NCLAT reproduced the relevant observations concerning the meaning of “valid requisition”, the Board’s obligation where the requirements of Sections 100(2) and 100(3) are satisfied, and the purpose of Section 100(4) in protecting shareholder rights and corporate democracy.
On that basis, the NCLAT held that a requisitioning member’s right to convene a meeting under Section 100(4) and the power of the Tribunal to intervene under Section 98 are mutually exclusive routes, and invocation of Section 98 is not dependent upon first exhausting Section 100(4).
The NCLAT, however, emphasised an important qualification. While the requisitioning member’s right under Section 100(4) is absolute, the right to invoke Section 98 is qualified by the statutory requirement that it must be established that it has become “impracticable” to hold a meeting without the Tribunal’s intervention. The Tribunal described the rule of internal management as a fundamental principle of corporate governance and characterised Section 98 as an exceptional jurisdiction that must be exercised sparingly.
The NCLAT then considered In Re: Ruttonjee and Co. Ltd., [AIR 1969 Calcutta 550], where the Calcutta High Court had considered circumstances in which the court could interfere with a company’s internal management and direct the convening of meetings under Section 186 of the Companies Act, 1956. The NCLAT noted that Section 98 is the new avatar of Section 186 without a change in this respect and reproduced the broad guidelines laid down in Ruttonjee.
Those guidelines emphasised that the court should ordinarily not interfere with domestic management; the discretion to direct a meeting should be exercised sparingly and cautiously; “impracticable” means impracticable from a reasonable point of view; the court should adopt a commonsense approach and act as a prudent businessperson; ordinary rivalry between groups of directors or shareholders should not ordinarily trigger judicial intervention; and intervention may be justified where circumstances create serious doubts about the validity of meetings or directors and make it impracticable to convene a meeting in the ordinary manner.
The NCLAT held that these guidelines are illustrative of the circumstances that may influence a decision under Section 98. The central principle, according to the Tribunal, is that the court or Tribunal should not rush to interfere with the internal management of a company. A requisitioning member who bypasses the absolute right under Section 100(4) in favour of invoking the qualified jurisdiction under Section 98 must place facts before the Tribunal from which it can reasonably be inferred that convening the meeting has become impracticable.
The Tribunal observed that the meaning of “impracticable” may vary according to the facts of each case and should be understood with reasonable elasticity from the perspective of ordinary prudence and common sense. Nevertheless, the facts must create an element of inevitability requiring the Tribunal to intervene; otherwise, there is a risk that the exceptional Section 98 jurisdiction could displace the fundamental doctrine of internal management merely because intervention appears expedient.
Applying these principles, the NCLAT examined the material relied upon by the first respondent to establish impracticability. It found that the company petition contained hardly any material allegations capable of supporting such an inference. Apart from an emphasis on the division within the Board, the first respondent had not placed before the NCLT facts, much less proof, sufficient to sustain the request for Tribunal intervention.
The NCLAT particularly noted that the company had five directors but close to 110 other shareholders. In those circumstances, it questioned where the difficulty lay in convening a meeting merely because the Board had rejected the first respondent’s request for an EGM by a 3:2 majority. The Tribunal further noted that the first respondent had not even attempted to convene a meeting under Section 100(4).
The NCLAT held that, in the absence of foundational facts, no inference of impracticability could be drawn. It cautioned that the fundamental rule associated with the doctrine of internal management should not be diluted to accommodate an exceptional exercise of Tribunal authority merely because doing so may be expedient.
Accordingly, the NCLAT set aside the order of the Adjudicating Authority in CP/04/KOB/2026 and allowed the appeal. The interlocutory applications, if any, were closed and there was no order as to costs.
Cases Discussed
- Invesco Developing Markets Fund and Other Vs Zee Entertainment Enterprises Limited and Others, [(2022) 232 CompCas 20 (Bom)] — relied upon on the relationship between Sections 98 and 100 of the Companies Act, 2013 and the rights of shareholders to requisition and convene an Extraordinary General Meeting.
- In Re: Ruttonjee and Co. Ltd., [AIR 1969 Calcutta 550] — referred to for the principles governing judicial or Tribunal interference with the internal management of a company and the circumstances in which it may become “impracticable” to convene a meeting.
FULL TEXT OF THE JUDGMENT/ORDER OF NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI BENCH
This appeal is preferred by three of the members of the 1st appellant company challenging the Order of the NCLT dated 22.06.2026, in C.P.No.04/KOB/2026 which the 1st Respondent herein had instituted under Sec. 98 of the Companies Act, 2013.
2. Providing a backdrop to the appeal, the learned counsel for the appellants has submitted that:
a) the board of the first appellant company originally comprised of the appellants 2 to 4 plus respondents 1 to 4. While so, due to certain acts of proven acts of misconduct of respondents 3 and 4, they were removed from the board by a resolution passed in the Extraordinary General Meeting of the company held on 10.11.2025, To this resolution, the 1st Respondent was also a party.
b) However, the alignment and alliance thereafter changed with the first respondent drifting away from appellants 2 to 4. It is in this setting, the first respondent has issued a notice dated 20.01.2026 under Section 100 of the Companies Act, 2013 for convening an Extraordinary General Meeting of the company for re-inducting respondents 3 and 4 back into the Board. On 09.02.2026, the Board by a majority of 3:2 rejected the same vide its resolution dated 09.02.2026
c) The 1st respondent would now approach the NCLT with a present petition under Section 98 of the Companies Act, 2013. Prior to the same, respondents 3 and 4 moved the NCLT with a petition in C.P. No.37/2026 under Sections 241 and 242 of the Companies Act, 2013, but when the 1st respondent moved the NCLT with his present petition under Sec.98 of the Companies Act, 2013, on 05.03.2026, they withdrew their company petition.
3. Heard Mr. Murari Raghavan for the appellants, Mr. Joseph Kodianthara for the first respondent, Mr. P.H. Arvindh Pandian for the 3rd and 4th respondents, all senior counsels appearing 4th for appellant as well as for the respondents. The learned Counsel for the appellant would submit that:
a) in terms of Sec. 100(4) of the Companies Act, 2013, if the Extraordinary General Meeting is not convened despite valid requisition given for the purpose, then those who had requested for the meeting have the right to convene the same under Sec.100(4). And Sec.98 can be invoked only if it is ‘impracticable’ to hold or conduct the meeting in the manner prescribed by the Act or the Articles of the company. However, the 1st Respondent has not chosen to demonstrate why it has become impracticable for him to convene the meeting.
b) The meeting is requested to be convened for re-inducting respondents 3 and 4 as directors, who were barely removed from the board months ago on certain allegations.
4. Mr. Joseph Kodianthara, the learned senior counsel, appearing for respondents 1 and 2, submitted that:
a) Sec.100(4) of the Companies Act, 2013, only enables an option in the alternative, but it does not foreclose the independent right to invoke under Sec. 98 of the Companies Act. Reliance was placed on the ratio Invesco Developing Markets Fund and Other Vs Zee Entertainment Enterprises Limited and Others [(2022) 232 CompCas 20 (Bom)] and In Re: Ruttonjee and Co. Ltd., [AIR 1969 Calcutta 550].
b) When a meeting is requested to be convened under Sec.100(2), it is not for the Board to decide on the nature of agenda to be moved in the meeting. It merely has to abide by it.
c) Be that as it may, after the delivery of the order now under challenge, on 08.07.2026, the appellants convened the board meeting where it was resolved to call for a meeting, inter alia induct two additional directors.
d) inasmuch as the appellants are defaulters in law in not convening a General Meeting despite a proper notice served for the purpose, they lack locus standi even to maintain this appeal.
5. Supporting the arguments of Mr. Joseph Kodianthara, Mr. P.H. Arvindh Pandian, the learned senior counsel appearing for respondents 3 and 4, placed emphasis on paragraph 85 of the above referred to judgment in Re Ruttonjee case.
Discussion & Decision
6. The dispute has two parts: First issue is whether Sec.100(4) provides an exclusive remedy to the one who is aggrieved by the failure of the Board of a company to convene a Extraordinary General Meeting pursuant to the requisition of the first respondent to convene it under Sec.100(2) or is it merely an alternative remedy. In other words, the issue is as to whether it is permissible to invoke Sec.98 without exhausting Sec.100(4). The second aspect is whether tribunal should invoke its powers under Sec.98 of the Act in directing the convening of the meeting requested for by the first respondent. While the former involves a legal issue, the latter is required to be ascertained on facts of this case.
7. Turning to the first issue, the dictum of the High Court of Bombay in Invesco Developing Markets Fund case throws ample light on it. The Court has held:
“14. In view of the aforesaid interpretation by the Supreme Court and this Court, we have no hesitation whatsoever in holding that the words “valid requisition” as appearing in Section 100(4) of the Act are restricted to numerical and procedural compliance and nothing further.
15. On a literal and plain reading of Sections 98 and 100, we do not see any discretion/power vested with the Board of a Company to sit in judgment over “any matter” for consideration of which the meeting is requisitioned. On a plain reading, the Board of a Company is mandatorily obliged to requisition a meeting if the requirements specified in sub-sections (2) and (3) of Section 100 are satisfied. Needless to state, whether or not the proposed requisition should be given effect to, is to be decided by the shareholders at the general meeting.
16. To our mind, the language used in the aforesaid Sections and corporate democracy and protect the rights of shareholders. Section 100(4) in fact provides shareholders with an additional right to proceed to call for and hold an EGM despite an unwilling Board. This intent and object of the legislature cannot be ignored whilst construing the relevant provisions of the Act.”
It is therefore, evident that convening a General Meeting by a requisitioning member under Sec.100(4) of the Act and convening a meeting through the intervention of the tribunal under Sec.98 are mutually exclusive, and invoking the latter is not dependent on exhausting the former.
8. There, however is a rider. While a requisitioning member’s right to convene a meeting under Sec.100(4) is absolute, his right to invoke Sec.98 is qualified as it can be invoked only upon proof of the statutory precondition that it has become impracticable to hold a meeting without the intervention of the tribunal. The fundamental rule in corporate governance is dictated by the rule of internal democracy, and it is axiomatic that tribunals shall not interfere with the internal management of the company. Set in the context, Sec.98 is an exceptional jurisdiction which though enables interference with the internal management involved in convening a meeting along the lines predicated by the Act or by the Articles of the company, yet can be exercised only when it is reasonably established that but for the tribunal stepping in with its authority, a meeting along the lines might not take place.
9. In the renowned Re: Ruttonjee case, the Calcutta High Court delved into circumstances when court can interfere with the internal management of the company and direct convening of meetings under Sec.186 of the Companies Act, 1956 (and Sec.98 is its new avatar without a change) and came up with its broad guidelines. They are:
“85. Upon considering the relevant authorities on this subject and examining the language of the statute the main principles involved in trying an application under section 186 are, to my mind, as follows:
1. The court would not ordinarily interfere with the domestic management of a company which should be conducted in accordance with its articles.
2. The discretion granted under section 186 should be used sparingly and with caution so that the court does not become either a shareholder or a director of the company trying to participate in the internecine squabbles of the company.
3. The word “impracticable” means impracticable from a reasonable point of view.
4. The court should take a commonsense view of the matter and must act as a prudent man of business.
5. A prudent man of business has not a sensitive, officious view of intervention in case of every rivalry between two groups of directors; prudence demands that the court ordinarily keep itself aloof from participating in quarrels of rival groups of directors or shareholders.
6. But where the meeting can be called only by the directors and there are serious doubts and controversy as to who are the directors or where there is a possibility that one or other or both the meetings called by the rival groups of directors may be invalid, the court ought not to expose the shareholders to uncertainties and should hold that a position has arisen which makes it “impracticable” to convene a meeting in any manner in which meetings of the company may be called.
7. The court should exercise its powers under section 186, when, upon considering all the facts and circumstances of a case, it can say with a reasonable approach to certainty or even prima facie that a meeting called in the manner in which meetings are ordinarily called under the Act or under the articles, would be invalid.
8. Before the court exercises its discretion under section 186 the court must be satisfied, when a director or a member moves an application, that it has been made bona fide in the larger interests of the company for removing a deadlock otherwise irremovable.”
These guidelines or parameters are illustrative of the circumstances which may influence a decision of the tribunal under Sec.98, if analysed, the bottom line – that the court/tribunal should not rush to interfere with the internal management of the company, is emphasised in (1) and (5) with an underscoring in (2) where the Court reminds that its authority to direct convening of the meeting must only be sparingly used. This signifies the importance of the requisitioning member under Sec.100(2) who opts to bypass his absolute right under Sec.100(4) in his preference for invoking the qualified jurisdiction of the tribunal under Sec.98, to place the facts before the tribunal from which it could reasonably be inferred that it has become impracticable to convene a meeting. What constitutes impracticability may vary depending on the facts of every case, but it must still be such that they are capable of creating an element of inevitability for the tribunal to step in. While the expression ‘impracticable’ is required to be understood not narrowly but with reasonable elasticity from a plane of ordinary prudence and common sense, yet the tribunal needs to reflect if it has become inevitable that unless it intervenes a meeting possibly could not be convened. If not, there is a potential danger of the fundamental rule of corporate governance pivoted in doctrine of internal management being replaced by the exceptional authority of the tribunal under the standalone provision in Sec.98, which as indicated, is designed for sparing use. In other words, the nature of facts must not be similar to Ruttonjee case, but something more than that.
10. This now shifts the focus to appreciate the facts which the right respondent has relied on for establishing a prima facie case on impracticability in holding a meeting under Sec.100(4). When the company petition filed by the first respondent is scanned for material allegations necessary for drawing an inference of impracticability in convening a meeting, we find hardly any. Except an emphasis on the division in the board, the first respondent has not troubled himself to place before Learned NCLT any facts, much less proof thereof for sustaining his prayer for the tribunal’s intervention in holding the Extraordinary General Meeting. When besides the five directors, there are close to 110 other shareholders in the company, where is the difficulty in convening a meeting merely because the board has dismissed the first respondent’s request to convene an EGM in the ratio 3:2? Indeed, Respondent No.1 has not even made an attempt to convene a meeting under Sec.100(4). No tribunal can draw an any inference when the foundational facts are absent. The first respondent needs to be reminded that it may not be appropriate for the tribunal to dilute the fundamental rule associated with the doctrine of internal management of a company to accommodate an act of exceptional authority merely because it is expedient to do so.
11. In conclusion, the order of the learned Adjudicating Authority in CP/04/KOB/2026 is hereby set aside, and the appeal is allowed. Interlocutory applications, if any, would stand closed. No costs.
