Jai Kumar Arya & Ors Vs Chhaya Devi & Anr (Delhi High Court)
Summary : In , the Delhi High Court examined an appeal against an interim order passed by a Single Judge restraining certain shareholders and directors of a company from acting upon notices and resolutions relating to the proposed removal of a director and managing director of the company. The dispute arose within the family controlling M/s Prabhat Zarda Factory (India) Pvt. Ltd., a company engaged in the manufacture of chewing tobacco products. The litigation revolved around attempts by some shareholders and directors to remove Chhaya Devi from the board and appoint other persons in managerial positions.
The dispute began when shareholders requisitioned an Extraordinary General Meeting (EGM) to consider resolutions for removing Chhaya Devi as Director and Managing Director and appointing Rukmini Devi as Managing Director. Chhaya Devi objected, alleging that the requisition did not comply with Sections 115 and 169 of the Companies Act, 2013 because no valid special notice had been served.
The judgment extensively discussed Sections 115, 169 and 100 of the Companies Act, 2013. The Court explained that under Section 169, removal of a director requires a special notice and an opportunity of hearing to the concerned director. The company must send a copy of the proposed resolution to the director concerned, who may also make a written representation for circulation among shareholders. The Court also examined Section 100 governing EGMs and noted that requisitionists may convene an EGM only if the Board fails to do so within the prescribed timeline.
