Removal of Directors under Sections 169 of Companies Act, 2013: FAQs

Summary: The article explains the statutory framework for removal of directors under Section 169 of the Companies Act, 2013, read with Section 115 and Rule 23 of the Companies (Management and Administration) Rules, 2014. It addresses the role of shareholders, Special Notice requirements, eligibility thresholds, timelines, General Meeting procedures, directors’ rights to be heard and make representations, restrictions on Tribunal-appointed and proportional-representation directors, filling vacancies, compensation rights and the relationship between Section 169 and other statutory mechanisms. It also distinguishes a Special Notice from an EGM requisition under Section 100. The article analyses Jai Kumar Arya & Ors. v. Chhaya Devi & Anr., particularly the scope of Section 430 and whether civil-court jurisdiction is excluded in disputes concerning director removal. It explains that Section 430 depends upon whether the NCLT is empowered to determine the particular dispute and grant the particular relief claimed, while Sections 241–242 and Section 242(2)(h) operate through a distinct statutory mechanism. The article also discusses the practical distinction between ordinary removal under Section 169 and NCLT proceedings involving oppression and mismanagement.

Which sections and rules of the Companies Act, 2013 are applicable for removal of a director?

Answer: The removal of a director is primarily governed by Section 169 of the Companies Act, 2013, read with Section 115 and Rule 23 of the Companies (Management and Administration) Rules, 2014.

Whether Board has authority to remove any director?

Answer: Under Section 169 of the Companies Act, 2013, the Board of Directors does not have the power to remove a director by passing a Board Resolution. The power to remove a director under Section 169 is vested in the members/shareholders of the company, subject to the procedure prescribed under the Act.

What does a member/shareholder have to do to remove a director under Section 169 of the Companies Act, 2013?

Answer: A member cannot simply pass a resolution on his own and remove a director.

As per Section 169(2) of the Companies Act, 2013, a special notice shall be required for any resolution to remove a director under Section 169, or to appoint another person in place of the director so removed, at the meeting at which he is removed.

Therefore, any member who wants to propose the removal of a director must first give a Special Notice to the company in accordance with Section 115 of the Companies Act, 2013 read with Rule 23 of the Companies (Management and Administration) Rules, 2014.

The removal is ultimately considered and decided by the members at a General Meeting by the requisite resolution.

Whether any member can give a Special Notice, or is there any specific requirement for giving a Special Notice?

Answer: No, any member cannot give a Special Notice. There is a specific eligibility requirement under Section 115 of the Companies Act, 2013, read with Rule 23 of the Companies (Management and Administration) Rules, 2014.

As per Section 115 read with Rule 23, a Special Notice can be given by members who satisfy either of the following requirements:

• Members holding not less than 1% of the total voting power of the company; or
• Members holding shares on which an aggregate amount of not less than ₹5 lakh has been paid-up.

The required threshold may be satisfied individually or collectively by the members.

When is the Special Notice required to be sent by the members to the company for removal of a director?

Answer: As per Rule 23(2) of the Companies (Management and Administration) Rules, 2014, the Special Notice for removal of a director must be given by the members to the company:

• Not earlier than 3 months before the date of the meeting at which the resolution is to be moved; and
• At least 14 clear days before the date of the meeting.

While calculating the 14-day period:

• The day on which the Special Notice is given is excluded, and
• The day of the meeting is also excluded.

Example: Suppose the General Meeting is scheduled for 30 September, 2026. The Special Notice must be received by the company:

• Not earlier than 30 June, and
• at least 14 clear days before 30 September.

Thus, the Special Notice must be given within the statutory 3-month to 14-day window prescribed by Rule

If a valid Special Notice for removal of a director is given by the members, can the member compel the Board to call a general meeting?

Answer: No, merely giving a Special Notice does not itself confer a right on the member to compel the Board to call a General Meeting.

It is important to distinguish between Special Notice and requisition of a General Meeting. The purpose of a Special Notice is to notify the company of the member’s intention to move a particular resolution, such as a resolution for removal of a director under Section 169(2).

Section 115 of the Companies Act, 2013 provides that where, under the Act or the Articles of Association of a company, special notice is required for any resolution, notice of the intention to move such resolution shall be given to the company by the prescribed number of members, namely members holding:

• not less than 1% of the total voting power, or
• shares on which an aggregate sum of ₹5 lakh or such lower prescribed amount has been paid-up.

The company is then required to give notice of the proposed resolution to its members in the prescribed manner.

Therefore:

Special Notice = Notice of intention to move the resolution.

It is not itself a requisition to call an EGM.

The member has to independently comply with Section 100 of the Companies Act, 2013, which deals with the calling of an Extraordinary General Meeting on the requisition of members. Accordingly, a member who merely satisfies the Section 115/Rule 23 threshold for giving Special Notice cannot automatically compel the Board to call an EGM. To requisition an EGM, the member(s) must satisfy the separate threshold and requirements under Section 100.

Suppose, after receiving a Special Notice for removal of a director under Section 169, the Board does not call any General Meeting. Would such non-action constitute a default under the Companies Act, 2013?

Answer: Not merely because the Board has received the Special Notice. A Special Notice under Section 169(2) read with Section 115 is a notice of the members’ intention to move the resolution; it is not, by itself, a requisition requiring the Board to immediately convene an EGM.

However, the position changes if the members have also made a valid requisition for an EGM under Section 100.

1. Only Special Notice is given

If members have given only a valid Special Notice under Section 115 read with Section 169(2),

but have not made a requisition under Section 100, the Board does not automatically become bound to immediately call an EGM merely because it received the Special Notice.

The company, however, must comply with its obligations under Section 115 and Rule 23, including giving notice of the proposed resolution to the members when the resolution is to be moved at a meeting.

2. Special Notice + valid EGM requisition

If the eligible members also make a valid requisition under Section 100(2) for convening an EGM, then the position is different.

Under Section 100(4), the Board is required to proceed to call the meeting within 21 days from the date of receipt of the requisition, and the meeting must be held within 45 days from the date of receipt of the requisition.

If the Board fails to do so, the requisitionists themselves may call and hold the meeting in accordance with Section 100.

Therefore:

Situation	Board’s obligation
Only Special Notice under Section 115/169	No automatic obligation to immediately call EGM
Valid EGM requisition under Section 100	Board must proceed to call the EGM
Board fails to act on valid Section 100 requisition	Requisitionists can call the meeting themselves, subject to Section 100

What is the obligation of the company after receiving a Special Notice?

Answer: Under Rule 23 of the Companies (Management and Administration) Rules, 2014, once the company receives a valid Special Notice, the company has a statutory obligation to communicate the proposed resolution to its members.

As per Section 169(3) read with Rule 23(3) provides that the company shall immediately after receipt of the notice, give its members notice of the resolution:

• At least 7 days before the meeting;
• The day of dispatch of the notice is excluded; and
• The day of the meeting is also excluded.

The notice must be given in the same manner in which notice of a general meeting is given.

What happens if it is not practicable for the company to give notice of the resolution in the same manner as notice of a general meeting?

Answer: Rule 23(4) of the Companies (Management and Administration) Rules, 2014 provides an alternative method of giving notice where it is not practicable to give the notice in the same manner in which notice of a general meeting is ordinarily given.

In such a case, the company must:

1. Publish the notice in an English newspaper having wide circulation in the State where the registered office of the company is situated;

2. Publish the notice in a vernacular newspaper having wide circulation in that State; and

3. Post the notice on the company’s website, if the company has a website.

Within what time must the notice under Rule 23(4) be published?

Answer: As per Rule 23(5) of the Companies (Management and Administration) Rules, 2014, where the notice is required to be published in newspapers under Rule 23(4), the notice must be published at least 7 days before the date of the meeting.

While calculating these 7 days:

• The day on which the notice is published is excluded, and
• The day of the meeting is also excluded.

Whether the proposal of a member to remove a director is required to be passed by a simple majority or by an Ordinary Resolution?

Answer: The resolution for removal of a director under Section 169(1) of the Companies Act, 2013 is generally required to be passed by an Ordinary Resolution. Section 114(1) provides that an Ordinary Resolution is passed when the votes cast in favour are greater than the votes cast against.

Whether an opportunity of being heard is required to be given to the director proposed to be removed?

Answer: Yes. An opportunity of being heard must be given to the director proposed to be removed.

Section 169(1) of the Companies Act, 2013 makes it clear that before passing an Ordinary Resolution for removal of a director, the director must be given a reasonable opportunity of being heard. Further, Section 169(3) specifically provides that the concerned director shall be entitled to be heard on the resolution at the meeting.

Therefore, the director proposed to be removed must be given a reasonable opportunity of being heard before the resolution for removal is passed.

What is the requirement for removal of an Independent Director who has been re-appointed for a second term?

Answer: First proviso to Section 169(1), an Independent Director who has been re-appointed for a second term under Section 149(10) of the Companies Act, 2013 can be removed by the company only by passing a Special Resolution. Further, before passing the Special Resolution, the Independent Director must be given a reasonable opportunity of being heard.

Therefore:

Independent Director re-appointed for second term → Special Resolution + Reasonable opportunity of being heard.

This is an exception to the general rule under Section 169(1), where an ordinary director may generally be removed by an Ordinary Resolution.

Whether director has right to make a representation against the proposed removal under Section 169(4) of the Companies Act, 2013?

Answer: Under Section 169(4) of the Companies Act, 2013, where a notice has been given of a resolution to remove a director, the concerned director has the right to make a representation in writing against the proposed removal and request the company to communicate such representation to the members.

If the director makes such a representation and requests its notification to the members, then, if sufficient time is available, the company is required to:

1. State in the notice of the resolution sent to the members that the director has made a written representation; and

2. Send a copy of the director’s written representation to every member to whom notice of the meeting is sent.

If, because of insufficient time or the company’s default, the representation is not circulated to the members, the director is not deprived of his right to be heard. The director may require that his written representation be read out at the General Meeting.

Therefore:

Notice of removal → Director’s written representation → Request for circulation → Company circulates representation → If not circulated due to insufficient time/default, representation may be required to be read out at the meeting.

Can the director’s written representation under Section 169(4) be withheld from the members or not be read at the meeting?

Answer: Yes. There is an exception to the director’s right under the proviso to Section 169(4) of the Companies Act, 2013.

The proviso to section 169(4) provides that the copy of the director’s written representation need not be circulated to the members, and the representation need not be read out at the General Meeting, if the Tribunal, on an application made by:

• the company, or
• any other person who claims to be aggrieved,

is satisfied that the rights given to the director under Section 169(4) are being abused to secure needless publicity for defamatory matter.

Power of the Tribunal- If the Tribunal is satisfied that the representation is being misused for needless publicity of defamatory material, it may order that:

1. The representation need not be circulated to the members; and

2. The representation need not be readout at the meeting.

The Tribunal may also order the company’s costs of the application to be paid wholly or partly by the director, even though the director is not a party to the application.

Can the vacancy created by the removal of a director under Section 169 be filled at the same meeting at which the director is removed?

Answer: Yes. Under Section 169(5) of the Companies Act, 2013, where a vacancy is created by the removal of a director, the vacancy may be filled by appointing another director at the same General Meeting at which the director is removed.

However, the following conditions must be satisfied:

1. The removed director must have been appointed by the company in General Meeting or by the Board.

2. Special Notice of the intended appointment of the new director must have been given under Section 169(2).

3. The appointment can be made at the same meeting at which the existing director is removed.

For how long will a new director appointed in place of a director removed under Section 169 hold office?

Answer: Under Section 169(6) of the Companies Act, 2013, a director appointed to fill the vacancy created by the removal of another director will hold office only for the remaining period of the term of the removed director.

In other words, the newly appointed director does not get a fresh full term merely because he is appointed in place of the removed director.

If the vacancy created by the removal of a director is not filled at the same meeting, how can the vacancy be filled?

Answer: Under Section 169(7) of the Companies Act, 2013, if the vacancy created by the removal of a director is not filled at the same General Meeting under Section 169(5), the vacancy may subsequently be filled as a casual vacancy in accordance with the provisions of the Companies Act, 2013.

However, there is an important restriction that the director who has been removed from office cannot be re-appointed as a director by the Board of Directors.

Important distinction- Section 169(7) does not say that the removed director can never become a director again under any circumstances. It specifically provides that the Board of Directors cannot re-appoint the director who was removed.

Therefore, the restriction is specifically against re-appointment by the Board.

Does removal of a director under Section 169 affect his right to claim compensation or damages?

Answer: No. Section 169(8)(a) of the Companies Act, 2013 specifically provides that removal of a director under Section 169 does not deprive the director of any compensation or damages that may be payable to him under:

• The terms of his contract;
• The terms of his appointment as director; or
• Any other appointment that terminates along with his appointment as director.

Therefore, even though the members have validly removed a director under Section 169, the director may still have a contractual right to claim compensation or damages, if such right exists under the terms of his appointment or contract.

Does Section 169 affect any other power to remove a director under the Companies Act?

Answer: No. Under Section 169(8)(b), the provisions of Section 169 do not derogate from, or take away, any other power to remove a director under any other provision of the Companies Act, 2013.

Thus, Section 169 is not the exclusive mechanism for removal of every director in every situation. Other statutory provisions providing for removal or cessation of a director continue to operate.

Example: Suppose a director has incurred a disqualification under Section 164 of the Companies Act, 2013. Consequently, his office may become vacant under Section 167.

In such a situation, the cessation of his office is not a removal under Section 169. It occurs because of the statutory consequence provided under Sections 164 and 167.

Similarly, Section 168 deals with resignation of a director, which is another mode by which a director ceases to hold office and is independent of Section 169.

Therefore, Section 169(8)(b) preserves these other statutory mechanisms and powers.

If members want to requisition an EGM for removal of a director, which provisions and requirements are applicable?

Answer: If members want to requisition an EGM for the removal of a director, two separate statutory requirements must be complied with:

1. Requisition of EGM

• Section 100 of the Companies Act, 2013 applies.
• The requisitioning members must satisfy the 10% threshold prescribed under Section 100.
• The requisition must state the matters/business to be considered at the proposed meeting under Section 100(3).

2. Removal of Director

• Section 169(2) requires Special Notice for removal of the director.
• Section 115 prescribes the eligibility and requirements for Special Notice.
• Rule 23 of the Companies (Management and Administration) Rules, 2014 prescribes the procedure and timing for Special Notice.
• The Special Notice must be given by members satisfying the 1% of total voting power / ₹5 lakh paid-up shares threshold.

In short:

• Section 100 → Requisition of EGM → 10% threshold
• Section 169(2) + Section 115 + Rule 23 → Special Notice for removal → 1% / ₹5 lakh threshold

Thus, the Section 100 requisition and the Special Notice for removal are two separate statutory requirements, and both should be complied with when members seek to convene an EGM specifically for removal of a director.

Are there any directors who cannot be removed under Section 169 of the Companies Act, 2013?

Answer: Yes. Section 169(1) specifically provides that the power of removal under Section 169 does not extend to certain categories of directors.

The removal provisions under Section 169 do not apply to:

1. A director appointed by the Tribunal under Section 242 of the Companies Act, 2013; and

2. A director appointed under the principle of proportional representation under Section 163 of the Companies Act, 2013.

The exclusion of directors appointed under Section 163 is intended to protect the representation of minority shareholders or other shareholder groups whose representation has been secured through the statutory mechanism of proportional representation.

Therefore, a director appointed under Section 242 or a director appointed pursuant to Section 163 cannot ordinarily be removed by the members through the procedure prescribed under Section 169.

Whether the members are required to state reasons or grounds for removal of a director in the Special Notice under Section 169 of the Companies Act, 2013?

Answer: No. There is no express requirement under Section 169, Section 115 or Rule 23 of the Companies (Management and Administration) Rules, 2014 that the members must state the reasons or grounds for proposing the removal of a director in the Special Notice.

The purpose of the Special Notice under Section 169(2) is to notify the company of the members’ intention to move a resolution for removal of the director. Section 115 and Rule 23 prescribe the eligibility, timing and manner of giving such Special Notice, but do not expressly require the members to disclose the grounds for removal.

However, the absence of a requirement to state reasons in the Special Notice does not dispense with the statutory safeguards available to the concerned director. Under Section 169(3), the director is entitled to be heard at the meeting, and under Section 169(4), the director has the right to make a written representation against the proposed removal and request that the representation be communicated to the members.

Therefore:

Special Notice → Reasons not expressly mandatory. Director → Right to representation and reasonable opportunity of being heard.

Whether the members are required to state reasons for removal of a director in the Special Notice under Section 169 of the Companies Act, 2013?

Answer: No. The members are not legally required to state the reasons or grounds for removal in the Special Notice issued under Section 169(2) read with Section 115 of the Companies Act, 2013.

The Delhi High Court in Jai Kumar Arya & Ors. v. Chhaya Devi & Anr., decided on 7 November 2017, specifically held that a Special Notice under Section 169 is not required to set out the reasons for the proposed removal. The Court relied upon the Constitution Bench judgment of the Supreme Court in LIC of India v. Escorts Ltd. and expressly disagreed with the contrary view expressed by the Kerala High Court in Queens Kuries & Loans v. Sheena Jose.

Thus, absence of reasons in the Special Notice, by itself, does not make the Special Notice invalid.

The distinction is important: The Special Notice need not contain the reasons, but the concerned director nevertheless has the statutory right under Section 169(3) and (4) to be heard and to make a written representation against the proposed removal

Whether a civil court has jurisdiction to entertain a suit concerning removal of a director under the Companies Act, 2013, or whether such a dispute can be entertained only by the NCLT?

Answer: The jurisdiction of the civil court is not automatically excluded merely because the dispute concerns removal of a director under Section 169 of the Companies Act, 2013.

In Jai Kumar Arya & Ors. v. Chhaya Devi & Anr., 2017 SCC OnLine Del 11436, the Delhi High Court held that the operation of Section 430 depends upon whether the NCLT is empowered under the Companies Act to determine the particular dispute and grant the particular relief claimed.

The Court specifically rejected the contention that the reference to the Tribunal in the proviso to Section 169(4) gives the NCLT general jurisdiction over all disputes concerning removal of a director. That provision confers only a limited power concerning abuse of the director’s representation.

Similarly, the NCLT’s power under Section 242(2)(h) to order removal of a director is exercised in the context of proceedings under the oppression and mismanagement provisions of Sections 241–242. It does not convert every ordinary removal under Section 169 into an NCLT proceeding.

Consequently, where the particular relief sought in a suit is not one which the NCLT is empowered to determine under the Companies Act, Section 430 does not bar the jurisdiction of the civil court.

However, where the dispute falls within the statutory jurisdiction of the NCLT—for example, a genuine proceeding under Sections 241–242 in which removal of a director is sought as a remedial measure—Section 430 would operate to exclude the jurisdiction of the civil court.

Thus, the correct proposition is:

Section 430 does not create a blanket bar against civil suits concerning directors. The jurisdictional test is whether the NCLT is empowered under the Companies Act to determine the particular dispute and grant the relief claimed. If the NCLT has such jurisdiction, the civil court is barred; if it does not, a civil suit may be maintainable.

Accordingly, Jai Kumar Arya should be understood as a case on the limited scope of NCLT jurisdiction in relation to an ordinary Section 169 removal—not as a proposition that every dispute concerning removal of a director lies before the civil court.

What is analysis of Judgment Jai Kumar Arya?

Answer: The removal of a director is not, merely by virtue of Section 169 of the Companies Act, 2013, a matter falling exclusively within the jurisdiction of the NCLT. The applicability of Section 430 depends upon whether the particular dispute and relief claimed are matters which the NCLT is empowered to determine under the Companies Act.

This principle was examined in detail by the Delhi High Court in Jai Kumar Arya & Ors. v. Chhaya Devi & Anr., 2017 SCC OnLine Del 11436, decided on 7 November 2017.

The judgment is important because the Court did not hold that every dispute concerning removal of a director must be brought before the NCLT. On the facts of that case, the Court held that the civil suit was maintainable because the NCLT did not have jurisdiction to grant the particular relief claimed by the plaintiffs.

1. Section 430 does not create a blanket bar on civil suits

Section 430 of the Companies Act provides, in substance, that no civil court shall have jurisdiction in respect of any matter which the Tribunal or Appellate Tribunal is empowered to determine under the Act or any other law for the time being in force.

It also restricts the grant of an injunction in respect of any action taken or to be taken pursuant to any power conferred by or under the Act upon the Tribunal or Appellate Tribunal.

Therefore, Section 430 establishes an important principle:

Where the NCLT is statutorily empowered to determine the particular matter, the jurisdiction of the civil court is excluded.

However, Section 430 does not mean that every dispute having some connection with a company or its directors automatically falls outside the jurisdiction of the civil court.

The first question must therefore be:

Is the NCLT empowered under the Companies Act to determine the particular dispute and grant the particular relief sought?

If the answer is yes, Section 430 may bar the civil suit.

If the answer is no, Section 430 does not operate merely because the dispute happens to concern a company or its director.

2. What was the argument in Jai Kumar Arya?

The defendants argued that the dispute related to removal of a director. Their argument was essentially:

Section 169 → removal of director → NCLT/Tribunal → Section 430 → civil court barred.

They particularly relied upon the reference to the Tribunal contained in the proviso to Section 169(4). The Delhi High Court, however, examined the actual scope of the statutory jurisdiction of the NCLT rather than accepting the argument merely because the dispute concerned removal of a director.

3. Exclusion of civil-court jurisdiction must be strictly construed

The Court referred to the settled principles governing exclusion of civil-court jurisdiction. The basic principle is that the jurisdiction of a civil court is not excluded merely by implication unless the statutory scheme clearly provides such exclusion.

Therefore, while Section 430 is an important jurisdictional bar, the Court must first determine whether the subject matter falls within the jurisdiction conferred upon the NCLT.

Thus, the proper approach is:

Nature of dispute + relief claimed → statutory jurisdiction of NCLT → application of Section 430.

It is therefore incorrect to apply Section 430 mechanically merely because the dispute arises under the Companies Act.

4. The crucial question: What exactly is the relief claimed?

In Jai Kumar Arya, the plaintiffs sought relief restraining the defendants from acting upon the notice concerning their proposed removal and from acting upon any resolution that might be passed for their removal as directors. The dispute was therefore essentially concerned with the proposed removal of the directors under Section 169.

The Court then examined whether the NCLT had been given jurisdiction under the Companies Act to adjudicate that particular dispute. This became the decisive issue.

5. Section 169(4) does not confer general NCLT jurisdiction

This is one of the most important aspects of the judgment. Section 169(4) deals with the right of the director concerned to make a representation against the proposed removal and to have that representation circulated to the members. The proviso permits the Tribunal to intervene in a limited situation where the right of representation is being abused for securing needless publicity for defamatory matter. In such a situation, the Tribunal may direct that the representation:

• need not be circulated to the members; and
• need not be read at the meeting.

The Delhi High Court therefore treated this as a specific and limited statutory power of the Tribunal. It does not mean that Section 169 generally confers jurisdiction upon the NCLT to adjudicate every dispute relating to removal of a director.

Accordingly:

Section 169(4) proviso ≠ General NCLT jurisdiction over all Section 169 removal disputes.

This distinction is extremely important.

6. What about Section 241?

The defendants also relied upon Section 241. Section 241 enables eligible members to approach the NCLT where the affairs of a company are being conducted in a manner prejudicial to public interest, oppressive to a member, prejudicial to a member’s interests, or prejudicial to the interests of the company. The Court recognised that Sections 241–242 confer wide powers upon the NCLT.

However, the existence of a possible oppression/mismanagement remedy does not mean that every dispute involving a director’s removal automatically becomes a Section 241 proceeding.

The Court must examine the actual cause of action and the relief sought.

Thus, if the dispute is genuinely one concerning oppression or mismanagement and the relief is sought under Sections 241–242, the NCLT’s jurisdiction would be attracted and Section 430 would become relevant.

But a standalone challenge to an ordinary Section 169 removal cannot be converted into an NCLT matter merely because the facts could potentially be connected with allegations of oppression or mismanagement.

7. Section 242(2)(h) — an important distinction

Section 242(2)(h) specifically empowers the NCLT, in appropriate proceedings under Section 242, to order:

the removal of the managing director, manager or any of the directors of the company.

At first sight, this provision may appear to suggest that all disputes concerning removal of directors belong to the NCLT. That would, however, be an incorrect reading.

There are two distinct statutory mechanisms:

Section 169 — ordinary removal by members

Under Section 169, members may remove a director by passing the requisite resolution, subject to the statutory requirements.

This is the ordinary shareholder-driven mechanism for removal.

Section 242(2)(h) — removal ordered by NCLT

Under Section 242(2)(h), the NCLT may itself order removal of a director as a remedial measure in proceedings under the oppression and mismanagement provisions.

These are fundamentally different statutory mechanisms.

Therefore: The fact that Section 242(2)(h) gives the NCLT power to order removal of a director does not mean that every challenge to a Section 169 removal falls within NCLT jurisdiction.

8. The decisive finding in Jai Kumar Arya

The Delhi High Court ultimately held that the particular relief claimed by the plaintiffs did not fall within the statutory jurisdiction of the NCLT. Consequently, there was no provision under the Companies Act under which the particular claim made in the civil suit could have been preferred before the NCLT. The Court therefore concluded that Section 430 did not exclude the jurisdiction of the civil court.

In other words:

Section 169 dispute

↓

NCLT not empowered to determine the particular relief

↓

Section 430 not attracted

↓

Civil suit maintainable

This is the central ratio relevant to the question.

9. What is the correct legal test under Section 430?

The correct test is not:

“Is this a dispute concerning a company?”

Nor is it:

“Does the dispute concern a director?”

The correct test is:

Whether the particular matter in dispute is one which the NCLT is empowered to determine under the Companies Act.

Accordingly, the Court must examine:

1. the nature of the dispute;

2. the cause of action;

3. the relief actually claimed;

4. the specific statutory provision conferring jurisdiction upon the NCLT; and

5. whether the NCLT can grant an effective and appropriate remedy in respect of that dispute.

Only after answering these questions can Section 430 be applied.

10. Therefore, is a civil suit challenging removal under Section 169 maintainable?

It can be, depending upon the nature of the relief and the statutory jurisdiction of the NCLT. A blanket proposition that:

“All disputes concerning removal of directors must be filed before the NCLT”

would not be correct.

Similarly, the opposite proposition that:

“All Section 169 removal disputes must be filed before the civil court”

would also be too broad.

The correct position is jurisdiction-specific.

11. Practical distinction between the different situations

Nature of dispute	Likely forum
Ordinary removal of director by members under Section 169	General Meeting / shareholders’ statutory process
Challenge to a Section 169 removal where the NCLT has no statutory jurisdiction over the particular relief	Civil Court may be maintainable
Oppression/mismanagement proceedings under Sections 241–242 involving removal as a relief	NCLT
NCLT exercising its power under Section 242(2)(h) to remove a director	NCLT
Limited issue concerning abuse of representation under proviso to Section 169(4)	NCLT/Tribunal to the extent of the specific statutory power
Matter which the Companies Act specifically places within NCLT jurisdiction	NCLT; Section 430 bars civil court

12. How should Jai Kumar Arya be understood after later decisions?

It is important not to read Jai Kumar Arya as laying down an absolute proposition that civil courts always have jurisdiction over director-removal disputes. The judgment establishes a narrower and more important principle:

Section 430 applies only when the NCLT is empowered to determine the particular matter.

Therefore, where the dispute falls within Sections 241–242 or another specific statutory jurisdiction of the NCLT, Section 430 can exclude the civil court.

This distinction was also recognised in subsequent Delhi High Court decisions, including Bhaskar Gupta v. Calcutta Club Ltd. and Suraj Prakash Arora v. Roshanara Club Ltd. (15th April 2025), which caution against treating Jai Kumar Arya as a universal exception to Section 430.

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Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the author whatsoever and the content is to be used strictly for informational and educational purposes. While due care has been taken in preparing this article, certain mistakes and omissions may creep in. the author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.