Summary: In M/s. Pearl City Marine Products Pvt. Ltd. & Ors. v. Hiras K. & Ors., Company Appeal (AT) (CH) No. 76/2026, judgment dated 17.08.2026, NCLAT, Chennai Bench considered whether a shareholder must first exhaust the remedy under Section 100(4) of the Companies Act, 2013 before invoking Section 98 for convening an Extraordinary General Meeting. NCLAT held that the two remedies are mutually exclusive and Section 98 is not dependent upon prior exhaustion of Section 100(4). However, Section 98 confers an exceptional jurisdiction and its invocation requires the applicant to establish the statutory precondition that it has become impracticable to call, hold or conduct the meeting without Tribunal intervention. The NCLAT relied on Invesco Developing Markets Fund and Other Vs Zee Entertainment Enterprises Limited and Others and In Re: Ruttonjee and Co. Ltd.. On the facts, mere division among five directors, rejection of the EGM requisition by a 3:2 majority and the existence of nearly 110 other shareholders did not establish impracticability. The first respondent had also not attempted to convene the meeting under Section 100(4). In the absence of foundational facts, the Tribunal could not presume impracticability. NCLAT accordingly set aside the NCLT order and allowed the appeal.
NCLAT Clarifies in Pearl City Marine Products Judgment: – Section 100(4) Need Not Be Exhausted Before Section 98
Under Section 100(2), eligible shareholders can requisition the Board to call an EGM. If the Board does not proceed with the requisition, Section 100(4) provides the requisitioning members with the right to call and hold the meeting themselves.
But there is another right available to shareholders to approach the NCLT under Section 98 for calling an EGM where it is impracticable to call or conduct the meeting in the manner prescribed by the Act or the Articles.
In the case of M/s. Pearl City Marine Products Pvt. Ltd. & Ors. v. Hiras K. & Ors., Company Appeal (AT) (CH) No. 76/2026, judgment dated 17.08.2026, NCLAT, Chennai Bench, the issue arose as to whether a shareholder can approach the NCLT under Section 98 for convening an EGM without first exhausting the remedy available to him under Section 100(4) of the Companies Act, 2013.
The two questions arising from this judgment and their answers may be read as follows:
Question 1: Do I have to first go through Section 100(4) before invoking Section 98?
Answer: No.
Question 2: Can I get an order under Section 98 merely because the Board refused my request to convene an EGM?
Answer: No. You must establish “impracticability.”
Section 98 and Section 100(4) Are Mutually Exclusive Remedies
In this matter, NCLAT relied heavily upon the Bombay High Court’s decision in Invesco Developing Markets Fund. On the basis of this judgment, NCLAT held that convening a General Meeting by a requisitioning member under Section 100(4) of the Companies Act, 2013, and convening a meeting through the intervention of the Tribunal under Section 98 are mutually exclusive remedies. Therefore, invocation of Section 98 is not dependent upon first exhausting the remedy available under Section 100(4).
There is, however, a rider. While a requisitioning member’s right to convene a meeting under Section 100(4) is absolute, the right to invoke Section 98 is qualified. It can be invoked only upon establishing the statutory precondition that it has become impracticable to hold the meeting without the intervention of the Tribunal.
The fundamental rule of corporate governance is based on the principle of internal democracy, and ordinarily, tribunals should not interfere with the internal management of a company. In this context, Section 98 confers an exceptional jurisdiction on the Tribunal, which may interfere in the internal management of the company for convening a meeting under the Act or the Articles. However, such jurisdiction can be exercised only when it is reasonably established that, without the intervention of the Tribunal, the meeting may not take place.
Principles Governing “Impracticability” Under Section 98
In the renowned Re: Ruttonjee & Co. Ltd. case, the Calcutta High Court examined the circumstances in which a court can interfere with the internal management of a company and direct the convening of a general meeting under Section 186 of the Companies Act, 1956. Section 98 of the Companies Act, 2013, is the corresponding provision and is substantially the same in this respect. The Court laid down broad guidelines governing the exercise of such power.
The guidelines laid down in Re: Ruttonjee & Co. Ltd. and referred to by the NCLAT are as follows:
1. Ordinarily, the Court should not interfere with the domestic management of a company, which should be conducted in accordance with its Articles.
2. The discretion under Section 186 should be exercised sparingly and with caution, so that the Court does not become a shareholder or director and involve itself in internal disputes between rival groups.
3. The expression “impracticable” means impracticable from a reasonable point of view.
4. The Court should take a commonsense approach and act as a prudent businessperson.
5. A prudent businessperson would not seek judicial intervention merely because there is rivalry between two groups of directors or shareholders. The Court should ordinarily keep itself aloof from such internal disputes.
6. Where a meeting can be called only by the directors and there are serious doubts or controversy regarding who the directors are, or where meetings called by rival groups may be invalid, the Court may hold that it has become “impracticable” to convene a meeting in accordance with the Act or Articles.
7. The Court should exercise its power when, considering the facts and circumstances, it appears with reasonable certainty, or even prima facie, that a meeting convened in the ordinary manner under the Act or Articles would be invalid.
8. Before exercising its discretion, the Court must be satisfied that the application by a director or member has been made bona fide and in the larger interests of the company, particularly for the purpose of removing an otherwise irremovable deadlock.
The Court said that Section 98 is an exceptional provision and the Tribunal should not interfere with the company’s internal management too quickly.
Section 98 Requires More Than Board Refusal or Difficulty
The main points are:
1. Section 98 power must be used sparingly. The Tribunal should direct the convening of a meeting only in exceptional circumstances.
2. Section 100(4) gives the member a normal/absolute remedy. If the requirements of Section 100 are satisfied, the requisitioning member can himself call the meeting under Section 100(4).
3. If the member chooses Section 98 instead, he must prove something more. He has to place facts before the Tribunal showing that it has become “impracticable” to convene the meeting.
4. Impracticable does not simply mean difficult or inconvenient. The situation must be so serious that there is a real likelihood that the meeting cannot be convened without the Tribunal’s intervention.
5. The Tribunal must ask:
“Has the situation become such that, unless I intervene, the meeting probably cannot be held?”
6. If the answer is No, the Tribunal should normally not interfere because the company’s internal management should be respected.
7. Therefore, the facts must be more serious than those in the Ruttonjee case. Mere disagreement, difficulty, or inconvenience is not sufficient.
NCLAT Examines Whether EGM Was Impracticable
The Court examined whether the first respondent actually showed that it was impracticable to call the EGM under Section 100(4). The Court found that the respondent failed to show this.
What the Court said:
1. Very few facts were given to prove impracticability. In the company petition, the first respondent mainly said that there was a division among the directors.
2. Division in the Board is not enough. The Board had rejected his request to call an EGM by a 3:2 majority. But that alone does not mean that an EGM cannot be convened.
3. There were about 110 other shareholders. Apart from the five directors, the company had nearly 110 shareholders. Therefore, the Court asked “Why should it be difficult to convene a meeting merely because the Board is divided?”
4. He did not even try Section 100(4). The first respondent never attempted to convene the meeting himself under Section 100(4).
5. The Tribunal cannot presume impracticability. A party must first provide foundational facts showing why the meeting cannot be held. If those basic facts are missing, the Tribunal cannot simply assume that it is impracticable.
6. Section 98 should not be used merely because it is convenient. The Tribunal should not weaken the principle of internal management of the company merely because intervention under Section 98 appears to be an easier or more convenient solution.
Conclusion
A requisitioning member is not required to exhaust his right under Section 100(4) before invoking Section 98. However, Section 98 is an exceptional jurisdiction and can be exercised only when the applicant establishes, through foundational facts, that it has become impracticable to call or conduct the meeting without the Tribunal’s intervention. Mere refusal by the Board, internal disagreement, or division among directors does not by itself constitute impracticability.
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