Disputed CEO Cannot Continue Representing Company: Bombay High Court

Daskalos Technologies Pvt. Ltd. Vs Atul Khosla (Bombay High Court)

Disputed Termination Does Not Permit Continued CEO Representation: Bombay High Court Grants Limited Protection

Summary: The Bombay High Court, in Daskalos Technologies Pvt. Ltd. Vs Atul Khosla, partly allowed a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, restraining Atul Khosla from representing himself as the present Chief Executive Officer, authorised signatory or authorised representative of Daskalos Technologies Private Limited while permitting him to contest the termination of his employment. Justice Amit Borkar pronounced the judgment on 3 November 2026 after reserving it on 29 October 2026 in Arbitration Petition (L) No. 34386 of 2026. The Court drew a distinction between the company’s authority to communicate a termination decision and whether the contractual or statutory grounds asserted for that termination were ultimately sustainable. While accepting the legal effect of a subsequent Board resolution ratifying the termination communication, the Court did not finally uphold the termination itself. Instead, it granted narrowly tailored interim protection against continued exercise of executive authority, unauthorised access to confidential information and retention of company property. Broader injunctions restraining participation in management, proceedings before other judicial forums and allegedly disparaging statements were refused. The parties’ substantive contractual disputes were left open for arbitration or determination by the competent forum.

The dispute originated from an Employment Agreement dated 1 July 2025, effective from 27 January 2026, under which Khosla was appointed CEO of the petitioner company. At the same time, he continued to hold the position of whole-time Vice-Chancellor of Shoolini University of Biotechnology and Management Sciences in Himachal Pradesh. The company relied on the University’s First Statutes, particularly the requirement that the Vice-Chancellor be a whole-time salaried officer, together with Section 203 of the Companies Act, 2013, to question the compatibility of the two appointments. A communication dated 23 September 2026 from the University Grants Commission, issued in response to a request made by the company’s advocate, indicated that concurrent private employment while continuing as whole-time Vice-Chancellor would not be permitted. The petitioner treated that communication as an important basis for asserting that the Employment Agreement could not lawfully continue. Khosla, however, relied on permissions allegedly granted by the University’s Chancellor and disputed the company’s interpretation of the applicable statutory and contractual provisions.

On 29 September 2026, the company issued a letter advancing three alternative grounds for ending the employment relationship. First, it asserted that the Employment Agreement was void from its inception under Section 23 of the Indian Contract Act, 1872, because performance would defeat the University’s statutory restrictions. Secondly, it asserted an immediate right of termination under the contractual provisions dealing with material breaches, particularly Clauses 12.4 and 12.5, concerning dedication of time and restrictions on other leadership or managerial engagements. Thirdly, it claimed rescission under Sections 18 and 19 of the Contract Act on the ground that Khosla had allegedly made incorrect representations about his eligibility and ability to perform the agreement without violating applicable law. In his communication dated 30 September 2026, Khosla rejected those positions and asserted that he continued to hold office as CEO. The company replied on 2 October 2026, disputing his continuing authority to represent it, and subsequently sought protective relief from the High Court.

The company argued that continuing representation by Khosla as CEO would cause serious confusion regarding its management, commitments, employees, investors, customers, banking relationships and international educational partnerships. It relied upon the principle that an ordinary contract of personal service generally cannot be specifically enforced and that a terminated private employee ordinarily cannot compel reinstatement through an injunction. In support, it cited Executive Committee of Vaish Degree College v. Lakshmi Narain, (1976) 2 SCC 58, concerning the recognised exceptions to the general prohibition on enforcing private employment contracts. Khosla disputed the termination, its supporting allegations and the company’s claimed entitlement to the extensive restraints sought. The Court therefore examined the requirements for interim protection separately from the final merits of the employment relationship, recognising that the legality of a disputed termination and the authority to continue representing a company were distinct issues.

Regarding the alleged statutory incompatibility of the two appointments, the High Court examined the University’s governing legislation, the First Statutes, the UGC communication and the competing interpretations advanced by the parties. The company contended that the Vice-Chancellor’s position required whole-time engagement and that a CEO was treated as whole-time managerial personnel under Section 203 of the Companies Act. It further submitted that the Chancellor could not grant an exemption under provisions applicable only to employees rather than officers of the University. Khosla maintained that the company knew of his existing University responsibilities and that the relevant permissions and contractual arrangements permitted his continued engagement. The Court treated these matters as requiring fuller examination of the underlying statutory provisions, University permissions, the negotiations and the parties’ knowledge. The UGC communication was relevant but did not conclusively establish every factual and legal requirement necessary to declare the agreement void under Section 23 or rescinded under Section 19.

The Court separately examined whether the company had established sufficient grounds for immediate termination under Clause 9.3(a) of the Employment Agreement. That clause contemplated a written notice describing a material breach and an opportunity to cure the breach within 30 business days. The company had not provided that contractual cure period before issuing the termination letter. It argued that simultaneous occupation of the two positions constituted a continuing or incurable breach, but the Court held that simply describing a breach as continuing or incapable of correction did not automatically dispense with the contractual procedure. The company’s case under Clause 12.4, requiring substantial dedication of time, was not sufficiently established on the available material. Clause 12.5, restricting engagement in other leadership or managerial positions, raised a more substantial issue, particularly concerning the scope of the contractual exceptions for identified entities and the requirement of consent from Eruditus. Nevertheless, the interaction of these provisions, the disputed permissions and the final determination of contractual “Cause” required consideration in the appropriate substantive proceedings. The Court therefore did not find that the company had established a prima facie valid termination for breach under Clause 9.3(a).

A central issue concerned the company’s Board resolution dated 19 October 2026, which approved and ratified the decision communicated in the termination letter dated 29 September 2026. Khosla challenged the validity of the earlier decision and the subsequent ratification, including objections regarding notice of the Board meeting, participation by directors and corporate procedure. The company argued that the earlier letter had been signed by the two directors entitled to decide the matter and that any procedural defect was cured by the later Board resolution. Examining principles of corporate ratification, including Maharashtra State Mining Corporation v. Sunil and Parmeshwari Prasad Gupta v. Union of India, the Court held that the Board had authority to decide the question of removal of the CEO and that the resolution dated 19 October 2026 validly ratified the earlier communication. For deciding interim relief, the ratification related back to 29 September 2026. However, the Court expressly distinguished the validity of that corporate action from the truth of the underlying allegations. Ratification could establish the company’s authority to issue the letter; it could not prove contractual breaches, misrepresentation, statutory illegality or compliance with the contractual termination procedure.

After considering the circumstances of the dispute, the Court held that the company had established a sufficient case for restraining Khosla from holding himself out as its present CEO or authorised representative. The available material included his express assertion that he continued to occupy the office, the company’s concerns regarding his public representation of that status and the potential for confusion among employees, banks, investors, customers and third parties. The Court explained that a person may challenge the legality of termination without thereby acquiring authority to issue company instructions, sign documents or bind the employer while the dispute remains unresolved. The balance of convenience supported preventing the creation of competing centres of executive authority. The restraint was carefully limited: Khosla could continue to state that the termination was disputed, pursue arbitration or other lawful remedies, and describe himself accurately as a former CEO. His independent rights, if any, as a director or shareholder were expressly preserved and remained exercisable in accordance with the Companies Act and the documents governing the company.

The High Court refused the company’s request for a broad prohibition against interference with management. Such relief, in the Court’s view, could improperly restrict lawful participation in Board meetings, voting, access to company information or the exercise of legitimate shareholder rights. The Court also declined the proposed anti-suit injunction preventing Khosla from pursuing proceedings before other courts, tribunals or authorities. Applying the principles in Modi Entertainment Network v. W.S.G. Cricket Pte. Ltd., (2003) 4 SCC 341, it found that the company had not established that the earlier proceedings before the Himachal Pradesh High Court were oppressive or vexatious or that the interests of justice required an injunction of such breadth. The Court considered the existing litigation, including proceedings concerning an earlier suspension and the appointment of a third-party expert, and noted that the company itself had participated in those proceedings while seeking reference to arbitration. The separate arbitration agreement did not justify preventing all resort to otherwise available statutory or judicial remedies.

The company also sought a broad non-disparagement injunction, referring to a disputed LinkedIn publication suggesting that a start-up had been “hijacked”. The Court declined that relief because the material presented did not sufficiently establish the falsity of the statement, the precise meaning attributable to it or the alleged reputational harm to justify the sweeping restraint sought. This refusal did not authorise false statements, misuse of protected material or unlawful disclosures. On the separate question of confidentiality and company property, the Court found that a limited protective injunction was appropriate. Khosla was restrained from accessing, using, publishing, transferring, retaining or disclosing the company’s confidential business information, financial information, records, communications, data and other proprietary material. The restriction was qualified to permit necessary use of limited material for obtaining legal advice or pursuing lawful proceedings, subject to appropriate confidentiality safeguards.

The company alleged that an Apple MacBook supplied for official use had not been returned, whereas Khosla denied possessing any company property or access credentials. The Court found insufficient material to conclude that he was deliberately disobeying an earlier ad-interim order or that the disputed laptop was necessarily in his possession. Rather than determining that disputed fact without adequate proof, it directed him to return company property, records, documents, devices, keys and access credentials within seven days, insofar as they remained in his possession or control. He was also required to file an affidavit detailing the relevant property, identifying which items had been returned and specifically addressing any disputed item, including the Apple MacBook. This approach protected the company’s legitimate proprietary interests without treating the allegations of possession or non-compliance as proved.

In its final operative order, the Court partly allowed the arbitration petition, granted the limited restraint against holding out as current CEO or authorised representative, protected confidential information and directed return of company property with an affidavit. Prayer clauses (b), (c) and (d), covering the wider injunctions, were rejected. The Employment Agreement provided for Singapore arbitration under SIAC Rules, and the company was directed, if arbitration had not already commenced, to initiate the proceedings under Clause 14 within 90 days, subject to Section 9(2) of the Arbitration and Conciliation Act, 1996. The petition was disposed of without costs. All substantive questions concerning the validity of the agreement, legality of the dual appointments, University permissions, misrepresentation, alleged breaches, the termination letter and related corporate disputes were expressly kept open. The decision accordingly establishes a distinction between interim protection of corporate authority and property and the final adjudication of contested contractual rights.

Introduction

The Bombay High Court has restrained Atul Khosla from representing himself as the current Chief Executive Officer or authorised representative of Daskalos Technologies Private Limited, while preserving his right to challenge the termination of his employment.

Justice Amit Borkar partly allowed the company’s petition under Section 9 of the Arbitration and Conciliation Act, 1996, granting protection over executive representation, confidential information and company property.

The judgment, pronounced on 3 November 2026 in Arbitration Petition (L) No. 34386 of 2026, distinguishes between the legality of termination and the authority to continue binding a company during that dispute.

Background of the Employment Dispute

The parties entered into an Employment Agreement dated 1 July 2025, effective from 27 January 2026, appointing Khosla as CEO.

Khosla also held office as Vice-Chancellor of Shoolini University. Following a UGC communication concerning simultaneous private employment, the company issued a letter dated 29 September 2026, asserting three alternative grounds for ending the relationship.

It claimed that the agreement was void under Section 23 of the Contract Act, that contractual breaches justified termination, or that misrepresentation entitled it to rescind under Section 19.

Khosla disputed the company’s position and maintained that he continued as CEO. The company consequently sought interim protection pending arbitration.

Substantive Grounds Were Not Established Finally

The Court did not accept that the company had established a prima facie valid termination for contractual breach under Clause 9.3(a).

The agreement required 30 business days’ notice and an opportunity to cure, which had not been provided. The record also lacked the relevant final determination of “Cause” contemplated by the agreement.

The alternative grounds involving illegality and misrepresentation raised serious questions. However, the University permissions, the company’s knowledge of Khosla’s existing office and the limited nature of the UGC communication prevented those grounds from being treated as conclusively established.

The merits therefore remained open for the appropriate forum.

Board Ratification Did Not Prove Contractual Breach

The company relied on a subsequent Board resolution dated 19 October 2026, approving and ratifying the earlier termination decision.

For deciding interim relief, the Court accepted the ratification as a valid corporate act relating back to 29 September 2026.

However, it drew an important distinction: ratification could establish the company’s corporate authority to issue the letter, but could not prove that the alleged breaches occurred.

Nor could it remove contractual requirements concerning notice and cure, establish misrepresentation or automatically render the agreement unlawful.

The company therefore could not treat Board approval as proof of every substantive allegation underlying termination.

Limited Restraint Against Acting as CEO

The Court held that challenging termination does not itself confer continuing authority to instruct employees, sign documents, enter transactions or bind the company.

Competing claims to executive authority could create confusion among universities, investors, banks, employees and business partners. The company did not have to await an actual loss before seeking preventive protection.

Accordingly, Khosla was restrained from holding himself out as the present CEO, authorised signatory or authorised representative.

He remained free to describe himself as a former CEO, state that termination was disputed and pursue available remedies. His separate rights, if any, as a director or shareholder were preserved.

Wider Injunctions Refused

The Court rejected the request for a general restraint against interference with management. Such an order could improperly restrict lawful participation in Board meetings, voting, access to information and protection of shareholder interests.

It also refused a broad anti-suit injunction preventing proceedings before other courts, tribunals or authorities. The company had not established the conditions necessary for that relief.

A general non-disparagement injunction was likewise rejected. The company relied on a disputed LinkedIn post describing a start-up as “hijacked”, but had not supplied sufficient material establishing falsity or actual reputational damage.

The Court nevertheless clarified that rejection of the broad prayer did not authorise false statements or unlawful disclosure of confidential information.

Confidentiality and Return of Property

The Court protected the company’s confidential information, records, data and proprietary material.

Khosla was directed to return company property, documents, devices, keys and access credentials within seven days, insofar as they remained in his possession or control.

He must also file an affidavit identifying the relevant items and their return status. Regarding the disputed Apple MacBook, the Court required a specific sworn statement rather than presuming possession or deliberate disobedience.

Limited use of necessary material for legal advice or lawful proceedings remained permitted, subject to confidentiality safeguards.

Arbitration and Final Outcome

The agreement provides for Singapore arbitration under SIAC Rules. The company was directed to commence arbitration within 90 days, if not already commenced, subject to Section 9(2).

The petition was partly allowed without costs.

The order regulates representation and protects company assets during the dispute. It does not finally determine the employment agreement’s validity, the legality of holding both positions, alleged misrepresentation, contractual breaches or the ultimate validity of termination.

Cases Discussed

• Vinod Kumar Saraf Vs Villayati Ram Mittal (Bombay High Court); Commercial Arbitration Petition No. 979 of 2026. Relied upon by the petitioner in connection with the arbitration agreement and the claim for an anti-suit injunction. The exact judgment date and a corresponding TaxGuru case page could not be verified.
• The Agriculture Produce Market Committee Vs State of Maharashtra and Others (Bombay High Court); 2025:BHC-AUG:17243. Cited in the arguments concerning whether an agreement or act alleged to be contrary to statutory requirements could operate lawfully. Its application depended on the statutory and contractual facts of the present dispute.
• Ghanshyam Malhotra and Others Vs Vithalnagar Co-operative Housing Society Ltd. (Bombay High Court); 2023:BHC-AS:33609. Relied upon by the respondent while challenging the validity of the earlier corporate action and subsequent ratification. The Court considered the effect of the cited authority in the context of the particular Board decision.
• Mahima Datla Vs Dr. Renuka Datla (Supreme Court); (2022) 10 SCC 258; Civil Appeal No. 2776 of 2022. Relied upon for the Duomatic Principle, under which unanimous assent of persons entitled to decide a corporate matter may have the legal effect of a formal resolution in appropriate circumstances. The present Court distinguished the applicability of that principle from the specific question of subsequent Board ratification.
• Vidya Drolia Vs Durga Trading Corporation (Supreme Court); (2021) 2 SCC 1. Relied upon in connection with the scope of arbitrability and the distinction between disputes suitable for arbitration and matters reserved to courts or statutory forums.
• PASL Wind Solutions Private Limited Vs GE Power Conversion India Private Limited (Supreme Court); (2021) 7 SCC 1. Considered in connection with foreign-seated arbitration and the legal framework applicable to disputes involving Indian parties who select an overseas arbitral seat.
• Rajendra Kumar Nagda Vs State of Rajasthan and Others (Rajasthan High Court); 2018 (4) RLW 2857. Cited by the petitioner regarding the distinction between teachers, employees and statutory officers, particularly the legal position of a Vice-Chancellor.
• P. Vijayan Vs Union of India and Others (Madras High Court); Writ Petition Nos. 12768 and 12769 of 2018. Relied upon concerning statutory University offices and the difference between the employment status of University officers and ordinary employees.
• A. Ayyasamy Vs A. Paramasivam (Supreme Court); (2016) 10 SCC 386. Relied upon concerning arbitrability of disputes, including the effect of allegations of fraud on the validity and operation of an arbitration agreement.
• Rajbir Singh Dalal Vs Chaudhary Devi Lal University (Supreme Court); (2008) 9 SCC 284. Relied upon by the petitioner to support the importance of the University Grants Commission’s expertise in matters involving standards and regulation of higher education.
• Government of Andhra Pradesh and Others Vs K. Bharmanandam (Supreme Court); (2008) 5 SCC 241. Relied upon by the respondent in disputing whether subsequent ratification could validate an earlier action alleged to be unlawful or void.
• Chander Kanta Bansal Vs Rajinder Singh Anand (Supreme Court); (2008) 5 SCC 117. Cited in connection with the meaning and requirements of due diligence.
• Maharashtra State Mining Corporation Vs Sunil (Supreme Court); (2006) 5 SCC 96. Considered for the principle that a competent Board’s subsequent ratification may relate back to the date of an earlier action originally undertaken without sufficient authority. The Court applied the principle to the Board resolution dated 19 October 2026, while keeping the substantive termination grounds open.
• Modi Entertainment Network Vs W.S.G. Cricket Pte. Ltd. (Supreme Court); (2003) 4 SCC 341. Applied in considering the requirements for an anti-suit injunction, including personal jurisdiction, the ends of justice, comity between courts and whether the other proceedings are oppressive or vexatious. The Court declined the broad injunction sought.
• Dhurandhar Prasad Singh Vs Jai Prakash University (Supreme Court); (2001) 6 SCC 534. Referred to by the respondent while distinguishing acts capable of subsequent validation from acts that are void or legally ineffective.
• College of Engineering of Yeshwant Rural Education Society Vs Asmita Basole and Others (Bombay High Court); (1998) 1 LLJ 95 (Bom). Relied upon concerning employment termination and the legal effect of applicable notice and contractual requirements.
• Runciman Vs Walter Runciman plc (English Court); (1992) BCLC 1084. Cited for the proposition that directors may, in appropriate circumstances, act unanimously without formal resolution procedures. The Court examined the factual limits of applying that proposition to the disputed corporate action.
• Sharif-ud-Din Vs Abdul Gani Lone (Supreme Court); (1980) 1 SCC 403. Cited for the distinction between mandatory and directory statutory requirements, particularly in relation to alleged procedural defects in corporate decision-making.
• Executive Committee of Vaish Degree College Vs Lakshmi Narain (Supreme Court); (1976) 2 SCC 58. Relied upon for the general principle that private employment contracts ordinarily cannot be specifically enforced, subject to recognised exceptions. Relevant to the respondent’s attempt to assert continuing executive status during the termination dispute.
• Parmeshwari Prasad Gupta Vs Union of India (Supreme Court); (1973) 2 SCC 543. Considered for the principle that a competent Board’s ratification of an earlier unauthorised corporate act may operate retrospectively. Applied to the corporate authority underlying the termination letter.
• In Re Duomatic Ltd. (English Court); [1969] 2 Ch 365. Referred to for the Duomatic Principle concerning unanimous shareholder assent and the circumstances in which it may substitute for formal corporate approval.
• Chancellor of Universities in Karnataka and His Excellency the Governor Vs Prof. H.B. Walikar, Vice Chancellor (Karnataka High Court); Writ Appeal No. 100035 of 2015. Cited by the respondent concerning the position and statutory status of a Vice-Chancellor and the legal implications of the University’s governing provisions.