Biju Scaria & Anr. vs Media Team Solutions (I) Pvt Ltd & Ors.

[Per : Justice Sharad Kumar Sharma, Member (Judicial)]

The Appellant in the instant Company Appeal, is the Petitioner / Applicant to the Application IA(C/Act) No.115/KOB/2025, where the Appellant had sought for grant of an interim relief during the pendency of the Company Petition preferred by him, being CP(C/Act) No.31/KOB/2024 before Learned NCLT, Kochi. The said Application has been rejected by the Learned Tribunal by the order dated 26.08.2025. Aggrieved by the said order, the instant Appeal has been filed.

Brief facts, which require a marginal reference is that, the Appellant had preferred a Company Petition, by invoking the provisions contained under Section 241 & 242 of the Companies Act, 2013, praying for a grant of appropriate orders, directions and reliefs under Section 241 & 242 of the Companies Act and other applicable provisions of the Companies Act, to bring to an end to the aforesaid alleged acts of oppression and mismanagement, as detailed therein in the Company Petition, being perpetuated by Respondents 2 to 5, a declaration that the act of Respondent No.2 is oppressive and prejudicial to the interest of the 1^st Respondent company, to set aside notice of board meeting dated 09.10.2024, to declare that Respondents 2 to 5 are not entitled to continue as directors of Respondent 1 company and to direct their removal, and to pass appropriate orders regulating conduct of affairs of the Respondent 1 company by superseding the Board & directing reconstitution of the same as may be deemed just and proper. In the memo of Company Petition itself, the Appellant had also modulated the interim relief, which he had prayed for to be granted during the pendency of the Company Petition, which was modulated in the following manner: -

Apart from the said interim relief as sought for in the Company Petition, the Appellant, on 23.06.2025, had filed yet another Interlocutory Application IA No.115/KOB/2025, wherein the Appellant has prayed for the grant of certain interim reliefs which are extracted hereunder: -

The interim reliefs sought for as above were basically in the nature of seeking a restraint order as against the Respondents of the Company Petition from conducting the Extraordinary General Meeting which was scheduled to be held on 01.07.2025, pursuant to the notice of 09.06.2025 and from proceeding with any resolution or any corporate action arising out of and in furtherance of the said notice dated 09.06.2025. But the fact remains that, when the proceedings of the IA(C/Act) No.115/KOB/2025, were taken up before the Learned Tribunal, Learned Tribunal after considering the rival contentions, and the averments, which were made in the proceeding, held on 23.06.2025, observed and recorded a categorial finding that there was no procedural anomaly in so far as it relates to the issuance of the notice of 09.06.2025, for the purposes of holding of the EGM on 01.07.2025 and further observed that any resolution passed or any action taken in pursuance to the proceedings to be held on the basis of the notice of the EGM dated 09.06.2025, would be subject to the decision to be taken on the said Interlocutory Application. Learned Tribunal also observed that the Board of Directors of the 1^st Respondent Company had already called the EGM as per the provisions of the Companies Act, 2013, and that, in the said EGM, supposed to be conducted on 01.07.2025, the Petitioners will have all the rights and opportunities to place their version before the shareholders of the company.

Learned Tribunal observed in the order dated 26.06.2025 that, since there was no procedural anomaly and no procedural or legal lapses as per the provisions of the Companies Act in calling for the EGM by the Board of Directors (BOD), staying the conduct of the said EGM, should not be ventured into as it would amount to be an interference in the day-to-day functioning of the company. This order passed by the Tribunal on 26.06.2025 has attained finality and has not been put to challenge by the Appellants before any superior forum. Subsequent thereto, the EGM was conducted on 01.07.2025, and by virtue of an Resolution passed by the said EGM, Appellant No.2 was directed to be removed from the position of the Whole-Time Director of the company with effect from the date of the meeting, i.e., 01.07.2025, as per the provisions of Section 169 of the Companies Act, 2013.

The Learned Tribunal, while considering the IA(C/Act) No.115/KOB/2025, while dismissing the same, has observed that the right of the shareholders to remove the directors is absolute, as per the provisions contained under Section 169 of the Companies Act, 2013, and the same cannot be diluted by virtue of a judicial interference on consideration of equity unless there is illegality, malafide intent or violation of natural justice. The basic objective of Section 169 is that the corporate democracy must prevail, until or unless the statutory process is abused. In the instant case, the Appellants had not been able to establish before the Learned Tribunal or by way of any documents, which have been placed on record that there was any procedural anomaly, because the notice of 09.06.2025 and the special notice, which was floated by the shareholders holding more than 66.64% voting powers, satisfy the procedures contemplated under the Companies Act. The copy of the said notice was duly served upon the applicants, and they were provided with an opportunity to represent their case, the EGM was conducted with full transparency including the appointment of an independent scrutinizer and the minutes of the meeting were shared. The Tribunal, after taking into consideration of the above and its own observations made in the order dated 26.06.2025, came to a conclusion in the impugned order that there is nothing to show any procedural anomaly or irregularity in the conduct of the EGM, and that the EGM was duly covered in compliance with statutory requirements and that the motion, which has been carried was well within the ambit of the provision contained under Section 169 of the Companies Act, 2013.

The Appellant has attempted to harp upon the subject of the settlement talks, as well as, the issue of the appointment of the valuer in pursuance to the deliberations which were recorded in the hearings that were held on 05.06.2025 and 13.06.2025 by Learned NCLT. Learned NCLT, in this regard, has observed that the said hearings deliberated an appointment of a valuer and no commitment was recorded as regards to the share transfer or valuation date and no consensus existed on these issues and that no status quo was ordered restraining the company from conducting its business on account of the above. Based on the above and holding that the statutory framework of the provisions contained under the Companies Act, is predominantly intended to protect the shareholders' right while balancing the corporate autonomy and it is absolutely legal for the shareholders to exercise its powers within the ambit of Section 169 of the Companies Act, 2013, to remove a director, the Learned Tribunal came to the conclusion in the impugned order that since there was no legal flaw in calling upon the EGM, there is no case for an interference by way of grant of an interim order as it was prayed for in the IA that, was preferred by the Appellant.

By the time when the IA(C/Act) No.115/KOB/2025 was finally considered by the impugned order of 26.08.2025, the EGM of 01.07.2025 had already been conducted, and Appellant No.2 had been directed removed from the post of director. Thus, the Tribunal observed that by the time the IA was heard on 30.07.2025 or even on the date when the impugned order was passed i.e., on 26.08.2025, since the EGM has already been conducted on 01.07.2025 consequent to which Appellant No.2 since has already been removed from the directorship, the prayer for grant of the first relief as extracted above, as it has been prayed for in IA(C/Act) No.115/KOB/2025; has been rendered redundant, and that the second relief, which was modulated in the interlocutory application, was based upon the first relief of restraining the proceedings of the EGM as scheduled on 01.07.2025, was consequential in nature, and that once the first relief was denied to be granted by the earlier order as passed by the Tribunal on 26.06.2025, the second relief of restraining the Respondents from proceeding with the resolution or the corporate action arising out of or in furtherance of the said notice, for all practical purposes, has become infructuous.

Owing to the savings prescribed by the Tribunal in para 16 of the impugned order rendered on IA(C/Act) No.115/KOB/2025, while rejecting the interlocutory application, coupled with the reasoning put forth by Learned NCLT in respect of the need to respect corporate democracy and the right of shareholders and the action taken holding them to be within the statutory framework of the Companies Act, 2013, the denial to grant an interim relief by the impugned order does not suffer from any apparent error, which will call for any interference by this Appellate Tribunal.

Apart from it, the Learned Counsel for the Respondent has attempted to draw the attention of this Tribunal to the special notice for the removal of the Whole-Time Director which has been issued under Section 169 of the Companies Act, to be read with Section 116 of the Companies Act, for the reasons which have been given therein. The Respondent Counsel has attempted to justify that the holding of the EGM of 01.07.2025, holding that it cannot be said to be contrary to law or owing to the conduct of Appellant No.2, which was in consonance to the special notice under Section 115 to be read with Section 169 of the Companies Act, 2013. We, at this stage, are refraining ourselves from making any remark upon the set of eleven allegations that has been levelled against the Appellant No.2, which obviously would be the subject matter of the Company Petition, to be decided for which liberty has been given by Learned NCLT as contained in para 16 of the impugned order. Owing to the above, the interim order does not suffer any procedural flaw or violation of the Companies Act. Further, because the EGM has already been held on 01.07.2025, the nature of the interim relief, as it was sought in IA(C/Act) No.115/KOB/2025 has been rendered redundant, with the efflux of time, owing to the proceedings held before the Learned NCLT on 30.07.2025 and 26.08.2025 and therefore, at present, there cannot be a status quo till the Company Petition itself is finally adjudicated. Thus, the Company Appeal lacks merit and the same is accordingly dismissed. All Interlocutory Applications would stand closed.