Bombay High Court Restrains Private University Vice-Chancellor From Representing Himself As Company CEO

The Bombay High Court has restrained a Vice-Chancellor of a private university from representing himself as the serving Chief Executive Officer (CEO) of a company or exercising executive authority on its behalf, pending adjudication of a dispute over his termination.

A Single Bench of Justice Amit Borkar clarified that the restraint does not amount to a final finding that the termination was valid. The court also preserved the vice chancellor's rights as a director and shareholder of the company.

The dispute arose after Daskalos Technologies Private Limited terminated Atul Khosla's employment as CEO, alleging that his simultaneous role as the whole-time Vice-Chancellor of Shoolini University violated the university's statutes and the terms of his employment agreement.

The company relied on a University Grants Commission (UGC) communication stating that a whole-time Vice-Chancellor could not simultaneously work with a private company. It also alleged breaches of contractual clauses requiring the CEO to devote substantial time to the company and restricting him from holding leadership positions elsewhere.

The court, however, observed that the UGC communication was not a final decision after hearing the parties. It noted that the UGC had not considered the permissions allegedly granted by the university or the proceedings of its Board of Management. The communication alone, therefore, could not establish that the employment agreement was void from the beginning.

On the alleged contractual breaches, the court found that the company had not established that the CEO failed to devote substantial time to its business or that his university role adversely affected its operations. While the restriction on holding leadership positions elsewhere raised a serious question, the court held that it would have to be examined in arbitration.

The court also found that the company had not given the CEO the 30 Business Days provided under the agreement to cure an alleged breach before termination.

“Merely saying that the breach was continuing or could not be corrected is not enough to avoid the requirement of Clause 9.3(a),” it observed.

Accordingly, the company had not established a prima facie valid termination on the basis of the alleged contractual breaches. The court left open the other questions concerning the validity of the agreement and termination for decision by the appropriate forum.

However, it held that the company's Board had formally adopted the decision to end the CEO's employment. It therefore restrained him from representing himself as the company's serving CEO or authorised representative, issuing instructions, signing documents or entering into transactions on its behalf.

“But merely because he says that the termination is not valid, he cannot continue to give instructions to the employees, sign documents as Chief Executive Officer, make commitments for the Company or represent before any third party or public authority that he has authority to bind the Company,” the court observed.

The court clarified that he could describe himself as the former CEO and challenge the termination. His separate rights as a director and shareholder would also remain unaffected.

The court rejected the company's broader pleas to restrain him from interfering with its management and from pursuing proceedings before other courts or tribunals.

It also directed him to return company property, documents, and access credentials in his possession within seven days. The company was directed to commence arbitration under the Singapore International Arbitration Centre Rules within 90 days, if proceedings had not already commenced.

The petition was partly allowed.

For Petitioner (Daskalos Technologies Pvt. Ltd.): Senior Advocates Darius Khambata and Sharan Jagtiani, with Advocates Juhi Mathur, Ayush Mitruka, Ayan Tandon and Karan Kaul, instructed by Trilegal.

For Respondent (Atul Khosla): Senior Advocates Rakeshwar Sood and Vivek Kohli, with Advocates Arjun Lall, Mayank Samuel, Neelanshu Roy and Nikhil Aswani, instructed by Advocate Mayank Samuel.