The National Company Law Tribunal (NCLT), New Delhi, on 15 October held that removing a director without complying with the mandatory notice requirement under Section 169 of the Companies Act, 2013, is unlawful.
A Bench comprising Judicial Member Bachu Venkat Balram Das and Technical Member Ravindra Chaturvedi allowed a petition filed by Subh Guatam against Krezon Specialities Private Limited and its director. The Tribunal observed:
“It is a mandatory requirement under Section 169 of the Companies Act, 2013 that a special notice has to be served to the Directors of the Company. The respondents have failed to place on record any evidence showing that the Petitioner was duly served for the Extra-Ordinary General Meeting in which he was removed. Therefore, the removal of the Petitioner as a Director from the Respondent No. 1 Company is unlawful.”
The petitioner alleged that the respondents had failed to produce any evidence showing that notice of the Extraordinary General Meeting (EGM), at which he was removed as a director, had been served upon him.
He further challenged the transfer of shares, contending that it did not comply with Section 56 of the Companies Act, 2013, and the company's Articles of Association.
Examining the share transfer documents, the Bench found that the statutory requirements and prescribed procedures had not been followed. It noted that Form SH-4, the securities transfer form, was executed on 5 August 2017 and bore the petitioner's signature. However, flight tickets and immigration stamps produced by the petitioner showed that he was outside India between 25 July 2017 and 6 August 2017. It also observed:
“The date of execution of Form SH-4 (Securities transfer form) is 05.08.2017 and the same bears the signature of the petitioner, however, it is apparent from documents i.e. flight tickets and immigration stamps placed on records by the petitioner that he was outside India from 25.07.2017 to 06.08.2017 and hence, could not have executed Form SH-4 as he was not present in the country on the date of execution of the mentioned form which.”
The Tribunal also referred to the Supreme Court's decision in John Tinson & Co. Pvt. Ltd. & Ors. v. Mrs. Surjeet Malhan & Anr., (1997) 9 SCC 651, which held that the transfer of shares in a private limited company requires the prior sanction of its directors.
Accordingly, the NCLT allowed the petition.
For the Applicant : Mr. Sanjiv Sen, Sr. Adv., Mr. Gaurav Singh, Mr. Prahalad Balaji, Ms. Jharna Singh, Ms. Simran Gupta, Mr. Karan Sharma, Mr. Sagar Chaturvedi, Ms. Anupriya , Ms. Anjali Singh, Advs
For the Respondent(s): Mr. Arijit Prasad Sr. Adv., Mr. Sahil Tagotra, Mr. Girish Tripathi, Mr. Deepak Kumar, Ms. Ankita Singh, Mr. Pankaj Pandey, Mr. Digvijay, Mr. Ashish Yadav, Ms. Shreya Kasera, Advs.
For the C.D.: Mr. Aditya Singh, Ms. Shreya Chandok, Advs.