2023 (3) TMI 178 - AT - Corporate Laws

Circular Resolutions - the main grievance of the Appellants / Petitioners is that the Circular Resolutions, are not duly circulated to all the Directors, as per Section 175 of the Companies Act, 2013, these Resolutions, were contrary to the clause 6.2 of the ‘Secretarial Standard – 1, on the Meetings of the Board of Directors, and in Violation of the Articles of Association of the Company.

HELD THAT:- In reality, Section 175 of the Companies Act, 2013, provides that no Resolution, shall be deemed to have been duly passed by the Board, or by a Committee, by circulation, was circulated in Draft, all the Directors or Members of the Committee, at their addresses, registered with the Company in India, and was approved by a Majority.

This Tribunal, points out Clause 22.4 of the Articles of Association of the Company, clearly mentions that A Circular Resolution, shall be deemed to have been duly passed by the Board, if it has been approved in writing (which would include confirmation via electronic or other means) by a majority of directors constituting the Board for the time being - Also that, Section 118 (10) of the Companies Act, 2013, enjoins that Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under Section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.

Furthermore, it is latently and patently quite clear that, as per Article 21.3 of the Articles of Association, the Majority, includes the consent of the 1st Appellant. That apart, as per Secretarial Standards-1 clause 6, the Circular Resolutions, have the same effect, as that of passed in the Board Meeting and hence, the Majority Vote, as applicable, for the Board Meeting, equally applies, to the Resolutions, passed by the Circulation, as well - the Circular Resolutions, cannot be said to have been duly approved, by the Majority Directors, and hence, this Tribunal, holds that the said Resolutions, are Void in Law.

This Tribunal, keeping in mind of the divergent contentions, raised on either side and taking note of the facts and circumstances of the case, in a conspectus fashion, without any haziness, holds that the Circular Resolutions No. 1 to 6 dated 03.11.2020, are Void in Law.

Appeal disposed off.