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Arun Kumar Goyal Versus Aar Kay Chemicals (P.) Ltd.

2015 (6) TMI 613 - COMPANY LAW BOARD NEW DELHI

Absence from three consecutive Board meetings with out obtaining leave of absence - Automatic cessation under section 283(1)(g) of the Companies Act 1956 - Cessation of right to inspect the books of account - Held that:- Board Meetings dated 16.8.2012 and 19.1.2013 there is no quarrel since the Petitioners have themselves produced copy of notice of such board meetings with the petition and P-2 did not attend either of the two meetings. However so far as the Board meeting allegedly held on 13.10. .....

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on the letter head of the company as compared to the notice dated 8.8.2012 and 10.1.2013.

The Company being a closely held company and in the peculiar circumstances of the case it can be presumed that leave of absence was normally granted without oral or written request from a director. Reliance is placed on S. Ajit Singh case [2001 (8) TMI 1372 - COMPANY LAW BOARD NEW DELHI]. Admittedly the company is a closely held company in which mutual trust prevailed between the parties up to a .....

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ellant. - C.P. NO. 84 (ND) OF 2013 - Dated:- 11-3-2015 - SRI D.R. DESHMUKH, CHAIRMAN, J. For The Petitioner : Virender Ganda, Sr. Adv. Vipul Ganda and C.S. Chauhan, Advs. For The Respondent : Ranjan Roy Gawai and Ms. Tushita, Advs. ORDER 1. This order governs the following preliminary issue framed by the vide order dated 26.8.2014 as being relevant to the adjudication of the statutory right of P-2 to inspect the records of the company as a Director:- "Whether P-2 had, u/s 283(1)(g) of the C .....

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by the learned counsel appearing for the company and Co-respondents was recorded that P-2 and R-20 continued to be Directors in the company. A perusal of the order dated 27.11.2013 depicts that on such date learned counsel never Intended to dispute the right of inspection of P-2 on the ground u/s 283 (l)(g) of the Act but solely questioned it on the touchstone of conduct of such Director disentitling him the right u/s 209(4) of the Companies Act to inspect the records of the company. On 6.2.2014 .....

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1.2013 were duly received by P-2 who abstained from attending such meetings. 3. During the course of arguments learned counsel for the Respondents Ms. Ranjana Roy Gawai while placing reliance on Mother Care (India) Ltd. v. Prof. Ramaswamy P. Aiyar ILR 2004 Karnataka 1081, Re Bodega Co. Ltd. (1904) 1. Ch. 276 and Bharat Bhushan v H.P. Portfolio leasing Ltd. 1992 ILR Delhi 193 argued that section 283(1)(g) of the Act does not require any declaration by the company regarding the cessation of a Dire .....

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ts of the present case the respondents reserved their right to oppose the right of P-2 to inspect the records of the company on the ground of conduct disentitling him to do so. 4. Shri Virender Ganda learned senior counsel appearing for the Petitioner while not disputing the proposition of law that under section 283(l)(g) of the Act a Director vacates the office by operation of law on failure to attend three consecutive Board Meetings without obtaining leave of absence also drew my attention to .....

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ing was sent to P-2 from Malerkotla, which is apparently 40 kms away from Dhuri. Adding more to the suspicion, learned counsel added that there is admittedly no mention of the second alleged Board Meeting in the reply filed by R-20. Counsel further urged that the format of such notices dated 8.8.2012 and 10.1.2013 as compared to the notice dated 5.10.2012 aroused suspicion. Learned senior counsel also drew my attention to the order dated 27.10.2014 wherein it was recorded as under:- "It als .....

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ince the minutes of such board meetings were not paginated and bound as required by law, no reliance could be placed on the notice for such meetings. Learned counsel also argued that since R-l is a closely held company, as per practice prevalent formal notice of Board Meeting was not required to be sent and leave of absence was routinely granted to a Director who did not attend a meeting. Shri Sarabjeet Mokha v. marble City Hospital (2008) 142 Company Case 757 (CLB) and S. Ajit Singh V. DSS ente .....

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case law cited. The relevant provision u/s 283 of the Act which deals with vacation of office by Directors is as under:- "283. Vacation of office by directors. (1) The office of a director shall become vacant if- (g) he absents himself from three consecutive meetings of the Board of directors, or from all meetings of the Board for a continuous period of three months, whichever is longer, without obtaining leave of absence from the Board;" A plain reading of section 283(1)(g) shows that .....

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y both the parties that there was never any requirement to send formal notices of Board meetings to the Directors as parties were working on mutual trust. In order to attract automatic cessation of the office of Director by P-2 by operation of Law it is imperative for the Respondents to establish by adducing reliable and unimpeachable evidence that notices for the three consecutive Board Meetings dated 16.8.2012, 13.10.2012 and 19.1.2013 were sent to P-2 as required by law and P-2 had failed to .....

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oard meeting dated 16.8.2012 and 19,1,2013 is identical but the notice for Board meeting dated 13.10.2012 is in a completely different format. Notice for Board meeting dated 16.8.2012 and 19-1-2013 is sent to all Directors named in the notice while the notice dated 5.10.2012 for the Board meeting dated 13.10.2012 is addressed only to P-2 in the form of a letter. Besides, such notice is not on the letter head of the company as compared to the notice dated 8.8.2012 and 10.1.2013. A comparison with .....

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ss to be transacted at the meeting on 13.10.2012 and the notes on agenda have also not been filed with the affidavit dated 9.1.2015. Notices to the Directors for Board Meetings were normally sent by courier from Dhuri. Therefore sending of a particular notice dated 5.10.2012 to P-2 from Malerkotla, a place 40 Kms away from Dhuri also renders such notice doubtful. 7. The admission by counsel for the respondents as recorded in para 2 of this order coupled with the fact that notices for subsequent .....

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no legal bar on sending notices to a Director who had absented from three consecutive Board meetings without obtaining leave of absence, the fact of continuously sending notices to P-2, a Director who had ceased to be a Director u/s 283(1)(g) of the Act for further Board meetings coupled with the admission by counsel as recorded on 27.11.2013 thee automatic cessation of P-2 as director does not stand to reason. 8. A perusal of the reply by the Respondents at para 5.1.32 (page 143) it appears th .....

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