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2016 (1) TMI 1044 - DELHI HIGH COURT

2016 (1) TMI 1044 - DELHI HIGH COURT - TMI - Disqualification or liability under Section 162 to act as an Director - Held that:- Section 167(3) of the Act is not and could not have been intended to provide for a mode of appointment of a Director, contrary to the provisions elsewhere in the statute. A promoter, desirous of appointing a Director in the company, will have to propose the same either to the Board of Directors, if permitted to appoint an additional Director or if only the shareholders .....

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oters have a special right under Section 167(3) of the Act to appoint a Director de hors the opinion of the other shareholders / promoters, cannot be accepted. The petitioners / applicants are required to follow the procedure ordinarily provided for appointment of a Director and which procedure admittedly has not been followed. Moreover, from the order dated 20th October, 2010 of the CLB, it is evident that as of today, the petitioners / applicants stand restrained from writing any letters to th .....

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id to be Directors of the subject company is doubtful and without the petitioners / applicants having a clear right to act as Directors and which is being opposed, the question of the petitioners / applicants incurring any disqualification or liability under Section 162 of the Act also, would not arise. The application is thus dismissed with liberty to the petitioners / applicants to apply to the CLB for the same reliefs. - W.P.(C) 3296/2015 & CM No.17927/2015 - Dated:- 14-9-2015 - MR. RAJIV SAH .....

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e to the rights and contentions of all the parties including the applicant seeking impleadment in this petition, upload digital signatures of the petitioners / applicants on its website, to enable the petitioners / applicants to file and upload the Annual Returns and Financial Statements for the Financial Year 2014-2015 with respect to the subject company i.e. Pragati 47 Development Ltd. 2. Though the senior counsel for the applicant seeking impleadment appearing on advance notice has at the out .....

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e and subject to the final outcome of the petition, the counsels have been heard in detail on the aforesaid aspect. 3. The counsel for the petitioners / applicants has argued: (i) that the three Directors of the subject company have ceased to be Directors under Section 164 of the Companies Act, 2013 which has come into force on 1st April, 2014, owing to the failure on their part to file the statutory records of the said company for three consecutive years; (ii) that the two petitioners / applica .....

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tioners / applicants along with said Mr. Y.K. Gauba, having became Directors of the company, are now desirous of making the statutory compliances which have to be made latest by 31st October, 2015 and if the petitioners / applicants and the said Mr. Y.K. Gauba, inspite of being Directors default in the same, they would also incur a similar disqualification under Section 162 of the Companies Act, 2013 and the relief aforesaid is required to prevent such disqualification on the part of the petitio .....

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f the company pending those proceedings, it is stated that there is none. 5. The counsel for the RoC also appearing on advance notice states that Minutes of a Board appointing the petitioners / applicants as Directors were received from the petitioners / applicants but a letter was also received from the Joint Commissioner of Police (Crime) of Kolkata, Govt. of West Bengal stating that a First Information Report (FIR) of the offence of forgery etc. is pending with respect to the same board meeti .....

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had on 22nd January, 2010 resigned from the Board of Directors of the subject company and has drawn attention to the prayers in the petition pending before the CLB and to the order dated 20th October, 2010 of the CLB, stated to be still in force, restraining the petitioners / applicants herein from writing any letters to the third parties, causing prejudice against the interest of the subject company. 7. I have in the aforesaid state of affairs, enquired from the counsel for the petitioners / a .....

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fora for considering, as to who should be the person responsible for the affairs of the company during the pendency of the disputes relating to the affairs of the company would be, the CLB before which the matter is stated to be now pending at the final stage. 8. The counsel for the petitioners / applicants has drawn attention to Section 167(2) of the Companies Act, 2013 and has argued that the same empowers a promoter to appoint a Director, when the existing Directors have vacated the office un .....

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fices under any of the disqualifications specified in sub-section (1), the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed by the company in the general meeting. 10. Attention is next invited to Section 2(69) of the Companies Act, 2013 containing the definition of promoter and which is as under: 2(69) Promoter means a person- (a) who has been named as such in a prospectus or is identified by .....

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.1% shareholders, are promoters and entitled to make appointments of Directors under Section 167(3) of the Act supra. 12. I have enquired from the counsel for the petitioners / applicants, whether a shareholder holding say 0.1% of the shareholding of the company, would qualify as promoter and would also be entitled to appoint a Director under Section 167(3) of the Act supra. 13. The counsel for the petitioners / applicants tends to suggest so, though not clearly, highlighting that the petitioner .....

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Director, to the shareholders in the meeting of the shareholders to be held. Section 167(3) of the Act cannot be interpreted as entitling each and every promoter of a company, upon contingencies mentioned therein having occurred, to appoint a Director. The appointment has to be made by following the procedure elsewhere provided in the statute for appointment of a Director and thus the contention of the petitioners / applicants that they as promoters have a special right under Section 167(3) of .....

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e assumed that the said order has been made assuming the petitioners / applicants to be not in control and management of the subject company. 15. As far as the argument of the counsel for the petitioners / applicants, of petitioners suffering a disability unless permitted to act so is concerned, the same is also subject to the petitioners / applicants being accepted as of today as Directors. The question, whether the petitioners can be said to be Directors of the subject company is doubtful and .....

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