TMI Blog2019 (7) TMI 1600X X X X Extracts X X X X X X X X Extracts X X X X ..... pointment and cannot be removed by a peer. Although the position and functions of the members of the Apex Council are defined in terms of the AOA, nevertheless they being appointed by the General Body can only be removed by the latter, higher authority. There is no answer forthcoming to the query as to whether this issue was examined earlier apropos the exercise undertaken for the amendment of Articles of Association, so as to bring the structure and administration of the appellant in consonance with the administrative structure of BCCI, as proposed by the Justice Lodha Committee Report. What clearly emanates from the above discussion is that only the company i.e. General Body can remove a director, because anything other than that would be in derogation of the statutory provisions. In view of the above, there is no reason to interfere with the impugned order - Petition dismissed. - FAO 62/2019 - - - Dated:- 2-7-2019 - Najmi Waziri, J For the Appellant: Mr. Sandeep Sethi, Sr. Adv. with Mr. Saurabh Chadha, Mr. Kunal Vats and Mr. Sidharth, Advs. For the Respondents: Mr. Dayan Krishnan, Senior Advocate with Sanjeevi Seshadri, Mr. Gaurav Mitra with Mr. Khowaja Siddi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent manner and in view of specific authorization contained in the Board Resolution of 02.07.2018. 18. Direction No.1 given in the Circular of 12.08.2018 was that appointment of CEO, COO, CFO and GM be kept on hold till further orders and that no contract, appointment letter, salary etc., be issued or released to any new appointees, as the same, according to Mr.Tihara, would amount to contempt of Supreme Court directives. This was in clear contradiction to the Board Resolution by Curriculum dated 29.07.2018, which was also signed by Mr.Tihara. The Resolution Nos.2 and 7 of the Board Meeting of 02.07.2018 have already been referred to above and it is clear that those resolutions did not empower Mr.Tihara to issue a direction of the nature of Direction No.l referred to above. I agree with the submission of the learned counsel for the Complainant that the Secretary by himself did not have the power or authority to issue such a direction. Furthermore, even if a wrong decision has been taken by the majority, a lone Director cannot take law in his hands and override the said decision. Such a decision can only be undone either by the DDCA/its Board or before the court/ Company Law Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l work or visit personal offices or business locations. A direction has also been given that no DDCA employee shall take any order on SMS, email, verbal etc., from the personal employees of the office-bearers or Directors, DDCA employees were also directed to serve DDCA from the DDCA premises alone and all Board Meetings and Committee Meetings were to be held in DDCA premises and that no additional costs shall be incurred on TA, DA, hotel costs etc., by the DDCA. According to the learned counsel for the Complainant, Direction No.3, which is addressed to the employees of the DDCA, is designed to disrupt the, functioning of the DDCA and the employees have been encouraged to question the orders/directions of the superiors. This would be completely disruptive to the functioning of the DDCA itself. Mr.Vinod Tihara has also directed that Board Meetings and Committee Meetings are to be held in the DDCA premises alone, when there is no such Prescription in the Articles of Association. 22. It may also be pointed out that each of the directions are also coupled with a threat to the effect that if there was any violation of the directions given, strict disciplinary action would be initiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - indiscipline or misconduct and, therefore, Mr.Tihara's action of issuing the Circular dated 12.08.2018 cannot fall within the said terms, is not tenable. The facts and circumstances are of such a nature, which indicate that the conduct of Mr.Tihara in issuing the said circular, consequently, the directions contained therein, was in the nature of clear indiscipline and misconduct, which was not only detrimental to the interest of the DDCA, but also to the game of cricket. 26. In view of the foregoing, I hold that the Circular dated 12.08.2018 was not in consonance with the Articles of Association, the Companies Act and law in general and in issuing the same, Mr.Tihara has exhibited indiscipline and misconduct, which is detrimental to the interest of the DDCA and the game of cricket. 3. The learned Senior Advocate for the appellant submits, that pursuant to the aforesaid findings, respondent no.1 was issued a Show Cause Notice on 20.12.2018, to show why he be not expelled from the membership of DDCA. 4. Aggrieved by the said Show Cause Notice, the respondent sought a restraint order. After hearing the parties, the learned Trial Court was, prima facie, of the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the provisions of Section 284 of the said Act have to be adhered to for purposes of removal of a Director in terms thereof. This is a mandate of the Act. This mandate would require an advance notice to be given and a shareholders meeting held where an ordinary resolution should be passed. In the present case the notice dated 11.06.1993 was for the Board Meeting to held on 29.06.1993 and thus there was an advance notice of fourteen days. However the notice was for a meeting of the Board of Directors and not for a shareholders meeting. The question thus arises as to whether a shareholders meeting was necessary to remove the plaintiff or could the Board of Directors have removed the plaintiff. The scope and effect of Section 284 of the said Act form part of the discussion in a Division Bench Judgment of the Allahabad High Court in A.K. Home Chaudhary v. National Textile Corporation U.P. Ltd 1948 (48) Indian Factories and Labour Reports The relevant portion at page 101 is extracted as under: Learned Counsel for the petitioner then urged that the petitioner being a Director of the Government company could be removed only in accordance with the procedure laid down by Section 284 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) and his services have been terminated by the Board of Directors in exercise of their powers under Article 86(c). The Articles of Association do not place any fetter on the power of the Board of Directors to remove a Director from service. The powers of the Board of Directors with regard to removal of Director remains unaffected by Article 284 of the Companies Act. The impugned order of termination, therefore, is not violative of Section 284 of the Companies Act. 17. In view of the aforesaid, it is not in doubt that though there is a mandate contained under Section 284 of the said Act that is not the only methodology for removing a Director. It is noted in the judgment that there may be eventualities like retirement, dismissal, removal or vacation of office voluntarily. The present case is one of removal of the plaintiff. The judgment makes it clear that where Articles of Association confer power on the Board of Directors to remove a director, such power is not affected by the provisions of Section 284 of the said Act. I am in full agreement with this view. The Articles of Association are in the nature of an agreement between the shareholders who are the joint owners of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors. It is further contended that a similar view has been taken in The Madras Stock Exchange Limited v. S.S.R. Rajakumar 2003 SCC OnLine Mad 148 and in K. Leela Kumar/M. Subbiah v. The Government of India, Ministry of Law Justice, Dept. of Company Affairs Ors. 1997 SCC OnLine Mad 308. 9. In The Madras Stock Exchange Limited (supra) it was held as under: 46. In case of companies limited by guarantee a provision for expulsion in the articles would not per se be inconsistent with the requirements of the Companies Act. In a club registered under the Companies Act, the privileges that accompany membership being personal to the member, the collective welfare of the Members would require that each one of them conform to a discipline which all of them agree to observe. Breaches of such discipline would require to be penalised, and if the conduct of the Member is such as to make his continued presence wholly undesirable amidst other members, there is nothing in principle that would come in the way of such a member being expelled 10. In K. Leela Kumar/M. Subbiah (supra) it was held, inter alia: 19. Mr. A.S. Chandrasekaran, learned counsel for the 3rd respondent, made some s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conferred on him under Section 25 of the Act, which has been delegated on him by the Government of India in Notification No. GSR 71 dated 1-1-1966. The appellants having been aggrieved by the order of suspension, have filed the writ petitions challenging the validity of Article XXVIII of the Articles of Association which confers power on the 3rd respondent to suspend a member. 21. It is the case of appellants that the said article cannot be enforced in view of the provisions of Section 9 of the Act and Circular No. 32 of 1975 issued by the 1st respondent. We are unable to appreciate the above contention for the following reasons. Necessary approval for amendment of Article XXVIII was given by the Regional Director, Company Law Board, Madras by his letter dated 8-5-1974, by virtue of powers delegated to him by the Government of India, whereas Circular No. 32 of 1975 was issued by the 1st respondent only on 1-11-1975. As rightly pointed out by the learned counsel for the 3rd respondent, Circular No. 32 of 1975 contains the mere opinion of the Department. It is not a statutory order issued pursuant to any statutory provision. The said Circular contains only certain administrative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the aforesaid modification by this Court would effectively have to be reviewed i.e. the suspension of R-1 would become operational automatically. He submits that: i) this would be a logical sequitor because respondent no.1 has been found to have conducted himself contrary to the interest of the DDCA; ii) the appellant does not wish to suffer any further at the hands of respondent no.1; iii) the appellant argues that respondent no.1 has harmed the DDCA and has the potential of further damaging the interest of the institution as a whole and indeed the game of cricket itself; iv) therefore, the appellant would like to take a decision about whether the said person should be kept on its rolls as a member or at all be retained in an administrative position. The appellant argues that in its SLP against the order of this Court‟s dated 20.09.2018 no substantive order has been passed and only notices have been issued. It is stated in the interim that the present impugned order has proceeded ahead and has disposed-off the plaintiff‟s application under Order 39 Rule 1 2 CPC. It is stated that it is open to the appellant to withdraw the SLP in view of the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable. Section 169 of the 2013 Act is essentially the same as section 284, except that the last word of sub-section 8 of section 169 has been changed to Act‟ from section‟. Sub-section 8 of Section 169 reads as under :- 169. Removal of directors xxx xxx xxx (8) Nothing in this section shall be taken-- (a) as depriving a person removed under this section of any compensation or damages payable to him in respect of the termination of his appointment as director as per the terms of contract or terms of his appointment as director, or of any other appointment terminating with that as director; or (b) as derogating from any power to remove a director under other provisions of this Act. (emphasis supplied) 17. Clause 7(b) of Section 284 of the Companies Act,1956 read as under :- 284. Removal of directors. xxx xxx xxx (7) Nothing in this section shall be taken- (a) xxx xxx xxx (b) as derogating from any power to remove a director which may exist apart from this section. (emphasis supplied) 18. The learned Senior Advocate contends that in the ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors, insofar as it does not derogate from the statutory scheme. The appellant submits that its present scheme of governance and management has the imprimatur of the Supreme Court, insofar as its AOA have been amended in consonance with the structure of administration as proposed by Justice Lodha Committee Report and approved by the Supreme Court. Therefore, article 5(c) of its AOA stands duly approved as being in consonance with the statutory scheme, and the said provision empowers the appellants‟ Apex Council to remove any member from the Association (i.e. the appellant company). 22. The Court, however, is not persuaded by the aforesaid arguments of the appellant because very significantly amended provisions of the 2013 Act, permit for removal of directors. Under section 284(8)(b) of 1956 Act an alternate scheme for removal of directors was permitted as a stand-alone, specific provision, provided as said alternate scheme did not derogate from any power which existed under that section. In other words, the test of derogation, if any, was limited to section 284 only. However, under section 169 of the 2013 Act, the power for alternate scheme of removal of directors has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the Apex Council, who are collectively chosen and entrusted with the administration of the DDCA by its General Body. Members of the Apex Council are equal to each other in terms of their appointment and cannot be removed by a peer. Although the position and functions of the members of the Apex Council are defined in terms of the AOA, nevertheless they being appointed by the General Body can only be removed by the latter, higher authority. Therefore, the reference to Ravi Prakash Singh (supra) is misplaced because it dealt with an alternate scheme of removal of directors under the scheme provided under section 284 of the 1956 Act. Whereas Article 5(c) of AOA is now being examined under the provisions of Section 169(8)(b) read with Section 6 (a) of the 2013 Act, which makes alternate schemes subject to the entire Act not only to a particular section. There is no answer forthcoming to the query as to whether this issue was examined earlier apropos the exercise undertaken for the amendment of Articles of Association, so as to bring the structure and administration of the appellant in consonance with the administrative structure of BCCI, as proposed by the Justice Lodha Committee ..... 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