C.P. No. 84 (ND) of 2013. Case: Arun Kumar Goyal Vs Aar Kay Chemicals (P.) Ltd.. Company Law Board

Case NumberC.P. No. 84 (ND) of 2013
Party NameArun Kumar Goyal Vs Aar Kay Chemicals (P.) Ltd.
CounselFor Appellant: Virender Ganda, Sr. Adv., Vipul Ganda and C.S. Chauhan, Advs. and For Respondents: Ranjana Roy Gawai and Tushita, Advs.
JudgesD.R. Deshmukh, J. (Chairman)
IssueCompanies Act, 1956 - Sections 209(4), 283, 283(1)(g)
Citation2015 (131) SCL 1 (CLB)
Judgement DateMarch 11, 2015
CourtCompany Law Board

Order:

D.R. Deshmukh, J. (Chairman), (New Delhi Bench)

  1. This order governs the following preliminary issue framed by me 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 Companies Act 1956 statutorily ceased to be a Director of the company on account of abstaining from attending 3 consecutive Board Meetings without obtaining leave of absence from the Board of Directors."

    Admittedly P-2 Mr. Ravi Nandan Goyal was appointed as a Director in M/s. Aar Kay Chemicals Pvt. Ltd. [henceforth "R-1 company"] on 19.3.1998 whereas R-2 Mr. Vijay Goyal and R-20 Mr. Shiv Kumar Goyal were appointed as Director on 27.8.1999. On 27.11.2013 the statement on admission 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(1)(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 the submission of Shri Arun Kathpalia, learned counsel for the Respondents was recorded that while the respondents have not removed P-2 as a Director of the company through a Board Resolution, the law would take its own course u/s. 283(1)(g) of the Companies Act, 1956 (henceforth the "Act") if P-2 had abstained from attending three consecutive Board Meetings of the company without obtaining leave of absence from the Board. Admittedly notice of the Board Meetings dated 16.8.2012 and 19.1.2013 were duly received by P-2 who abstained from attending such meetings.

  2. 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 [2004] 51 SCL 243 (Kar.), Bodega Co. Ltd. In re (1904) 1. Ch. 276 and Bharat Bhushan v. H.P. Portfolio Leasing Ltd. [1992] 74 Comp. Cas. 20 (Delhi) argued that section 283(1)(g) of the Act does not require any declaration by the company regarding the cessation of a Director and there is also no legal obligation on the company to issue show cause notice to such Director who had absented himself in the three consecutive Board Meetings without seeking leave of absence. It was further submitted that sending notice of...

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