Full Judgment
2. Shri U.P. Mathur, appearing for the petitioners, submitted that this company was incorporated in February, 1998, with 7 shareholders - 4 from the petitioners' group and 3 from the respondents' group, each with 10 shares. According to hi, all the petitioners were directors of the company. This company, according to him, was conceived as a quasi-partnership between the two groups. As per the understanding between the parties, the 2nd respondent was to be the Chairman of the company and the 1st and 2nd petitioners as the executive director and managing director, respec- tively. No meeting of the Board of directors had been convened or held right from incorporation of the company.
However, the respondents got a notice published in Statesman, dated 21.8.1998, notifying that the 2nd petitioner had been removed as a director in a Board meeting held on 25.7.1998. Later, the respondents published ano- ther notice in Sunday Pioneer, dated 29.9.1998, that both the 1st and 2nd petitioner had been removed as directors in a board meeting held on 25.7.1998. They had also sent a copy of the caveat filed in the Delhi High Court on 19.8.1998 from which the peti- tioners came to know that they had been removed as directors in terms of Section 283(1)(g) of the Act. He submitted that after the directions of the Company Law Board to the respondents to give inspection of the records of the company, the petitioners found that minutes of a number of Board meetings had been recorded in the minutes book even though the petitioners had not received notices for any of these meetings. In some of the minutes, the presence of the petitioners had been noted even though they had not attended these meetings as is evident from the absence of the atten- dance slips maintained by the company. In the minutes of the Board meeting allegedly held on 8.7.1998, it is recorded that the 1st and 2nd petitioners had not attended the Board meeting from 8.5.1998 onwards and as such had become disqualified to be direc- tors in terms of Section 283(1)(g) of the Act and that they be given a notice as to why they should not be disqualified. Even though , the petitioners had not received any notice, in the minutes of the Board meeting allegedly held on 25.7.1998, it is recorded that in view of their failure to reply to the notice, the 1st and 2nd petitioners had ceased to be directors in terms of Section 283(1)(g) of the Act.
According to Shri Mathur, all the minutes recorded in the minutes book are fabricated inasmuch as the company having no business could not have convened so many meetings within such a short time. He also pointed out that the petitioners have not produced any evidence as to the issue of notices to the petitioner directors, nor have they produced copies of the agenda for these meetings. Even otherwise, he contended that, as per Section 283(1)(g) of the Act, the disqualification would arise only if a director does not attend 3 conse- cutive meetings or from all meetings of the Board for a continuous period of 3 months whichever is longer. He contended that since according to the respondents, the peti- tioner directors did not attend Board meeting from the one held on 8.5.1998, the 3 months period would expire only on 8.8.1998 and, therefore, taking a stand that they had ceased to be directors on 25.7.1998 cannot be sustained in law. He pleaded that the wrongful removal of promoter directors in a company conceived as quasi-partner- ship is a grave act of oppression against them and as such, the resolution removing them as directors should be declared as null and void.
3. Shri Manoj Singh, Advocate, appearing for the respondents, submitted that the petitioners and the respondents were directors in another company, namely, Khelgaon Resorts Ltd. By misusing his posit on as director in that company, the first petitioner has collected a large amount of money in e name of the company and has mis- appropriated the same. He submitted that there was no understanding between the parties that the petitioners would be designated either as the managing director or an executive director. Even though the company was not doing any business, yet, regular Board meetings were held, some of which were attended by the petitioner directors. He also pointed out that the 3rd and 4th petitioner were never appointed as directors of the company. Insofar as the omission of the 1st petitioner in the notice published in the Statesman, he submitted that in view of this omission, a second notice was pub- lished in the Sunday Pioneer indicating that both the 1st and 2nd petitioner have been removed as directors. He also pointed out that the attendance slips which had been signed by the petitioners for attending the earlier meetings have been taken away by them as also other records. In view of this, the respondents had to reconstruct these records. Accordingly, he submitted that this petition should be dismissed.
4. We have considered the pleadings and arguments of the counsel. The only issue for our consideration in this matter is whether the 1st and the 2nd petitioners had ceased to be directors by virtue of Section 283(1)(g). We find that the respondents have not been able to establish that notices for the Board meetings, which according to them have not been attended by the petitioner directors, were sent to them. Further, as rightly contended by Shri Mathur, the petitioner directors had not come under the mischief of Section 283(1)(g) inasmuch as this section provides that to invoke disquali- fication under this section, a director has to absent himself in 3 consecutive meetings or all meetings held in a period of 3 consecutive months, whichever is longer.
In the present case, the first meeting which was not allegedly attended by the petitioner directors was dated 18.5.1998. Even though further meetings had been allegedly held on 29.6.1998, 8.7.1998 and 25.7.1998, all these meetings fall within a period of 3 months. Therefore, to contend that the petitioner directors had ceased to be directors in terms of Section 283(1)(g) on 25.7.1998 is not legally valid.
Therefore, we declare that the 1st and 2nd petitioners had not ceased to be directors and will continue as directors of the company. The Registrar of Companies will not take cognizance of Form No. 32, if any, had been filed, in respect of the cessation of office by these directors. We also direct that, in future, for all Board meetings, notices should be sent by registered post acknowledgement due.