Delhi High Court
Sh. Vishnu Lal vs M/S Jai Durga Commodity Trading ... on 23 November, 2017
$~CP-31
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 23.11.2017
+ CO.A(SB) 21/2014 and CA 1025/2014
SH. VISHNU LAL ..... Appellant
Through Mr. Chandra Shekhar Yadav, Adv.
versus
M/S JAI DURGA COMMODITY
TRADING PVT. LTD. & ORS. ..... Respondents
Through
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J. (ORAL)
1. This appeal is filed under Section 10F of the Companies Act, 1956
seeking to impugn the order dated 24.02.2014 passed by the Company Law
Board.
2. Pursuant to an order of this court directing service of notice through
publication, the necessary publication has been made by the appellant. The
respondents are accordingly served. As none is present for the respondents,
respondents are proceeded ex parte.
3. The grievance of the appellant is limited. The appellant is said to be
one of the initial promoters and the director of respondent No.1 Company
till 26.02.2008 holding 5000 fully paid up equity shares of Rs.10 each. The
case of the appellant is that being disappointed with the arbitrary functioning
CO.A(SB) 21/2014 Page 1
of the other promoter, namely, Bakshi Rajiv Sabharwal, he decided to
disassociate himself from the Company and the Board and submitted his
resignation on 26.02.2008. It is the grievance of the appellant that
respondent No.2 has not filed Form 32 showing the appellant's resignation
and his name continued to appear in the records of the ROC as the director.
The appellant claims to have sent an intimation to the ROC about his
resignation. Aggrieved by the acts of the respondents and the ROC, the
appellant also filed a writ petition before the High Court of Judicature at
Allahabad. The writ was disposed of on 14.03.2012 directing the Registrar
of Companies to pass an appropriate order in respect of respondent No.1
Company after giving due notice to the appellant and giving fullest
opportunity of hearing. No relief was given to the appellant by the ROC.
Thereafter, the appellant filed a second writ petition before the Allahabad
High Court. This was subsequently withdrawn and the appellant approached
the Company Law Board with the objections under Sections 397, 398, 399
read with Sections 402, 403 and 406 of the Companies Act.
4. By the impugned order, the Company Law Board observed that the
facts show that the appellant had submitted his resignation on 26.02.2008
under Section 283(3) of the Companies Act. It also noted that the appellant
has not attended the Board Meetings held subsequent to his resignation. It
also noted that as per Article 35 of the Articles of Association of the
respondent Company, a director can resign from the office. The impugned
order also held that it was necessary to give reasonable time to the
respondent Company to appoint a new director and to accept the resignation
of the outgoing director by filing requisite Form 32 with the ROC. Keeping
in view the balance between the two situations, in the interest of justice, the
CO.A(SB) 21/2014 Page 2
impugned order held that as the appellant had not attended Board Meetings
continuously for three quarters, the appellant is deemed to have vacated the
office from 01.01.2009.
5. The grievance of the appellant is that his resignation has to be
effective from the date he has resigned, namely, 26.02.2008 and not
01.01.2009.
6. Section 283 (3) of the Companies Act, 1956 reads as follows:-
"283. Vacation of office by directors.
(1) ...
(2) ...
(3) A private company which is not a subsidiary of a public
company may, by its articles, provide, that the office of director
shall be vacated on any grounds in addition to those specified in
sub- section (1)."
7. Hence, an office of the director can be vacated on any ground in
addition to those specified in Section 283(1) of the Act. Article 35 of the
Articles of Association of the respondent Company provides that a director
shall be entitled to resign from the office of the directors from such date as
he may specify while so resigning.
8. It is manifest from a reading of Section 283(3) of the Companies Act
and the Articles of Association of the respondent Company that the Director
had a right to resign from the date he may specify while so resigning. In this
context as rightly relied upon by the learned counsel for the appellant
reference may be had to the judgment of the Division Bench of the Bombay
High Court in the case of Saumil Dilip Mehta vs. State of Maharashtra and
Ors., AIR 2002 Bom. 194 where the Court held as follows:-
"6. The submissions advanced by the litigating parties are
CO.A(SB) 21/2014 Page 3
touching an important point involved in this matter which make
us to express our views on the point whether a director of a
public or private limited company can resign unilaterally and
that too by writing a letter to the chairman of the said company
or its secretary. Is it necessary for such a director to fill up form
No. 32 and is obliged to give a notice or intimation to that
effect to the Registrar of Companies? The question arises for
our adjudication is whether that particular director is obliged to
give such information to the Registrar of Companies and
whether he cannot retire without complying with the said
requirement. Keeping in view the provisions of the Companies
Act the relevant articles of the Constitution of India, we come
to the conclusion that a director of the public limited company
or private limited company can tender his resignation
unilaterally and without filling in form 32 and without sending
a notice to the Registrar of Companies. It is clear that the filling
in the said form and giving due intimation and information to
the Registrar of Companies is the duty of the Company
Secretary and not of an individual director. Suffice it to say that
what he has to do is to send in writing a letter informing either
the Chairman or the Secretary of the Company, as the case may
be, his intention to resign from the post of the Director of the
said company. Thereafter the said letter has to be moved in the
meeting of the directors of the company, may be ordinary
meeting or may be extra-ordinary or special meeting, as the
case may be, and the Board of Directors have to take a decision
whether the Board is accepting his resignation or not. An
intimation should be sent to such director and after such
resolution is passed, the Company Secretary is under the
obligation to comply with the legal formalities for giving a
finishing touch to the resolution which has been passed in the
said meeting of the Board of Directors. It is for the Company
Secretary to fill in the forms as prescribed and to give due
information and intimation to the Registrar of Companies, as
the law requires. Thereafter, it has to be so mentioned in all
prescribed registers of the company, accounts and balance sheet
of the company and thereafter the said fact is to be brought to
the notice of the members of the company as early as possible
CO.A(SB) 21/2014 Page 4
and at the latest in annual general meeting."
9. In the present scenario, the Articles of Association of the Company
clearly provide that the director has a right to resign with effect from the
date he may specify. I see no reason why the impugned order has accepted
the resignation of the appellant with effect from a date different from the
date of his resignation, namely, 26.02.2008. In the facts of this case, in my
opinion, resignation has to operate from 26.02.2008 and not from
01.01.2009. The impugned order accordingly stands modified.
10. The appeal stands disposed of.
11. pending applications, if any, also stand disposed of.
JAYANT NATH, J
NOVEMBER 23, 2017
rb
CO.A(SB) 21/2014 Page 5
