Removal of Nominee Director with majority in duly convened EGM giving special notice
Facts of the case:
1st Appellant and 2nd Respondent jointly entered into a Consortium Agreement and agreed to
form a partnership to submit a Resolution Plan to take over 1st Respondent Company.
Resolution plan was submitted and approved by the COC as well as ratified by NCLT, Kolkata
under Section 31 of Insolvency & Bankruptcy Code, 2016.
As per mutual understanding
nominee directors of both the parties were appointed in 1st Respondent Company. Appellant
argued that due to several disputes which arose between both the parties, special notice was
issued for removal of nominee director of Appellant from directorship and the resolution was
passed in an EGM, thereby ousting the appellant from the consortium without giving a fair
opportunity to give representation. Further, it was stated that in a quasi-partnership company
or closely held company, a nominee director of the two partners cannot be removed, that too
without any reason.
Respondents argued that there is no bar for removal of nominee of minority shareholder under
the Companies Act, 2013. Further, in spite of giving notice, no shareholders from 1st to 3rd
appellant were present and thus they did not raise any objection to passing of the resolution
for removal of nominee director and the removal has already been approved by the Registrar
of Companies.
Appellant were present.
Judgement:
The NCLAT held that as proper notice was issued to convene EGM and the same was received
by the appellants including the nominee director, but they did not make any representation
and the EGM voted for removal of nominee director with majority. Thus, there is no illegality
in this process and dismissed the appeal.
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