Corporation’s Representative Must Act Per Board’s Decision, If No Specific Direction Is Given, They May Act as Per Will | NCLAT

Case Details: Deepak Kishan Chhabria v. Orbit Electricals (P.) Ltd. - [2024] 168 taxmann.com 334 (NCLAT-New Delhi)

Judiciary and Counsel Details

• Justice Ashok Bhushan, Chairperson & Barun Mitra, Technical Member
• Ramji Srinivasan, Sr. Adv., Amit Jajoo, Malak Bhatt, Ms. Vatsala Pant, Mandeep Singh, Aman and Ms. Namrata Sarogi, Advs. for the Appellant.
• Janak Dwarkadas, Shikhil Suri, S.N. Mukherjee, Sr. Advs., Kunal Mehta, Abhinav Agarwal, Ms Vidhi Kapoor, Ms Ishita Ahuja, Mahesh Agarwal, Ankur Saighal, Shivam Shukla & Ms Geetika Sharma, Advs. for the Respondent.

Facts of the Case

In the instant case, the appellant filed a company petition under section 241 of the Companies Act 2013, alleging oppression and mismanagement in the respondent company. Subsequently, an AGM of the respondent company took place wherein two special business resolutions were passed with the requisite majority for amendment of Article 59 and deletion of Article 60.

The appellant filed an application for interim relief in the company petition, praying for a stay in implementation of the resolution passed. It was noted that the main company petition was still awaiting for its final decision, whereas the NCLT had been engaged by parties by filing different applications, including one, which was decided and impugned in instant appeal.

NCLAT Held

The NCLAT noted that both parties’ pleadings in the main company petition had already been completed long ago. It was a fit case for the NCLT to proceed to decide the company petition finally.

The NCLAT held that the NCLT was requested to finally decide company petition expeditiously, preferably within a period of six months from date the copy of the instant order was produced.

The NCLAT, further held that a representative under Section 113 of the Companies Act, 2013, is bound to exercise his representation as per the decision of the Board of the Company. In the event the Board has not made any specific decision for the exercise of power, the representative is free to exercise his representation as per his will.

List of Cases Reviewed

• Order dated 31.12.2019 passed by NCLT in MA No 1449/2019 in CP No 47/NCLT/MB/MAH/2016 [2024] 168 taxmann.com 170 (NCLT -Mum.) (Para 49) affirmed

List of Cases Referred to

• Insurance Corporation of India v. Escorts Ltd. and Ors. – (1986) 1 SCC 264 (para 37).