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IN THE
XYZ BENCH
IN THE MATTERS OF
PETITIONER
V.
RESPONDENT
[UNDER SECTION 241 OF THE COMPANIES ACT, 2013, READ WITH RULE 20 OF THE NATIONAL
AND
V.
RESPONDENT
[UNDER SECTION 241 OF THE COMPANIES ACT, 2013, READ WITH RULE 20 OF THE NATIONAL
I. THE REMOVAL OF MS. ALICENT AS CEO WAS VALIDLY CARRIED OUT IN ACCORDANCE
C. There Were “Just And Equitable” Reasons For The Dismissal Of Ms. Alicent…….9
II. CLAIMS OF OPPRESSION AND MISMANAGEMENT ARE INVALID AND UNFOUNDED .............. 9
A. The Petitioner does not Meet the Criteria to Seek Remedy under Section 241 .......... 9
B. in any event, the threshold to prove oppression and mismanagement is not met ..... 10
i
INDEX OF AUTHORITIES
CASES
Ajit Kumar Nag v. General Manager (PJ), Indian Oil Corpn. Ltd., Haldia, AIR 2005 SC 4217.
................................................................................................................................................8
Cyrus Investment Pvt Ltd. v. Tata Sons Ltd., (2020) SCC OnLine NCLAT. ......................... 11
K.R.S. Narayana Iyengar v. T.A. Mani, (1959) SCC OnLine Mad 134. ................................. 11
P.D. Agrawal v. State Bank of India & Ors., AIR 2006 SC 2064. ............................................ 8
Rajahmundary Electric Supply Corpn. Ltd. v. A Nageshwara Rao, (1955) 2 SCR 1066. ...... 11
Tata Consultancy Services Ltd. v. Cyrus Investments (P) Ltd. (2021) 9 SCC 449 ................... 9
Tata Consultancy Services Ltd. v. Cyrus Investments (P) Ltd. 2017 SCC Online NCLAT 261.
..............................................................................................................................................10
V.S. Krishnan v. Westfort Hi-tech Hospital Ltd., (2008) 3 SCC 363. .................................... 11
STATUTES
The Companies Act, 2013, § 2 (51) (i), The Gazette of India, pt. II sec. 1 (August 30, 2013) .7
RULES
The Companies (Meetings of Board and its Powers) Rules, 2014 ............................................ 7
TREATISES
INTERNATIONAL CASES
ii
In re Albert David Ltd., [1964] 68 CWN 163 .......................................................................... 11
iii
STATEMENT OF FACTS
Ms. Alicent Hightower was appointed Chief Executive Officer of Caraxes and Co. Ltd.
However, on October 24, 2019, the Board of Directors of Caraxes voted to remove Ms. Alicent
from her position. Ms. Alicent claimed a violation of the principles of natural justice as she was
not provided the opportunity to make a representation before the Board. The proposal wasthen
approved at the Extraordinary General Meeting with the requisite majority. After her
representation to the Board was denied, she filed an application with the National Company
wisdom dictates that the decisions concerning the management and the expansion of the
business carried out by the CEO. However, Ms. Alicent’s decisions were often interfered with
which adversely impacted the performance of Caraxes”. Viserys also approached the NCLT
against Caraxes, claiming oppression and mismanagement. Noting the similarity in issues, the
iv
STATEMENT OF JURISDICTION
The Respondent, most humbly and respectfully, submit that this Hon’ble Tribunal has the
a. C.P. No. xxxx of 2022, filed under Section 241 of the Companies Act, 2013, read with
b. C.P. No. xxxx of 2022, filed under Section 241 of the Companies Act, 2013, read with
All of which is urged in detail in the written submission and is submitted most respectfully.
v
ISSUES FOR CONSIDERATION
vi
SUMMARY OF ARGUMENTS
It is submitted that Ms. Alicent was validly removed as Section 179 of the Companies Act read
with Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 permits the
It is submitted that firstly, the claim of oppression and mismanagement is not maintainable
under Section 244 of Companies Act, and secondly, that in any event, that the company is not
vii
ARGUMENTS ADVANCED
Ms. Alicent, as Chief Executive Officer (CEO), is considered a “Key Managerial Personnel”
[hereinafter “KMP”], within the meaning of Section 2(51)(i) of the Companies Act, 2013 1.
[hereinafter, “the Act”]. Thus, she is subject to provisions relating to removal of KMPs under
the Act as well as the Companies (Meetings of Board and its Powers) Rules, 20142[hereinafter,
“the Rules”]. In this context, it is submitted, firstly, that the Board of Directors [hereinafter
“BoD”] is vested with the power to remove key managerial personnel [A]; and secondly, that
in any event, the principles of natural justice were complied with [hereinafter “PNJ”] [B] and
thus, that the removal was carried out in accordance with procedure. Furthermore, there were
“just and equitable” reasons for the dismissal of Ms. Alicent [C].
The power to remove KMPs flows from Section 179 of the Act,3 dealing with the powers of the
BoD, read with Rule 8 of the Rules.4 These provisions state that the power to appoint or
remove KMPs shall be exercised by the BoD only by means of resolutions passed at meetings.
Further, the power to remove KMPs does not fall under the list of powers required to be
exercised with the consent of the General Meeting via a Special Resolution under Section 1805.
In the present case, Ms. Alicent’s removal by the BoD fulfils the aforementioned requirements
– removal only by way of resolution. General corporate practice does not substitute as law, and
1
The Companies Act, 2013, § 2 (51) (i), The Gazette of India, pt. II sec. 1 (August 30, 2013).
2
The Companies (Meetings of Board and its Powers) Rules, 2014.
3
Supra note 1, at § 179.
4
Supra note 1, at § 179.
5
Supra note 1, at § 180.
8
thus, any deviance from the same would not constitute a violation of the prescribed procedure.
Therefore, it is submitted that the removal of Ms. Alicent via the tabling of a resolution to that
effect by the BoD on October 24, 2019, does not fall contrary to the procedure prescribed under
Section 424 of the Act requires Tribunals to be guided by the PNJ in their proceedings.
However, the PNJ are subject to certain exceptions. Pertinently, the audi alteram partem rule,
which requires that no one be condemned unheard, does allow for post-decisional hearing in
extraordinary circumstances.
This rule was propounded by the Supreme Court in the case of Maneka Gandhi v. Union of
lndia. 6 The Court held that if in the interest of the general public, quick action was fundamental
and it is impractical to manage the cost of a hearing before the decision, it ought to be managed
after the decision. Further, it has been held that the principles of natural justice cannot be put
in a straitjacket formula; instead, it must be seen in circumstantial flexibility.7 The PNJ are not
rigid or immutable, and must yield to and change with exigencies of situations.8
In the present case, it is submitted that the act of tabling the resolution for Ms. Alicent’s removal
constituted an emergent circumstance, requiring prompt action, and thus, it was not practicable
to give Ms. Alicent prior notice of hearing. As CEO, she indulged several activities against
company interests – she started her own business, and allowed activities detrimental to the
company to continue under her supervision. In consideration of the public nature of the company
and in consideration of the PNJ, a post-decisional hearing was afforded to Ms. Alicent, and she
was given the opportunity to make her representation to the BoD. Nonetheless, being void of
6
Maneka Gandhi v. Union of India, AIR 1978 SC 597.
7
P.D. Agrawal v. State Bank of India & Ors., AIR 2006 SC 2064.
8
Ajit Kumar Nag v. General Manager (PJ), Indian Oil Corpn. Ltd., Haldia, AIR 2005 SC 4217.
9
merit, the representation was rightly rejected. Thus, it is submitted that the company complied
with the requirements of the audi alteram partem rule in its decision, and thus, the resolution
passed is valid.
C. THERE WERE “JUST AND EQUITABLE” REASONS FOR THE DISMISSAL OF MS. ALICENT.
The removal of a person from the post of executive of chairman cannot be termed as oppressive
and prejudicial if the same is based on some “just and equitable” cause.9 When the lack of
confidence springs lack of probity in the conduct of the company’s affairs, then the former is
10
justified. If shareholders find that these conditions or some of them are deliberately and
consistently violated and set aside by the action of a member and official of the company who
wields an overwhelming voting power, and if the result of that is that, for the extrication of their
rights as shareholders, they are deprived of the ordinary facilities which compliance with the
Companies Acts would provide them with, then there does arise, in my opinion, a situation in
which it may be just and equitable for the Court to hold the dismissal as valid. 11
In the present case, As CEO, she indulged several activities against company interests – she
started her own business, and allowed activities detrimental tothe company to continue under her
illegal business being carried out by and under the supervision of Ms. Alicent, which led to loss
of the confidence of the shareholders necessitating her removal from the post of CEO with
immediate effect.
9
Loch v. John Blackwood, 6 [1924] AC 783.
10
Ebrahimi v. Westbourne Galleries Ltd, 7 (1924) SC 83
11
Tata Consultancy Services ... vs Cyrus Investments Pvt Ltd, . (2021) 9 SCC 449.
10
II. CLAIMS OF OPPRESSION AND MISMANAGEMENT ARE INVALID AND UNFOUNDED
Oppression and mismanagement are dealt with under Chapter XVI of the Act, and Sections
241 and 244 therein provide for the circumstances and criteria, respectively, in which aggrieved
members may approach the NCLT to seek relief from the Tribunal as mentioned under Section
242. In this context, it is submitted, firstly, that the Petitioner does not meet the criteria to seek
remedy under Section 241 [A], and secondly, that in any event, the threshold to prove
A. THE PETITIONER DOES NOT MEET THE CRITERIA TO SEEK REMEDY UNDER SECTION 241
In this regard, it is submitted, firstly, that the Petitioner, for reason of not being a member,
cannot seek relief from this Hon’ble Tribunal [i]; secondly, that in any event, the petitioner
lacks the numerical strength required to seek relief, and does not meet the criteria to waive the
requirement.
i. The Petitioner, for Reason of not Being a Member, Cannot Seek Relief from this
Hon’ble Tribunal
The language of Section 241, which allows any member of a company to complain about
oppression and mismanagement, clearly restricts the remedy under Section 242 to only
members, and that too, for raising grievances of as a member and not in any other capacity.12
It is submitted that Mr. Viserys, as a former Independent Director, does not meet the
12
Tata Consultancy Services Ltd. v. Cyrus Investments (P) Ltd. (2021) 9 SCC 449.
11
ii. In any Event, The Petitioner Lacks the Numerical Strength Required to Seek
Relief, and does not Meet the Criteria to Waive the Requirement
Section 244 lists certain requirements of numerical strength for the right to apply for an action
under Section 241. It submitted that even in the event that we consider Mr. Viserys as a fit
member to seek relief from this Hon’ble Tribunal, the numerical requirement is not fulfilled.
Thus, since Mr. Viserys is the only individual approaching this Hon’ble Tribunal, relief cannot
be given.
However, the Tribunal has the discretion to waive this numerical requirement if it deems such
waiver to be necessary. The NCLAT has devised a four-step test to determine whether the
numerical requirement of Section 244 may be waived or not.13 The very first requirement is
that the petitioner must be members of the company in question, and thus, if the petitioners are
In the present case, since Mr. Viserys is not a member of the company, the numerical
requirement cannot be waived, and thus, this application must be rejected as not maintainable.
MET
However, even if we assume, arguendo, that Mr. Viserys – not being a member, and without
the requisite numerical strength – may file an application before this Hon’ble Tribunal, the
13
Tata Consultancy Services Ltd. v. Cyrus Investments (P) Ltd. 2017 SCC Online NCLAT 261.
12
In terms of Section 242, the NCLT may interfere if it is of the opinion that the company’s
affairs have been or are being conducted in a manner prejudicial to any the interest of a member,
the public, or the company. This test for the NCLT’s interference is high and stray or lone acts,
Oppression means a lack of probity and fair dealing in the affairs of the company to the
prejudice of some members.14 To constitute oppression, it must be proved that there has been
a wrongful act, the conduct of which is mala fide and against good conduct.15 On the other
hand, mismanagement implies that the affairs of the company are being conducted in a manner
Additionally, petitioners may only allege oppression in their capacity as members, not in other
roles such as directors.17 Further, prejudice means damage or detriment to one’s legal rights or
claims and prejudicial is defined as unfairly disadvantageous.18 Indian courts have relied on a
foreign interpretation of the term, which states that prejudice is an outcome of the oppression.19
In the present case, it is submitted that oppression is not made out. No wrongful act has been
established by the Petitioner against the Respondent. Further, Mr. Viserys lacks the capacity to
bring a claim of oppression as he is not a member of the company. Thus, in the absence of
oppression, prejudice cannot be established. Thus, it is submitted that claims of oppression and
14
Rajahmundary Electric Supply Corpn. Ltd. v. A Nageshwara Rao, (1955) 2 SCR 1066.
15
V.S. Krishnan v. Westfort Hi-tech Hospital Ltd., (2008) 3 SCC 363.
16
In re Albert David Ltd., [1964] 68 CWN 163.
17
K.R.S. Narayana Iyengar v. T.A. Mani, (1959) SCC OnLine Mad 134.
18
Black’s Law Dictionary, 11th ed. (2019).
19
Cyrus Investment Pvt Ltd. v. Tata Sons Ltd., (2020) SCC OnLine NCLAT.
13
PRAYER FOR RELIEF
Wherefore, in the light of facts stated, issues raised, arguments advanced and authorities cited,
it is most humbly prayed before this Hon’ble Tribunal that it may be pleased to hold that:
a. Ms. Alicent was validly removed from her position as CEO of Caraxes & Co. Ltd
b. Dismiss Mr. Viserys’ petition claiming oppression and mismanagement in the affairs
of the company
and pass any other order in favour of the RESPONDENT which this Court may deem fit in the
14