NAZIR HOOSEIN AND ANR. versus DARAYUS BHATTENA AND ORS.

Citation: [2000] SUPP. 1 S.C.R. 269 · Decided: 12-05-2000 · Supreme Court of India · Bench: AJAY PRAKASH MISRA · Disposal: Appeal(s) allowed

Judgment (excerpt)

NAZIR HOOSEIN AND ANR. 
A 
v. 
DARA YUS BHATTENA AND ORS. 
MAY 12, 2000 
[A.P. MISRA AND M.B. SHAH, JJ.] 
B 
Companies Act , 1956-Sections 175 , 193-Meeting convened by 
respondents I to 3 , without serving any notice upon appellant no. I and 
other directors supporting him and passing resolutions removing appellant 
no. I and instead appointing respondent no. I as Chairman and appointing C 
12 additional directors-Challenge to-Consent Order passed by the High 
Court that a fresh meeting of the Board of Directors be held under the 
chairmanship of a third person, one S to reconsider afresh the agenda of the 
said impugned meeting-Held, as a consequence of the consent order, what 
was resolved previously in the impugned meeting is wiped off and has D 
become non-est-Thus, the resolution appointing respondent no. I as Chairman 
of the Board and consequently authority of respondent no. I to preside under 
it also diti,So/ved--No fresh authority having been conferred, respondent no. 
I could not preside in Board's meeting-In view of this, the appointment of 
12 additional Directors cannot be sustained as the resolution appointing 
them stands obliterated in view of the consent order passed by the High E 
Court-Further, the resolution passed in another meeting chaired by 
respondent no. I regarding the induction of new life members also does not 
survive after passing of the consent order-However, in order to keep the 
interest of the life members, their cases directed to be placed before the next 
Annual General Meeting to be held for its consideration. 
F 
Minutes of meeting-Recording of-Minutes recorded by the secretary 
and the one by the Chairman at variance with each other-Acceptance of-
Held, the Chairman of the Board is under an obligation to authenticate the 
minutes of the meeting of the Board and is empowered to exercise an absolute 
discretion in regard to the inclusion or non-inclusion of any matter in the G 
minutes-Jn the present case because of conflict between two groups, a via 
media was found to eliminate the ensuing mistrust by appointing a third 
agreeable person as Chairman and even if there. be conflict, the minutes 
prepared by such third person is to be accepted and not of the other belonging 
to one of such conflicting grou~Hence, the minutes prepared by the 
H 
269 
0 
270 
SUPREME COURT REPORTS [2000] SUPP. I S.C.R. 
A Chairman are to be accepted as authentic and not the minutes prepared by 
the Secretary which are relied on by one of the conflicting groups. 
The appellants and respondent nos. 1 to 3 were the Directors of a 
company and the first appellant was the Chairman of the Board of Directors 
of the Company. The nucleus of conflict started when in a Board's meeting 
B held by respondent nos. 1 to 3 , appellant no. 1 was removed and respondent 
no. I was appointed in his place as the Chairman of the Board of Directors. In 
the said meeting, which was held without serving any notice upon appellants, 
resolutions were also passed shifting the office to the house of respondent 
no. I and appointing 12 additional Directors which included respondents 4 to 
C 8 along with 7 others. 
The appellants filed a suit before the City Civil Court challenging the 
said resolutions. The City Civil Court did not interfere with the resolution so 
far the shifting of the office and removal of appellant no. 1 as a Chairman but 
injuncted the 12 additional Directors from acting as Directors. Aggrieved by 
.. D one part of the order, viz, non-interference with shifting of the office and 
removal of appellant no. 1, the a11pellants filed an appeal before the High Court. 
On the order hand, respondent nos. 1 to 3 and 5 additional Directors, being 
aggrieved by the other part of the order, viz., injuncting 12 additional Diriectors 
from functioning, filed a cross appeal. 
· 
E 
Subsequently, a notice was issued for a meeting of the Board of Directors 
for the co-option of another set of 12 additional Directors, in place of the 
injuncted Directors which included respondent nos. 4 to 8. This led the 
appellants to file another application for injunction to restrain these 
respondents from holding the said meeting. Pursuant to it, the Court directed 
F that any resolution passed at the meeting shall not be implemented for two 
weeks which was subsequently extended. In the said meeting presided by 
respondent no. 1, 12 new additional Directors were appointed till such time 
as the injunction against the first set of 

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