NCLAT : In Nasik Diocesan Trust Assn. Pvt. Ltd. vs. Uday Daniel Khare

When there was an exceptional circumstances, which may merit ‘waiver’ under sub-section (1) of section 244, the Tribunal had rightly exercised its discretion.

The main issues raised in this appeal were:

  1. Whether the proviso to Section 244(1) would be applicable to the present case and whether Respondents Nos. 1 and 2 would be entitled to the waiver thereunder.
  2. Whether a person who is not a member is entitled to the waiver under Section 244(1) would also have to be determined.
  3. Whether NCLT is entitled to grant the said waiver under Section 244(1) even without determining whether a petitioner before it is a member or not.
  4. Whether the waiver under the proviso to Section 244(1) could apply even to non-members.

Under proviso to sub-section (1) of Section 244, the Tribunal is required to decide the question whether application merits ‘waiver’ of all or any of the requirements as specified in clauses (a) and (b) of sub-section (1) of Section 244 to enable such member(s) to file application under Section 241.

To form an opinion as to whether the application merits waiver, the Tribunal is not only required to form its opinion objectively, but also required to satisfy itself on the basis of pleadings/evidence on record as to whether the proposed application under section 241 merits consideration.

The Appellate Tribunal is of the opinion that there is provision in the Companies Act that a director can be removed but members are not normally removed. On the other hand, as per the claim of the appellant that respondents are not members and counter claim by the respondents that they are members. There are also some conflicting documents as some documents are showing that they are members of the company at some point of time and some documents are showing that they are not members of the company. Even if there is a provision in the Articles of Association for removal of the members, it may conflict with the provisions of law and if not so, strict compliance with the requirement for removal need to be placed on record so as to deny the membership right to a person who has been a member at one point of time or the other. Since this issue could be an exceptional circumstances, which may merit ‘waiver’.

Link : http://www.nclat.nic.in/final_orders/Court_II/2018/company/21052018AT3682017.pdf