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1. In this suit seeking a declaration that the plaintiff was and continues to be a director of the defendant-company and also for declaring that the plaintiff has not incurred any disqualification under section 283(1)(g) of the Companies Act, thereby vacating the office of the director of the defendant-company and for a perpetual injunction restraining the defendant from holding that the plaintiff has vacated the office as director and also restraining the defendant from obstructing the plaintiff from discharging his duties and from exercising his powers and privileges as a director of the defendant-company, the plaintiff has moved the application for grant of an interim injunction till the disposal of the suit restraining the defendant from holding that the plaintiff has vacated the office as director and restraining the defendant from obstructing the plaintiff from discharging his duties and exercising his powers and privileges as a director of the defendant-company.

2. I have heard arguments for deciding this application, I.A. No. 1558 of 1991. It is averred in the plaint that the defendant-company was incorporated on July 23, 1985, and that the same was promoted by the plaintiff and his son, Vijay Bhushan, who formed one group and Harish Chander Bhasin and his associates who formed the other group and that the plaintiff, along with his associates as well as Harish Chander Bhasin, hold not less than 10% of the paid-up equity capital of the defendant-company. It is mentioned that, at the time of incorporation of the company, it was agreed between the two groups that the management and control of the company would be exercised by the two groups jointly and that the two groups will have an equal share in the management of the company and that the name of the company was also taken from the first alphabets of the names of the plaintiff and Harish Chander Bhasin. It is then pleaded that rule 104B of the memorandum and articles of association of the defendant-company stipulated nomination by the plaintiff and his associates of up to a maximum of four persons as directors on the board of directors of the company. It is then pleaded that plaintiff was always being intimated by a written notice of the dates of holding of board meetings from time to time and the plaintiff has been attending all the board meetings of which he received a notice in writing till October, 1989. It is then alleged that, some time in October, 1989, the relationship between the plaintiff and Harish Chander Bhasin became strained as certain differences arose between the two groups but, despite efforts, the differences could not be resolved and the discussions in that respect continued in between the period October, 1989, and January, 1991. It is then pleaded that the plaintiff did not receive any written notice regarding the holding of any meeting of the board of directors after October, 1989, and had not come to know about holding of any such meeting and, in the Economic Times dated January 14, 1991, it was published that the defendant was proposing to have a public issue of shares and, on making inquiries from the Registrar of Companies, the plaintiff learnt that the defendant had filed a prospectus for registration in respect of a proposed public issue and the said prospectus disclosed the names of the directors which did not include the names of the plaintiff and his son, Vijay Bhushan. As such a prospectus, in view of the provisions of the Companies Act, is required to be signed by all the directors or their constituted attorneys, Vijay Bhushan, in order to ascertain the factual position, wrote a letter dated February 13, 1991, to the Registrar of Companies intimating that he had not ceased to be a director of the company and the prospectus filed was defective inasmuch as it did not have the signatures of all the directors. It was then pleaded that, from the office of the Registrar, it was learnt that a statutory Form No. 32 had been filed by the defendant intimating the change in the board of directors which did not include the names of the plaintiff and his son, Vijay Bhushan, mentioning that they had ceased to be directors on the ground of having incurred a disqualification on account of not attending three consecutive board meetings as per the provisions of section 283(1)(g) of the Companies Act and also in terms of article 101 of the memorandum and articles of association of the defendant-company. So, it is pleaded that the defendant-company had illegally declared that the plaintiff and his son had vacated the offices of directors inasmuch as no notice, at any time, of any meetings, had been received by the plaintiff for the alleged board meetings which the plaintiff, in the absence of receipt of any notice or knowledge, could not attend. In the alternative, it is pleaded that the plaintiff has exercised his right under article 104B by nominating himself and others as directors, vide letter dated February 18, 1991, and thus, he has become a director of the defendant-company and is entitled to have the injunction on that score in any event.

7. Section 283(1)(g) lays down that the office of a director shall become vacant if he absents himself from three consecutive meetings of the board of directors, or from all meetings of the board for a continuous period of three months, whichever is longer, without obtaining leave of absence from the board. This particular provision does not contemplate the passing of any board resolution for showing that the office of the director has been vacated by a particular director. It appears that the vacation of the office of director is automatic as soon as a director is found to have incurred the disability as contemplated by clause (g). Section 284 of the Companies Act, however, contemplates removal of a director by the passing of a board resolution. That provision, in fact, is not applicable where the director vacates office by virtue of incurring the disqualifications laid down in section 283. The case of Turnbull [1894] 70 Law Times 92, examined the provisions of article 70 of the articles of association of a company which provided that the office of any director should be vacated on any of the five grounds enumerated therein, one of them being that a director had absented himself from board meetings for a period of three months. In the said case, the plaintiff was a director and, at a meeting of the board, he informed the chairman that he was jointly interested with one "M" in a contract but he did not specify the precise nature or extent of his interest. At a meeting of the board of which no notice was given to the plaintiff, a resolution was passed declaring his seat as director vacated for infringing article 70(e) which prohibits a director from having contracts with the company or being concerned in or participating in the profits of any contract with or work done for the company without declaring his interest. It was this particular clause (e) of article 70 which was examined by the Chancery Division and it held that, in such a case, the construction must be that something more must be done to render the seat vacant and, moreover, natural justice requires that a director shall have an opportunity of saying what occurs to him on his own behalf. As, in the said case, no opportunity of hearing had been granted to the director before passing the resolution that he had incurred the disability under clause (e) of article 70, the injunction in favor of the director was granted. The facts of the said case are distinguishable. In case a particular director acts against the interest of the company obviously the rules of natural justice do require that, before he is held guilty of such act, he should be given an opportunity of hearing.

10. Section 283 merely makes the disqualification on a director for not attending three consecutive meetings without obtaining leave of absence from the board. It is not the case of the plaintiff in the present case that he had obtained any leave of absence from the board. Here the question raised is whether the plaintiff had been served with written notices for attending the board meetings or not. There was no question of giving any show-cause notice to the plaintiff to explain his position before he could be held to have vacated the office of director. A broad proposition of law cannot be paid down that, before a director incurs the disability as required by section 283, he must be given a show-cause notice or reasonable opportunity of being heard. In the case of Shekhar Mehra [1986] 3 Comp LJ 234 (MP), this very provision came up for consideration and it was held that under section 283(1)(g), no hearing is required to be given to a director whose office has become vacant by reason of his absenting himself as vacation of his office is automatic, if absence is proved. It was also held that presumption of due service of notice under section 53(2) of the Companies Act is to be drawn. I agree with the law laid down in this judgment and I hold prima facie that no show-cause notice was required to be served on the plaintiff before he was deemed to have vacated the office of director on his failure to attend three consecutive board meetings. In the present case, the facts that the plaintiff took no steps from October, 1989, to have any interest in the affairs of the company rather prima facie shows that the plaintiff deliberately did not attend the board meetings which he knew were bound to take place in law once in three months. Be that as it may, prima facie, it is also clear that the plaintiff did not care to attend the annual general meeting where the decision was taken for public issue. The plaintiff cannot claim in law that, in fact, he was not aware of the holding of the annual general meeting knowing very well that such notice is also published in newspaper. So, prima facie, it cannot be said that the plaintiff has a prima facie case in his favor.