It cannot be denied that there are some members who, by
creating various kinds of troubles for the management, try to wrest undue
advantage for themselves. Can such members be expelled? The Department of
Company affairs following the judgement in the case of Bajaj Auto Ltd. v. N.K Firodia [1971] Comp. Cas. 388 has expressed
the view that the company cannot by amending the Articles given itself a power
to expel a member. Such an amendment is opposed to the fundamental principales
of the Companies’ jurisprudence and is ultra
vires the company. Such a provision is repugnant to the various provisions
in the Act pertaining to the rights of a member in a public limited company and
cuts across the scheme of the Act as it has the effect of rendering nugatory
the very power of the Company Law Board under s.111 and the powers of the
courts under s.107 and 395 and is, therefore, void by the operation of the
provisions of s.9.
However, it seems permissible for a company limited by
guarantee or a company governed by s.25 to include a provision for expulsion of
a member from the company (through forfeiting his shares), if his conduct or
action is considered detrimental to the interest of the company.
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