Authority: National Company Law Appellate Tribunal, Chennai Bench

Order Date: October 5, 2026

Case Overview

This appeal (Company Appeal (AT) (CH) No. 52/2026) arises from proceedings before the National Company Law Tribunal (NCLT) concerning Sri Varadaraja Textiles Pvt. Ltd. The appellants are V Krishnaveni and two others, while the respondents include the company and seven others.

The core dispute involves the interpretation and application of Section 167 of the Companies Act, 2013, which governs the automatic vacation of director office. The respondent, represented by counsel Mr. R. Vidhya Shankar, presented two key arguments. First, they highlighted that the respondent (an octogenarian director) was admitted to the hospital on December 26, 2025, which prevented attendance at a crucial board meeting scheduled for December 27, 2025. This meeting was significant as it marked the end of the one-year period relevant for Section 167 calculations.

Second, the respondent's counsel argued that both Section 167 of the 2013 Act and its predecessor (Section 283(1)(g) of the Companies Act, 1956) require that absence from board meetings must be "voluntary" to trigger vacation of office. The statutory language uses the expression "absents himself," indicating legislative intent to apply only when a director shows no inclination to fulfill responsibilities, not in cases of involuntary absence such as hospitalization.

The background context includes allegations by the respondent that they were prevented from participating in board meetings, which culminated in an NCLT order dated September 24, 2025, appointing an observer for board meetings. These proceedings occurred within the context of oppression and mismanagement allegations filed by the respondent.

Final Outcome

The NCLAT bench comprising Justice N. Seshasayee (Member-Judicial) and Jatindranath Swain (Member-Technical) heard preliminary arguments and adjourned the matter for further hearing. The case is listed for continuation of arguments immediately after admission on November 16, 2026. No final determination on the interpretation of Section 167 or the director's status has been made at this stage.

Topics: Director Vacation, Companies Act Section 167, Board Meeting Attendance