Authority: National Company Law Appellate Tribunal, Chennai Bench (Justice N. Seshasayee, Member (Judicial) and Jatindranath Swain, Member (Technical))

Order Date: 17 August 2026

Case Overview

This appeal was filed by three directors and shareholders of Pearl City Marine Products Private Limited (Appellants) challenging an order dated 22 June 2026 from the National Company Law Tribunal (NCLT), Kochi Bench in COMPANY PETITION (C/ACT/04/KOB/2026). The petition was instituted by Mr. Hiras K (1st Respondent), the Managing Director and shareholder, under Section 98 of the Companies Act, 2013. The dispute originated from a boardroom conflict. The appellants had removed Respondents 3 and 4 (Mr. Velliyattil Muhammed Haneefa Abuthahir and Mr. Velliyattil Muhammed Haneefa) from the board via a resolution passed in an Extraordinary General Meeting (EGM) on 10 November 2025, which the 1st Respondent initially supported. Subsequently, the 1st Respondent issued a notice on 20 January 2026 under Section 100 of the Companies Act to convene another EGM to re-induct the removed directors. The company's board rejected this requisition by a 3:2 majority resolution on 09 February 2026. Instead of exercising his right under Section 100(4) to convene the meeting himself, the 1st Respondent approached the NCLT under Section 98 seeking the tribunal's intervention to call the EGM.

The principal legal question before the NCLAT was whether invoking Section 98 is permissible without first exhausting the remedy under Section 100(4). The 1st Respondent argued, citing precedents like Invesco Developing Markets Fund vs Zee Entertainment Enterprises Limited and Re: Ruttonjee and Co. Ltd., that Section 100(4) provides an alternative, not an exclusive, remedy and does not foreclose the right to invoke Section 98. The appellants contended that Section 98 can only be invoked if it is demonstrated that it is 'impracticable' to convene the meeting as per the Act or the company's articles, a burden the 1st Respondent failed to meet.

The NCLAT conducted a detailed analysis of the legal provisions and precedents. It affirmed the Bombay High Court's ruling in the Invesco case that Sections 100(4) and 98 are mutually exclusive remedies. However, it emphasized the Calcutta High Court's guidelines from the Ruttonjee case, which state that the power under Section 98 (and its predecessor, Section 186 of the 1956 Act) is an exceptional jurisdiction to be used sparingly. The tribunal should not ordinarily interfere with a company's internal management and can only do so when it is reasonably established that it is 'impracticable' to convene a meeting without judicial intervention. The term 'impracticable' must be interpreted from a reasonable and common-sense business perspective, and the facts must show an inevitability requiring tribunal involvement.

Upon examining the facts, the NCLAT found that the 1st Respondent had placed no material before the NCLT to demonstrate such impracticability. The mere fact of a divided board (3:2 vote) and the presence of approximately 110 other shareholders did not, by itself, constitute a scenario where convening a meeting was impracticable. The 1st Respondent had not even attempted to convene the meeting himself under Section 100(4) before approaching the tribunal.

Final Outcome

The NCLAT allowed the appeal and set aside the NCLT's order dated 22 June 2026. The tribunal held that the 1st Respondent failed to establish the statutory precondition of impracticability required to invoke Section 98. The NCLT's order directing the convening of an EGM was therefore unsustainable in law. No costs were awarded. All connected Interlocutory Applications were closed.

Topics: Corporate Governance, NCLT/NCLAT Jurisdiction, Companies Act