New Delhi, August 2025 –

The Delhi High Court has ruled that an interim injunction under Section 9 of the Arbitration and Conciliation Act, 1996 cannot be invoked to restrain the convening of a Board Meeting or Extraordinary General Meeting (EGM) for the removal of a director, as such an order would amount to granting final relief and curtail statutory powers vested in companies under the Companies Act, 2013.

 

A Division Bench of Justices Anil Kshetarpal and Harish Vaidyanathan Shankar delivered the verdict while allowing appeals filed by the appellant company under Section 37(1)(b), ACA against orders of the District Judge (Commercial Court), Saket, which had restrained the company from holding meetings concerning the proposed removal of a director.

 

The Court noted that while the District Judge found alleged violations of Sections 169 and 173(3), Companies Act, the injunction imposed was excessive since it prevented shareholders and the Board from exercising their statutory right to deliberate on the removal of a director.

 

Key Observations

• Scope of Section 9 ACA: Interim measures should not virtually decide the dispute or block statutory corporate functions.

• Procedural compliance: Shorter notice of meetings is permissible under the proviso to Section 173(3) for urgent business.

• Prima facie case not established: The Commercial Court failed to record findings on balance of convenience, irreparable harm, or mala fides.

• Reliance misplaced: The District Judge’s reliance on Chhaya Devi v. Rukmini Devi was incorrect since it was set aside by the Delhi HC in Jai Kumar Arya v. Chhaya Devi.

 

Accordingly, the High Court set aside the impugned orders and clarified that the company was free to convene its meetings to consider removal of the director.