Ranbaxy Laboratories Ltd v. Dr. Jayaram Chigurupati And Others  153 Comp Cas 162 CLB
Decided on 21/10/2009
Companies Act, 1956 – Section 260 and 287(2) – Quorum for Board Meeting convened by Single Director on account of resignation of two directors to appoint two additional directors to constitute quorum – whether such appointment is valid – Held Yes.
SEBI (SAST ) Regulations, 1997 – Regulation 22(7) – substantial acquisition of shares – applicant company acting in concert with acquirer company – applicant company shareholder of target company – whether applicant company can appoint any person on the Board of target company.
The Board meeting was convened by a single director on account of resignation of two directors of the fourth respondent company and the appointment of the two additional directors as independent non-executive directors and non-independent executive directors on the board of the fourth respondent company with immediate effect was approved. The applicant submitted that the convening of the Board Meeting by a single director was not a proper quorum in accordance with the provisions of Section 287(2) of the Act. The Respondent submitted that the board meeting convened was in accordance with regulation 75 of table A of Schedule I to the Act, and also in article 97 of AOA which stated that if number of directors fall below the requisite quorum, a single director could be considered as quorum and the meeting was valid.
Respondent relied on the case of Maharashtra Power Development Corporation Ltd. v. Dabhol Power Co.  120 Comp Cas 560 (Bom) to support his argument that according to SEBI regulations, 1997, the acquirer or persons acting in concert with him shall not be entitled to be appointed on Board of directors of the target company during the offer period. The applicant company was acting in concert with respondent and who was an acquirer of shares of respondent company.
The court held that the appointment of additional director at the Board meeting held by a single director was in accordance with section 260 of the Act and there was no violation of the provisions of section 287(2) of the Act. All the decisions taken at the meeting are valid.
The applicant having acted in concert with respondent cannot appoint any person on the board of target company.
The Board was directed to go ahead with the conduct of Board meeting in accordance with provisions of the Act since the proceedings were held to be valid.