Chitra Developers Limited, a listed company, adopted Articles of Association as per Article 84 of Table F of Schedule I under the companies Act, 2013, held a Board of Directors meeting on 1st February 2024, during which

(i) Validity: Authority to declare interim dividend: As per Section 123(3) of the Companies Act, 2013, the Board of Directors of a company may declare interim dividend during any financial year or at any time during the period from closure of financial year till holding of the annual general meeting. Time limit to open a separate bank account: In terms of sub-section (4) of Section 123 of the Companies Act, 2013, the amount of Dividend, including Interim Dividend, shall be deposited in a scheduled bank in a separate account within 5 days from the date of declaration of such Dividend. Revocation of Dividend: The right of Members to claim Dividend arises only after the Dividend is declared either by the company in an Annual General Meeting or, in the case of Interim Dividend, by the Directors in a Board Meeting. Until and unless it is so declared, no Member has any claim against the company in respect thereof, even though the company may have sufficient profits [Bacha F. Guzdar v Commissioner of Income Tax 1955 AIR SC 740]. Members cannot compel the company by any process of law to declare Dividend [C.W. Spencer V. ITO, (1957) 27 Comp. Cases 15, 25 (Mad)]. A Dividend once declared becomes a debt due to the Members and hence cannot be revoked. It gives rise to an enforceable obligation or creates a debt enforceable immediately or in the future. Conclusion: The Board of directors are the competent authority to declare interim dividend in the Board meeting. Hence, the declaration of interim dividend by the Board of directors in its meeting held on 1st February, 2024 is valid. The interim dividend declared by the Board has become debt and it cannot be revoked. Hence, the revocation of interim dividend by the Board in the board meeting of 10th February, 2024 is not valid. Time limit: In accordance with the provision, the company should have opened a separate bank account to deposit the interim dividend amount by the latest date of 6th February 2024, which is within 5 days from 1st February 2024, the date of declaration of the interim dividend. (ii) Shareholders increasing the proposed rate of dividend: The dividend recommended by the board of directors as mentioned in the Directors Report is declared at the annual general meeting of the company. Article 80 of Table F of schedule 1 Companies Act, 2013, states that "the company in general meeting may declare dividends, but no dividend shall exceed the amount recommended by the Board." The shareholders have no right to declare a final dividend in the annual general meeting at a rate exceeding the rate proposed by the Board. Hence, the decision of the shareholders to declare the dividend @ 20% which is more than the rate of 10% proposed by the Board, is invalid.