Julu Retail Limited is a Public Limited Company having a Chairman (who is also a Director), a Managing Director, four whole-time directors (Finance, Technical, Marketing, etc.), six other Directors including five Indepen

Corporate democracy means that the ultimate control of a company lies with its shareholders, and decisions especially those relating to the appointment or removal of directors must be taken collectively through prescribed procedures. Directors, though involved in management, hold office subject to the will of the shareholders expressed in a legally valid manner. Removal of a director is therefore not a matter of individual discretion (even of a Chairman or majority on the Board), but must follow due process, including proper notice and opportunity to be heard. This ensures fairness, transparency, and protection against arbitrary exercise of power. Position when removal is attempted without special notice: The requirement of special notice is a crucial safeguard. It serves two purposes: It alerts the concerned director in advance so that he can defend himself. It informs shareholders about the proposed action so they can make an informed decision. If a director is removed without complying with this requirement, the action is generally treated as invalid because it violates the principles of corporate democracy and natural justice. Relevant Case Laws: Manmohan Singh Kohli (Capt.) v. Venture India Properties P. Ltd., (2005) The dispatch of notice is not bad in law because it is sent from some other post office which is not situated near to the company's registered or working office. The removal of director without serving the notice u/s 284 is invalid and is an act of oppression & mismanagement. Consequently, the director shall be restored to his original position as director and all subsequent actions taken by the company in this regard would also be null and void. B.V. Thirumalai v. Best Vestures Trading P. Ltd., (2004) It is settled proposition of law that further shares could be issued only for the benefit of the company and not with a view to create a new majority, even if the powers to issue shares is vested in the Board. If the purpose of allotment of shares is for upsetting the existing shareholding to the detriment of one group, then such an allotment of shares is to be held an act of oppression. The procedure u/s 284 for the removal of director shall be followed: An extraordinary general meeting being conducted without a board meeting is invalid & the director removed at such meeting is invalid and he is entitled to receive the pending remuneration. If it is proved that a director is fooled by the other for resigning from the post of directorship shall be considered an act of oppression more so, when the company is a family company. Naginder Singh Shiena v. R.S. Infrastructures Ltd., (2007) If it is established that the resolutions in the EOGM were passed with a view to oust the directors from the management of the company and take control of the affairs of the company, then, the same could be agitated in a petition under Sections 397/398 of the Act. In case of closely held companies, the removal of any shareholder from the board who has been associated with the company for long, could be considered to be an act of oppression and could be agitated in a petition under Sections397/398 of the Act. *Corresponding provisions under the Companies Act, 2013 are Section 169 for removal of directors and Sections 241-242 for oppression and mismanagement." LIC of India v. Escorts Ltd. The Court emphasized that corporate decisions must reflect the will of the shareholders, and such will must be expressed in accordance with statutory procedures. Any deviation undermines corporate democracy. It was reiterated that shareholders are supreme, but their power must be exercised through proper legal channels—not arbitrarily. Shanti Prasad Jain v. Kalinga Tubes Ltd. The Court highlighted that majority powers in a company must be exercised bona fide and in accordance with law. Any action violating procedure or fairness can be challenged. Parmeshwari Prasad Gupta v. Union of India It was held that removal or termination of directors without following proper procedure (such as valid meetings and notice) is invalid. Corporate democracy does not merely mean majority rule — it means rule by majority in accordance with law. Removal of a director without special notice violates: Statutory requirements, Principles of natural justice, and The foundational concept of corporate democracy.