ISSUE 1: WHETHER THE COURT SHOULD ORDER THE BOARD OF DIRECTORS

TO HOLD AN EGM TO CONSIDER THE PROPOSALS MADE BY THE

Summary of Pleadings

It is submitted that the court should not order the Board of Directors to hold an EGM since the
Governance Consortium has made not made a valid requisition and it is not impracticable to hold
a meeting. Firstly, the present requestion is not valid since ‘validity’ does not denote mere
procedural compliance to Section 100 but rather includes substantive ‘legality’ of the proposed
resolutions. Moreover, the resolutions compel the company to resile from its statutory
obligations of obtaining the prior-approval of the Nomination and Renumeration Committee and
Ministry of Petroleum and Natural Gas. Secondly, it is not impracticable to hold a meeting since
the threshold for impracticality is not met. The requistionists cannot claim impracticality on the
grounds of not possessing the list of members of the company since they can approach the
tribunal for the same.

ARGUMENTS FROM RESPONDENTS

Participants must contend –

i) the Governance Consortium (‘GC’) has not made a valid requisition

ii) it is not impracticable to hold a meeting in the manner prescribed by the CA, 2013.

Applicable law for (i) – the GC has not made a valid requisition
The court can order the BoD to hold an EGM only when the requisitionists make a valid
requisition.1 However, the present requestion is not valid since, first, validity does not denote
mere procedural compliance and, secound, the proposed resolution to appoint Independent
Directors is illegal and, third, the proposed resolution to remove Mr. Shukla as a director is
illegal.

As already mentioned, requisition must be valid and lawful; 2 however, validity does not mean
mere procedural compliance for requestioning a meeting 3 and includes substantive compliance.4
Although shareholders have the right to regulate affairs of the company, 5 to call EGMs6 and
propose resolutions,7 they must not be permitted to drive the company into illegality. 8 Thus, if
the resolutions proposed to be passed are wholly illegal such that they compel the company to
resile from its statutory obligations, the BoD are under no obligation to call the meeting. 9 The
court must examine the substance of resolutions to determine their validity. ITPC, the proposed
resolutions are illegal since, first, the general meeting cannot carry out the objects of the
requisition and, second, the resolutions compel the company to resile from its statutory
obligations.

First thing first, the general meeting cannot be requisitioned to do something which it does not
have the power to do in law.10 Shareholders cannot exercise or control the exercise of powers
vested in the BoD,11 and this is applies to meetings 12 even by a resolution of a numerical majority
at a general meeting.13 In such situations, the BoD can refuse to convene the EGM. 14 Independent
directors must be selected by the BoD 15 based on recommendations of the NRC. 16 The difference

1
Zee Entertainment Enterprises Ltd. v. Invesco Developing Markets Fund, [2021] 229CompCas540(Bom).
2
A. Ramaiya, Guide to the Companies Act, Vol.1 (19th ed., 2020).
3
Cricket Club of India v. Madhav L Apte, (1975) 45CompCas574(Bom).
4
Infra note 9;Supra Note 1; Kaye &Anr v. Oxford House (Wimbledon) Management [2019] EWHC 2181 (Ch);
NRMA v. Parker, (1986) 11 ACLR1 5 (Aust).
5
SEBI (LODR) Regulations, 2015, Reg. 4(2)(a).
6
LIC of India v. Escorts Ltd, (1986)1 SCC 264.
7
Id. 264
8
Supra Note 1.
9
Centron Industrial Alliance Ltd v. Pravin Kantilal Vakil, (1985)CompCas12.
10
Queensland Press Ltd v. Academy Investments No 3 Pty Ltd, [1987]QC3; Supra Note 1.
11
Automatic Self-Cleaning Filter Syndicate Co. v. Cunningham (1906) 2 Ch. 34.
12
National Roads and Motorists' Association v. Parker (1986) 4 ACLC 609.
13
Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd., AIR1981SC1298.
14
Supra Note 11, Supra Note 1.
15
The Companies Act, 2013, §149(8) r/wSchedule IV, Part IV(1).
16
SEBI (LODR) Regulations, 2015, Reg. 19(4) r/wPart D, A, (1A).
between appointment of ordinary directors and independent directors is that shareholders are to
‘approve’ the appointment of independent directors17 and not ‘appoint’ them.18 Approval means
confirming or consenting to an act or thing done by another. 19 This is distinct from the
appointment which means to ordain or designate.20 ‘Approval’ for the appointment of
independent directors clearly indicates the intention of the legislature to limit the powers of the
shareholders to merely approving the independent directors selected by the BoD.

ITPC, the GC has requisitioned a general meeting to appoint the directors selected by
them,21going beyond the powers of the general meeting, which are limited to approval of their
appointment. The object encroaches upon the BoD’s power to select independent directors. The
general meeting has been requisitioned to do something which it cannot, in law, and therefore the
requisition is invalid.

Moreover, if the resolutions compel the company to resile from its statutory obligations it is
deemed to be illegal.22 The proposed resolutions are illegal because they compel Aril to resile
from its obligations to obtain prior-approval of the NRC and MoPNG. Whether a provision is
mandatory depends on the wording of the statute 23 and its object.24 The word ‘shall’ ordinarily
denotes that a provision is mandatory,25 unless such a construction causes inconvenience to
innocent persons.26 If the intention of the legislature is defeated by construing a provision to be
directory, it will be construed as mandatory.27 These provisions were introduced to reduce the
influence of controlling shareholders on independent directors and to protect the rights of
minority shareholders.28 Construing it as merely ‘directory’ would defeat the object of the
legislature since it would enable majority shareholders to appoint independent directors who
would serve their personal wishes.
17
The Companies Act, 2013,§150(2) &§149(8) r/w Schedule IV, Part IV(2).
18
The Companies Act, 2013, §152(2).
19
BLACK’S LAW DICTIONARY 128 (4th ed., 1968).
20
Id., 128.
21
Moot Proposition, ¶12.
22
Supra note 9.
23
EARL T. CRAWFORD, THE CONSTRUCTION OF STATUTES 516 (2014).
24
Chandrika Prasad Yadav v. State of Bihar, AIR2004SC2036.
25
State of Haryana v. RaghubirDayal, (1995)1SCC133.
26
Id., 134.
27
DR AVTAR SINGH & DR HARPREET KAUR, INTRODUCTION TO THE INTERPRETATION OF STATUTES (5th ed., 2020).
28
THE INSTITUTE OF COMPANY SECRETARIES IN INDIA (ICSI), ICSI Recommendations to Strengthen Corporate
Governance Framework (2009); MR. NARESH CHANDRA COMMITTEE, Report of the CII Task Force on Corporate
Governance (2009).
ITPC, Aril is required to constitute a NRC. 29 The NRC ‘shall’ evaluate the balance of skills,
knowledge and experience on the Board and then prepare a description of the role and
capabilities required in the independent directors. 30 On its basis, the NRC ‘shall’ recommend the
appointment of an individual as an independent director. 31Thus the recommendation of the NRC
is mandatory for the appointment of independent directors. Since shareholders can appoint
independent directors by nominating them to the NRC, 32 their right to nominate and elect
members to the board of directors33 is preserved. It is submitted that prior approval of NRC is a
mandatory provision which must be complied with before the independent directors are
appointed. Since this has not been sought for the appointment of Mr. Carnegie and Ms. Nagen,
the resolution proposing to appoint them as independent directors is illegal.

Further, Art. 24 of Aril’s AoA stipulates that approval of the MoPNG is required before any
changes to the composition of the BoD of the company are given effect.34 Aril’s JVA contains a
similar provision, with the stipulation that approval of MoPNG would be necessary only as long
as ICOL held 15% shares in the company.35 In case of inconsistencies between the AoA and JVA
of a company, the AoA take precedence.36 When the AoA has been taken from a source and there
is departure from the original text, its interpretation depends on legal precedent regarding the
issue.37 The AoA must be interpreted such that it serves and promotes the functioning of the
society.38Art. 24 of the AoA would apply, and approval of MoPNG would be required before the
appointment of directors is given effect in the EGM. The MoPNG is responsible for the
exploration and conservation of oil and natural gas. 39 Approval of the ministry would therefore
serve the interests of the society.

29
The Companies Act, 2013, §178.
30
SEBI (LODR) Regulations, 2015, Reg. 19(4) r/w Schedule II, Part D, Para A (1A).
31
Id.
32
SEBI, Consultation Paper on Review of Regulatory Provisions related to Independent Directors,
https://www.sebi.gov.in/sebi_data/meetingfiles/jul-2021/1626155485805_1.pdf (Last visited on February 24, 2022).
33
SEBI (LODR) Regulations, 2015, Reg. 4(2)(a)(v).
34
Moot Proposition, ¶13.
35
Id.
36
World Phone India Pvt. Ltd. v. WPI Group Inc., (2013)178CC173(Del); V.B. Rangaraj v. V.B. Gopalakrishnan,
(1992)73CC201.
37
J. Dalmia v. Commissioner of Income Tax, New Delhi MANU/SC/0107/1964.
38
Parmod Dhawan v. Mes Builders Association of India, MANU/DE/3818/2012.
39
Ministry of Petroleum and Natural Gas, >>https://mopng.gov.in/en<<
Hence, it may be argued that since the proposed resolutions result in the appointment of
Independent Directors and removal of Mr. Shukla, the resolutions compel the company to resile
from statutory obligations. The resolution is illegal, ultra vires and ineffective.

Applicable law for (ii) – It is not Impracticable to hold a meeting in the manner prescribed by
the Companies Act

The tribunal can order a meeting of the company to be held in a manner it deems fit, only if it is
impracticable to hold a meeting of the company in the manner prescribed by the Act. 40 The
tribunal must exercise this power sparingly and with great caution since it interferes with
companies’ right to manage their own affairs. 41 The threshold for its exercise nears that of
impossibility42 or extreme inconvenience43 in holding the meeting. If shareholders are in a
position to hold the meeting, they must attempt to hold it themselves, 44 instead of applying to the
tribunal for an order to hold the meeting.45

ITPC, the GC’s contention of ‘impracticability’ on the ground that they did not want to hold the
meeting without the support of the administrative machinery of the company 46 is invalid since it
does not meet the threshold of impracticability. The contention that they did not have the list of
shareholders of the company47 is invalid since the requisitionists can approach the tribunal for
acquiring the list of members of the company.48 When requisitionists have not been provided the
list of shareholders, courts have, subject to validity, ordered the requisitionists to be supplied
with the list of shareholders and they have refrained from interfering in the affairs of the
company by ordering to hold the meeting.49 The GC’s contention of ‘impracticality’ on the
ground that they that they did not want to incur the cost of convening an EGM 50 is premature and
40
The Companies Act, 2013, §100.
41
Re, Clive Mills Co. Ltd., (1964)34 ComCases731(Cal).
42
Mohan Gopal, Impracticability and The Court's Power to Convene a Company Meeting,Malaya Law Review,
December 1982, Vol. 24, No. 2 at 248-263 (December 1982).
43
Jenashare Pty Ltd v. Lemrib Pty Ltd., 1993 (Supreme Court of New South Wales)(Unreported).
44
B. Mohandas v. AKMN Cylinders P. Ltd., (1998) 93 Com Cases 532.
45
Bengal & Assam Investors Ltd. v. J.K. Eastern Ind. Pvt. Ltd., (1957)27ComCases86.
46
Moot Proposition, ¶14.
47
Id.
48
The Companies (Management& Administration) Rules, 2014, Rule 17.
49
Bharat J. Patel v. Jyoti Ltd., [2015]191CompCas343(Guj).
50
Supra note 46.
invalid since the requisitionists have the right to be reimbursed for the cost of convening the
EGM.51 It is submitted that it is not impracticable to hold a meeting in the manner prescribed by
the companies act and thus the court must refrain from ordering the BoD to hold the EGM.

ISSUE 2. WHETHER A CLASS ACTION CAN BE BROUGHT AGAINST

Summary of Pleadings

It is submitted that the Appellants cannot bring class action against its directors and statutory
auditors. Firstly, the class action does not satisfy the statutory requirements as the minimum
threshold of 100 applicants, holding membership at the time of accrual of cause of action, is not
met. Secondly, there is no Good faith, Separate action and Commonalities in claims of the Class.

ARGUMENTS FROM RESPONDENTS

S. 245 of CA, 2013, prescribes the procedure for instituting a class action when management or
conduct of affairs of a company proceed in a manner prejudicial to interests of the company or
its members.52 Broadly, the requirements to be met are, first, minimum threshold of members,
and, second, considerations made by adjudicatory authority.

Participants must contend –

51
The Companies Act, 2013, §100(6).
52
The Companies Act, 2013, § 245(1).
i) the requirements of minimum threshold of members is not met

ii) the requirements of considerations made by adjudicatory authority are not met

Applicable law for (i) – the requirements of minimum threshold of members is not met

The institution of a class action requires that it be brought by a minimum of 100 members of a
company having a share capital.53 A minimum threshold such as this, furthers the authenticity
and weightage of the action.54 In considering the minimum threshold of a petition, the qualitative
aspect also needs to be factored in with the quantitative aspect. 55 An act that cannot be done
directly in accordance with the law, cannot be done indirectly. 56 For a petition pertaining to
prevention of oppression and mismanagement, the petitioner must be a shareholder of the
company at the time of occurrence of the impugned act, without which the locus standi to
institute the petition would be invalidated.57

Here, the class action application, membership of 10 shareholders commenced after the
occurrence of the alleged breaches, i.e., 31st March, 2020, and 20th July, 2020.58 Therefore, the
right to institute a class action does not vest in these shareholders. Consequently, there exist only
95 valid members applying for a class action, failing to meet the minimum threshold.

Applicable law for (ii) – the requirements of considerations made by adjudicatory authority
are not met

To determine admissibility of a class action, adjudicatory authorities consider the following

53
The Companies Act, 2013, § 245(3)(i)(a).
54
Manish Kumar v. Union of India, (2021) 5 SCC 1.
55
Jodh Raj Laddha v. Birla Corporation Ltd., C.P. 57 of 2004 (CLB) (Unreported).
56
Abdul Basit v. Abdul Kadir Choudhary, 2014 (10) SCC 754.
57
Power Finance Corporation Ltd. v. Shree Maheshwar Hydel Power Corporation Ltd., (2019) 2 CompLJ 475.
58
Moot Proposition, ¶19.
The adjudicatory authority considers good faith in making the application. 59 For an act to be done
in good faith, it must be done in fact honestly.60 ITPC, the application was made by deliberately
creating membership for 10 applicants. The same was done vide representative party transferring
10 of its shares to such applicants, at a nominal price, solely for meeting the threshold to initiate
class action.61 This nullifies good faith in making the application.

Separate Action is considered whether applicant members can pursue the cause of action in their
own right, rather than through a class action. 62 One or more persons can, with permission of the
court, institute a civil suit on behalf of all persons interested. 63 Pursuance of such suits does not
require existence of common cause of action64 or common transaction giving rise to the
grievance.65 The essential requirement is community of interest among plaintiffs. 66 ITPC, the
applicants can take recourse through such a representative suit in a civil court. While they do not
hold a common cause of action as shall be contended in succeeding arguments 67, they allege a
common interest against the conduct of respondents. Therefore, a separate action by applicants in
their own right can be taken through a representative suit.

Existence of common questions of law or fact among the class 68 and similarity in claims and
defences made by members of the class 69 must be considered. A common grievance 70 and
common cause71 among members is an essential condition for class action. However, Correlation
does not amount to causation.72 Causation with respect to harm suffered due to GHG emissions,
cannot be pinned upon a singular entity, due to the disparate nature of emissions from various
sources mixing in the atmosphere globally. 73 ITPC, the class comprises members who were

59
The Companies Act, 2013, § 245(4)(a).
60
The General Clauses Act, 1897, § 3(22).
61
Supra note 132.
62
The Companies Act, 2013, § 245(4)(c).
63
The Code of Civil Procedure, 1908, Order 1, Rule 8.
64
Supra note 137.
65
S. Avtar Singh & Ors. v. State of Jammu & Kashmir & Ors., AIR 1980 J&K 50.
66
Surayya Begum v. Mohd Usman, (1991) 3 SCC 114.
67
Infra Issue III.A.2.c.
68
NCLT Rules, 2016, Rule 85(1)(b).
69
NCLT Rules, 2016, Rule 85(1)(c).
70
Manish Kumar v. Union of India, (2021) 5 SCC 1.
71
Ramesh B. Desai v. Sayaji Industries, 2021 SCC OnLineNCLT 129.
72
John Aldrich, Correlations Genuine and Spurious in Pearson and Yule, 10(4) STATISTICAL SCIENCE 364 (1995).
73
Lisa Benjamin, The Road to Paris Runs Through Delaware: Climate Litigation and Directors’ Duties, 2 UTAH
LAW REVIEW 313, 327 (2020).
shareholders at the time of asset impairment, claiming compensation for losses suffered due to
the write down74, and representatives of residents of Port Blair, claiming compensation for losses
suffered due to the climate event in terms of cost of recovery and clean-up. 75 The claim of the
former group is based on the conduct of respondent directors and auditors as the cause of action.
The claim of the latter group admittedly does not extend to the cause and grievance of the
former.76 The link between GHG emissions and freak weather events, as per research of Cosmos
Clime, an organization affiliated with appellant Terra Firma 77, is limited to bearing some
correlation and not an established causal connection. 78 As a causal connection cannot be
established due to the nature of GHG emissions, it cannot be considered to arise from the cause
of action claimed by the former group. There is thus no common claim or interest between the
members.

Hence, it may be argued that the requirements of considerations made by adjudicatory authority
are not met under section 245 of the CA 2013.

74
Moot Proposition, ¶20.
75
Id.
76
Id.
77
Moot Proposition, ¶5.
78
Moot Proposition, ¶16.