GANAPAVARAM 14 March 2025

Company secrtaary of company, defended group of directors for oppression and mismanagement

I request respected members to kindly enlighten me on the following.

A suit was brought by a Director against rest of the board for oppression and mismanagement. The company secrtary who is also company secretary to the company defended the group against whom the suit was brough before NCLT. The Hon NCLT allowed the petition and opined that there is oppression and mismanagement, removed all the defending directors from board, and ordered the directors to pay back the money.

Now my question is, as per my knowledge, CS is an officer of the company, who is supposed to be neutral, defended the directors as counsel

Is the CS now be considered as interested officer and continuing him in company would be detrimental to the company.

Can he be asked to resign or be removed in board meeting?

Kindly advice

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3 Replies

T. Kalaiselvan, Advocate (Advocate) 14 March 2025

You can move an application against the company secretary for his biased acts towards the removed directors to replace the company secretary.

Dr. J C Vashista (Advocate ) 14 March 2025

I agree with the opinion and advise of learned expert Mr. T Kalaiselvan, get the CS removed from case / company by adopting a resolution.

Vishesh K Sapra (Advocate Supreme Court (888-215-3399)) 16 March 2025

Hi Mr. GANAPAVARAM, surprisingly I regularly deal with such matters concerning corporate governance, oppression, and mismanagement disputes before the NCLT.

A Company Secretary (CS) is an officer of the company under Section 2(24) of the Companies Act, 2013 and is expected to act in the best interest of the company as a whole, maintaining neutrality and professional integrity. In this case, the CS acted as a legal representative for the directors, who were found guilty of oppression and mismanagement, instead of upholding the company’s interests. This raises serious concerns regarding conflict of interest and breach of fiduciary duties.

Given the NCLT’s ruling, the CS can no longer be considered neutral and his continuation may be detrimental to the company. As per Section 203 of the Companies Act, 2013, read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a CS can be removed by the Board of Directors if it is deemed in the best interest of the company.

The Board can take the following actions:
1. Call a Board Meeting – Pass a resolution to remove the CS citing conflict of interest and loss of confidence.
2. Seek Voluntary Resignation – Ask the CS to resign in light of the NCLT ruling.
3. Initiate Removal Process – If the CS refuses to resign, the company may remove him following the due process under employment laws and company policies.

For further legal consultation, contact me at adv.vishesh@icloud.com. We'l get you out of this!