Company Secretary Regulations: There Is Distinction Between Absence And Post Fallen Vacant- SC Upholds Election Of Chairman Of EIRC

The Supreme Court while upholding the election of the Chairman of Eastern India Regional Council (EIRC) has held that under the Company Secretary Regulations, there is a distinction between absence and the post falling vacant.

The Court observed, "On fair reading of Regulation 92(2) read with Regulation 117(2), we are of the opinion that Regulation 92(2) shall not be applicable at all. Regulation 92(2) shall be applicable only in a case of absence and not in a case where the post of Chairman and/or office bearer has fallen vacant. There is a distinction between the absence and the post fallen vacant. Regulation 92(2) shall be applicable in a case where the Chairman and/or the office bearer though is not disqualified but is absent for some reason. Regulation 117(2) shall be applicable in a case where the elected member of the Regional Council has been disqualified on he being found guilty of any professional or other misconduct and awarded penalty of fine. Therefore, in case of a vacation of office as per Regulation 117(2), such post fallen vacant is required to be filled in by election by electing another person from amongst its members to hold the office for the remaining period of a year (Regulation 119(2))."

The Court while allowing the appeal has set aside and quashed the judgment and order passed by the Division Bench of the Calcutta High Court quashing and setting aside the election of the office bearers of the EIRC of the ICSI held on 27th December 2021, on the ground that the meeting was not presided over by the Vice¬-Chairman who in absence of the Chairman was required to conduct and/or chair the meeting as Chairman

The bench of Justice M.R. Shah and Justice M.M. Sundresh held that the High Court erred in entertaining the writ petition challenging the election at the instance of respondent no.1 who did not even contest the election of the office bearers and that the High Court has seriously erred in misinterpreting Regulation 92(2) and Regulation 117 read with Regulation 119(2). 

In this case, the office of the Chairman fell vacant due to its disqualification, and any person from amongst its members was required to be elected as Chairman and/or to hold the office of the Chairman for the remaining period, and consequently, appellant was elected as the Chairman for the remaining period who presided over the meeting dated December 27, 2021.

The issue dealt with by the Court was -

Whether the meeting i.e. July 21, 2021, was presided over by the person duly elected as Chairman for the remaining period or not.

Senior Advocate Sanjiv Sen appeared on behalf of the appellant and submitted that it was a case of vacation of office and not the absence of an office bearer for a particular period of time and that there is a distinction between the absence and the post fallen vacant. Regulation 92(2) shall be applicable in a case where the Chairman and/or the office bearer though is not disqualified but is absent for some reason. Regulation 117(2) shall be applicable in a case where the elected member of the Regional Council has been disqualified on being found guilty of any professional or other misconduct and awarded penalty of fine. Therefore, in case of a vacation of office as per Regulation 117(2), such post fallen vacant is required to be filled in by election by electing another person from amongst its members to hold the office for the remaining period of a year (Regulation 119(2)).

Per Contra Senior Advocate Ritin Rai, appearing on behalf of the contesting respondent no.1 submitted that even otherwise the election was not held legally and that there was irregularity in conducting the election/meeting is concerned.

The Apex Court observed that "the Single Judge, as well as the Division Bench of the High Court, have seriously erred in misinterpreting Regulation 92(2) and Regulation 117 read with Regulation 119(2). Both, the learned Single Judge as well as the Division Bench of the High Court have not appreciated the distinction between the vacation of office under Regulation 117(2) of the Regulation and the absence of an office bearer under Regulation 92."

The Apex Court further observed that "the High Court erred in entertaining the writ petition challenging the election at the instance of the respondent no.1 who even did not contest the election of the office bearers."

Accordingly, the Apex Court has set aside and quashed the judgment and order passed by the Division Bench of High Court as well as the learned Single Judge quashing and setting aside the election of the office bearers of the EIRC of the ICSI on the ground that the respondent has no locus standi to file the Writ Petition challenging the election of the Chairman as he did not even contest the Election of the Office Bearer.

Cause Title- Institute of Company Secretaries of India & Ors. v. Biman Debnath & Ors.

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