A director who is also a shareholder has two distinct legal capacities. The removal from the board extinguishes the director's rights as a director, but it does not extinguish the shareholder's rights as a member. The NCLT Ahmedabad, in Hardeep Singh Gill v. Glulam Technologies Pvt. Ltd. (April 2026), held that the right to move under Sections 241 and 242 flows from one's status as a member, not from holding a position on the board.
The Member Standing
Gill held 27% of the shares of Glulam Technologies and was removed as a whole-time director at an EGM in May 2019. The respondents argued that he lacked standing because he was no longer a director. The Tribunal rejected the argument: Gill's 27% shareholding comfortably met the Section 244 threshold, and his removal from the board did not dilute or extinguish his rights as a shareholder.
The petition was therefore maintainable. But maintainability is not merits. The Tribunal examined the removal and found that it had been carried out in accordance with the procedure laid down in the Act, including due notice and an opportunity to participate. The relationship between the parties had broken down, but the removal itself was not oppressive.
The Limits
The decision illustrates an important limit: a shareholder who is removed as a director can file an oppression petition, but the petition will fail if the removal was procedurally valid and the company's affairs are not otherwise being conducted in an oppressive manner. The removal of a director is a statutory power of the members under Section 169, and the Tribunal will not interfere with its exercise unless the removal is vitiated by illegality or is part of a broader pattern of oppression.
The distinction between the member's rights and the director's rights is therefore not a guarantee of relief; it is a threshold question of standing. The member must still prove oppression on the merits.
The Practical Lesson
A director-shareholder who is facing removal should focus on the procedural validity of the removal and on any broader pattern of conduct that affects the member's rights. A challenge that is framed solely as a challenge to the removal, without evidence of oppression, is unlikely to succeed.
Call to Action
Anuj Desai & Associates advises director-shareholders and companies on the interaction between Section 169 removal and Sections 241-242 oppression claims—from the standing analysis to the procedural challenge and the merits of the oppression case. If you are facing removal or responding to an oppression petition, we can help you assess the position.
📧 office@anujdesaiassociates.com
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