Manoj Kumar Grover vs Union Of India Through Ministry Of Corporate Affairs & Ors.

$~22 & 23
* IN THE HIGH COURT OF DELHI AT NEW DELHI
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Date of Decision: 24 February, 2026
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Uploaded on: 9 March, 2026
+ W.P.(C) 7051/2020 & CM APPL. 62526/2024
MANOJ KUMAR GROVER .....Petitioner
Through: Mr. Tishampati Sen, Ms. Riddhi
Sancheti, Mr. Mukul Kulhari, Mr.
Anurag Anand, Advs.
versus
UNION OF INDIA THROUGH MINISTRY OF CORPORATE
AFFAIRS & ORS. .....Respondents
Through: Mr. Rajesh Gogna, CGSC for R1
~23 AND
+ W.P.(C) 11048/2024
SITAMRAJU SREE RAMAKRISHNA .....Petitioner
Through: Mr. Tishampati Sen, Ms. Riddhi
Sancheti, Mr. Mukul Kulhari, Mr.
Anurag Anand, Advs.
versus
UNION OF INDIA & ORS. .....Respondents
Through: Mr. Dhaval Mehrotra and Ms. Aditi
Desai, Advs. for SEBI
Mr. Amit Acharya, GP.
Mr. Pravin Bahadur, Mr. S. Anjani
Kumar, Advs. for R3.
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE MADHU JAIN
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
2. These are two writ petitions filed by the Petitioners raising challenge to
W.P.(C) 7051/2020 & 11048/2024 Page 1 of 12
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NEGI
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certain provisions of Companies Act, 2013, Companies (Meetings of Board
and its Powers) Rules, 2014, as also Securities Exchange Board of India
(Listing Obligations And Disclosure Requirement) Regulations, 2015.
3. In particular, in W.P.(C) 7051/2020 , challenge has been raised to
Sections 177(9) & 177(10) of the Companies Act, 2013 and Rules 7(1) & 7(4)
of the Companies (Meetings of Board and its Powers) Rules, 2014.
4. In W.P.(C) 11048/2024, striking down of Section 177(10) of the
Companies Act, 2013, Rule 7(4) of the Companies (Meetings of Board and
its Powers) Rules, 2014 and Regulation 22 (1) of the Securities Exchange
Board of India (Listing Obligations And Disclosure Requirement) Regulation,
2015 is sought.
BACKGROUND OF W.P.(C) 7051/2020:
5. The background giving rise to W.P.(C) 7051/2020 is that the
Petitioner– Sh. Manoj Kumar Grover, who is an ex-employee of HP India
nd
Sales Private Ltd. was appointed as an employee in the said company on 2
January, 2004, as a Regional Channel Manager, Commercial (B2B) Business.
He was thereafter promoted as Zonal Manager, Sales, in November, 2014.
6. According to the Petitioner– Sh. Manoj Kumar Grover, he was coerced
and forced by his seniors into being involved in unethical practices and he is
stated to have brought the same to the notice of the higher management,
including the Managing Director. It is the Petitioner’s case that the said
complaint led to various retaliatory measures against him, which led him to
him then approaching the Global HP Ethics Office and the Chief Human
Resource Officer of HP Inc., in the United States.
7. Correspondence ensued between the Petitioner and HP Global officials
and according to the Petitioner, he was completely cooperative throughout the
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process.
8. However, one of the officials against whom allegations were raised by
the Petitioner is stated to have been given an honourable exit in March, 2019,
and thereafter the enquiry was closed. This closure was, however, not
acceptable to the Petitioner. It is his case that he was coerced to hand over his
digital devices to the Company and then the Petitioner was, in effect,
suspended.
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9. Finally, on 12 June, 2020, a termination letter notice was issued to the
Petitioner and the Petitioner has availed of his legal remedies in respect of his
alleged unlawful termination.
10. The present petition, however, relates to a challenge mounted by the
Petitioner in respect of Section 177(9) & 177(10) of the Companies Act, 2013
and Rule 7(1) & 7(4) of the Companies (Meetings of Board and its Powers)
Rules, 2014.
BACKGROUND OF W.P.(C) 11084/2024:
11. The background giving rise to W.P.(C) 11084/2024 is that the
Petitioner– Sh. Sitamraju Sree Ramakrishna, who is an ex-employee of
GlaxoSmithKline Consumer Healthcare Ltd. was appointed as an employee
in the said company on 4th March, 2014, as a Manager Process with initial
posting in Rajahmudry Plant, Sonipat, Haryana.
12. According to the Petitioner, in 2016, he had communicated through
various emails, concerns relating to environmental norm violations by the
company.
13. It is the Petitioner’s case that in September, 2016, he received an email
from the Deputy Manager (Environment Health and Safety Department),
asking for support related to the safety issues raised by him.
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14. However, it is further stated that after he had raised such concerns, he
was routinely subjected to vindictive and retaliatory behaviour by the
management and was also met with poor feedback related to his work, despite
his contributions that did not warrant such feedback.
15. The Petitioner, in August, 2018, wrote an email to his Line Manager,
detailing all of his contributions to the AVG project and listed the harassment
he had faced since becoming a whistle blower, and thus requested a transfer
as well. He also contacted the General Manager - Human Resources,
highlighting the treatment that was being meted out to him.
16. Thus, on 10th August, 2018, the Petitioner was transferred from
Rajahmundry Plant Site to Gurugram Head Office.
17. Due to the continuation of the alleged harassment and retaliatory
behaviour despite a transfer, the Petitioner wrote to the Global Compliance
Head of his company, however, the same was to no avail.
18. Finally, on 16th January, 2024, a termination letter notice was issued
to the Petitioner and the Petitioner has availed of his legal remedies in respect
of his alleged unlawful termination.
19. The present petition, however, relates to challenge raised by the
Petitioner in respect of Section 177(10) of the Companies Act, 2013, Rule
7(4) of the Companies (Meetings of Board and its Powers) Rules, 2014 and
Regulation 22 (1) of the Securities Exchange Board of India (Listing
Obligations And Disclosure Requirement) Regulation, 2015.
20. According to ld. Counsel for the Petitioners, the provisions under
challenge in both these petitions are inadequate in setting up a proper vigil
mechanism and do not provide for any safeguards to be taken by companies
to ensure that their employees are not victimised by the company itself.
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NEGI
Signing Date:09.03.2026
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21. The second challenge raised by the Petitioners in these cases is that the
vigil mechanism provided in the provisions under challenge is mandated only
for public listed companies and not for unlisted companies.
22. According to ld. Counsel for SEBI, it is stated that all listed companies
have to set up a vigil mechanism, and the same is governed by Regulation 22
(1) of the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015.
23. Thus, as per SEBI, every listed company and such other class of
clustered companies, as may be prescribed under 177 (1) of the Companies
Act, 2013 have to constitute an Audit Committee and the Audit Committee
has to have three Directors with the independent Directors forming a majority.
Thus, it is the case of SEBI that this Audit Committee by itself acts as a safety
mechanism.
24. It is further submitted on behalf of SEBI that the said Regulation 22 (1)
of the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015, read with Section 177 (9) & 177
(10) of the Companies Act, 2013, read with Rule 7 of the Companies
(Meetings of Board and its Powers) Rules, 2014 is an inbuilt vigil mechanism
which has already been codified.
25. Insofar as the Union of India is concerned, their counter affidavit is on
record in W.P.(C) 7051/2020 . It is the UOI’s stand that the Companies
(Meetings of Board and its Powers) Rules, 2014 require establishment of a
vigil mechanism. The relevant portion of the counter affidavit is set out below:
“2. The Answering Respondent is confident that based
upon the submissions hereinafter, this Hon'ble Court
would be apprised with the correct facts of the issue at
hand and would further be pleased to dismiss the
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Petition of the Petitioner in limine, being without any
merits.
3. That it is most respectfully submitted that each and
every averment made and contentions raised in the
present writ petition are denied, except the averment
which are matter made which are matter of record, in
view of preliminary submissions. Any omission on the
part of Respondent No. 1 to deal with any particular
contention or averment of the Petitioners should not be
construed as an admission / acceptance thereof by
Respondent No. 1.
xxxxxx
6. Section 177(9) states that "every listed company or
such class or classes of companies, as may be
prescribed, shall establish a vigil mechanism for
directors and employees to report genuine concerns in
such manner as may be prescribed".
Section 177(10) "the vigil mechanism under sub-section
(9) shall provide for adequate safeguards against
victimisation of persons who use such mechanism and
make provision for direct access to the chairperson of
the Audit Committee in appropriate or exceptional cases
". Rule 7 of The Companies (Meetings of Board and its
Powers) Rules,2014 deals with 'Establishment of vigil
mechanism'; It states;
(1) "Every listed company and the companies belonging
to the following class or classes shall establish a vigil
mechanism for their directors and employees to report
their genuine concerns or grievances:-
(a) The companies which accept deposits from the
public;
(b) The companies which have borrowed money
from banks and public financial institutions in
excess of fifty crore rupess.
(2) The companies which are required to constitute an
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audit committee shall oversee the vigil mechanism
through the committee and if any of the members of the
committee have a conflict of interest in a given case,
they should recuse themselves and the others on the
committee would deal with matter on hand.
(3) In case of other companies, the board of directors
shall nominate a director to play the role of audit
committee for the purpose of vigil mechanism to whom
other directors and employees may report their
concerns.
(4) The vigil mechanism shall provide for adequate
safeguards against victimisation of employees and
directors who avail of the vigil mechanism and also
provide for direct access to the chairperson of the Audit
Committee or the director nominated to play the role of
Audit Committee, as the case may be, in exceptional
cases.
(5) In case of repeated frivolous complaints being filed
by a director or an employee, the audit committee or the
director nominated to play the role of audit committee
may take suitable action against the concerned director
or employee including reprimand"
26. On this, the submission on behalf of the Petitioners is that the existing
mechanism under Section 177 of the Companies Act, 2013 only requires
listed public companies to establish an Audit Committee and a vigil
mechanism. This, however, does not extend to other categories of companies.
27. In addition to this, the court also notices that in the counter affidavit
filed by the Registrar of Companies in W.P.(C) 7051/2020 , it is stated as
under:
“10. That Section 177(9) of the Companies Act, 2013
provides for establishment of a vigil mechanism for
director and employees in respect of listed company and
for a class of companies, which may be described.
Under rule 7 of the Companies (Meetings of Board and
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its Powers) Rules, 2014 apart from listed companies,
the companies which accepts deposits from the public,
or companies which have borrowed money from
Banks and Public Finance Institutions in excess of Rs.
50 crores are also required to establish a vigil
mechanism . In case a Company is required to constitute
an Audit Committee (in which majority of directors are
required to be independent Directors), the vigil
mechanism will be overseen by such committee. In other
cases, one director nominated by the Board will play the
role of the Audit Committee. In view of the larger public
interest involved in the functioning of such companies,
the vigil mechanism has been extended to such
companies, at present.
11. That in view of the recommendations of the Standing
Committee on Finance, Section 177(10) of the
Companies Act, 2013 clearly provides that the vigil
mechanism should provide for safeguards against
victimization of the complainants and also direct access
to the Chairman of the Audit Committee in appropriate
or exceptional cases. In terms of the recommendations
of the Standing Committee on Finance, the contours of
the vigil mechanism is required is not subject to external
regulation, but the details of the establishment of such
mechanism is required to be published on company's
website, as well as in the Board's report.”
28. Thus, as per UOI, apart from listed companies, the setting up of vigil
mechanism is also extended to further categories of companies including
those which have borrowed from banks and financial institutions in excess of
Rs.50 crores.
29. The Court has heard the ld. Counsels for all parties.
30. The question whether vigil mechanisms need to be established in
companies has been statutorily legislated in Section 177 of the Companies
Act, 2013, read with Rule 7 of the Companies (Meetings of Board and its
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Powers) Rules, 2014.
31. Sections 177 (1), 177 (9) & 177 (10) of the Companies Act, 2013 are
set out below:
“(1) The Board of Directors of every listed company
and such other class or classes of companies, as may be
prescribed, shall constitute an Audit Committee.
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(9) Every listed company or such class or classes of
companies, as may be prescribed , shall establish a vigil
mechanism for directors and employees to report
genuine concerns in such manner as may be prescribed.
(10) The vigil mechanism under sub-section (9) shall
provide for adequate safeguards against victimisation
of persons who use such mechanism and make provision
for direct access to the chairperson of the Audit
Committee in appropriate or exceptional cases:
Provided that the details of establishment of such
mechanism shall be disclosed by the company on its
website, if any, and in the Board’s report.”
32. Further Rule 7 of the Companies (Meetings of Board and its Powers)
Rules, 2014 reads as under:
“ 7. Establishment of vigil mechanism. -(1) Every listed
company and the companies belonging to the following
class or classes shall establish a vigil mechanism for
their directors and employees to report their genuine
concerns or grievances-
(a) the Companies which accept deposits from the
public;
(b) the Companies which have borrowed money from
banks and public financial institutions in excess of fifty
crore rupees.
(2) The companies which are required to constitute an
audit committee shall oversee the vigil mechanism
through the committee and if any of the members of the
committee have a conflict of interest in a given case,
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they should recuse themselves and the others on the
committee would deal with the matter on hand.
(3) In case of other companies, the Board of directors
shall nominate a director to play the role of audit
committee for the purpose of vigil mechanism to whom
other directors and employees may report their
concerns.
(4) The vigil mechanism shall provide for adequate
safeguards against victimisation of employees and
directors who avail of the vigil mechanism and also
provide for direct access to the Chairperson of the Audit
Committee or the director nominated to play the role of
Audit Committee, as the case may be, in exceptional
cases.
(5) In case of repeated frivolous complaints being filed
by a director or an employee, the audit committee or the
director nominated to play the role of audit committee
may take suitable action against the concerned director
or employee including reprimand.”
33. A perusal of the above provision would show that all listed companies
have to mandatorily constitute Audit Committees. Apart from listed
companies, this mandate can be extended to other classes of companies as
well. The Government can, from time to time, prescribe the kind of companies
that need to have a vigil mechanism. Under Rule 7, apart from listed
companies, those companies which accept deposits from the public or even
companies which have borrowed monies from banks/public financial
institutions of more than Rs. 50 crore rupees have to establish vigil
mechanisms.
34. Under Section 177 of the Companies Act, 2013 an Audit Committee
has to be set up with a minimum of three Directors with the Independent
Directors forming a majority and such Audit Committee would have to be
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established in all listed companies and any other class of companies, as may
be prescribed.
35. The grievance of the Petitioners herein is that there should be a mandate
for extending such vigil mechanisms for even unlisted companies. The class
of companies to which the said mechanisms are applicable, has been expanded
to beyond listed companies, under Rule 7.
36. A perusal of Rule 7 of the Companies (Meetings of Board and its
Powers) Rules, 2014, read with Section 177 of the Companies Act, 2013,
leaves no manner of doubt that wherever vigil mechanisms have to be
established, there has to be access provided to the Chairperson of the Audit
Committee, and there have to be independent Directors who are in a majority.
37. The question that thus arises is whether the Court can direct extension
of this establishment of the vigil mechanism to any further class of companies,
beyond what is prescribed in Section 177 of the Companies Act, 2013 read
with the Rules.
38. In our opinion, the clear answer to this question would be a NO,
inasmuch as the extension of such a vigil mechanism to any other classes of
companies is not an issue that is to be adjudicated but a policy decision
followed by legislative measures which have to be taken after adequate
stakeholder consultation. Such a decision would also be required to be taken
after bearing in mind, the nature and the extent of complaints which may be
received against a particular class of companies. Moreover, a legislative
exercise cannot be undertaken by way of a judicial order in the manner as is
being sought. The question whether the time has come to extend such
mechanisms to private limited companies or any other categories of firms or
companies would also be a policy decision.
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39. No Mandamus or direction can be issued by the Court directing the
Government to extend vigil mechanisms to other categories of companies,
than those already prescribed. At best, the Court can only direct the
Government to hold a stakeholder consultation in this regard and take a
decision as to whether the vigil mechanism is to be extended to other classes
of companies or not.
40. In conclusion, this Court is of the view that it is for Government to
decide from time to time as to for which categories of companies or other
legal entities, the vigil mechanism is to be mandatorily established and such
a decision would be taken by the Government after adequate stakeholder
consultation from time to time as a matter of its policy.
41. The Court is, accordingly, of the opinion that these two writ petitions
deserved to be disposed of with directions to the Ministry of Corporate
Affairs, Government of India, to undertake a stakeholder consultation in this
regard, and thereafter take a decision, within a reasonable period, as to
whether establishment of vigil mechanism needs to be extended to any other
companies beyond what is already prescribed.
42. The present petitions are disposed of in these terms. No other orders are
called for. Pending applications, if any, are also disposed of.
PRATHIBA M. SINGH
JUDGE
MADHU JAIN
JUDGE
FEBRUARY 24, 2026 /ys/ss
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