1. Notwithstanding anything contained in this Act, the articles of a company may provide that no member shall exercise any voting right in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid, or in regard to which the company has exercised any right of lien.
2. A company shall not, except on the grounds specified in sub-section (1 ), prohibit any member from exercising his voting right on any other ground.
3. On a poll taken at a meeting of a company, a member entitled to more than one vote, or his proxy, where allowed, or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.
Legal Commentary & Landmark Judgments: Section 106
Section 106 statutorily circumscribes the grounds on which a company may restrict the voting rights of its members, strictly limiting such disenfranchisement to unpaid calls, sums presently payable, or valid corporate liens, and declaring any other restriction in the articles void.
If an incumbent board passes a resolution or amends articles to restrict the voting rights of a significant shareholder (e.g., alleging competing business interests, foreign ownership limits, or non-cooperation), immediately challenge the move before the NCLT under Section 241 read with Section 106(2). Section 106(2) provides an absolute statutory defense; the Tribunal will grant an immediate injunction restraining management from disqualifying the shares.