2018 (11) TMI 1956 - AT - Companies Law

Rejection of application for impleadment of Director of Respondent as a party - Section 424 of the Companies Act 2013 - HELD THAT - What comes to fore from record is that the Appellants primarily sought impleadment of Mr. Pranav Patwardhan as party respondent on the score that such appointment was illegal and documents were fabricated to file statutory compliances while other reliefs claimed were consequential. This factual position stares in the face of Appellants who cannot wriggle out of the same. Even the Memo of Appeal incorporates this factual position. The impleadment was sought on the ground that such appointment was violative of Section 161 of the Companies Act 2013. The Tribunal took cognizance of the fact that Mr. Pranav Patwardhan had already resigned from the post of Additional Director on 16th January 2018. The factum and validity of such resignation has not been questioned by the Appellants. Infraction of the Articles of Association of the Company or provisions of Companies Act in this regard cannot be attributed to Mr. Pranav Patwardhan who is neither a necessary party nor a proper party for being impleaded as party respondent more so as he has admittedly tendered resignation on 16th January 2018 and ceased to be a member of the Board of Directors. There being no legal infirmity in the impugned order the appeal merits dismissal - Appeal dismissed.

Summary

Issues:
- Rejection of application under Section 424 of the Companies Act, 2013 for impleading a Director as a party respondent in a Company Petition.
- Allegations of illegal appointment, fraud, and corporate fraud against the Director.
- Dismissal of the appeal challenging the impugned order.

Analysis:

1. The Appellants filed an application under Section 424 of the Companies Act, 2013 to implead a Director as a party respondent in a Company Petition alleging oppression and mismanagement. The National Company Law Tribunal rejected the application, leading to the appeal. The Appellants claimed the Director was illegally appointed, forged documents, and resigned hastily. They argued that the resignation did not absolve him of liabilities, calling it corporate fraud that should have been investigated. The impugned order was challenged on grounds of unsustainability.

2. The Tribunal reviewed the case and found the appeal lacking in merit. The Appellants primarily sought the Director's impleadment due to alleged illegal appointment and fabricated documents for statutory filings. The Tribunal noted the Director's resignation and the absence of harm caused to the Appellants or the Company. The Appellants failed to prove any prejudice during the Director's tenure. The Tribunal concluded that the Director's resignation and lack of demonstrated harm negated the need for impleadment, as he was no longer a member of the Board of Directors.

3. The Tribunal emphasized that the Appellants' other claimed reliefs were dependent on the Director's impleadment, which was not warranted given the circumstances. The Director's resignation, coupled with the absence of proven harm, rendered the impleadment unnecessary. The Tribunal found no legal infirmity in the impugned order and dismissed the appeal, with no costs awarded. Overall, the appeal challenging the rejection of the application for impleading the Director as a party respondent was dismissed based on the lack of merit and the Director's resignation, which mitigated the need for his impleadment.