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2018 (8) TMI 1031 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHIAllegation of oppression and mismanagement by the appellant - second director became ineligible by operation of law - thereafter, appellant acting in furtherance of her obligations under Section 174(2) of the Companies Act, 2013, appointed 3rd respondent on 12.10.2017 as an Additional Director to ensure the smooth functioning of the 1st respondent who’s board consisted of only one director as the office of 2nd respondent became vacany by operation of law. - NCLT directed that, Status Quo ante 12.10.2017 be restored. All decisions taken subsequent to 12.10.2017 and thereafter are hereby set aside. Held that:- If the disqualification of original petitioner whether it was in fact and in law is yet to be decided, so is the question whether the appellant could or could not have legally appointed Respondent No.3 as Additional Director by sending off an email. The case put up by the appellant is that in view of Section 174 when she was the only director left she could appoint another Additional Director. When the company had only two directors, and shareholding was equally divided between the two groups, prima facie, fairness required consultation with the original petitioner to ask if he would nominate a person of his choice. This does not appear to have been done. We are concerned with the interest of the Company because in the CP No.401(ND)/2017 which has been filed by the appellant after the present petition, NCLT has passed the order dated 15.11.2017 (Annexure A filed with counter affidavit, Diary No.2704) and where it is recorded that it was not in dispute that the business of the company under the Respondent No.2 i.e. the present original petitioner had prospered over the years. Keeping in view this provision, prime consideration for NCLT should have been and which is now our consideration because of this appeal is that the interim order needs to concentrate on regulating the conduct of the company’s affairs on such terms and conditions as are just and equitable. Now when we are disposing this appeal, we find the operative order of the impugned order was not correct as it was in the nature of final orders which could not have been passed at the interim stage. We intend to give directions so as to balance the equities between the parties. The impugned order is quashed and in its place it is directed that the 2nd respondent-original petitioner will continue as director alongwith the appellant. The appointment of Respondent No.3 as Additional Director/Director is stayed. The decisions taken by original Respondent No.2 and 3 subsequent to 12.10.2017 are also stayed till the decision of the company petition. We request NCLT to appoint, during the pendency of the company petition, an independent Director to the company on remuneration similar to other directors who will ensure compliances by the Company with provisions of the Companies Act and Rules.
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