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2020 (4) TMI 244 - AT - Companies LawAggrieved Persons - removal of nominee director of the Corporate Debtor - powers of Directors in a ‘Compulsory Liquidation’ - Section 169 of the Companies Act, 2013 - Appellants contends that the Appellants can only be removed by adhering to the procedure specified in terms of Sec 169 of the Companies Act, 2013. Also, it is the plea of the Appellants that the ingredients of Sec 169 of the Companies Act, 2013 restrict the powers of removal of ‘PR’ to those provided under the Act - HELD THAT:- It cannot be lost sight of that a Director removed under Section 169 of the Companies Act, is not deprived of his right to receive compensation for the loss of office if he is otherwise entitled to it, as per the Act 2013 and by virtue of his term of appointment, a removal a Director in terms of the ‘Article of Associations’ is not a defective one - As per section 169 (8) of the Companies Act, 2013 (old Section 284(7) of 1956 Act) enjoins that compensation or damages in the case of wrongful removal of a Director and the same can be claimed not only in respect of the termination of the Office but also any other offence which all terminate along with the office like that of ‘Managing Director’. When a Corporate Debtor is Liquidated, the Liquidator shall file an ‘Account of Liquidation’ exhibiting in what manner it was conducted and how the Corporate Debtor’s Assets were Liquidated. A Final report shall form part of Application for dissolution of a ‘Corporate Debtor’ to the Adjudicating Authority, to be filed under Section 54 of the Code - In terms of Regulation 38 of the Liquidation process regulations 2016 a Liquidator with the permission of Adjudicating Authority, may distribute among the stakeholders the assets that are to be readily or gainfully sold because of its peculiar character or other circumstances. As a matter of fact, the application praying for permission before the Adjudicating Authority under sub-Regulation shall identify the assets provide, a value of asset, mentioning the endeavours to sale the assets if any and to provide reasons for such distribution. There is no simmering doubt that the Directors of a Company appointed by the shareholders in the ‘Annual General Meeting’ are to be removed as per ‘Ordinary Resolution’ passed in the ‘General Body Meeting’. - There is no different opinion on this well settled proposition. It cannot be gained said that the Appellant (‘Nicco Parks and Resort Pvt. Ltd’) is bound by the terms of Agreement and the Appellant is bound by the proposal and is to present the same before the ‘Annual General Meeting’ for its accord/approval, without any iota of doubt. As a matter of fact, the proposal submitted by the Liquidator in terms of the power bestowed on him under the I&B Code, read with Rule, Article 140 (4) of the ‘Articles of Associations’ cannot be ignored and a self-serving decision being arrived at in this regard. The Appellant (‘Nicco Parks and Resorts Pvt. Ltd’) is not required to be informed of the reasons behind the replacement of existing ‘Nominee Directors’ by the ‘Liquidator’, although the said ‘Directors’ were elected as ‘Directors’ because of the fact that they had secured the shares of ‘Nicco Parks and Resorts Pvt. Ltd’, in an individualistic manner. No wonder, unless and until the ‘Liquidator’ permits the ‘Nominee Directors’ to continue, they do not have any right in this regard. The Appellants in Company Appeal (AT) (Ins) No.1518 of 2019 and Company Appeal (AT) (Ins) No.224 of 2020 had acted against the Liquidator, the impugned orders passed by the Adjudicating Authority in discharging their ‘Nominee Directors’ position w.e.f. 17.10.2017 etc., are free from any legal flaws - Appeal dismissed.
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