2019 (4) TMI 1802 - Tri - Companies Law

Remuneration to Directors - Removal of petitioner from the Directorship of the company - HELD THAT - The Board Resolution, pertaining to the removal of the petitioner from the Directorship cannot be given effect without informing to and prior permission of the Court, i.e. The Company Law Board. In such a peculiar circumstance of the present case, it was incumbent upon the respondents to maintain status quo with regard to the status of the directorship of the present petitioner along with attended benefits to them. However, it is alleged that despite the above stated direction, the respondents have stopped making payment of remuneration of directorship to the petitioners, who claims themselves to be full time director and executive chairman of the company, which is the main issue involved in the present petition for consideration of this Tribunal, even though, this is being disputed by the respondent. We examined the relevant provisions of the Companies Act,2013, specifically Section 197 of the Companies Act, which allows a company to pay remuneration to its Non-Executive Director(s) either by way of a monthly payment or at a specified percentage of the net profits of the company - The Company is, however, not obligated to remunerate its Non- Executive Director(s). The respondents are legally expected to maintain status quo in respect of the petitioner position as being Executive Chairman/ Director as on 31.10.2013 - So far as the removal of directorship of the Petitioners 1 and 2 are concerned, they cannot be removed pursuant to an interim order dated 31.10.2013 passed by the then Company Law Board without informing to and without having express permission from the then Company Law Board / or from this Court. The present application can be disposed on this short ground, without going into details of other controversy involve in the present Company Petition, by directing to the respondent to restore back the position of petitioner in the directorship of the company with all attended benefits including the remuneration, which was being paid to them on 31.10.2013 and further not to make any change in their remuneration or other attending benefits or terms and condition of their directorship until further order. Application allowed in part.

Summary

Issues Involved:
1. Payment of due remuneration to Petitioners.
2. Allegations of oppression and mismanagement.
3. Legality of the removal of Petitioners from directorship.
4. Maintenance of status quo regarding Petitioners' directorship and benefits.

Issue-wise Detailed Analysis:

1. Payment of Due Remuneration to Petitioners:
The Petitioners, Mr. Girish Jetly (P-1) and Mr. Vivek Jetly (P-2), claimed unpaid remuneration from the Respondent Company, M/s. Sudama Chemtech Private Limited. P-1 sought ?30,000 per month from November 2013, and P-2 sought ?20,000 per month from September 2013. The Tribunal noted that the Petitioners were previously receiving these amounts as remuneration and that the Respondents had stopped these payments without informing the Company Law Board or obtaining its permission. The Tribunal directed the Respondents to restore the Petitioners' remuneration as it was on 31.10.2013, maintaining the status quo until further orders.

2. Allegations of Oppression and Mismanagement:
The original Company Petition No. 116 of 2013, filed by the Petitioners, included allegations of siphoning funds, illegal allotment of shares, and illegal appointment and removal of directors. The Tribunal observed that these issues were part of the main Company Petition and would be addressed comprehensively during its final hearing. The interim application focused on the immediate relief of restoring remuneration and directorship status.

3. Legality of the Removal of Petitioners from Directorship:
The Tribunal noted that the Company Law Board had issued an interim order on 31.10.2013, preventing the implementation of the resolution removing P-2 from directorship. Despite this, the Respondents had stopped the remuneration of the Petitioners, which the Tribunal found to be a violation of the status quo order. The Tribunal emphasized that any changes to the Petitioners' directorship or benefits required prior permission from the Company Law Board or the Tribunal.

4. Maintenance of Status Quo Regarding Petitioners' Directorship and Benefits:
The Tribunal reiterated that the Respondents were legally expected to maintain the status quo regarding the Petitioners' directorship and benefits as of 31.10.2013. The Tribunal directed the Respondents to restore the Petitioners' directorship positions and associated benefits, including remuneration, until further orders. This directive was subject to the final outcome of the main Company Petition.

Conclusion:
The Tribunal partly allowed the Interlocutory Application No. 209 of 2018, directing the Respondents to restore the Petitioners' directorship positions and remuneration as of 31.10.2013, maintaining the status quo until further orders. The Tribunal clarified that the final decision on the eligibility of remuneration and the legality of the Petitioners' removal would be addressed during the hearing of the main Company Petition.