2019 (12) TMI 795 - AT - Companies Law

Rejection of prayer for Director's remuneration of the respondents - Money Laundering - siphoning of funds - illegal allotment of shares - HELD THAT - It is true that if we read relief (iv) Directors remuneration be paid to petitioners until outcome of the petition with this order the remaining prayers made in the application have already been considered earlier and were found in favour of the petitioners. Therefore, they are rejected. Then it seems that the Company Law Board has earlier rejected the prayer for directors remuneration to be paid by the Company. However, the appellants have not placed on record any such order to show that earlier such prayer was considered and rejected. It seems that inadvertently Company Law Board while deciding the application with other reliefs have made this observation - also the appellants in the reply of present application before NCLT have not raised this ground. It means that they are well aware that earlier Company Law Board or NCLT has not considered and rejected the prayer of respondents for directors remuneration. The reasoning of NCLT is justified - appeal dismissed.

Summary

Issues:
- Dispute over remuneration to directors
- Allegations of siphoning of funds, illegal allotment of shares, and appointment/removal of directors
- Non-functional directors seeking remuneration
- Company Law Board's previous orders on remuneration

Issue 1: Dispute over remuneration to directors
The appeal involves a dispute regarding the remuneration of two directors of a company. The respondents filed an application seeking payment of remuneration, which was opposed by the appellants. The appellants argued that the respondents were non-functional directors and not entitled to remuneration as per a board decision. The respondents claimed they were unfairly removed and entitled to remuneration. The NCLT directed the restoration of the directorship position with benefits, including remuneration, until the final outcome of the main company petition.

Issue 2: Allegations of siphoning of funds, illegal allotment of shares, and appointment/removal of directors
The petition involved allegations of siphoning funds, illegal share allotment, and appointment/removal of directors. The respondents accused the appellants of siphoning funds and making illegal decisions regarding share allotment and director appointments. The respondents sought relief, including the restoration of directorship and payment of remuneration. The Company Law Board had previously rejected a prayer for remuneration, but the NCLT ordered the restoration of benefits pending further proceedings.

Issue 3: Non-functional directors seeking remuneration
The dispute also centered on whether the directors were functional or non-functional. The appellants claimed the respondents were non-functional directors and not entitled to remuneration. The respondents argued they were unfairly removed and entitled to remuneration as per their designation. The NCLT directed the restoration of benefits until the final resolution of the main company petition.

Issue 4: Company Law Board's previous orders on remuneration
The appellants raised objections regarding the Company Law Board's previous order rejecting a prayer for remuneration. However, the records did not support the claim that the prayer had been considered and rejected earlier. The NCLT examined the previous orders and found that the Board had maintained status quo regarding directorship benefits. The NCLT upheld its decision to restore benefits to the directors pending further proceedings.

In conclusion, the appeal was dismissed as the NCLT's interim order was upheld based on the reasoning provided. The NCLT's decision to restore directorship benefits, including remuneration, until the final resolution of the main company petition was deemed appropriate, and the appellants failed to provide sufficient grounds for interference.