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2020 (9) TMI 1037 - Tri - Companies LawAppointment of Interim Administrator or appoint an official from the Ministry of Corporate Affairs to take over the management of the 1st Respondent Company - HELD THAT - No doubt that the Company Petition was filed before National Company Law Tribunal, Chennai Bench on 08.02.2019, but it was not numbered or presented before the Bench. It was numbered only on 27.08.2019 in Registry of NCLT, Kochi Bench and it was put up for first time on 03.09.2019 for presentation - I have heard both the parties and meticulously perused all the case records submitted before me. Considering the reliefs sought in the main Company Petition and allegations made against Respondents Nos. 1 3, particularly relating to the disqualification of applicant and Respondent No.3, I, by exercising the inherent power of the Tribunal under Rule 11 of the National Company Law Tribunal Rules, 2016 and for meeting the ends of justice or to prevent abuse of the process of this Tribunal, decided to Both the parties are directed to suggest names of qualified persons, who may be appointed as an Interim Administrator in the matter to look after the management and affairs of the Respondent No.1 Company - Application allowed.
Issues:
1. Appointment of Interim Administrator for a company with disqualified directors. 2. Validity of director appointments without share qualifications. 3. Lack of validly constituted Board of Directors. 4. Timeliness of filing Interlocutory Application. Analysis: Issue 1: Appointment of Interim Administrator The applicant, Respondent No. 2, sought the appointment of an Interim Administrator or an official from the Ministry of Corporate Affairs to take over the management of the company until final orders were passed in the Company Petition. The Tribunal, considering the disqualification of one director under the Companies Act, 2013, and the lack of a validly constituted Board of Directors, decided to appoint an Interim Administrator to oversee the affairs of the company until the main Company Petition was resolved. Issue 2: Validity of Director Appointments The counsel argued that the appointment of two directors without the necessary share qualifications was invalid as per the Articles of Association of the company. The alleged directors appointed by the disqualified director were not shareholders, rendering their appointments legally questionable. This lack of adherence to the company's Articles of Association raised concerns about the legitimacy of the current Board of Directors. Issue 3: Lack of Validly Constituted Board The counsel contended that none of the directors on the Board were qualified to continue, leading to a situation where the company was managed by a group of individuals, including disqualified directors and non-shareholder appointees. This deadlock in management highlighted the urgent need for intervention to prevent further complications and potential dissolution of the company. Issue 4: Timeliness of Filing Interlocutory Application Respondent Nos. 1 and 3 opposed the Interlocutory Application, citing its filing after a significant delay from the main Company Petition and the availability of alternative remedies under the Companies Act, 2013. However, the Tribunal, after considering the arguments and relevant case laws, decided to allow the Interim Administrator's appointment to address the complexities arising from the disqualification of directors and the lack of a validly constituted Board. In conclusion, the Tribunal allowed the Interlocutory Application, directing both parties to propose qualified individuals for the role of Interim Administrator, with the costs to be borne by the company. This decision aimed to ensure the proper management and affairs of the company during the ongoing legal proceedings and to prevent any potential abuse of the legal process.
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