2021 (1) TMI 766 - AT - Companies Law

Jurisdiction - power of NCLT to appoint Special Officer - allegations and grievances among the management/ owners - HELD THAT - Under the Company Petition filed before the NCLT, Kolkata being CP. No. 42 of 2016 there were allegations and grievances among the management/ owners. The NCLT, Kolkata had felt the need that the various documents adduced from all the parties require an in-depth and physical inspections/ verification on the ground. For this NCLT, Kolkata have appointed a Special Officer to make a detailed report and to ensure there is no deadlock in management by ensuring implementation of the resolutions passed in the Board Meetings which shall be presided by such Special Officer. The contentions of the Appellants that NCLT, have exceeded its jurisdiction by appointing a Special Officer has been taken down as Section 242(4) have given general power to the NCLT to make any interim order which it thinks fit for regulating the conduct of the company s affairs upon such terms and conditions as appear to it to be just and equitable. Since, there were numerous allegations made under the Company Petition it was needed to be verified and no order could be passed abruptly until the allegations and grievances are examined completely. The Special Officer being an officer appointed by the Tribunal was given the power under the impugned order to supervise, conduct and preside over the Board meetings and ensuring the implementation of the resolutions passed in the said Board meetings. The Special Officer was ordered to ensure that such resolutions shall not be prejudicial to the interest of Respondent No. 1 Company so that frivolous litigations may be avoided and for this Special Officer was asked to make the complete Minutes of the meetings and get it signed by all the participants mandatorily. The Special officer was asked to submit its report within 60 days from the date of taking the charge. Therefore, the contention on behalf of the Appellant that the report of Special Officer will further escalate the issues among the parties is a matter of speculation and cannot be given due consideration. In fact, the report will give a true and fair picture of the state of affairs of the Respondent No. 1 Company. The Contention of the Appellants that the petition under section 422 of the Companies Act are required to be disposed of within a specified time frame and by appointing the Special Officer it is defeating the purpose of Section 422 of the Companies Act, 2013. This Contention of the Appellant is duly considered but since there were pleadings going on and various applications were filed before the NCLT, Kolkata, no order could have been passed abruptly. Since the pleadings were pending and in order to protect and preserve the assets of the Company from being depleted, NCLT had appointed the special officer in the interregnum and also for the detailed verification of the various allegations imposed by the parties against each other, it was correct to appoint an officer - Nothing has been brought on record in relation to the report of the Special Officer. There is nothing on record what are the actions taken by the NCLT, Kolkata on the basis of such report. Also, inspite of the directions parties have not filed any Written Submissions. The matter is pending before the NCLT, Kolkata, there are no reason to entertain the present Appeal. Appeal dismissed.

Summary

Issues Involved:
1. Appointment of Special Officer by NCLT, Kolkata.
2. Allegations of Oppression and Mismanagement.
3. Shareholding disputes and company structure.
4. Compliance with Section 422 of the Companies Act, 2013.
5. Contentions regarding the disposal of the main petition.

Detailed Analysis:

1. Appointment of Special Officer by NCLT, Kolkata:
The NCLT, Kolkata appointed a Special Officer to preside over the meetings of the Board of Directors of Respondent No. 1 Company and ensure the implementation of resolutions passed in such meetings. The Special Officer was also tasked with submitting a report on all claims and the current state of affairs of the company within 60 days. The Appellants contended that this appointment was beyond the jurisdiction of NCLT and would delay the disposal of the main petition. However, the Tribunal justified the appointment under Section 242(4) of the Companies Act, 2013, which grants it the power to make interim orders to regulate the conduct of the company's affairs.

2. Allegations of Oppression and Mismanagement:
The case involved various allegations of Oppression and Mismanagement under Sections 397 and 398 of the Companies Act, 1956. The Respondents alleged that the Appellants had formed a new company and diverted business from Respondent No. 1, leased valuable properties at low rents, and mismanaged the company's operations, leading to significant financial losses. The Appellants denied these allegations, stating they had not obstructed the Respondents' access to the company premises and had not engaged in any acts of Oppression or Mismanagement.

3. Shareholding Disputes and Company Structure:
The shareholding pattern of Respondent No. 1 Company was disputed. The Respondents claimed that the shareholding should be equally divided into three groups, each holding 33%, based on a will executed by Smt. Uttama Gupta. In contrast, the Appellants argued that there was no understanding or intention for equal shareholding among the three groups. The NCLT observed that the management and owners were divided, with grievances against each other, necessitating a Special Officer to investigate and ascertain the factual position.

4. Compliance with Section 422 of the Companies Act, 2013:
The Appellants argued that the NCLT failed to comply with Section 422, which mandates the disposal of petitions within three months. They contended that the appointment of the Special Officer would further delay the proceedings. The Tribunal acknowledged this concern but noted that various applications and pleadings were pending, and it was essential to protect and preserve the company's assets. Therefore, appointing the Special Officer was deemed necessary to verify the allegations and ensure proper management.

5. Contentions Regarding the Disposal of the Main Petition:
The Appellants emphasized that the main petition had been pending since 2016 and should be disposed of expeditiously. They argued that appointing a Special Officer would not serve the purpose and would only prolong the matter. The Tribunal, however, found that the appointment was justified to prevent further depletion of the company's assets and ensure a fair examination of the allegations. The Tribunal dismissed the appeal, stating that the report of the Special Officer would provide a true and fair picture of the company's state of affairs.

Conclusion:
The Tribunal dismissed the appeal, upholding the appointment of the Special Officer by NCLT, Kolkata. It emphasized the need for an in-depth investigation and verification of the allegations of Oppression and Mismanagement. The Tribunal also highlighted the importance of protecting the company's assets and ensuring proper management during the pendency of the main petition. No order as to cost was made.