2022 (3) TMI 1267 - Tri - Companies Law

Appointment of directors from the Petitioner families on the Board of Company - appointment of Alternate Director - Section 161 of the Companies Act, 2013 - HELD THAT - In this case, the Articles of Association contain specific provision for appointing an alternate Director. Before approaching this Tribunal, the applicants could have taken up this issue in the Board Meetings of the Company. This Bench has not been informed about any such effort being made by the applicants and the results, if any, of the same. Furthermore, Section 161 of the Act lays down that an Alternate Director can be appointed if there is the absence of a director for a period not less than three months from India. In the case in hand, Shri Manmohan Singh Kalsi is in India and his possible absence is still in the realm of the future. This Tribunal is conscious of the decisions in the case of Union of India Ors. v. Modiluft Ltd., 2003 (5) TMI 530 - SUPREME COURT Raja Khan v. Uttar Pradesh Sunni Central Waqf Board Anr., 2010 (11) TMI 201 - SUPREME COURT wherein it has been held that if interim relief is same as that of permanent relief, then it is not permissible because no case would be left for adjudication at the time of final hearing. It was further held that in such a situation, the Court shall not grant any interim relief unless the case is fully heard. This Bench is of the considered view that the prayers made by the applicants cannot be acceded to - Application disposed off.

Issues Involved:
1. Appointment of directors from the Petitioner families.
2. Restraining respondents from participating in the affairs of the company.
3. Equal shareholding and remuneration.
4. Production of financial statements/other statutory documents.
5. Restraining respondents from using the trademark KALSI.
6. Appointment of Alternate Director in place of Shri Manmohan Singh Kalsi due to his illness.

Detailed Analysis:

1. Appointment of Directors from the Petitioner Families:
The petitioners sought the appointment of directors from their families on the company's board to restore parity and equal representation. This request aimed to ensure that the petitioner families had a say in the company's affairs, reflecting their stake and involvement in the business.

2. Restraining Respondents from Participating in the Affairs of the Company:
The petitioners requested that the respondents be restrained from participating in the company's affairs. This was likely due to disputes and conflicts within the family-run business, which necessitated such a measure to prevent further complications and ensure smooth operations.

3. Equal Shareholding and Remuneration:
The petitioners sought equal shareholding and remuneration. This issue underscores the need for fairness and equity in the distribution of shares and compensation among family members involved in the business.

4. Production of Financial Statements/Other Statutory Documents:
The petitioners requested the production of financial statements and other statutory documents. This request was aimed at ensuring transparency and accountability within the company, allowing all stakeholders to have access to crucial financial information.

5. Restraining Respondents from Using the Trademark KALSI:
The petitioners sought to restrain the respondents from using the trademark KALSI. This issue highlights the importance of protecting the company's brand and intellectual property from unauthorized use, which could potentially harm the business's reputation and operations.

6. Appointment of Alternate Director in Place of Shri Manmohan Singh Kalsi:
The petitioners sought the appointment of an Alternate Director due to Shri Manmohan Singh Kalsi's illness, which rendered him unable to participate in the company's day-to-day affairs.

Detailed Analysis of the Appointment of Alternate Director:

Application Details:
Six company applications (CAs) were filed for the appointment of an Alternate Director in place of Shri Manmohan Singh Kalsi, who was bedridden due to illness. The applicants suggested appointing Smt. Maneet Kalsi and Smt. Ravinder Kaur Kalsi as Alternate Directors in different CAs.

Respondents' Arguments:
The respondents opposed the appointment, arguing that the conditions prescribed under Section 161(2) of the Companies Act, 2013, were not met, as Shri Manmohan Singh Kalsi was neither outside India nor outside the State of Punjab. They contended that the appointment of an Alternate Director is governed specifically by Section 161(2) and cannot be sought under a general provision like Section 242(4) or the inherent powers of the Tribunal.

Tribunal's Analysis:
The Tribunal examined the relevant provisions of Section 161 of the Companies Act, 2013, and the Articles of Association (AoA) of the respective companies. The AoA contained specific provisions for appointing an Alternate Director. The Tribunal noted that the applicants had not demonstrated any effort to address this issue in the Board Meetings of the Company before approaching the Tribunal.

Tribunal's Decision:
The Tribunal concluded that the prayers made by the applicants could not be acceded to. It emphasized that any decision regarding the appointment of an Alternate Director would have a direct bearing on the main petitions' prayers and could affect the balance ensured by a previous Tribunal order. Citing precedents, the Tribunal noted that interim relief should not be granted if it mirrors the permanent relief sought, as it would leave no matter for final adjudication.

Conclusion:
The Tribunal dismissed and disposed of the six applications (CA Nos. 116/2021, 117/2021, 118/2021, 119/2021, 120/2021, and 121/2021) seeking the appointment of an Alternate Director. Consequently, the applications for urgent hearing of these CAs were rendered infructuous and disposed of accordingly.

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