2020 (9) TMI 360 - Tri - Companies Law

Removal of the applicant as a director - main issue put across by way of the present application is that the applicant has not received his remuneration @ ₹ 1,10,000/- per month as a director of the company since October 2016, although the other directors of the company have continuously received their salary from the company unlike the applicant - HELD THAT - There is no urgency to pass any interim directions/orders as regards entitlement of the applicant to any remuneration/salary, or any payment thereof to the applicant by the company. What weighed in our mind in refusing to pass any interim order was the Resolution passed in the EoGM by the majority shareholders/directors, converting the status of the applicant from the Executive director to a Non Executive Director, which meeting was attended by the applicant and the Resolution is stated to have been challenged by the applicant. There is no use keeping this application on board particularly when an application on the same and similar facts is already filed and pending. Prima facie, we are convinced that the applicant has not been able to prove even that he ever worked for the company as a director or as an employee for which he deserved some remuneration or salary as an interim measure. This is not a fit case for passing any interim orders or keep this petition for further consideration - application dismissed.

Summary

Issues involved:
Claim for unpaid remuneration as a director of the company since October 2016.

Detailed Analysis:
The applicant, a shareholder and director of the company, filed an urgent application due to non-receipt of remuneration since October 2016. The company, a family business, faced internal disputes leading to legal actions. The applicant sought protection as a minority shareholder and director, preventing his removal. Previous orders restrained his removal as a director. Despite interim orders, disputes persisted, leading to appeals and pending civil proceedings.

The main issue revolved around the applicant's unpaid remuneration of ?1,10,000 per month since October 2016. Previous orders directed partial payment of arrears, but the balance remained outstanding. The applicant, the sole earner for a family of four, faced financial strain, exacerbated by the COVID-19 lockdown. The application detailed varying amounts claimed based on Provident Fund contributions and interest, highlighting the financial impact on the applicant.

In response, the respondents argued that the applicant ceased functioning as an Executive Director in 2016, transitioning to a Non-Executive Director without remuneration. They contended that salaries were paid as per previous orders, and the applicant's lack of involvement in company affairs justified the non-payment of remuneration. The respondents highlighted the applicant's anti-business activities and lack of contribution during the lockdown period, where no salaries were paid.

The Tribunal, after considering arguments from both parties, concluded that no interim orders were warranted regarding the applicant's remuneration claim. The resolution converting the applicant to a Non-Executive Director, challenged by the applicant, was a significant factor. The Tribunal found insufficient evidence of the applicant's work deserving remuneration. The application was dismissed, emphasizing the lack of urgency and the existence of a similar pending application.

In conclusion, the Tribunal dismissed the urgent application for unpaid remuneration, citing lack of evidence of work deserving remuneration and the existence of a similar pending application. The decision highlighted the resolution converting the applicant to a Non-Executive Director and the ongoing internal disputes within the family-run company. The judgment underscored the need for substantial proof of work to support remuneration claims in corporate disputes.