2021 (6) TMI 191 - AT - Companies Law

Oppression and mismanagement - implementation of the circular resolution dated November 3, 2020 - Power of the tribunal in issuing direction to consider creating an interim committee to run the day-to-day affairs of the first respondent/company - HELD THAT - This Tribunal without delving deep, at this juncture, is of the prima facie view that the implementation of the circular resolution dated November 3, 2020 is to be stayed in respect of the first respondent/company, in furtherance of substantial cause of justice and accordingly, stays the implementation of circular resolution dated November 3, 2020 till the next date of hearing June 11, 2021 - it is open to learned counsel for respondent No. 7 and learned counsel for respondents Nos. 3, 4, 5, and 11 to file a detailed reply/response/counter to the main appeal (not only through e-filing and also through hard copy before the office of the registry ) and the copy of the same shall be served to the appellants side before June 7, 2021. Soon after the receipt of the reply/response/counter of the respective parties, it is open to the appellants to file rejoinder if any, (not only through e-filing and also through hard copy before the office of the registry ), of course, after serving to learned counsel for respondent No. 7 and respondents Nos. 3, 4, 5 and 11 - Let notice be issued through speed post returnable by June 11, 2021. Let the requisite together with process fee be filed by the appellants within 3 days from today. Notice to respondents Nos. 1, 2, 6, 8, 9 and 10 is also directed to be issued to the e-mail address of the said respondents, in the event of appellants furnishing the same. The office of the registry is directed to list the matter on June 11, 2021.

Summary

Issues:
1. Circulation of draft resolution to directors as per Companies Act, 2013 and secretarial standards.
2. Granting interim relief to suspend circular resolutions passed in negation of articles of association.
3. Direction to consider creating an interim committee versus mediation under section 442 of the Companies Act, 2013.
4. Allegations of non-issuance of circular resolution to a director.
5. Involvement of the first appellant in day-to-day affairs and financial matters.
6. Compliance with section 241 and section 175 of the Companies Act, 2013.
7. Interpretation of articles of association and company law provisions.
8. Stay on implementation of circular resolution dated November 3, 2020.

Analysis:
1. The Appellants contended that the draft resolution was not circulated to the first appellant as required by section 175 of the Companies Act, 2013 and the company's articles of association. They argued that the circular resolution was passed without proper authority, violating the articles of association. They sought interim relief to suspend the circular resolutions dated November 3, 2020.
2. The Tribunal was criticized for not granting the interim relief and instead suggesting the creation of an interim committee to manage the company's affairs. The Appellants argued that mediation under section 442 of the Companies Act, 2013 should have been considered instead. They also disputed the observation made in the interim order regarding the management of the company by the first appellant.
3. Respondent No. 7 argued that the first appellant's counsel was served notice of the resolution, and the first appellant had acknowledged it. They presented evidence that the first appellant had resigned and had been involved in seeking decisive actions previously.
4. Respondents Nos. 3, 4, 5, and 11 contended that the first appellant had received the draft resolution, offered comments, and was not oppressed as per section 241 of the Companies Act, 2013. They emphasized the first appellant's participation in the interim committee and the absence of oppressiveness in the actions taken.
5. The Tribunal considered the provisions of the Companies Act, 2013, regarding articles of association and company matters. After evaluating the submissions, the Tribunal decided to stay the implementation of the circular resolution dated November 3, 2020 until the next hearing date for further examination.
6. Procedural directions were given for filing detailed responses and counterarguments, as well as the issuance of notices to other respondents. The matter was scheduled for the next hearing on June 11, 2021, with instructions for filing necessary documents and serving all parties involved.