2024 (11) TMI 803 - AT - Companies Law

Oppression and Mismanagement - Dispute between two shareholders/directors affecting company operations - failure to make statutory compliances, legal authorization etc. - HELD THAT - Apparently, the company is not able to complete the statutory and legal compliances due to differences between the Directors. The Learned Counsels for the Appellant and Respondent in their submissions are ad idem regarding differences between the Directors leading to non-compliances of statutory and legal requirements of the company. In the interest of the company, the Ld. NCLT is requested to nominate an independent Director to the Company for meeting of Board of Directors wherein only the Agenda for statutory and legal compliances be taken up. The Independent Director be given usual statutory remuneration and in case of deadlock, will have a casting vote. The Ld. NCLT is requested to appoint the independent Director within three days, considering the urgency of meeting the statutory compliances by the Company. Appeal disposed off.

Issues:
1. Application for exemption from filing certified copy of the impugned order.
2. Application for exemption for filing dim and illegible copies of documents without proper margin and certified copies of the annexures.
3. Dispute between two shareholders/directors affecting company operations.
4. Need for intervention by the Appellate Tribunal to resolve deadlock and ensure statutory compliances.
5. Appointment of a 3rd Director to break the deadlock.
6. Applicability of previous judgments in similar cases.
7. Tribunal's power to intervene in the interest of the company.
8. Disagreement on the appointment of a director without findings of Oppression and Mismanagement.

Detailed Analysis:
1. The judgment addresses two applications seeking exemptions related to filing requirements. The first application, I.A. No. 6985 of 2024, requests exemption from filing a certified copy of the impugned order, which is allowed. The second application, I.A. No. 6986 of 2024, seeks exemption for filing dim and illegible copies of documents without proper margin and certified copies of annexures, which is also allowed.

2. The appeal arises from a dispute between two brothers who are shareholders and directors of a company, leading to operational issues. The National Company Law Tribunal (NCLT) directed the parties to cooperate and settle urgent matters, but subsequent meetings failed due to non-cooperation, resulting in a deadlock affecting statutory compliances and legal authorizations.

3. Citing relevant judgments, the Appellant argues for the appointment of a 3rd Director to break the deadlock, emphasizing the need for intervention to address non-compliances and ensure the company's interests are protected. Previous cases where independent Directors were appointed to oversee company affairs are referenced to support this request.

4. The Respondent contests the appointment of a director without findings of Oppression and Mismanagement, citing a specific judgment. However, the Tribunal acknowledges the operational challenges faced by the company due to Director disputes and differences, leading to non-compliances.

5. Ultimately, the Tribunal intervenes in the interest of the company, directing the NCLT to nominate an independent Director to facilitate meetings focused on statutory and legal compliances. The appointed Director will have a casting vote in case of deadlock, with usual statutory remuneration, to ensure smooth operations and compliance. The urgency of meeting statutory requirements prompts the Tribunal to request the prompt appointment of the independent Director within three days.

6. The judgment concludes by disposing of the appeal with the outlined directions to address the deadlock and ensure the company's compliance with statutory and legal obligations.

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