Medsynaptic Private Limited And Ors vs Dr. Prashant K Lahane

[Arising out of order dated 19.07.2021 in CA-201/2021 in CP-193(MB)/2021 passed by the National Company Law Tribunal, Mumbai Bench, Court-IV.]

IN THE MATTER OF:

1. Medsynaptic Private Limited 5th Floor Mantri galleria, Model colony Shivaji Nagar, Pune 411016. .... Appellant No. 1. 2. Dr. Ashish Prakash Dhawad Flat No. 53, Godrej Sherwood Wakdewadi Shivaji Nagar, Pune 411005. .... Appellant No. 2. 3. Mr. Sanjay Sukhdeaorao Gorde B-400, LA Valley Casa, NDA Pashan Road, Bavdhan Pune 411021. .... Appellant No. 3. 4. Mrs. Preeti Dhawad Flat No. 53, Godrej Sherwood Wakdewadi Shivaji Nagar, Pune 411005 .... Appellant No. 4.

Versus

1. Dr. Prashant Lahane Bungalow No. 4, Lazy Rock, NDA Pashan road, Near Bank of Maharashta, Bavdhankh, Pashan Pune 411021. .... Respondent. 2

Present:

For Appellant: Mr. Dhruba Mukherjee, Sr. Advocate with Mr. Ankit Tripathi, Mr. NPS Chawla and Mr. Kumar Anurag Singh, Advocates. For Respondent: Mr. Akshat Singh, Mr. Gaurav Mitra and Mr. Bhanu Gupta, Advocates.

JUDGMENT

(18th November, 2021)

Justice Anant Bijay Singh;

This Appeal has been preferred by the Appellants aggrieved and

dissatisfied by the order dated 19.07.2021 passed by the National Company

Law Tribunal, Mumbai Bench, Court-IV in CA-201/2021 in

CP-193(MB)/2021 whereby and where under the Ld. National Company Law

Tribunal passed the following interim orders:

"3. The removal of directorship of the Petitioner is

inconsistent with the restriction provided under the

Articles of Association. Therefore, the Petitioner has made

prima facie case for grant of interim stay of resolution

passed in EOGM dated 31.05.2021.

4. It is observed that Respondent No. 2 has acted ultra

vires of the powers conferred under Articles of Association.

Therefore, this Bench is of the considered view that the

implementation of the Resolutions passed in the board

meetings on 12.03.2021, 31.03.2021, 06.05.2021 &

Company Appeal (AT) No. 102 of 2021 3

31.05.2021 have also been consequently stayed pending

final disposal of the Company petition.

5. Counsel for the Respondent is directed to file reply

within six weeks as sought by him by duly serving the copy

to the other sides. The Petitioner is directed to file

rejoinder, if any, within 2 weeks thereafter. List this matter

on 21.10.2021."

2. The facts giving rise in the instant Appeal are as under:

i) The present Appeal is being filed by Appellant No. 1 through Appellant

No. 2 authorized by the Board Resolution dated 09.08.2021 (Annexure A-2 at

page 80 of the Appeal Paper Book) with Appellant No. 2, Appellant No. 3 and

Appellant No. 4.

ii) Further case is that on 27.08.2003, the Appellant No. 1 was

incorporated and registered under the Companies Act, 1956, as a private

limited company having its registered office address at 5th Floor, Mantri

Galleria, Model Colony Shivji Nagar, Pune, Maharashtra 411016.

iii) At the time of incorporation, the Authorized Share capital was

Rs. 500,000/- divided into 50,000 Equity shares of Rs. 10/- each which was

further increased to Rs. 1,00,00,000/- divided into 10,00,000 equity shares

of Rs. 10 each on 23.02.2008. The total paid up share capital was

Rs. 200,000/- divided into 20,000 Equity shares of 10/- each.

iv) The Appellant No. 2 was holding 60% shareholding in the Appellant No.

1 and Respondent was holding 40% shareholding. Both were also the

directors in the Appellant No. 1.

Company Appeal (AT) No. 102 of 2021 4

v) The Appellant No. 1 is engaged in the business of software & related

services relating to medical products and has been developing innovative &

user-friendly products since last 18 years. Due to the relentless efforts of

Appellant No. 2 and the team, the Appellant No. 1 became the No. 1 PACS

and Teleradiology Company in India having spread its wings across 25 plus

countries across the world.

vi) Further case is that the Respondent was looking after the day to day

operations of Appellant No. 1 and was also heading Finance, Administration,

Human Resources and Compliances departments of Appellant No. 1. It is

pertinent to mention that during his tenure as director in the Appellant No.

1, the Respondent failed to perform its duties and responsibilities towards

Appellant No. 1 and due to the dereliction of Respondent's duties, the

Appellant No. 1, shareholders and the management of Appellant No. 1 was

losing its trust in him.

vii) The Appellant No. 3 has been associated and contributing in the

capacity of Sales Head for more than 15 years in the Appellant No. 1. He has

gained a lot of expertise and has achieved all the targets in the past 15 years

in the capacity of Sales Head, thereby taking the Appellant No. 1 to a greater

height.

viii) That in view of Appellant No. 3's contribution, it was therefore decided

unanimously by Appellant No. 2 and Respondent to reward him for his past

performance association by appointing him as an additional director in

Appellant No. 1 by passing a resolution in the Board meeting. Accordingly, it

was decided by the Appellant No. 2 and Respondent to call a board meeting

and appoint Appellant No. 3 as an additional director. Company Appeal (AT) No. 102 of 2021 5

ix) Pursuant thereof, on 17.09.2019, the Appellant No. 1 held a Board

Meeting wherein the Appellant No. 2 in the capacity of Chairman placed before

the Board proposal to co-opt Appellant No. 3 as an Additional Director on the

Board of Directors of Appellant No. 1. Thereafter, the Appellant No. 2

presented before the Board, the reasons for his proposal and stated how the

Appellant No. 3 has gained a lot of expertise and has achieved the targets in

the past 15 years in the capacity of Sales Head, thereby taking the Appellant

No. 1 to a greater height.

x) Further case is that considering Appellant No. 3's past association and

contribution in the capacity of Sales head for more than 15 years, Board of

directors unanimously passed the resolution in the meeting for appointment

of Appellant No. 3 as an Additional Director in Appellant No. 1 in accordance

with the provisions of Section 161(1) of the Companies Act, 2013, read with

Article 28 of the Articles of Association of the Appellant No. 1 with effect from

17.09.2019. The Respondent attended the Board Meeting held on 17.09.2019

and consented for the appointment of Appellant No. 3 as an Additional

Director while signing on the true copy of the resolution passed in the board

meeting [Annexure A-4 (Colly) at page 106 to 108 of the Appeal Paper Book].

xi) Further case is that since there were already two directors in the

Appellant No. 1, Appellant No. 3 was appointed as an Additional Director in

the Appellant No. 1. In terms of clause 26 of the Articles of Association

directors appointed in Appellant No. 1 were liable to retire at every AGM and

were required to be reappointed unless otherwise decided by the members.

xii) On 30.09.2019, 16th AGM of Appellant No. 1 was held wherein all the

directors and members participated including the Respondent. Amongst other Company Appeal (AT) No. 102 of 2021 6

resolutions, a resolution was passed to appoint the Appellant No. 3 as the

Director in Appellant No. 1 liable to retire at every Annual General Meeting,

which was seconded by the Respondent. From 30.09.2019, the appointment

of Appellant No. 3 as Director of Appellant No. 1 was regularized and

confirmed [Annexure A-5 (Colly) at page 109 to 128 of the Appeal Paper Book].

xiii) The Respondent while acting as the head of Finance, Administration,

HR and Compliances departments of Appellant No. 1 failed to give the correct

and updated information about Appellant No. 3 being a Director of Appellant

No. 1 to the Statutory Auditor while finalizing the Balance sheet for the year

2019-20 which resulted in the details of Appellant No. 3 as well as details of

Relative of Appellant No. 3 from being disclosed in the Balance sheet of

Appellant No. 1 for the year ended on 31.03.2020.

xiv) The 17th Annual General Meeting of Appellant No. 1 was held on

31.12.2020 (Annexure A-6 at page 129 to 130 of the Appeal Paper Book)

approved the resolution for reappointment of Appellant No. 3 which was

attended by the Appellant No. 2, Appellant No. 3 and the Respondent. In the

AGM, amongst other resolutions proposed, a resolution was passed to

reappoint Appellant No. 3 as the Director in Appellant No. 1 Company.

xv) The Appellant No. 1 had bank accounts with ICICI Bank as a part of

which a declaration was submitted to Bank by the Appellant No. 1 on

06.02.2021. The Respondent himself signed KYC declaration on 05.02.2021

which was submitted with ICICI Bank confirming the details of all the three

directors i.e. Appellant No. 2, Appellant No. 3 and Respondent of Appellant

No. 1 as submitted to the Bank on 06.02.2021 in the declaration mentioned

Company Appeal (AT) No. 102 of 2021 7

the designation of Appellant No. 3 as a director (Annexure A-7 at page 131 to

132 of the Appeal Paper Book).

xvi) Meanwhile, a Notice for the Board meeting no. 4/2020-21 dated

12.03.2021 along with agenda and proposed resolution was issued by the

Appellant No. 2 via mail to all the Directors including Respondent with the

proposed agenda, inter alia, to consider request received from Appellant No.

2, existing shareholder of the Appellant No. 1 to split his share certificate and

to issue new share certificates in Form SH-I [Annexure A-8 (Colly) at page 133

to 137 of the Appeal Paper Book].

xvii) Further case of the Appellant is that the 1st EOGM of the Financial Year

2021-22 was conducted on 31.05.2021 which was attended by the Appellant

No. 2, Appellant No. 3 and Appellant No. 4 and the Respondent did not chose

to attend the EOGM despite advance notice served to him.

xviii) Further case is that the Respondent filed a Company Petition dated

09.06.2021 before Hon'ble National Company Law Tribunal, Mumbai bench

under Section 241-242 of Companies Act, 2013 against the Appellants

alleging mismanagement and oppression in the functioning of the Appellant

No. 1 by Appellant No. 2 in connivance with Appellant Nos. 3 & 4 and

Consultant PCS of Appellant No. 1.

xix) Further case is that the Respondent filed an application seeking early

hearing of the Company Petition filed by the Respondent and the Appellants

were not served with the copy of the early hearing application bearing CA

201/2021 filed in CP193/MB/2021. The Learned Counsel for the Respondent

intimated through WhatsApp regarding urgent hearing on 09.07.2021.

Company Appeal (AT) No. 102 of 2021 8

xx) Further the CA 201/2021 in CP 193/MB/2021 listed on 09.07.2021

and 16.07.2021 but could not be taken up for hearing due to paucity of time.

xxi) Further on 19.07.2021 the matter was again listed whereby the Ld.

National Company Law Tribunal passed the interim order and hence this

Appeal.

Submissions on behalf of the Appellants

3. The Learned Sr. Counsel for the Appellant during the course of

argument and his memo of Appeal while assailing the impugned order

submitted that the Hon'ble National Company Law Tribunal erred in passing

the impugned order in gross violation of the principle of natural justice and

by allowing the Respondent to argue an application which was not even served

to the Appellants

4. It is further submitted that the Hon'ble National Company Law Tribunal

erred in granting interim relief sought in the Company Petition while hearing

the urgent hearing application even when the Respondent did not even sought

for any such reliefs in the early hearing application.

5. It is further submitted the Hon'ble National Company Law Tribunal

failed to appreciate that the removal of the Respondent as a director of

Appellant No. 1 was pursuant to a properly conducted extraordinary general

meeting and the majority in the Appellant No. 1 have voted and spoken

against him as he had acted against the interest of the Company.

6. It is further submitted that the Hon'ble National Company Law Tribunal

failed to appreciate that the Respondent was removed from the Appellant No.

1 as a director by following the due procedure prescribed in law and all the

Company Appeal (AT) No. 102 of 2021 9

prerequisite statutory compliance required under the provisions of Section

100, 115 and 169 of the Companies Act, 2013.

7. The Learned Sr. Counsel for the Appellants further submitted that these

facts are not considered by the Ld. Adjudicating Authority while passing the

impugned order. So, based on these submissions the impugned order is fit to

be set aside and the Appeal be allowed.

Submissions on behalf of the Respondent

8. The Learned Counsel for the Respondent during the course of argument

and his Reply Affidavit submitted that the Respondent is a founder director

and shareholder of Medsynaptic Pvt. Ltd. and holds 40% of the total paid up

share capital of the Appellant Company which was incorporated in 2003 with

two shareholders and two directors only i.e. Appellant No. 2 and the

Respondent herein. Ever since the incorporation of the Company, it had been

running on a quasi-partnership basis where the two sole shareholders of the

Company i.e. the Appellant No. 2 and the Respondent, were also the Directors

of the Company who were jointly responsible for running the affairs of the

Company and making decisions related to the functioning of the Company.

9. It is further submitted that the Appellant No. 1 Company is a private

Company that was incorporated on 27.08.2003 and is registered at Registrar

of Companies, Pune and there have been two shareholders who are also the

Directors of the Company since its inception. For the last 18 years, the

number of shareholders was always two and similarly, the percentage of

shareholding was always in the ratio of 60:40 i.e. the Appellant No. 2 held

60% shares whereas the Respondent held 40% shares.

Company Appeal (AT) No. 102 of 2021 10

10. It is further submitted that the present Appeal filed by the Appellants

is nothing but a gross abuse of process of law as the Appellant by way of this

false and frivolous Appeal, is seeking to obtain findings of this Hon'ble

Appellate Tribunal before even the Ld. NCLAT could adjudicate on the matter.

The Appellants through the instant Appeal are attempting to delay and derail

the Company Petition filed under Section 242-242 of the Companies Act,

2013.

11. It is further submitted that the Appellants have been provided with an

opportunity by the Ld. NCLT to file a counter in the company petition pending

adjudication before the Ld. NCLT, however, the Appellants are yet to file a

counter till date and have straight way approached this Hon'ble Appellate

Tribunal knowing fully well that this Hon'ble Appellate Tribunal will not give

its finding on the merits of the matter until the company petition under

Section 241 and 242 of the Companies Act, 2013 is disposed of first by the

Ld. NCLT.

12. It is further submitted that during the pendency of the petition, the

Respondent has been granted interim stay by the Ld. NCLT in the interest of

justice considering the balance of convenience and the irreparable loss that

has been caused to the Respondent. However, if the Appellants are aggrieved

by the interim order, they can file an objection against the interim stay order.

They are at liberty to request the Ld. NCLT to set aside the temporary stay

order.

13. It is further submitted that the Respondent filed a company Petition

before the Ld. NCLT on being aggrieved by the resolution passed fraudulently

in the EOGM dated 31.05.2021 wherein he was purportedly removed as Company Appeal (AT) No. 102 of 2021 11

director. The Petitioner / Applicant is a founder director, and as per Article

26 of the Articles of Association of the Appellant Company, the Respondent

herein and the Appellant No. 2 are appointed as life-time/founder Directors,

defined as "First Directors" who shall not be liable to retire and that they shall

hold office until they resign or cease to hold office on account of

death/incapacitation or otherwise become disqualified to hold such office in

accordance with the provisions of the Companies Act, 1956.

14. The Learned Counsel for the Respondent further referred to Extract of

Articles 25 and 26 of the Articles of Association are reproduced herein under:

Directors

25. The number of Directors shall not be less than Two and shall not be more than Twelve.

26. The First Directors shall be:

1. DR. ASHISH PRAKASH DHAWAD

2. DR. PRASSHANT KRISHNARAO LAHANE The First Directors appointed by the Articles of Association shall not be liable to retire. However they shall hold office until they resign or cease to hold office on account of death/incapacitation or otherwise become disqualified to hold such office in accordance with the provisions of Companies Act, 1956. The directors appointed from time to time by the Company shall be liable to retire at every Annual General Meeting of the Company and shall be reappointed unless otherwise decided by the members. However the members may be passing special resolution appoint directors not liable to retire at a General Meeting.

(Emphasis Supplied)

Company Appeal (AT) No. 102 of 2021 12

15. It is further submitted that the Ld. NCLT passed the interim order on

19.07.2021 (Impugned Order) as per Article 26 of the Articles of Association

makes it evidently clear that the "First Directors" i.e. the Appellant No. 2 and

the Respondent herein, cannot be removed from the Board of Directors of the

Appellant Company unless any one of the three conditions is fulfilled:

i. They resign from the Board.

ii. They cease to hold office on account of death/incapacitation.

iii. They become disqualified to hold office under the Companies Act,

1956.

16. It is further submitted that the Respondent does not fall into any of the

three aforementioned criteria as defined under the Articles of Association of

the Appellant Company. Therefore, based on these submissions there is no

merit in the instant Appeal, the Appeal is fit to be dismissed.

FINDINGS

17. After hearing the parties and having gone through the pleadings made

on behalf of the parties we are of the conscious view that the instant Appeal

is against the interim order dated 19.07.2021 passed by the National

Company Law Tribunal, Mumbai Bench, Court-IV in CA-201/2021 in CP-

193(MB)/2021 and the main petition is still to be heard on merit.

18. We are restraining from expressing our views and while passing the

impugned order has considered the provisions of Articles 25 and 26 of the

Articles of Association and have committed no illegality.

19. The plea raised by the Appellant in paragraph no. 7.42 at page 42 to 43

of the memo of Appeal that the Article of Association of company cannot

Company Appeal (AT) No. 102 of 2021 13

supersede the provisions of Companies Law and this Article was itself subject

to the provisions of the Companies Act, 2013 is concerned, only can be decided

while hearing the main petition i.e. CP-193(MB)/2021 is still pending before

the Ld. National Company Law Tribunal, Mumbai Bench, Court-IV for hearing

and adjudication.

ORDER

20. We are of the considered view that there is no illegality in the impugned

order and we hereby affirm the interim order dated 19.07.2021 passed by the

National Company Law Tribunal, Mumbai Bench, Court-IV in CA-201/2021

in CP-193(MB)/2021. There is no merit in the instant Appeal, the Appeal is

hereby dismissed. No order as to costs.

21. Since the parties have appeared before the Ld. National Company Law

Tribunal, Mumbai Bench, we request the Ld. National Company Law

Tribunal, Mumbai Bench, to expedite the matter at the earliest.

22. Registry to upload the Judgment on the website of this Appellate

Tribunal and send the copy of this Judgment to the Ld. National Company

Law Tribunal, Mumbai Bench, Court-IV, forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical) New Delhi 18th November, 2021 R. Nath.

Company Appeal (AT) No. 102 of 2021