Pratap Singh Parmar vs Prabh Paul Parmar

Pratap Singh Parmar ...Appellant(s)

Versus

Prabh Paul Parmar ...Respondent(s)

Present: For Appellant : Mr. Gaurav Mitra, Mr. Adarsh Rai, Mr. Ishan Ray C., Advocates. For Respondents : Mr. Bhupender Pratap Singh, Advocate.

ORDER

(Hybrid Mode)

24.10.2024: I.A. No. 6985 of 2024: This is an application seeking

exemption from filing certified copy of the impugned order. The application is

allowed.

2. I.A. No. 6986 of 2024: This is an application seeking exemption for

filing dim and illegible copies of documents without proper margin and

certified copies of the annexures. The application is allowed.

3. The present appeal is against an impugned order dated 05.09.2024 of

National Company Law Tribunal, New Delhi (Court-VI). The brief facts of the

case are that the Appellant-Pratap Singh Parmar and the Respondent Prabh

Paul Parmar are brothers and are shareholders of equal strength and

Directors in the company M/s ANP Atelier and Associates Company Pvt. Ltd.

The differences between the two shareholders/directors are effecting the

working of the company.

Company Appeal (AT) No. 329 of 2024 2

4. In the short-impugned order, the Ld. NCLT has stated as under:

ORDER

"Ld. Counsel on behalf of the Petitioner and Ld. Counsel on behalf of the Respondent are present. It was submitted that there is an urgent need for a meeting of the Board which comprises the two members who are contesting this case, for taking decisions in respect of statutory compliances under the Companies Act, payment of taxes, filing Returns with tax authorities and pursuing litigation against the company. In order to finalize/authorize the payment of taxes, submission of returns to the RoC and tax authorities and for authorization and engagement of counsels for the litigation pending before various enquiry judicial/quasi- judicial authorities both the directors have agreed to have the Board meeting for that purpose and settle these issues. It is directed that both the sides cooperate with each other in this meeting and conclusively settle the urgent pending issues. List the matter on 07.11.2024 along with IAs."

5. It is the submission of Learned Counsel for the Appellant that

subsequent to the order dated 05.09.2024, a meeting of Board of Directions

was called on 08.09.2024 and none of the Agenda items were taken up due

to non-cooperation of the Respondent. The complete deadlock between the

two shareholders/directors has led to problems like failure to make statutory

compliances, legal authorization etc. which are not in the interest of company.

Another meeting of Board of Directors was called on 23.10.2024 at 04:00 PM

wherein the Respondent did not attend.

6. It was submitted that it will be in the interest of the company that a 3rd

Director is appointed to break the deadlock. The Learned Counsel for the

Company Appeal (AT) No. 329 of 2024 3

Appellant drew our attention to para 25 of the judgment of this Tribunal in

the case of Smt. Smruti Shreyans Shah Vs. The Lok Prakashan Limited,

Company Appeal (AT) No. 25 of 2018 dated 05.09.2019 wherein it was held

that if an independent conclusion is made as regards existence of a prima

facie case in respect of deadlock entailing consequences like non-holding of

meetings and non-filing of statutory compliances effecting the conduct of the

affairs of company, this Appellate Tribunal can intervene. In the said

judgment it was decided to appoint a retired Judge, who would constitute the

single-member "Oversight and Supervision Committee" to oversee and

supervise the conduct of the company's affairs and the Board of Directors of

the Company were directed to work under his supervision, and not to take

any decision without his approval.

7. The Learned Counsel for the Appellant also cited the judgment of this

Tribunal in the case of R. Jeyapaal Vs. Arjuna Engineering Pvt. Ltd,

Company Appeal (AT) No. 372 of 2017 wherein following directions were

issued:

"iv. NCLT is directed to nominate an independent Director to the Company on remuneration/salary similar to other Directors. Considering the Oppression and Mismanagement on the part of Respondents 2 and 3 it is directed that in the Bank Accounts of the Respondent No.1 Company, the Respondent No. 2 and Appellant shall be Joint Signatories and the accounts shall be liable to be operated jointly with immediate effect. In case of deadlock in any transaction if Respondent No.2 or Appellant do not agree on a transaction, independent Director will have a casting vote and Joint Signatories shall be bound to act accordingly. The independent Director will ensure that

Company Appeal (AT) No. 329 of 2024 4

company follows provisions of the Companies Act and Rules."

8. The Learned Counsel for the Appellant further submitted that the

Tribunal has powers to intervene in the interest of company, if it is of the

opinion that the same will protect the interest of the company. The Learned

Counsel for the Appellant cited decision in the case of M.S.D.C.

Radharamanan Vs. M.S.D. Chandrashekara Raja and Another reported in

(2008) 6 SCC 750 and specifically to paragraphs 15 and 22 of the said

judgment.

9. The Learned Counsel for the Respondent has submitted that the

Respondent had attended the meeting held on 08.09.2024 but no progress

was made on Agenda items due to bickering between the Directors. He stated

that the Tribunal cannot appoint a director without giving finding regarding

Oppression and Mismanagement. He relied upon the judgment of Ram

Parshotam Mittal and Others Vs. Hotel Queen Road Private Limited and

Others reported in (2019) 20 SCC 326 and specifically referred to para 69

of the said judgment.

10. We have considered the judgments cited by the Appellant and

Respondent. 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 Appeal (AT) No. 329 of 2024 5

company, we request the Ld. NCLT 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.

With these directions, this appeal is disposed of accordingly.

[Justice Yogesh Khanna] Member (Judicial)

[Mr. Ajai Das Mehrotra] Member (Technical)

R.N./Manu

Company Appeal (AT) No. 329 of 2024