Shareholder deadlock and board paralysis can justify appointment of an independent administrator and suspension of the board.

In oppression and mismanagement proceedings, where shareholder deadlock leaves the company non-functional and no valid board meeting can be convened, the Tribunal may step in with interim protective relief. The admitted facts showed a complete standstill in the company's affairs, with nominee directors resigned and both shareholder groups blaming each other for the paralysis. On that basis, the Tribunal found that continuation of the existing management would not serve the company's interests and appointed an independent administrator to run the company pending disposal of the petition, while suspending the board to preserve business functioning during the proceedings.

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Issues: Whether, in a petition alleging oppression and mismanagement, the Tribunal should appoint an independent administrator and suspend the board where the company had become non-functional because the requisite nominee directors had resigned and no valid board meeting could be held.

Analysis: The pleadings and the admitted factual position showed that the board could not function, no meeting could be validly convened, and the affairs of the company had come to a standstill. The shareholders' groups were in complete deadlock and each side blamed the other for the situation. In these circumstances, the Tribunal held that the continuance of the petitioners in management would not serve the company's interests and that an independent administrator was necessary to run the company till disposal of the company petition.

Conclusion: The prayer for appointment of an independent administrator was accepted and the board was suspended.

Final Conclusion: The company was placed under independent management pending further orders, with the Tribunal preserving the company's functioning during the pendency of the oppression and mismanagement proceedings.

Ratio Decidendi: Where a company is paralysed by shareholder deadlock and the board is unable to function, the Tribunal may, as an interim measure in oppression and mismanagement proceedings, appoint an independent administrator to manage the company's affairs and suspend the board.

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