2022 (10) TMI 440 - Tri - Companies Law

Tribunal Orders Director Compliance: Legal Obligations & Shareholder Protection

Kiran Sharma Versus Atul Kumar Sharma and Anr.

The Tribunal directed the respondent to complete necessary compliances under Rule 25A within two weeks, including filing E-Form 22A with digital ... Seeking interim relief of issuing directions to the other director to affix his digital signature in the prescribed E-Form 22A (Active) sent to him by the applicant - HELD THAT:- The paramount duty of this Tribunal is to see whether a company has followed the principles of natural justice while taking decisions and has protected the interests of shareholders and the survival of the company itself. It is also observed that the respondent No. 1 is a party to all the decisions regarding the appointment of the applicant as a director of the company. It is apparent that, for some reason, there is a dispute between the two directors, but that does not entitle either of the Directors to take such steps, which will adversely impact the legal status of the company. It is also noted that the complaint against the applicant before the ROC has been closed - As the respondent has fairly admitted during the proceedings that the affairs are currently managed by the sole surviving respondent director, i.e., respondent No. 1, it is all the more obligatory for him to ensure compliance with all the Rules and Regulations laid down in the Companies Act 2013 and the Rules made thereunder. The respondent No. 1 is directed to make compliances under Rule 25A and affix his digital signatures in the prescribed E-Form 22A (Active) sent to him by the applicant through email dated 23.04.2022 and file the same along with payment of fee/penalty as required so that the status of the company becomes active within two weeks - List the case on 29.11.2022. Issues:Interim relief sought for directorial dispute regarding digital signature in E-Form 22A, compliance under Rule 25A of Companies (Incorporation) Rules, 2014, obligation of directors to discharge statutory compliances, management dispute impact on company status.Interim Relief for Directorial Dispute:The application involved a directorial dispute where one director sought interim relief to direct the other director to affix his digital signature in E-Form 22A for company status activation. Respondents cited a directorial dispute and pending issues before the Calcutta High Court. Tribunal emphasized the importance of statutory compliances and natural justice principles in protecting shareholder interests and company survival. Despite the dispute, both directors were legally obligated to comply with Rule 25A of the Companies (Incorporation) Rules, 2014.Compliance under Rule 25A:Rule 25A mandates companies to file particulars in e-form Active by a specified date, subject to certain exceptions. The Tribunal highlighted that the dormant status of the company did not exempt it from compliance under Rule 25A. Both directors, including the respondent managing the affairs, were obligated to fulfill their duties under the Companies Act, 2013, and related Rules. The Tribunal directed the respondent to complete the necessary compliances within two weeks, including filing E-Form 22A with digital signatures and payment of fees/penalties.Obligation of Directors for Statutory Compliances:The Tribunal stressed that directors must adhere to the rules and regulations of the Companies Act, 2013, and ensure compliance to protect the company's legal status. Despite a dispute between the directors, it was noted that the complaint against the applicant before the ROC had been closed. The Tribunal highlighted the importance of both directors fulfilling their obligations under Rule 25A and other statutory compliances to maintain the company's active status.Impact of Management Dispute on Company Status:While acknowledging the directorial dispute, the Tribunal emphasized that such disputes should not adversely affect the company's legal status. The Tribunal noted the significant shareholding of the applicant compared to the respondent and directed the respondent to comply with the statutory requirements within the specified timeline. The order was limited to the interim relief sought, with further directions for responses from the respondents and subsequent filings before the next hearing date.In conclusion, the Tribunal issued directions for the respondent to complete the necessary compliances under Rule 25A and file E-Form 22A within two weeks to activate the company's status. The decision highlighted the legal obligations of directors, the importance of compliance with statutory requirements, and the need to protect shareholder interests and the company's survival.