The Kerala High Court on Thursday passed an interim order directing the State government not to take further steps for the nomination of new directors for the Sree Narayana Dharma Paripalana Yogam (SNDP Yogam) [VK Natesan & anr v Dr K Reghu Anchayil & ors].
The interim order was passed on appeals filed by Vellappally Natesan, his son Thushar Vellappally, and other SNDP directors challenging a single-judge Bench ruling that declared them disqualified from directorship and ordered their removal.
A Division Bench of Chief Justice Soumen Sen and Justice Syam Kumar VM today ordered that the status quo be maintained until March 24, Tuesday, or until further orders from the court, whichever is earlier.
Effectively, the State has been directed not to take further steps for the nomination of new directors to replace Natesan and others, for now.
The interim direction was issued after the Division Bench was informed by counsel for the appellants, as well as the State government's counsel, that the government had not yet compiled a list of nominees for appointment as the new directors of SNDP Yogam.
On March 12, a single-judge Bench of the High Court found that the SNDP Yogam had failed to file its financial statements for three consecutive years. As such, its directors - including its general secretary Nateshan - stood disqualified from directorship under Section 164 (2) of the Companies Act, the single judge held.
The single judge had also directed the State government to appoint new directors to manage the affairs of the SNDP Yogam.
Natesan and his son have challenged this ruling by filing a joint appeal before the High Court's Division Bench.
Their appeal contended that the single judge's conclusion regarding the non-filing of returns is factually incorrect.
According to them, annual returns and financial statements had in fact been regularly submitted, but were not formally taken on record due to administrative complications. The administrative complications cited included the non-availability of original records, which remained in sealed custody pursuant to certain court proceedings for several years.
The appellants also submitted that the single judge committed a serious jurisdictional error by deciding issues relating to the disqualification of directors and the internal affairs of a company, which fell within the domain of the National Company Law Tribunal (NCLT).
Such disputes concerning the management of a company cannot be heard by a High Court in the exercise of its writ jurisdiction, it was argued.
"Any intrusion into the jurisdiction of statutory tribunals, specifically established for deciding such questions of fact, would violate judicial discipline and cause chaos to the administration of justice. The impugned order is therefore bad in law on this ground also," the appeal stated
The appellants further submitted that the single-judge ruling violated a binding Division Bench judgment, which had earlier held the SNDP Yogam to be a private company that cannot be subject to a challenge under writ jurisdiction.
The appellants have also disputed a finding regarding Director Identification Number (DIN), stating that a valid DIN issued under the Companies Act was already produced before the Court.
They added that the single judge himself recorded that no State rules existed for the issuance of DINs. Yet the single judge proceeded to hold the appellants to be disqualified for not possessing a DIN, the appeal says.
"The Appellants cannot be disqualified for failing to comply with a requirement for which no machinery exists. If the State Government has not framed the rules or established a mechanism for allotment of DIN, it is a case of impossibility of performance," the appeal stated
Vellappally Natesan and Tushar Vellappally are being represented by advocates Chandapillai Abraham PG, Isaac Thomas, Paul P Abraham and John Vithayathil.