Kerala High Court Orders Status Quo on SNDP Yogam Board Amid Legal Dispute
In a significant legal development, the Kerala High Court has issued an order to maintain the status quo regarding the current composition of the board of directors of the SNDP Yogam until further notice. This directive effectively restrains the state government from appointing the required number of directors until new directors are appointed by the company in a general meeting, in accordance with a previous single bench order.
Background of the Case and Appeals
The order was delivered by a bench comprising Chief Justice Soumen Sen and Justice V M Syam Kumar in response to appeals filed by SNDP Yogam general secretary Vellappally Natesan and others. These appeals challenge a single bench order that had disqualified them from holding posts in the Yogam and declared their offices vacant due to violations of the Companies Act, 2013. The division bench has further adjourned the appeals filed by Natesan, along with his son Thushar (vice-president of the Yogam), M N Soman (president), and Arayakkandil Santhosh (devaswom secretary), to March 24 for further proceedings.
Grounds for Disqualification Under Companies Act
The single bench had disqualified all board members who did not possess a director identification number (DIN), as mandated under Section 152(3) of the Companies Act. Additionally, it noted that SNDP Yogam had failed to file annual accounts and returns from the financial year 2006-07 to 2016-17 until September 2020. This failure attracted disqualification under Section 164(2) of the Act, which applies when a company fails to file financial statements or annual returns for three consecutive years.
Arguments Presented in the Appeals
In their appeals, Natesan and others contended that disputes relating to the disqualification of directors and the internal management of a company fall within the jurisdiction of the National Company Law Tribunal (NCLT). They further argued that Section 430 of the Companies Act expressly bars the jurisdiction of civil courts and other forums in matters that the tribunal is empowered to determine. This legal argument forms a key part of their challenge against the single bench's decision.
The status quo order by the High Court ensures that the current board composition remains unchanged pending the outcome of these appeals, preventing any immediate governmental intervention in the appointment of directors. This case highlights ongoing legal complexities in corporate governance and compliance with the Companies Act in India.
