Hamlin Trust Vs LSFIO Rose Investments S.a.r.I. (NCLAT Delhi)
The appeal challenged the NCLT order dated 29.03.2022 directing the appointment of Mr. Bipin Kabra as Chief Financial Officer (CFO) of the respondent company. The appeal was confined only to the issue of the CFO’s appointment and did not deal with the merits of the pending company petitions concerning allegations of oppression, mismanagement, and winding-up.
Background of the dispute: The appellants and the first respondent each held approximately 50% shareholding in the company as joint venture partners. Following disputes between them, cross-petitions under Sections 241 and 242 of the Companies Act, 2013, along with a winding-up petition, were pending before the NCLT. During those proceedings, an application sought appointment of a CFO, resulting in the impugned order.
Appellants’ contentions: The appellants argued that Article 140 of the Articles of Association (AoA) required the nomination process for the CFO but did not permit nomination of ineligible candidates. Under Article 140, the first respondent could nominate two candidates, and if both were rejected, it could nominate a third candidate whom the joint venture partners were required to support. However, the appellants contended that the first two nominees, Mr. Devendra Mehta and Mr. Venkataraman Subramanian, remained employees of their respective parent organisations and were proposed through service arrangements rather than as whole-time employees of the company. According to the appellants, such arrangements violated Section 203 of the Companies Act, 2013, which contemplates a whole-time Key Managerial Personnel (KMP), including the CFO. They further argued that the third nominee, Mr. Bipin Kabra, also held positions in other companies and had not unequivocally undertaken to resign from those positions before appointment.
