Kerala High Court stays order removing Vellappally Natesan, other SNDP Yogam Directors

The Kerala High Court on Monday stayed the operation of a single-bench judgment ordering the removal of Vellappally Natesan and others as directors of the Sree Narayana Dharma Paripalana Yogam (SNDP Yogam), after finding that the organisation had failed to submit its financial statements within the stipulated time as required by law.

A Division Bench comprising Chief Justice Soumen Sen and Justice Syam Kumar VM passed the order on appeals filed by Vellappally Natesan, his son Thushar Vellappally, and other SNDP directors, challenging the single-judge ruling that had declared them disqualified from directorship and ordered their removal.

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“Prima facie, it appears that the present appellants had DIN, and it would appear from the report of the Inspector General of Registration that rules with regard to DIN, as applicable to the State of Kerala, have not yet been framed. As such, the present appellants cannot be held guilty of contravening any provisions of the Companies Act by which they can be asked to provide DIN, although they possess a DIN under the Companies Act, 2013,” the Division Bench said.

The Court noted that the appellants had Director Identification Numbers (DINs) and that the relevant rules applicable in the State had not yet been framed. It therefore opined that the appellants could not be held responsible for any alleged non-compliance on this ground.

“Moreover, prima facie, it appears that the present appellants had DIN, and it would appear from the order of the Inspector General of Registration that rules with regard to DIN, as applicable to the State of Kerala, have not yet been framed. As such, the present appellants cannot be held guilty of contravening any provisions of the Companies Act by which they can be asked to provide DIN, although they possess a DIN under the Companies Act, 2013. Another aspect of the matter which seems to have escaped the attention of the learned Single Judge is that the directors could be disqualified if the company had failed to file annual returns, and it was by reason of such failure that the directors also became disqualified. The object of the said section was that the directors be vigilant, as they act as the organs of the company, and it is through them that the company functions,” the court said.

The appellants contended that the single judge’s conclusion regarding the non-filing of returns was 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. These complications 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 fall within the domain of the National Company Law Tribunal (NCLT). Such disputes concerning company management cannot be adjudicated by a High Court in the exercise of its writ jurisdiction, they argued.

A single bench of the Kerala High Court had, on March 12, ordered the removal of certain directors of SNDP Yogam, including its General Secretary Vellappally Natesan, after finding that the organisation failed to submit its financial statements within the stipulated time as per law.

The Court had also ruled that SNDP Yogam President M.N. Soman, Vice President Thushar Vellappally, and Devaswom Secretary Arayakandi Santhosh were not entitled to continue in their positions.

It ordered that all four be removed from their posts and that a new board of directors be constituted through elections in accordance with the law. The Court had further directed the government to nominate directors to manage the administration of SNDP Yogam until the elections are completed.