Kerala High Court Disqualifies SNDP Yogam Leaders for Companies Act Violations
In a significant legal development, the Kerala High Court has disqualified and declared the offices vacated for SNDP Yogam general secretary Vellappally Natesan and three other office-bearers due to violations of the Companies Act, 2013. The court's order, passed on Thursday, stems from petitions challenging the eligibility of these directors to hold their positions within the organization.
Details of the Disqualification
The disqualified individuals include SNDP Yogam president M N Soman, vice-president Thushar Vellappally, and devaswom secretary Arayakkandil Santhosh, alongside Vellappally Natesan. Justice T R Ravi delivered the ruling in response to petitions filed by the late literary critic M K Sanoo, M K Saseendran, and others. These petitioners had contested an earlier order by the inspector general (IG) of registration, which had rejected their application seeking the disqualification of the directors for alleged breaches of company law.
As a result of this disqualification, the four office-bearers are no longer entitled to hold any office within the SNDP Yogam organization or be appointed as directors on its board. This decision marks a pivotal moment in the governance of the prominent socio-religious organization based in Kochi.
Legal Grounds for the Disqualification
The petitions, filed in 2024, alleged multiple violations of the Companies Act. Specifically, the office-bearers were accused of contravening Section 152(3) of the Companies Act, 2013, which mandates that no person can be appointed as a director of a company without possessing a director identification number (DIN). The petitioners argued that the four individuals did not hold valid DINs, rendering their appointments invalid.
Furthermore, the petitions highlighted that the SNDP Yogam had failed to file annual accounts and returns from the financial year 2006-07 through 2016-17 until September 2020. This failure contravened Section 274(1)(g) of the Companies Act, 1956, which was later superseded by Section 164(2) of the Companies Act, 2013. Due to this non-compliance, the directors incurred disqualification starting from 2009 onwards, according to the court's findings.
Court Proceedings and Orders
Earlier, the High Court had directed the IG of registration to adjudicate the matter after hearing all parties involved. However, in an order dated February 17, 2024, the authority concluded that the directors were not disqualified for the failure to file annual accounts. This decision prompted the petitioners to approach the High Court once again, seeking a reversal.
In its latest ruling, the High Court set aside the IG registration's order, emphasizing that no person can be appointed or reappointed as a director of the Yogam without a valid DIN. Since the four office-bearers lacked this essential identification number, the court held that they were not entitled to continue in their offices under the provisions of the Act.
The court also issued directives for corrective measures:
- The state government has been instructed to take necessary steps under Section 167(3) of the Companies Act, 2013, to appoint the required number of directors to hold office until new directors are elected by the company in a general meeting.
- The IG registration has been directed to take consequential action against the disqualified individuals, in light of the declaration that they have vacated their director positions due to disqualification.
This ruling underscores the importance of adherence to corporate governance norms and legal compliance for organizations registered under the Companies Act, setting a precedent for similar cases in the future.
