The National Company Law Appellate Tribunal has given a go-ahead to the outcome of the AGM of Finolex Cables, wherein shareholders voted against the reappointment of Deepak Chhabria on the company’s board.
A two-member bench of the appellate tribunal said the consolidated scrutinizer’s report of the AGM of Finolex Cables Ltd (FCL) reflects that 72.34 per cent of votes were against resolution Number 4, which was for the reappointment of Deepak Chhabria.
“The decision of the Annual General Meeting (AGM) held on 29.09.2023 on Resolution No.4, which took place during the pendency of this Appeal is not interfered with,” the bench comprising Chairperson Justice Ashok Bhushan and Member (Technical) Barun Mitra said.
Besides, the NCLAT also declined to invalidate the extraordinary general meeting (EGM) of Orbit Electricals in 2019, a holding company of Finolex Cables, in which the Articles of Association (AoA) were amended.
The NCLAT has upheld the earlier order passed by the National Company Law Tribunal (NCLT), which approved EGM, in which the rights of Deepak Chhabria were curtailed by amending AoA on May 3, 2019.
“The Adjudicating Authority (NCLT) did not commit any error in approving the EOGM held on 03.05.2019,” said a 60-page long order by NCLAT last week.
The appellate tribunal has also directed the Mumbai Bench of the NCLT to decide this almost eight-year-old legal dispute over the transfer of 100,300 shares of Orbit Electricals by Pralhad Chhabria to his son Prakash Chhabria.
“The NCLT is requested to finally decide the Company Petition No.47 of 2016 expeditiously, preferably within a period of six months from the date of copy of this order is produced,” said NCLT.
This transfer of 100,300 shares through a gift deed, on March 28, 2016, is the bone of contention between the cousins Deepak Chhabria and Prakash Chhabria.
On March 31, 2016, Deepak visited the venue of the Meeting and claimed that after signing the attendance sheet, he left the meeting. He also claimed that no board meeting was held on that day.
However, the Prakash Chhabria camp claimed that a board meeting was held in March 2016 and passed a resolution approving the transfer of 100,300 shares of Pralhad to Prakash.
Later another board meeting of Orbit happened on June 21, 2016, where the Minutes of the Meeting dated March 31, 2016, were confirmed.
This was challenged by Deepak Chhabria before the NCLT by filing a company petition alleging oppression’ and mismanagement’ in Orbit Electricals under Section 241 and 242 of the Companies Act, 2013.
An AGM of Orbit Electricals was fixed for September 25, 2018, to decide on the reappointment of the Chairman of FCL, since Deepak’s five-year tenure had expired. It was decided by the board of Orbit Electricals and passed a resolution that Orbit would vote against Deepak’s reappointment at FCL’s AGM.
However, Deepak Chhabria was appointed as chairman of FCL in 2018 for a five-year term, being representative of Orbit Electricals on the Finolex board.
His term was coming to an end on June 30, 2023, and now a proposal to reappoint him was defeated at the AGM held in September 2023.
In this matter, the NCLAT on September 21, 2023, directed a status quo on the AGM till it finally decides the matter.
However, the Supreme Court vacated the stay on September 26, 2023, directing the NCLAT to pronounce its order over the AGM, only after scrutinizer reports are published.
However, NCLAT pronounced its order on October 13, before the scrutinizer released its report.
This was immediately brought to the attention of the Supreme Court, where a bench led by Chief Justice D Y Chandrachud ordered an enquiry over the bench of the NCLAT by its Chairperson Justice Ashok Bhushan. The Supreme Court had also issued show cause notice to the two members of the said bench observing that its order was willfully defied.
However, later the apex court withdrew the contempt proceedings against the NCLAT bench after one of the members who passed the order resigned and another tendered an apology. The Supreme Court however, asked Deepak Chhabria to pay a fine of Rs one crore for misconduct and scrutiniser of the Annual General Meeting (AGM) to pay Rs 10 lakh for defying its order related to withholding of voting results at Finolex.
The Supreme Court directed NCLAT chairperson Justice Ashok Bhushan to re-hear the entire case and pass a fresh order. Following the directive, the NCLAT bench led by Chairperson Justice Ashok Bhushan passed the order on August 28, 2024.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First Published: Sep 03 2024 | 11:47 PM IST
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