CLB dismisses Mansukhani plea challenging withdrawal as MD

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CLB dismisses Mansukhani plea challenging withdrawal as MD

The Company Law Board (CLB) has passed a significant judgement on the sibling spat between the Mansukhani brothers, promoters of leading pipe maker Man Industries. CNBC-TV18's Ashwin Mohan reports.

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The Company Law Board (CLB) has passed a significant judgement on the sibling spat between the Mansukhani brothers, promoters of leading pipe maker Man Industries . CNBC-TV18's Ashwin Mohan reports.

CLB has held that Man Industries' board did indeed have the power to either confer or withdraw managerial powers.

The question of law before the CLB was whether the board of Man Industries had to power to withdraw the managerial powers of its director, in this case the younger brother Jagdish Mansukhani. The recent judgement, which went against the younger brother, is definitely a turning point in the sibling spat between the promoter brothers.

In a meeting held on May 19, 2011, Man Industries board decided to withdraw the managerial powers of Jagdish Mansukhani on allegations of alleged insider trading. The board alleged that Jagdish Mansukhani's activities had adversely affected the business of the company.

It further said, Jagdish Mansukhani had written letters to a few banks because of which Axis Bank and Bank of Baroda had withdrawn their facilities to the company.

On the other hand, Jagdish Mansukhani had approached the CLB saying that the entire board meeting was illegal and that he was only given 16 hours notice to respond. He also said that the board resolution passed were invalid.

After hearing out the arguments from both the parties, the CLB, in a very significant judgement, has held that Man Industries' board did indeed have the power to either confer or withdraw managerial powers. It also said that it was not illegal for the board to hold a meeting at short notice.

CLB believed that the board had taken the decision keeping the company's interest in mind and the resolutions passed were in accordance with the articles of the company.