In the latest twist in the battle between Valli Arunachalam and the Murugappa Group, Valli and her family have moved an application at the NCLT (National Company Law Tribunal), Chennai, on March 10, seeking a waiver of the minimum shareholding requirement of 10 percent, for filing a case against the family-owned business group for alleged mismanagement and oppression.
Senior Counsel PS Raman, who appeared for Valli, said her family owns 8.21 percent in Ambadi, thus falling short of the minimum requirement by 1.79 percent.
Section 244 of the Companies Act requires a party to hold at least 10 percent in order to move a case on grounds of oppression and mismanagement. However, there is a precedent here, as Cyrus Mistry was also given a waiver when he moved a similar application against Tata Sons a few years ago.
If the waiver is granted, Valli Arunachalam and her family will be able to sue the Rs 38,000-crore Murugappa Group's holding company Ambadi Investments for alleged oppression and mismanagement. The move comes months after she sent a legal notice to Murugappa family members after she was denied a board seat at Ambadi Investments.
The Chennai-headquartered Murugappa Group is one of India's oldest family-run business groups, that has traditionally never had a female member from the family on the board. Valli has been fighting this for the last three years, but faced a setback after a majority of the shareholders of the holding company voted against her appointment.
“Murugappan is the only family member who does not have a male legal heir. We are making a very serious allegation of gender discrimination. When Valli Arunachalam's name was proposed to the board, they replied that she was not qualified," Raman said. He added that that main petition also seeks a fair buyout of her stake.
Valli is the daughter of former Murugappa Group chairman MV Murugappan. After her father passed away in 2017, the 8.21 percent stake held by him in Ambadi passed on to Valli, her mother, and her sister. Valli believes her stake and her qualifications make her eligible for a board seat.
The respondents have three weeks time to file their counter. Founded in 1900, Murugappa Group runs over two dozen companies, of which 9 are publicly listed.