The National Company Law Appellate Tribunal on October 16 suspended the operation of an order regarding the annual general meeting (AGM) of Finolex Cables after the Supreme Court (SC) ordered an inquiry against an NCLAT bench for defying its orders.
On October 13, NCLAT permitted Deepak Chhabria to continue as the chairman of Finolex Cables Limited, and putting on hold the changes that were to be brought in to the Articles of Association of the company.
The Supreme Court on October 13 directed NCLAT chairperson Justice (retd) Ashok Bhushan to conduct an inquiry into whether a bench of the appellate tribunal defied the apex court order. Justice Bhushan has to submit the report by 5 pm on October 16.
The court said, "If what is stated is correct, this will clearly constitute defiance."
The NCLAT had on September 21 directed the status quo on the conduct of the AGM till it decided a dispute between cousins Prakash Chabria and Deepak Chabria.
The Supreme Court on September 26 vacated the order and said that important decisions such as the appointment of an executive chairperson would be subject to the outcome of the litigation at NCLAT.
Despite the AGM, Finolex's results were not published and Prakash Chabria filed a contempt petition which was heard by the Supreme Court on October 13.
The court asked the scrutinizer of the meeting to publish the results immediately and also directed NCLAT to not pronounce the order till the results were published.
The NCLAT pronounced the order at 2 pm, while the scrutiniser uploaded the result at 2.40 pm. The court ordered an inquiry, noting that it will not comment on the merits of the submission.
What does SC expect from the chairperson's enquiry?
The court order has asked the chairperson to specifically verify and apprise it as to whether:
1 The Supreme Court's order dated October 13, passed in the morning session was drawn to the attention of the two NCLAT judges
2 If yes, the circumstances in which the judges proceeded to pronounce the judgment despite the clear mandate of the SC order passed in the morning session.
Dispute between cousins:
Cousins Prakah Chhabria and Deepak Chhabria have been involved in a dispute with each other since 2016 over the control of Finolex cables. They have accused each other of scheming to gain control of the company.
On March 28, 2016, Finolex Group’s Pralhad C Chhabria (PCC) allegedly handed over a gift deed to his son, Prakash Chhabria. The deed transferred 70.4 percent out of the 82.07 percent of the holding company Orbit’s shares.
Since Pralhad Chhabria passed away in May 2016, this gift deed effectively made Prakash Chhabria the majority owner in Orbit. This has turned into a bone of contention between Prakash and his cousin Deepak Chhabria - son of co-promoter Kishandas P Chhabria or KPC – who has filed a complaint with the Pune police.
In 2019, an Extraordinary General Meeting (EGM) was held, wherein some changes to the Article of Association (AoA) of the company were authorised. However, Deepak Chhabria challenged these changes on the ground that they will cause irreparable damage to him upon his removal from the chairmanship of Finolex Cables Limited.
Deepak Chhabria challenged this order at National Company Law Tribunal (NCLT), however the NCLAT held in his favour.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
