Best printers for Home

Best Mixer Grinder

Best wired Earphones

Best 43 Inch TV in India

Best Wi Fi Routers

Best Home Theatre in India

Smart Watch under 5000

Best Laptops for Education

Best Laptop for Students

New Delhi, In an unusual move, the Supreme Court on Wednesday issued notices to the National Company Law Appellate Tribunal judicial member Rakesh Kumar and technical member Alok Srivastava, asking them why contempt proceedings be not initiated against them for defying apex court orders in Finolex Cables disputes matter. A bench headed by Chief Justice DY Chandrachud took strong exception to the passing of a judgement by the <keyword id="6396355" type="General" weightage="20" keywordseo="nclat" source="Orion">NCLAT</keyword> bench. The top court set aside the NCLAT bench's October 13 judgement relating to the annual general meeting (AGM) of Finolex Cables without going into its merit. The bench also comprising Justices JB Pardiwala and Manoj Misra said the case would be heard by NCLAT chief Justice Ashok Bhushan. "NCLAT has got down to a rot now. This case is an illustration of that rot.We are prima facie of the view that the members of the NCLAT have failed to disclose correct facts. "We are of the view that it is necessary to pass orders to ensure that the dignity of this court is restored. Parties cannot be allowed by recourse to devious means to obviate this court's orders," the bench said. The order is related to the annual general meeting (AGM) of Finolex Cables and Prakash Chhabria and Deepak Chhabria's legal tussle over the management control of the company. It is rare for the Supreme Court to issue contempt notices against NCLAT members. The Supreme Court on Friday last had directed the NCLAT chairperson to conduct an enquiry and submit a report by Monday over an allegation that one of its benches proceeded and delivered an order without following the top court's directions. A three-member apex court bench headed by Chief Justice Chandrachud had on that day directed the NCLAT to proceed to its judgment and declare the results of the meeting only after getting the scrutiniser's report. The Supreme Court order was uploaded at 1.55 pm and the counsel also informed the development to the NCLAT bench, which was scheduled to deliver the judgment at 2 pm. However, a two-member bench of the NCLAT comprising Justice Kumar, Member Judicial, and Srivastava, Member Technical, went ahead and pronounced the order, while the scrutiniser's report was uploaded at 2:40 pm.

Finolex Cables matter: SC issues contempt notices to NCLAT judicial member, technical member for defying its orders

<ul><li><keyword id="6418655" type="General" weightage="20" keywordseo="minority-shareholders" source="Orion">Minority shareholders</keyword> can do little to protect their investments in case of boardroom and family battles of promoters, say experts.</li><li>Shareholders should take a call to sell or stay invested based on how the company is performing.</li><li>Any legal recourse by minority shareholders can lead to further dilution of stock value, warn lawyers. </li></ul>The Raymond family drama has taken its toll on minority shareholders of the company because this category of investors is the most vulnerable. The stock has fallen by over 17% ever since <keyword id="6405378" type="General" weightage="20" keywordseo="gautam-singhania" source="Orion">Gautam Singhania</keyword>’s wife <keyword id="305817" type="General" weightage="20" keywordseo="nawaz-modi" source="Orion">Nawaz Modi</keyword> publicly accused him of assault. His letter to the board assuring smooth functioning of Raymond, has done little to calm the storm. This is not the only case where minority shareholders, who hold less than 50% of the stock, are affected by feuds between board and family members. There are two other ongoing cases of family members sparring over control of companies — pharma company Hikal and Finolex Cables. In these cases, there is very little that shareholders can do, say experts. They’re left between the choice of offloading stock as it’s falling or holding it for an indefinite period. In these cases, should shareholders sell or stay? “There is no easy way to answer this,” says Deepak Jasani, head of retail research at HDFC Securities. “It all depends on if the company is continuing to do well. They have to decide based on if the dispute can have a quick resolution or will be prolonged,” he adds. Delhi-based corporate lawyer Anuroop Omkar, founding partner of law firm AK &amp; Partners says that minority shareholders are very low in the pecking order when it comes to their ability to act. “Even in an insolvency, they’re below secured creditors,” he says. There is a provision in the Company Act 2013 called ‘Oppression and mismanagement in a company’ which protects minority rights. Mismanagement can be defined as conducting company affairs in a prejudicial, dishonest or inept manner. “But this can’t be invoked in the Raymond case, as it’s a personal battle,” he adds. Top corporate battles that affected shareholder value <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Feud </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Year </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Effect </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Family dispute between Mukesh Ambani &amp; Anil Ambani </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2004 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Culminated into a split of the company &amp; a court battle over natural gas sales later </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Dispute between promoter Narayana Murthy &amp; Vishal Sikka, the CEO over functioning of the company </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2017 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Sikka quit the company </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Family members Sungandha Hiremath and Baba Kalyani battle over Hikal </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2023 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">The case over family arrangement made in 1994 is being heard in Bombay High Court </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Cousins Prakash and Deepak Chhabria battle over control of Finolex </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2016 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">The case is with courts and National Company Law Appellate Tribunal (NCLAT) </td></tr></tbody></table> Between stock &amp; a hard place There is no third option for shareholders, even if they lose faith in the promoters’ ability to conduct business. They can only wait and watch, experts say. “Minority shareholders will have to rely on the Board and independent directors to act on their behalf,” Shriram Subramanian, founder &amp; MD of proxy advisory firm InGovern tells Business Insider India. In Raymond’s case, the board of directors can investigate based on allegations made by Modi that company funds have been misused. “The Board has to ringfence the company from utilization of funds by Gautam Singhania for any personal legal matters,” adds Subramanian. Institutional advisory firm IiAS also wrote an open letter seeking independent investigation by the board, asking them to send promoters on leave till investigation is complete. “Independent directors have a fiduciary responsibility towards minority investors, employees and a larger set of the company’s stakeholders. Therefore, you will need to dispassionately separate ownership from management,” IiAS’ letter says. Legal recourse: A double-edged sword There is, however, a way for minority shareholders to edge into the board, with the help of courts. “If there is a case of harassment or erratic behaviour, many entities related to the company like vendors, employees can file a class-action lawsuit wherein shareholders can join in too. But it doesn’t happen too often in India,” says Omakar. Only Foreign Institutional Investors (FII) who have over 1% stake in the company or a high-networth individual (HNI) who can afford to take up such long-standing fights. Subramanian believes that fighting for rights comes at a cost for minority shareholders. Also, the rights need to be exercised with responsibility. Minority shareholders, depending on their shareholding, can exert their rights to bring about change in the company, including change of directors, appointment of new directors, etc. Legal recourse can also work against the long-term interests of shareholders too. “There can be a major share price drop if a legal battle is taken up,” says Omkar. That can go against the interests of shareholders who want to protect the value of their investments. Until then, stock experts advise shareholders to read up on the corporate governance track record of companies and take a call on whether they want to hold on or sell out from a company engaged in a battle of its own. SEE ALSO <a href="https://www.businessinsider.in/finance/news/rbi-governor-asks-realty-companies-to-stress-test-their-books/articleshow/105411235.cms">RBI governor asks realty companies to stress test their books</a> <a href="https://www.businessinsider.in/policy/economy/news/rupee-hits-a-new-low-in-november-despite-fall-in-dollar-index/articleshow/105551439.cms">Rupee hits a new low in November despite fall in dollar index</a>

Minority shareholders must grin and bear it when promoters wash dirty laundry in public

You Searched For "finolex cables matter" and got 2 results

Finolex Cables matter: SC issues contempt notices to NCLAT judicial member, technical member for defying its orders

PTI

Minority shareholders must grin and bear it when promoters wash dirty laundry in public

Katya Naidu

Popular Keywords

Buying Guides