The National Company Law Appellate Tribunal (NCLAT) Principal Bench, New Delhi, on Monday suspended an earlier order that allowed Deepak Chhabria to continue as the chairman of Finolex Cables. NCLAT said it had done this after taking into consideration the Supreme Court order that said NCLAT would deliver the judgement after it was apprised of the result of the Annual General Meeting (AGM).
Given the SC order, it was imperative to suspend the judgement till the Appellate Tribunal was apprised of the result of the AGM, the NCLAT bench ruled. The NCLAT was to submit its report to the SC by Monday evening and the SC is expected to decide on the NCLAT ruling on Tuesday.
The case pertains to the Annual General Meeting (AGM) of Finolex Cables and the voting results on the special resolution for the re-appointment of Deepak Chhabria as executive chairman of Finolex Cables.
The NCLAT order of October 13 had said, “The extraordinary general meeting held in May 2019 and the resolutions passed at the EGM may not be acted upon and such an interim order should continue till the time the case is finally decided.”
This case is part of the ongoing dispute between cousins Deepak Chhabria and Prakash Chhabria over the control of Finolex Cables. Deepak Chhabria, who serves as Finolex Cables’ executive chairman, has been at loggerheads with his cousin, Prakash Chhabria, over gaining control of Finolex Cables.
Orbit Electricals and Finolex Industries, controlled by Prakash Chhabria, had voted against the re-appointment of his cousin, Deepak Chhabria, as the executive chairman of Finolex Cables. Orbit and Finolex Industries voted to oust Deepak Chhabria, with 72.34% of the votes cast against the resolution of his re-appointment. Only 27.66% of the votes were cast in favour of Deepak Chhabria’s re-appointment.
Orbit Electricals is a promoter of Finolex Cables and holds a 30.7% stake in Finolex Cables, while Finolex Industries holds 14.51% in Finolex Cables. Both these companies are controlled by Prakash Chhabria, the son of the late Prahlad Chhabria. Prakash Chhabria owns 78% of Orbit Electricals, while KP Chhabria (father of Deepak Chhabria) and his children own 7%.
Finolex Cables shareholders had voted on the resolutions at the Finolex Cables AGM on September 28 but Finolex Cables had kept the voting results in abeyance. The company disclosed voting results in an exchange filing on Friday (October 13).
Orbit Electricals voted against the re-appointment resolution, but as per the Supreme Court’s order of September 26, any action taken on the proposed resolution about the appointment of the executive chairperson was subject to the outcome of the appeal pending before the NCLAT.