Hyderabad High Court not convinced on DCHL plea

Delhi CLB to hear the SFIO petition on Tuesday

A petition seeking the change of management as well as the appointment of a special officer to run the affairs at the Deccan Chronicle Holdings Limited(DCHL) is likely to come up for hearing before the principal bench of the Central Law Board, New Delhi on Tuesday even as the company's senior counsel tried today to convince the Hyderabad High Court to stop the CLB from going ahead with the case albeit with little success.

Arguing in a writ petition filed against the Serious Fraud Investigation Office(SFIO)'s application as well as its listing for the hearing by the CLB, New Delhi, the DCHL counsel D V Sitarama Murthy said there was no basis for seeking such a drastic action based on a mere inspection report filed by the Registrar of Companies(RoC) and neither the government had formulated an opinion on the matter nor any investigation was conducted to substantiate the move.

In its petition the company requested the court to prohibit the CLB principal bench of New Delhi from proceeding with this case. SFIO filed a case under section 388-B of the Companies Act, 1956 under which the Central Government may state a case against the person and refer the same to the Company Law Board with a request that it may inquire into the case as to whether or not such person is a fit and proper person to hold the office of director or any other office connected with the conduct and management of any company.

The Centre had followed a similar process when it swung into action to salvage the scam-hit Satyam company in the past.

Meanwhile Justice P Naveen Rao, however, asked the counsel if this court has the jurisdiction over a matter that was being heard by the CLB, a statutory body constituted to decide on such and other company matters under the Companies Act.

The counsel argued that the High Court has the jurisdiction over the matter as the cause of action arises from the city of Hyderabad.

When the judge advised the counsel to raise these issues before the CLB instead of seeking a relief from the High Court, Rao said the principal bench has taken up the main case for hearing on Tuesday keeping aside the objections raised by the company over the SFIO application as soon as the case was listed for the hearing.

The counsel had to dedicate most of the latter part of his arguments on whether the High Court has jurisdiction over this matter which was already being heard by the CLB since the judge said he was not convinced of the position taken by the lawyer.

Subsequently the judge agreed to hear more arguments on this particular aspect during the post lunch session as the senior counsel has insisted for the same stating that the matter was coming up for hearing before the CLB on Tuesday.

But when the court had reassembled after the lunch break the DCHL counsel requested the the judge that he would present his arguments on the matter of jurisdiction on Tuesday.