The Company Law Board (CLB) today ordered a freeze on the controversial April 18 decision by a majority of the board of directors of Kasturi & Sons, which runs The Hindu daily, to have five members of the family divested of all editorial responsibility.
Also frozen by the order of Lizamma Augustine, member of the CLB bench here, was the decision to appoint the Delhi bureau head, Siddharth Varadarajan, as the next editor of the 105-year-old daily. Her order raps the board for having ignored the CLB direction of December last year to work out a proper succession plan for the warring group.
The board’s April 18 decision was to have been ratified by an Extraordinary General Meeting (EGM) of the shareholders, convened for today. The EGM did meet after the CLB decision, but with the freeze order, it was unable to attend to the issue for which it had been called. “Only routine business was discussed. The board has taken note of the case filed,” said a source.
The board has been given four weeks by the CLB to either appeal against the order or file their responses to what has been directed.
Background
The April 18 decision was forced through by seven of the 12 members of the board of directors, all part of the same family (as are the 50-odd shareholders), led by the chairman, publisher and editor-in-chief, N Ram. The others opposed it and then appealed to the CLB. The resolution approved by the board said Ram would step down as editor-in-chief, and so would four others on the board with editorial responsibility -- editor N Ravi, executive editor Malini Parthasarathy and joint editors Nirmala Lakshman and K Venugopal. Varadarajan was to replace Ravi.
Ravi (who is Ram’s brother) challenged the decision, with the other four. Ravi argued he was to succeed Ram under an earlier succession plan. Ram and his supporters, he alleged, were trying to impose a plan totally at variance with the tradition at Kasturi and Sons and also contrary to the CLB direction. The matter had gone to CLB due to similar battles last year in the family.
The present CLB appeal was filed by Ravi, Parthasarathy and other nine family members and the order of today seems to agree that they have a point. It said: “The far-reaching consequence of the proposals is that a shareholder of the company will be perpetually debarred from holding the post of editor of The Hindu, which in my view is contrary to the tradition and practice followed by the company since its inception. Besides, it is doubtful whether the proposed advisory board, which consists of members of the rival groups, would be able to effectively guide the non-family editor in discharging his duties.”
CLB rap
Adding: “I am of the prima facie view that except the wholesale removal of the family editors, the present proposals (have not) addressed the aspects (retirement, entry and exit norms, etc) refereed to in my earlier order...it appears the Board has given a go-by to the idea of framing guidelines for succession or, rather, they have limited the directions of the CLB only to the extent of removing (all) family editors.”
Added a source: “The Member declined to pass any order on final relief regarding the implementation of a permanent editorial succession plan or retirement and corporate governance policy. As repeatedly undertaken by the respondents (Ram and others), the Board of Directors and the shareholders are directed to consider these issues and to take a decision without much delay.”
He added that at today’s EGM, 39.59 per cent were against the April 18 resolution and 60.41 per cent were for. If it had been voted on, Ram’s resolution would have been carried.
The CLB order today also addressed another contentious mater within the family, resulting from a March 2010 order which took away some powers of N Murali, senior managing director. That decision was set aside, though this would be effective only till August, when he is due to retire.
