Govt moves SC for directors on Morepen board

The Supreme Court has sought a response from Morepen Laboratories, a bulk-drug manufacturer, on a petition filed by the Centre seeking to increase the number of government nominees on the company's board.

A bench headed by Justice C K Thakker continued its status quo order of July 16 on a petition filed by Morepen. Both the matters will come up for hearing on October 22.

Additional Solicitor General K P Pathak along with G Umapathy said the company was not allowing the two government directors to function and they were being kept out of board meetings. The company was flouting the Company Law Board's orders, which allowed the government to appoint two nominees as directors for three years to monitor the company's affairs.

Challenging a Himachal Pradesh High Court order which held that government directors should act like a watchdog to ensure the company functions properly, the government said its strength on the Morepen board should be greater to safeguard the interest of depositors, particularly the small depositors.

The petition, filed through the Company Affairs Ministry, alleged that Morepen raised deposits of Rs 156.19 crore from the public to fund its long-term capital requirements, but failed to repay the matured deposits from October 2002 onward.

After receiving a large number of complaints, the CLB framed a scheme for repayment of all the deposits in August 2003 but the company had not been adhering to the repayment scheme, the ministry stated, adding the total outstanding of fixed deposits in September was at Rs 156 crore.

There was a need for six directors for effective supervision of the company's affairs and safeguard the interests of the public. The company had even diverted over Rs 67 crore as investment in associate firms, it said.