 "Finolex cables")
The Supreme Court on Tuesday vacated an interim direction of the National Company Law Appellate Tribunal (NCLAT) and permitted Orbit Electricals, led by Prakash Chhabria, to participate in the voting at the Finolex Cables' annual general meeting scheduled for Friday, according to a report by The Economic Times (ET). With this development, the Finolex Group dispute has taken a new turn.
The dispute is related to the executive control of Finolex Cables involving the cousins Prakash and Deepak Chhabria. The Supreme Court's directive could lead to increased friction in the dispute since it gives Orbit Electricals the authority to cast votes related to the resolution concerning the appointment of Deepak Chhabria as executive chairperson.
Orbit Electricals has a 31 per cent stake in Finolex Cables, while Prakash Chhabria, directly and through Finolex Industries, holds 15 per cent.
The Supreme Court order stated that NCLAT provided no reasons for issuing the interim order, which asked both parties "to maintain status quo as was available prior to the extraordinary general body meeting dated May 3, 2019" until the tribunal gives a judgement.
NCLAT reserved its order on September 21, 2023.
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But, in its order, the Supreme Court said that any action on the proposed resolution would be subject to the result of the final NCLAT order.
Prakash Chhabria is the largest shareholder of Orbit Electricals, the promoter entity of Finolex Cables, with a 78 per cent stake, whereas Deepak is Finolex Cables's executive chairman.
Cousins Prakash and Deepak Chhabria have accused each other of attempting to gain control of Finolex Cables. Prakash Chhabria has alleged that in the 2018 AGM, Deepak Chhabria did not follow the mandate stipulated by the board resolution passed by promoter entity Orbit Electricals.
In September, voting advisory firm InGovern sought deferment of voting on two resolutions floated by Finolex Cables. These resolutions pertain to Deepak Chhabria's re-appointment as five years' executive chairman (item no. 4) and payment of commission to non-executive directors (item no. 6).
"Given that 13 days is a shorter notice for a significant addition in item 4 to the notice, many shareholders would not have had the time to study it. The law requires 21 clear days from the date of issue of the amended notice," InGovern has said in a note.
Finolex Cables' AGM is slated to be held on 29 September. The company issued an original notice to its shareholders on 4 September—25 days ahead of the AGM.
