The National Company Law Tribunal (NCLT), Chennai has ruled in favour of Amalgamations Limited (AL), in a nearly 20-year dispute between the firm and one of its shareholders.
The Amalgamations group of companies was founded by S. Anantharamakrishnan in 1938. AL, the holding company of the group, is into businesses ranging from manufacture of automobile engines to publication of books and periodicals. Tea companies are also part of its portfolio. Flagship companies include Tractors and Farm Equipment Ltd (TAFE), Simpson, India Pistons and Higginbothams, among others.
Post the death of Anantharamakrishnan in 1964, the shares where inherited by his descendants and their family members. Shankar Sundaram, who owns 10% in AL (inherited from his mother Kalyani Sundaram), moved a petition alleging mismanagement in AL. He alleged that though the company has more than 40 subsidiaries, it is run like a single economic unit, impacting functioning of the units. Mr. K. Ravi, senior counsel appearing for Mr. Sundaram, contended that AL was closely held and therefore ought to be treated as a quasi-partnership firm and sought relief.
Mr. Sundaram also sought a board seat in one of the profit-making companies in the group . He also sought directions to buy out his stake at a fair market value.
Krishna Srinivasan, senior counsel appearing for AL and group companies, contended that the holding company was incorporated in 1938 as a private company and it was not a conversion of partnership or proprietorship into a company.
Mr. Srinivasan also pointed out there has been separation of ownership of shares and management of the company, with several outside directors on the board, and AL was by no stretch a quasi partnership. It was stated by him that the subsidiaries were managed by their respective boards. It was also contended that no grounds for a buyout of a minority shareholder were made out. AL also opposed all other reliefs sought by Mr. Sundaram.
Mohd. Sharief Tariq, member (judicial), NCLT, dismissing the petition, ruled that the principles of quasi-partnership have no applicability to the companies in question, as it was not the case where an existing partnership was converted into a company. Nor was there any arrangement which provided for participation of shareholders in the management and sharing of the profit through directorial remuneration.
“The day-to-day functioning of all subsidiaries is consistently entrusted to their respective board of directors and decisions taken by them are strictly within the purview of indoor management,” he said and dismissed the argument of Mr. Sundaram.
The tribunal dismissed Mr. Sundaram’s plea for a board seat, citing that it was purely in the form of a personal shareholder’s grievance and could not be granted. It also rejected the plea on buyback of shares, as no circumstances to issue such a direction were found in the facts and circumstances of the case.
The NCLT, on the contrary, found that all the companies were functioning smoothly, not warranting any interference in their running. It finally ruled that Mr. Sundaram had not established a case for the grant of any of the reliefs sought by him.