The National Company Law Tribunal’s Chennai Bench has ruled in favour of the petitioners — A Jawahar Palaniappan and A Kothai — in a case pertaining to Kumudam Publications Pvt Ltd and said the cancellation of 3,32,440 equity shares held by Jawahar Palaniappan, representing 64.73 per cent of the company, was “illegal, invalid and non-est” in law.
The order followed a petition filed against Kumudam Publications, P Varadarajan, P Srinivasan and Imprint Tech India Pvt Ltd, which is owned by Varadarajan and his family.
Kumudam Publications brings out a number of magazines and periodicals, including the popular Tamil weekly Kumudam, which was founded in the 1940s. The dispute between the petitioners and the respondents (Varadarajan and Srinivasan) relates to the management of the company that owns Kumudam.
Long-drawn fight
It has been going on for sometime with both sides approaching various legal fora, including civil and criminal courts. There was even an attempt to work out a mediated settlement between the two groups, following which an agreement was signed providing for the exit of the respondents from the company in return for consideration to be given to them as per the MoU.
Palaniappan, a medical professional based in the US, is the son of SAP Annamalai, the founder-editor of Kumudam. Varadarajan is the son of PV Parthasarathy, who was associated with the magazine from the early days, first as a manager and later as publisher.
In its order, passed by BSV Prakash Kumar, Acting President, and S Vijayaraghavan, Member (Technical), the tribunal permitted the petitioners to nominate two more directors in proportion to their shareholding in Kumudam Publications, the first respondent, bringing the total number of directors to six. It appointed KK Balu, former Vice-Chairman, Company Law Board, as Chairman of Kumudam Publications for six months.
The Chairman will head the Board of Directors and also hold necessary annual general meetings/extraordinary general meetings and conduct the affairs of the company, including updating the register of members, preparing annual accounts and balance sheet for all the years where no accounts have been approved by the board and for convening the shareholders’ meeting to give effect to the orders of the tribunal.
The tribunal held that the resolutions passed by the board meeting on September 28, 2011, of the respondents without the presence of the petitioners was invalid and hence the cancellation of 3,32,400 equity shares of ₹100 each held by the first petitioner (Palaniappan) was illegal, invalid and non-est in law.
It also held the subsequent cancellation of 200 shares of the first petitioner was invalid and illegal. The tribunal directed that the Register of Members of Kumudam Publications be rectified to restore the 3,32,640 equity shares in the name of the first petitioner. The tribunal also held as illegal and non-est in law the Form-32 filed by the second respondent (Varadarajan) with the RoC, Chennai, intimating the cessation of petitioners as directors of the company from January 2, 2012. It ordered deletion of clauses 31(a), 32 and 39(b) of the Articles of Association.