The Hindu Business Line : CLB holds Essel Group stake in UNI ‘null and void’

New Delhi, Jan. 22 The Company Law Board (CLB) has held the transfer of unsubscribed shares of news agency UNI to Media West, a firm promoted by Mr Subhash Chandra’s Essel Group, as ‘null and void’ on the grounds that the deal lacked transparency.

“The impugned acts have changed the character of the company (UNI) and the entire exercise suffers from lack of transparency. I declare the allotment of impugned shares to Media West as null and void,” the CLB Chairman, Mr S. Balasubramanian, said.

The Board also declared that Media West ceased to be a member and its nominees should cease to be additional directors with immediate effect. It said that UNI would forthwith rectify its register of members by deleting Media West and reduce its share capital and also refund the amount paid by Media West.

In its order, the CLB has asked the management of UNI to refund the Rs 27 crore kept in fixed deposit immediately and also repay the Rs 5 crore already utilised to Media West at the earliest.

The CLB also directed the ABP Group, the main petitioner, to assist the UNI Board to raise funds to repay Media West. It, however, did not give any conclusive finding over the alleged ineligibility of Media West to become a member of UNI following its Article 4 (which says only an Indian newspaper company can buy shares in UNI).

“It is for the Board of Directors of UNI to decide the eligibility,” the order said.

Spelling out the reasons for declaring the transaction null and void, he said, “I would only attribute lack of transparency on their part (committee) and not malafide.”

Observing that the news agency was in financial distress, the CLB Chairman said, “I would not have declared the allotment as null and void, as while considering a petition under section 397 (mismanagement), this Board has to give utmost importance to the interests of the company.”

“Now that the allotment has been declared as null and void, consequent to which the company (UNI) would be deprived of funds raised by impugned allotment, it is now the responsibility of the board (UNI management), more particularly that of the petitioners (ABP), who have prosecuted this petition to find ways and means to mobilise funds,” the CLB Chairman said in the order.

The Board added that now it was also the responsibility of the ABP to find ways along with the management to infuse funds in UNI.

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