The ongoing tussle between cousins Prakash Chhabria, the major shareholder of Orbit Electricals and Finolex Cables, and Deepak Chhabria took an interesting turn.
Orbit Electricals has moved the Supreme Court challenging the decision by Finolex Cables to withhold the results a resolution voted upon the shareholders of the company in its annual general meeting. The resolution relates to the re-appointment of Deepak Chhabria as a Whole Time Director of the company.
The petition filed in the Apex court has accused the scrutinizer of Finolex’s 55th AGM of committing contempt of court for breaching the Supreme Court’s order on September 26, by withholding the outcome. The hearing in the case is expected on Wednesday.
The move will intensify the battle to take control of $2 billion FCL, known for making pipes and cables.
As per securities law, the director of the company is not supposed to hold office after the AGM as there is automatic termination if the shareholder approval is not received on the resolution pertaining to his/her reappointment. Cousins Prakash Chhabria and Deepak Chhabria have earlier accused each other of scheming to gain control of Finolex Cables.
Orbit Electricals holds about 31 per cent stake in Finolex Cables, according to BSE data. Prakash Chhabria founder of the Pune-based Finolex Group and his related parties own 20 per cent in Finolex Cables.
Prakash is the biggest shareholder of Orbit Electricals, the promoter entity of Finolex Cables, while Deepak is the latter company’s executive chairman. Prakash Chhabria controls about 78 per cent of Orbit Electricals while KP Chhabria faction (father of Deepak Chhabria) along with his children owns around 7 per cent stake.
Vinay Chauhan, a corporate lawyer said information pertaining to voting outcome by shareholders on such resolutions is a significant material information and should not be withheld from the shareholders.
Any delay in disclosure of the same, apart from undermining the sanctity of timely disclosures, would result in information asymmetry in the markets and give rise to needless speculations, he added.
Accusing the scrutinizer of FCL’s 55th AGM of contempt of court, Orbit in its Supreme Court appeal said the scrutinizer has intentionally breached the Apex court order pertaining to re-appointment of Whole-Time Director / Executive Chairman of FCL Mr Deepak Chhabria by withholding the outcome.