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TMI Blog2011 (5) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... pril 18, 2011, as it is oppressive. To declare the notice dated April 21, 2011, to convene extraordinary general meeting on May 20, 2011, as oppressive and set aside the same. To appoint an independent chairman in the place of respondent No. 2 to conduct future board meetings. Pending disposal of the company petition, the petitioners are seeking (a) to stay the resolutions passed on April 18, 2011, at the meeting of board of directors removing the powers and designations of the first and second petitioners and the purported appointment of eleventh respondent, (b) to restrain the respondents from proceeding with the extraordinary general meeting on May 20, 2011, pursuant to the notice dated April 21, 2011, in connection with special business item No. 1 in so far as the first and the second petitioners are concerned and in connection with the appointment of the eleventh respondent, (c) to restrain the respondents from passing any board or shareholders resolutions with respect to any editorial removal, succession, retirement, professionalisation plan or corporate governance policies without the unanimous consent of all shareholders, etc. Ms. Nirmala Lakshman (respondent No. 9) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Board on February 2, 2011. On that basis, respondent No. 3, in his presentation at the board meeting on March 16, 2011, submitted the following proposals : "(1)The third respondent, on the alleged basis that the Company Law Board directions dated December 22, 2010, required so, recommended that editorial reorganisation be implemented immediately. Business reorganisation was proposed to be carried out only after August, 2011. (2)Misquoting the letter dated August 16, 2009, of the seventh, eighth and tenth petitioners and Mr. Narayan Lakshman and Ms. Vidya Ram, the third respondent alleged that separation of ownership from management by way of wholesale removal of family shareholders from editorial positions is what Gen 2 wants and this was allegedly recommended in the Mckenzey Report (and allegedly agreed to by the board of directors). (3)The family directors (corporate board) to surrender operational functions of the board to executive board (consisting only of non-family, non-shareholder professionals). All editorial directors to surrender titles. The corporate board, comprising a majority of non-editorial directors, would oversee editorial policy, thereby subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e replacement of Shri Ram as editor-in-chief by his brother (Shri N. Ravi) who is the fourth petitioner. It may be a legitimate expectation but the members of the company cannot entertain any expectation which will go beyond the legal rights conferred on them by the constitution of the company. The editor is the living articulate voice of the newspaper and The Hindu is a newspaper which can claim a grand succession of eminent editors during its 132 years of glorious existence. Continuing litigation and constant upheavals will cause great and irreparable harm to that reputation. There is some force in the contention of the petitioners that as the younger generation members are coming in, the oldest members had to make way for those in between. Evidently, and admittedly the note on the Code of Corporate Governance Guidelines of the company sent by the second petitioner was placed at the board meeting of February 18, 2010 and is under consideration by the board of directors. It is on record that, in the board meeting dated August 21, 2009, Ms. Malini Parthasarathy (respondent No. 11) has expressed her concern regarding the delay in the matter of evolving a framework and guidelines f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., is a public limited company which cannot claim the position of a quasi-partnership. As such the petitioners cannot entertain any legitimate expectation and their claims shall be based on the decisions taken by the board of directors. As the concept of legitimate expectation was not seriously taken as a specific ground in the pleadings, I am not bound to enter into any finding in that regard. What is specifically pleaded is the existence of a tacit understanding on the basis of which petitioner No. 2 is holding the post of managing director since 2006. His appointment is for a period of five years from April 10, 2006. As a result of the infight, his powers were curtailed and he was elevated to the glorified position of senior managing director at the meeting of the board held on March 20, 2010. Prior to this meeting, N. Murali, as a managing director, was in charge of accounts and EDP (independent), general administration, advertisement, circulation and production (joint). As per the reallocation of his duties on March 20, 2010, his responsibilities were reduced to circulation (independent), accounts, human relations and industrial relations (joint). It is pertinent to note t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rect that the position prior to March 20, 2010, shall be restored as far as allocation of departments concerning petitioner No. 2 is concerned. This will not affect the continuation of respondent No. 3 K. Balaji as the managing director and his functions can be appropriately determined by the board without affecting the position and status of petitioner No. 2 as the senior managing director. The month of August in the year 2011 is not far away and I hope it will augur well for the beleaguered company. Some allegations are raised regarding the waiver of interest in respect of a loan availed by a member of the family and the mismanagement of a subsidiary company by respondent No. 6. In view of the reliefs granted in the company petition I do not think it necessary to go into those allegations. In the light of the discussions made above, the company petition is disposed of as follows : (i)The reliefs (a) and (b) to implement permanent editorial succession plan of retirement for the editorial board members and permanent Corporate Governance Policy on the basis of the informal discussion among the editorial directors are declined. The board of directors and the shareholders are here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 25 of 2010. 14. To consider convening a meeting of the shareholders of Kasturi and Sons Ltd., to consider and decide on editorial succession in pursuance of the relevant directions in the Company Law Board order of December 22, 2010, in C. P. No. 25 of 2010." Special business 1.To consider and if thought fit, to pass with or without modification the following resolution as an ordinary resolution. Resolution that Siddarth Varadarajan, associate editor and National Bureau Chief, The Hindu, be appointed editor of The Hindu, reporting to N. Ram, editor-in-chief, The Hindu, in such time as the board of directors of the company may decide. Resolved that Mr N. Ram will step down as editor-in-chief of The Hindu in such time as the board of directors of the company may decide. Resolved that Mr N. Ravi will step down as editor of The Hindu in such time as the board of directors of the company may decide. Resolved that Ms. Nirmala Lakshman will step down as joint editor of The Hindu in such time as the board of directors of the company may decide. Resolved that Ms. Malini Parthasarathy will step down as executive editor of The Hindu in such time as the board of directors of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinary general meeting is challenged in this company petition. The petition says that the action is violative of the Company Law Board order and patently oppressive and that change of basic structure of the company in the proposed disqualification of family shareholders from the day to day management requires unanimous agreement among shareholders and an amendment of the articles of association, that this new rule is a change from the established practice to groom the family members/shareholders in different departments of the company, that the present action is contrary to the decision taken by the board majority in March, 2010, that the proposed rule to disqualify the shareholders is contrary to the scheme of the Companies Act and the articles of association which specifically allow directors to hold offices of profit in the company, that highly qualified professional journalist who have been working in the company for decades and their removal is not in the interest of the company that no notice was given of any resolutions, etc. 9. Kasturi and Sons Ltd., founded in 1878 as a partnership firm and later in 1940 incorporated as a company, is a family owned, family funded and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f removing the entire family editors. However, I am not staying the holding of the extraordinary general meeting. The issue is the role of the family in the company and in my view it has to be decided by the shareholders. Learned senior counsel appearing for the company and other respondents submitted that the resolutions regarding the removal of family editors even if approved in the extraordinary general meeting will not be implemented immediately. At this juncture, the petitioners have produced before me a copy of the agenda for the board meeting scheduled to be held on May 20, 2011 and one item is to consider the decisions of the shareholders taken at the extraordinary meeting to be held on May 20, 2011 and pass necessary resolutions. For the reasons discussed above, I decline to restrain the respondents from proceeding with extraordinary general meeting on May 20, 2011. But I am inclined to restrain the respondents from implementing the resolutions proposed as special business in the extraordinary general meeting on item "1" in the notice, until further orders. The company is also directed to record the dissent if any expressed by the petitioners and other shareholders. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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