NCLT rejects Usha Martin ex-chief's plea

Prashant Jhawar
The National Company Law Tribunal (NCLT) has rejected an appeal by Usha Martin’s ousted chairman, Prashant Jhawar, board member Basant K Jhawar, and other promoter shareholders to stay a board meeting scheduled for Saturday.

The meeting is about infusing fresh capital into the company.

In a filing with the Bombay Stock Exchange, the company said the promoters, including Usha Martin Ventures Ltd and Peterhouse Investments India Ltd, had moved the Kolkata Bench of the NCLT on Thursday, seeking the appointment of a special officer or administrator to supersede the current board as well as prevent the company from infusing fresh equity.

Debanjan Mandal, partner, Fox & Mandal, the solicitor firm representing Usha Martin, said the NCLT had, on Friday, declined to stay the board meeting.

“After hearing the parties at length, the Bench did not pass any order of stay on the board meeting or any resolution or agenda item proposed to be taken up at the board meeting scheduled on August 19,” he said.

The bench has directed the applicant and the respondent to maintain the status quo on their shareholding pattern in the company.

The resolution to be proposed at the board meeting on Saturday will be over infusing Rs 90 crore in the company by issuing convertible equity warrants and will not alter the shareholding pattern of the parties concerned and is only a proposal to allot shares to the promoters and promoter group entity. 

It implies that Prashant Jhawar, who continues to be on the board despite losing his chairmanship, and Rajeev Jhawar, the company’s managing director, will infuse Rs 45 crore each into the company.

In case the proposal for capital infusion is passed, the shareholders of the company will have to approve the resolution at a general meeting.

“The infusion of fresh capital is in accordance with a prior agreement reached between the lenders and the promoters. The infusion will help in repayment of loans, besides other things,” Rajeev Jhawar said.

In the petition before the NCLT, the Basant-Prashant Jhawar faction had alleged mismanagement at the company by Rajeev Jhawar and oppression of shareholders. Also, this faction of promoters in the company sought to restrain the current management from selling or disposing of immovable assets or property of the company.

They also alleged that the board meeting convened on April 25 this year, when Prashant Jhawar was removed as chairman, and Basant Jhawar stripped of his powers on the board, was illegal. The same day, in the board meeting, G N Bajpai, former chairman of the Securities and Exchange Board of India, was appointed chairman.