CALCUTTA, MAY 18: The Calcutta high court today upheld a 1998 Company Law Board order that had directed Shaw Wallace & Co to take four government nominees on its board, but gave the liquor major time to move the Supreme Court.A division bench of Justices SB Sinha and MHS Ansari also dismissed petitions filed against the CLB order of July 27, 1998, by the company, its non-resident chairman Manu Chhabria and the All India Shaw Wallace Employees' Federation.The operation of the order was stayed for one month, giving time to the company to file its appeal before the Supreme Court.A Shaw Wallace's spokesperson declined to comment on its course of action. "We are to yet to receive a copy of the order. We will decide on our further course of action after we get it," she said.The CLB had directed the induction of three additional government nominees on the basis of two petitions filed by the employees' federation on July 16, 1996, which were supported by the Union government.The CLB bench of chairman PK Majumdar and vice-chairman S Balasubramanian had said that two will be from the Union government and one from the CLB. They were to have joined the then CLB nominee, CK Hazari, who was already on the board.In fact, when the employees' had moved the CLB, two nominees - CK Hazari and LC Gupta - were inducted. Gupta was first to be ousted. Subsequent to this, PK Pandit, who was representing Life Insurance Corp and other financial institutions, was voted out in December 1997. Later, Hazari was also removed from the board.The induction of three government nominees then would have resulted in an evenly balanced board, with four nominated by chairman Manu Chhabria.The CLB had refused to tilt the numbers in favour of the government noting that it would mean "indirect way of supersession" which was unwarranted.At present, the Shaw Wallace board has eight directors - PL Narasimhan, Komal Chhabria Wazir, TS Shettigar, MH Godwani, RW Holland, YC Lumba, S Bhattacharya and JA Kershaw, who alternates for the non-resident chairman.The bench said that the strength of the voting members on the board should be frozen at nine for two years, to provide continuity and prevent turnover.Noting that the several qualifications of the auditors were "disturbing" and its contents "fully justifies the auditors' disclaimer" the CLB had directed the creation of management and audit committees, with suitable mandate of responsibilities.It noted: "The acts of commission and omission have been going on in the affairs of the company, especially in the matter of financial management and the effect of the same is all pervasive."In today's order, Justices Sinha and Ansari dismissed all the three petitions filed against the CLB order. The appeal of the employees' federation was dismissed on technical grounds as the certified copy of CLB order was not annexed with their petition. The bench also directed the company to pay Rs 8500 to the employees' federation as costs.
