Date:12/06/2004 URL: http://www.thehindu.com/2004/06/12/stories/2004061212100300.htm

Tamil Nadu - Chennai

Single judge's order on RBF chairman's powers suspended

By Our Staff Reporter

CHENNAI, JUNE 11. A Division Bench of the Madras High Court has suspended the authority of the Royapettah Benefit Fund (RBF) chairman to operate bank accounts and run the company on the basis of a single judge's order.

The Bench comprising Justice N.V. Balasubramanian and Justice M. Thanikachalam suspended a portion of the order passed by Justice R. Balasubramanian, stating that the Board of Directors of the RBF appointed by the Government of India would have the power to operate the bank accounts. The order will be valid till June 14, when the matter is scheduled to come up for further hearing.

Earlier, a civil court order had stayed the extension of tenure of the RBF Chief Executive Officer, granted by the Board through a resolution on March 26. Following the interim injunction, the Board met on April 30 and took exception to the filing of several internal communications and resolutions in the suit.

According to the appellants, all of them Directors of the RBF, the Chairman had admitted that he had given those papers to the applicants without obtaining due permission from the Board. The Board then adopted a no-confidence motion against the Chairman on the ground that his action amounted to filing `proxy litigations' against the company.

However, a petition was filed in the High Court against the no-confidence motion against the chairman.

Passing orders on the petition, Justice R. Balasubramanian permitted the Chairman to operate bank accounts and run the affairs of the company. Aggrieved, six Directors filed the present appeal.

They contended that as per the earlier directions of a Division Bench of the court, the depositors must approach only the Company Law Board, and not the High Court, for redressing their grievances. Stating that no civil right of depositors had been violated, they said the suit had been filed in haste and it deserved to be dismissed as the Chairman had not been made a party to the case in his personal capacity.

Also, till date the Chairman, who is the aggrieved party, had not challenged the no-confidence motion against him.

The single judge had "virtually superseded the Board of Directors appointed by the Central Government, which was also not made a party to the case," they added.