The National Company Law Appellate Tribunal (NCLAT) has rejected an appeal filed by Deepak Chhabria and his wife, Vini Chhabria, against Orbit Electricals Private Limited. Orbit Electricals holds a 30.70% stake in Finolex Cables and an 18.80% stake in Finolex Industries.
Deepak’s cousin Prakash Chhabria is the biggest shareholder of Orbit Electricals with about 78% stake, while KP Chhabria faction (father of Deepak Chhabria) and his children own around 7% stake.
In an order dated August 28, 2024, the NCLAT also declined to interfere with a December 31, 2019 order from the National Company Law Tribunal (NCLT), Mumbai, which was the basis for the appeal by Deepak and Vini Chhabria.
Deepak and Vini Chhabria had filed an application along with a company petition before the NCLT, Mumbai, against Orbit Electricals. The dispute arose in 2016 when Pralhad Chhabria gifted 100,300 shares in Orbit to his son Prakash. A share transfer form was subsequently executed in favour of Prakash, and a board meeting of Orbit was held to approve the transfer.
Deepak Chhabria claimed that this meeting did not take place and that there was an oral agreement between Pralhad and Kishan that both groups would hold equal shares in Orbit. Additionally, Deepak and Vini opposed certain amendments to the Articles of Association of Orbit proposed during an extraordinary general meeting on May 3, 2019.
After their application was dismissed by the NCLT, Deepak and Vini Chhabria appealed to the NCLAT. In response, counsel for Prakash and Orbit provided evidence that the board meeting on March 31, 2016, did indeed occur and that no agreement existed between Pralhad and Kishan regarding equal shareholding in Orbit. They also argued that the amendments to the Articles of Association were necessary due to the misconduct of Deepak Chhabria.
The NCLAT concluded that the arguments presented by Deepak and Vini Chhabria regarding the amendments lacked merit. The tribunal noted that the amendments could be made by a special resolution, as passed in the meeting on May 3, 2019, without requiring agreement from all members. The NCLAT also refused to interfere with the resolution rejecting Deepak Chhabria’s re-election as vice chairman of Finolex Cable.
