Associated Journal issuing shares to Young Indian is defrauding minority shareholders: Shanti Bhushan
Shanti Bhushan talks exclusively to Sumeet Mehta on the law of meetings and how directors of Associated Journal misused their fiduciary position for helping Gandhi family to grab control of AJL by undervaluing and issuing shares to Young Indian
Sumeet Mehta (SM): As you told me on the phone, your Late Father was a freedom fighter and went to jail on numerous occasions, and as a prosperous lawyer he supported Associated Journals Ltd by buying some shares. How many shares did your Late Father subscribe to?
Shanti Bhushan (SB): My father had five preference shares whereas Jawaharlal Nehru had only three. Each preference share was Rs 100/= whereas each ordinary share was only Rs 10/=.
SM: As you stated on the phone, after your father's sad demise, you have not yet transferred the shares in name of his legal heirs (you and your siblings). What is your assessment on timelines to get your name listed in Shareholders' Register so that you can initiate action against the Directors of AJL?
SB: It might take a couple of months to get the names of heirs substituted.
SM: What is your view on Directors of AJL issuing shares to Young India and what are the reasons why it is illegal and / or unethical?
SB: It was in my opinion unethical and illegal and an abuse of their powers by the Directors to issue nine crore shares of Rs 10/= each to Young Indian – a company with only four shareholders Sonia and Rahul Gandhi with 76 % shares and two of their loyalists Motilal Vora and Oscar Fernandes with 12 % each. The Directors are in a fiduciary position with the shareholders and are required to act in the best interest of the shareholders. Associated Journals is said to be having assets worth Rs 2,000 crores in several cities. The debt was only 90 crores. It could have easily sold or even mortgaged any small asset to raise Rs 90 crores to pay off the debt and retain the company and its assets in the hands of its existing shares without hurting them by making them irrelevant and putting all the assets of the company in the hands of four people. This was a totally malafide act of the Directors. Kapil Sibal has said that preference shareholders had no voting rights. Perhaps under this impression they might not have sent any notice of the EGM to preference shareholders. If so the meeting would be illegal and any decision taken therein null and void. Even preference shareholders had the right to vote under Sec 87 as no dividends had been paid for more than three years.
SM: You have stated that your family has not received any notice for AGM / EGM of AJL at your residence at Allahabad. Can you elaborate this and share more light on legal implications of this issue of non-receipt of notice of any General Body Meeting by any shareholder?
SB: The settled law of meetings is that if a single member has not been given a notice of the meeting it shall become a nullity.
SM: How do you propose to initiate action against Directors of AJL and which are the sections of Companies Act, 2013 that Directors of AJL could have possibly violated?
SB: A petition may be filed before the Co Law Board for seeking the quashing of the issue of nine crore shares to the co Young Indian.
SM: In case Directors of AJL are held guilty for this issue of shares to Young India in a wrongful manner, what are the implications for Gandhi Family, Directors and Shareholders of Young India, and Directors of AJL?
SB: The Gandhis will be deprived of the control of all these assets.