Madras HC appoints ex-judge as Zylog administrator

Move comes after Ramanujam Sesharatnam resigned as MD of the company

The Madras High Court today appointed retired justice S Rajeswaran, as the administrator of crisis ridden IT company Zylog Systems Ltd to take charge of the company for two months. An emergency meeting convened by the administrator took decision on expansion of the board of directors and revealed to request the Registrar of Companies to change the status of the company to 'active' from 'under liquidation'.

The move comes after Ramanujam Sesharatnam, who was the managing director of the company along with M Gajhanathan and K S Subramanian, two independent directors of the company submitted their resignation and the company, which is under the official liquidator of Madras High Court, required a head to function.

While shareholders, in the Annual General Meeting (AGM) of the company held recently, has voted to remove Sesharatnam from the directorship, he sent a letter dated November 16, 2015, to the Madras High Court-appointed official liquidator stating that he has resigned as managing director. While the shareholders resolved that the two independent directors have to take all such steps necessary to give effect to the resolution of removal of Sesharatnam as Director, the independent directors also resigned, observed the Court.

Justice S Manikumar, observing that the company cannot function without a head and the minimum requirement is three directors, appointed Justice S Rajeswaran, who has been heading the Annual General Meeting of the company for last two years, as the Administrator.

The Court also directed the official liquidator to request the two independent directors, who submitted their resignation, to continue co-ordinate and co-operate with the Court appointed Administrator till a new management is formed.

The company, in a filing with the exchanges today said that in an emergency meeting convened by the Administrator, the independent directors accepted to withdraw their resignation letters submitted to the official liquidator and the letters to this effect was accepted by the Administrator and the Official Liquidator.

Besides, the investors proposed P Srikanth, S Vimaleshkumar, S P Srihari, Krishna Kishore, KSM Rao and MP Mehotra to be appointed as additional directors whose appointment shall be subject to the confirmation of the shareholders at the General meeting to be convened. The Administrator requested the Board of Directors to take necessary action to restructure the subsidiaries and branches.

"It was decided to write to the Registrar of companies with the direction or communication from the OL to change the status of the company to ACTIVE from under Liquidation," said the company.

Appointing the Administrator earlier, the Court also granted an application of the official liquidator to direct the ex-managing director and other two independent directors of the company to file the statement of affairs of the company as on date along with all relevant actions or steps to be taken in day to day affairs of the company including the affairs of all subsidiary companies with the official liquidator.

According to earlier reports, the Madras High Court has appointed the official liquidator for the company by an order dated July 3, 2014, with directions to take charge of all the properties and effects of the company and in August 21, 2014, asked the official liquidator to take over all the money transactions and the accounts of Zylog systems Ltd and issued directions to make all the administrative decisions only with the concurrence of the Official Liquidator appointed by the Court and not to spend money without the consent of the official. The company has been facing various issues including higher level of debt.