The move is under section 408 of the Companies Act which provides for central government intervention in public interest to prevent oppression or mismanagement of a company.
This follows an inspection by the department which threw light on several violations of the act by the company. These included financial irregularities and siphoning of funds, which warrant government intervention.
In extreme cases, the government can also recommend winding up of a company. But in the case of SWC, the government intends to bring under its overall supervision the management of the company.
CLB now has to decide if there is sufficient ground for appointing government directors, and if so, the number of such directors.
The government can intervene also if an application is filed by not less than 100 members of the company, or by shareholders holding one-tenth of the total voting power.
An application meeting this norm and seeking the ouster of the present management, was filed by the All India Shaw Wallace Employees Federation in July. DCA has sought time to reply to this application. Shaw Wallace has replied to the federation's charge, and CLB has granted time until September 24 to the directors of the company to file their replies.
Meanwhile, Rupchand Pal (CPM) yesterday demanded in the Lok Sabha that the government should institute an inquiry into the financial irregularities of the Manu Chhabria-owned group of companies, including Dunlop.
Raising the issue during zero hour, he alleged that the management had "siphoned off" money from these companies and Indian financial institutions were not advancing any more money as old debts had not been repaid.
