Shaw Wallace and Company (SWC) has decided to shift its books of accounts from Calcutta to its premises in Ballard Estate, Mumbai. The move is significant in the light of the beleaguered company's attempts to shift its head office from Calcutta to Mumbai amidst allegations of gross financial mismanagement and siphoning off of funds.
A board resolution to this effect has been passed and intimation has been filed with the Registrar of Companies. Interestingly, the resolution had been passed before the Company Law Board's (CLB) recent order to reconstitute the SWC board by appointing govt nominees.
Only last week, the CLB decided to appoint four government directors in addition to the existing five directors on the board of SWC in response to the separate petitions filed by the All India Shaw Wallace Employees Federation and the DCA (Department of Company Affairs), but still retained Manu Chhabria's majority control on the board. The DCA has however expressed its helplessness to interfere in the matter of shifting of books of accounts. According to the DCA, "there is no provision in the Companies Act 1956 to stop the company from keeping the books of accounts at the place other than the registered office when once the requisite resolution of the Board is passed and the intimation thereof is filed with the Registrar of Companies."
Earlier, the company management had taken the important decision of shifting its registered office to Mumbai without the approval of the board. However, the CLB nominee on SWC's board at that time had informed the DCA about this move. This observation was brought to the notice of CLB which was then adjudicating the petition filed under section 408 of Companies Act 1956.
The 52-page judgement delivered last week rejected the DCA's prayer for appointing five government directors to make up a majority on the SWC board saying, this would mean practically taking over the company, which in facts and circumstances of the case was not warranted. The judgement also rejected the All India Shaw Wallace Employees Federation's demand for the supersession of the board. Hence, SWC's attempts to move the registered office to Mumbai, in general, and the decision to shift books of account, in particular, would make for an interesting tussle within the reconstituted board where Manu Chabbria still holds majority control.
