The Supreme Court on Friday prohibited shareholders in BPL Communications from disposing of their shares without the sanction of the Company Law Board. The board may pass interim orders to this effect.
The Bench, headed by Justice S N Variava, passed the order on an appeal moved by TPG Nambiar, founder of the telecom company, alleging that his son-in-law, Rajeev Chandrasekhar, was dealing in the shares of the companies through a complex process and acquiring control of the group.
Such transactions were going on for the past seven years, Nambiar had said in a petition to the Company Law Board. Chandrasekhar is the chairman of BPL Communications Ltd and runs the cellular business.
According to Nambiar's counsel KK Venugopal, Chandrasekhar now holds 32.5 per cent in BPL Communications, while Nambiar's stake has come down to 14 per cent.
The court decision, however, will not affect the sale of France Telecom's stake in BPL Mobile to overseas investor Asia-Pacific Systems and Essar Teleholdings.
When Venugopal asked the Supreme Court to stop further transactions in the shares, some of which were held by foreign telecom companies, the apex court observed that it could not stop transactions in shares of third-party companies.
However, the court asked the board to decide the jurisdiction issue within two months. The Supreme Court will examine the issues thereafter.
Nambiar had moved the Company Law Board in September 2004 seeking an investigation into the company's affairs. He had alleged in the petition that Chandrasekhar had taken a majority stake in the cellular business through questionable means.
The board had ordered that there shall be no transfer of shares in the future without its approval.
Chandrasekhar then approached the Karnataka High Court, raising doubts about the jurisdiction of the board.