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CLB appoints board of directors for RBF Nidhi

Our Bureau

CHENNAI, Jan. 18

THE Company Law Board on Tuesday passed ex parte orders appointing a six-member board of directors for Chennai-based RBF Nidhi Ltd, in supercession of its existing board with immediate effect.

The directors are Mr. A.M. Swaminathan (former Secretary, Tamil Nadu Government), Mr. N.R. Sridharan (retired Director, Department of Company Affairs, Chennai), Mr. K.J. Pappachen (President, RBF Nidhi Investors Association, Chennai), Mr. R. Desikan (con sumer activist), Mr. Arvind Datar (advocate, Madras High Court), and Mr. R. Rudrakumar (chartered accountant, Chennai).

According to the CLB order, the first meeting of the newly constituted board of directors will take place not later than January 31 and thereafter at least once a month. The board will prepare a status paper on the affairs of the company and also a suita ble scheme for repayment of the deposits for the CLB's consideration and order.

The CLB has asked the company to publish information about the constitution of the board and, at periodic intervals, a summary of the various steps taken by it in collecting the dues and repayment of deposits. The order was passed in Delhi by the princip al bench of the CLB comprising Mr. Justice A.K. Banerji, Chairman, and Mr. S. Balasubramanian, Vice Chairman.

The order followed a petition filed with the CLB by the Government of India, alleging mismanagement in the affairs of RBF Nidhi Ltd and seeking appointment of majority Government directors on its board.

In his petition, according to the order, Mr. M.L. Sharma, Joint Director (Legal), Department of Company Affairs, submitted that RBF Nidhi had mobilised over Rs. 400 crores by way of deposits from members of the public, and over a period of time, had fail ed to repay the deposits. He said that the board of directors had sanctioned and paid large amounts of money to various persons, which remained uncollected, resulting in a mismatch between inflow and outflow of funds. This had led to deposits not being r epaid on maturity.

Mr. Sharma said that of the seven directors of the company, five had been arrested and the other two were absconding. While the Centre had appointed a special officer to manage the affairs of the company, Mr. Sharma wanted the appointment of an independe nt board consisting of Government nominees to assist the special officer.

The CLB said that the southern bench of the Board had received a spate of complaints of non-repayment of deposits. ``We find that there is practically no board functioning at present in view of the arrest/absconding. We have also seen various press repor ts indicating that the depositors have become restless and are agitating against non-repayment of deposits. Under these circumstances, with a view to create a sense of confidence in the minds of the investors, we consider it appropriate that before passi ng any order on appointment of Government Directors after hearing the parties that we should pass suitable interim orders ex parte in terms of Section 403 of the Act for regulating the conduct of the affairs of the company. This will also be in the inter est of the investors and in public interest,'' the CLB said.