NCLT Appoints Interim Administrator To Manage Mangalam Publications Amid Family Dispute

The National Company Law Tribunal at Kochi has recently appointed an Interim Administrator to take over the management of Mangalam Publications (India) Private Limited, publisher of the Malayalam daily Mangalam and several weekly magazines, amid an ongoing family dispute over control of the company.

A coram of Judicial Member Vinay Goel observed that the continuing disputes between shareholders and the management were adversely affecting the company's business and the interests of its employees and other stakeholders.

“This Tribunal is of the view that it would be just and proper to appoint an Interim Administrator, as final adjudication of the disputes may take some time. The ongoing disputes between the shareholders and the management are adversely affecting the business of the Company and the interests of its employees and workmen and other stakeholders,” the tribunal noted.

Mangalam Publications (India) Private Limited is based in Kottayam, Kerala. It publishes the Malayalam daily “Mangalam Daily” and weekly magazine “Mangalam Varika” across the State, and also brings out other Malayalam publications including Mangalam Weekly, Kanyaka and Cinema Mangalam, along with its online news platform.

It is a closely held family company of the late M.C. Varghese.

The dispute arose between Biju Varghese on one side and the faction comprising Sajan Varghese, Sabu Varghese and Dr. Saji Varghese on the other. The latter group, along with their mother, collectively holds 74.12% of the share capital. Biju Varghese and his family hold 24.70%.

Cinara Varghese and Toshma Varghese, children of Biju Varghese, approached the tribunal alleging oppression and mismanagement. They contended that Sajan Varghese, Sabu Varghese and Dr. Saji Varghese, the majority shareholder directors, incurred disqualification under Section 164(2) of the Companies Act, 2013 due to alleged non filing of financial statements by Mangalam Global Media (P) Ltd, where the said directors were also on the Board.

The company contended that upon communication of the interim order, its bankers froze the company's accounts, resulting in serious disruption of business operations.

It thereafter appointed Cyriac Sajan and Babu Joseph as additional directors under Section 167(3) of the Act and filed the present application seeking permission to operate the bank accounts through them.

The present application was filed seeking recall or modification of the interim order dated June 26, 2024, which had restrained the majority directors from functioning and operating the company's bank accounts.

Opposing the application, Cinara Varghese argued that Cyriac Sajan and Babu Joseph were acting as agents and successors of the majority directors. She contended that, being strangers to the company without valid appointment, they had communicated with the company's banks claiming to be directors and sought to operate the bank accounts.

During the hearing of the application, the parties arrived at a consensus for the appointment of an Interim Administrator.

The tribunal clarified that upon appointment, the Interim Administrator would take over the management of the company, while the alleged appointment of the additional directors would, for the time being, remain in abeyance, and their legality would be examined at the stage of final adjudication.

Consequently, the tribunal directed the concerned banks to de-freeze the company's accounts forthwith and enable the Interim Administrator to operate the same.

The Bench further ordered the constitution of a Consultation Committee, directing each faction to nominate two members to assist the Interim Administrator.

“However, the Interim Administrator shall not be bound by the advice of the Consultation Committee. The role of the consultation committee would be purely consultative in nature,” it clarified.

Accordingly, the tribunal appointed Rajmohan R, Chartered Accountant, as the Interim Administrator for an initial period of six months or until further orders, and disposed of the application.

For Applicant: Advocate Shinu J Pillai

For Respondents: Advocates Saji Isaac, Jen Jaison and Representative of RoC