NEW DELHI, Nov 23: The wrangle relating to the rights issue of paint maker Jenson and Nicholson (I) Limited (J&N) has taken a new turn with one of its shareholders asking the company law board (CLB) to appoint an independent chairman and a new auditor to protect the interest of the minority share holders.

The petitioner, Tuner Morrison group, engaged in investment and trading, alleged that J&N's cancellation of the rights issue was against the law under section 100 of the Companies Act, 1956.

Turner Morrison pointed out that CLB intervention was necessary under section 397 and 398 of the Companies Act, 1956 for prevention of oppression of minority's interest and mismanagement of company.

J&N last year had cancelled its rights issue of 20,68,939,17 per cent unsecured and fully convertible debentures (FCD) saying the issue has failed on grounds of ``illegality'' after the company received a communication from one of the allottees of these FCD's.Turner Morrison, which held 3.07 per cent stake in J&N was hoping to up its stake to 18.18 per cent after the full conversion of the now controversial rights issue. Industry sources said, cancellation of the J& N rights issues was on grounds of violation of SEBI takeover code which says that a shareholder has to make public notice if they acquire more than five per cent of the company's paid-up capital.

Sources said the cancellation of the issues after allotment was rare in corporate history and in this regard the SEBI had also barred the company from raising money from the primary market for the next two years.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.