Kanthi Narahari - (1.) THE present application is filed under regulations 44 and 47 of the Company Law Board Regulations, 1991 seeking directions from this Bench, inter alia, to take appropriate action against respondents Nos. 2 to 7 for having committed acts of perjury by making false statements on oath in their affidavit dated April 13, 2003 filed in C. A. No. 63 of 2003, etc., and punish and prosecute respondents Nos. 2 to 7 for wilful and blatant contempt of this Bench and sought declaration that the purported sale of the first respondent's immovable properties (as described in exhibits A and B to this application) to respondents Nos. 9 and 10 is illegal and the same may be set aside. Shri Sudipto Sarkar, learned senior counsel for the applicants narrated the brief acts. He submitted that the petitioners being shareholders of respondent No. 1 company filed the above petition for grant of reliefs as stated therein. Respondent No. 1 was the owner of Club Cabana situated at Bangalore and also the owner of certain unsold flats and shops in its projects known as Sai Gardens at Bangalore. Respondents Nos. 2 to 7 were seeking to sell the said properties by taking advantage of their brute majority. The applicants took out Company Application No. 63 of 2003 for restraining the sale of said properties apprehending that the said properties were likely to be purchased by the respondents themselves or through their nominees. Respondents Nos. 2 to 4 filed an affidavit dated April 13, 2003 in the said C. A. No. 63 of 2003, have categorically stated that the purchaser procured by them was in no manner whatsoever either directly or indirectly connected to them or to respondents Nos. 5 to 7. Basing on the statement the Company Law Board passed its order on April 28, 2003, giving liberty to respondents Nos. 1 to 7 to sell Club Cabana for a consideration of Rs. 10 crores and the Sai Garden premises for a consideration of Rs. 575 per sq.ft The applicants later came to know that the said statement made by respondents Nos. 2 to 7 were false and in gross contempt of this Bench. The respondents made a statement before this Bench on October 17, 2003 that Club Cabana and the Sai Garden premises had been sold to respondents Nos. 9 and 10 on October 17, 2003. From the enquiries it revealed that respondents Nos. 9 and 10 were front companies of respondents Nos. 2 to 4 and the funds were provided by them. The petitioners filed an application being C. A. No. 20 of 2004 before this Bench for amendment of C P. No. 64 of 2002 for impleadment of respondents Nos. 9 and 10 as parties to the company petition. The respondents have stated that respondents Nos. 9 and 10 herein are independent legal entities and bona fide purchasers for consideration owned and controlled by their respective shareholders and not connected with these respondents. It is to say that a special resolution dated November 14, 2003 passed at the extraordinary general meeting of respondent No. 9 wherein it was clearly established that respondents Nos, 2 to 4 were in fact on the board of directors of respondent No. 9. In the circumstances the petitioners took out C. A. No. 187 of 2004 in the above company petition for contempt and perjury. Respondents Nos. 2 to 4 filed an affidavit dated August 16, 2004 in C. A. No. 187 of 2004, wherein it was stated that respondents Nos. 9 and 10 were purchasers of special purpose vehicles for Club Cabana and the Sai Garden premises. The petitioners say that the contents in reply dated August 16, 2004 and the earlier affidavits create doubt that respondents Nos. 9 and 10 are none but the nominees of respondents Nos. 2 to 7 for acquiring the said two properties. The respondents have concealed the facts of payment of monies for acquiring the properties from this Bench as well as the hon'ble High Court. The respondents contended that the funds were provided by respondent No. 11 but the facts clearly show that no funds are transferred either by respondents Nos. 11 to 9 or to respondent No. 10. It is submitted that the entire funding was done by the Chandru L. Raheja group. The sale deed was executed on October 17, 2003 in favour of respondent Nos. 9 and 10. Thus respondents Nos. 2 to 4 were successful in acquiring respondent No. 1's properties by themselves through their nominees or front companies. The conduct of respondents Nos. 2 to 4 in gross and wilful suppression of the relevant facts from this Bench as set out in detail in this application. In the facts and circumstances, it is submitted that respondents Nos. 2 to 7 have wilfully and knowingly committed blatant and contumacious contempt of this Bench. It is absolutely essential that this Bench be pleased to order and direct restoration of the said properties as described in exhibits A and B to this application to respondent No. 1 and cancellation of all deeds, documents and writings by which the same was purported to be sold to respondents Nos. 9 and 10. This Bench has full powers to pass appropriate orders in this regard to safeguard the rights of the applicants. In support of his case he relied upon the following decisions of the apex court (1) in the matter of United India Insurance Co. Ltd. v. Rajendra Singh, 2000 100 Comp Cas 705; : (2000) 3 SCC 581 paragraph 16 it is held (page 710 of 100 Comp Cas): "Therefore, we have no doubt that the remedy to move for recalling the order on the basis of newly discovered facts amounting to fraud of high degree, cannot be foreclosed in such a situation. No court or Tribunal can be regarded as powerless to recall its own order if it is convinced that the order was wangled through fraud or misrepresentation of such a dimension as would affect the very basis of the claim" (2) In the matter of Oswal Fats and Oils Ltd. v. Additional Commissioner (Administration) : (2010) 4 SCC 728 paragraph 20 it is held (page 739) : "It is settled law that a person who approaches the court for grant of relief, equitable or otherwise,' is under a solemn obligation to candidly disclose all the material/important facts which have bearing on the adjudication of the issues raised in the case. In other words, he owes a duty to the court to bring out all the facts and refrain from concealing/suppressing any material fact within his knowledge or which he could have known by exercising diligence expected of a person or ordinary prudence. If he is found guilty of concealment of material facts or making an attempt to pollute the pure stream of justice, the court not only has the right but a duty to deny relief to such person".
(2.) RESPONDENTS Nos. 2, 3 and 4 have filed a detailed reply and submitted that the present application is the third in a series of applications taken out by the petitioners before this Bench. The previous two being C. A. Nos. 20 and 187 of 2004 based on the same allegations, for similar reliefs against these respondents. However, this Bench has not granted any reliefs to the petitioners. Thus the present application is nothing but an abuse of process and ought not to be entertained particularly for the reason that the Principal Bench before whom the purported acts of suppression and contempt and perjury, etc., were alleged to have been committed by these respondents, eventually the Company Law Board did not take cognisance of the same and did not pass any adverse orders against these respondents. The present application is barred by the principles of res judicata or constructive res judicata and estoppel. It is submitted that on IL&FS invoking guarantee given by respondent No. 2 and calling upon respondent No. 2 to repay the said term loan, these respondents, requested the Rajan Raheja group to make payment as advance against the intended sale of the Club Cabana Property and the Sai Garden Premises and which could be utilised towards repayment of a portion of the said term loan; if not, the entire amount. At this, the Rajan Raheja group informed these respondents that at best, they would forward cheques drawn directly in favour of IL&FS, but on the condition that the said cheques will not be deposited and encashed by IL&FS. Accordingly, by and under their two separate letters both dated April 3, 2003 addressed to respondent No. 1, Castlerock and Facade (Rajan Raheja group companies) offered to forward their respective cheques in the amount of Rs. 3,00,00,000 and Rs. 2,36,18,125 both 'drawn in favour of IL&FS. By the said letters, Castlerock and Facade made conditional offers for the intended sale transaction in respect of the Club Cabana Property and the Sai Garden Premises and clearly specified therein that the two cheques in favour of IL&FS were to be deposited by IL&FS only upon execution of sale deeds by respondent No. 1 in favour of Castlerock and Facade respectively and consequent intimation by Castlerock and Facade of such execution to IL&FS. Upon receipt of the above letter from respondent No. 1, IL&FS on the same day, by its letter dated April 3, 2003, addressed to these respondents, withdrew its letter dated March 24, 2003, addressed to these respondents for invoking the guarantee as it felt that respondent No. 1 was initiating steps to sell the assets mortgaged to it, i.e., the Club Cabana Property and the Sai Garden Premises. At this juncture, the petitioners took out Company Application No. 63 of 2003, inter alia, seeking to restrain respondent No. 1, these respondents and respondents Nos. 5 to 7 by an injunction from selling, alienating or otherwise disposing of the assets of respondent No. 1, holding an extraordinary general meeting and postal ballot as per notice dated March 27, 2003. The said extraordinary general meeting and postal ballot were in respect of the sale of the Club Cabana Property. This hon'ble Board, by its order dated April 4, 2003 in Company Application No. 63 of 2003 granted liberty to the petitioners to find a buyer for a better price. By an order dated April 28, 2003 passed by this hon'ble Board, directions were issued for sale of the Club Cabana Property and the Sai Garden Premises upon the terms provided in the said order. As stated hereinabove, this hon'ble Board was pleased to pass the said order after being satisfied that there was a need for respondent No. 1 to sell the Club Cabana Property and the Sai Garden Premises. This hon'ble Board was therefore satisfied that the Club Cabana Property and the Sai Garden Premises were proposed to be sold, after obtaining valuation from independent valuers and that the price of which the Club Cabana Property and the Sai Garden Premises were to be sold were consistent with the valuation of the two independent valuers. This hon'ble Board reproduced and recorded the statement made in paragraph 14(b) of the reply of these respondents to the said company application only in order to deal with the applicant's apprehension that the Club Cabana Property and the Sai Garden Premises would be purchased by these respondents indirectly. These respondents submits that even while sanctioning the sale of the Club Cabana Property and the Sai Garden Premises, this hon'ble Board directed an extraordinary general meeting to be held, permitted the petitioners to get a higher offer, within, the time specified and further directed that the board of directors of respondent No. 1 consider the higher offer received by the petitioners, if any. If no higher offers were obtained, this hon'ble Board directed the respondent, to sell the Club Cabana Property and the Sai, Garden Premises at the proposed prices as set out therein. The petitioners preferred an appeal from the said order dated April 28, 2003 under section 10F of the Companies Act, 1956 before the hon'ble Bombay High Court. While admitting the appeal, the vacation judge of the hon'ble High Court, vide its order dated May 21, 2003, granted interim reliefs and directed that the appeal be posted for hearing immediately after reopening peremptorily. These respondents crave leave to refer to the said order dated May 21, 2003, for its true meaning and correct interpretation. At the time of the final hearing of the said appeal before the hon'ble High Court, the petitioners after arguing the matter at length chose to withdraw the said appeal as recorded in the order dated October 13, 2003 passed by the hon'ble High Court. By virtue of the said order dated October 13, 2003, passed by the High Court of Bombay the interim order dated May 21, 2003 was vacated. As a result respondent No. 1 was free to complete the sale transactions of the Club Cabana Property and the Sai Garden Premises. The petitioners were however permitted by the hon'ble Bombay High Court, to make such application before the Company Law Board, as they may be advised. Accordingly, the said sale transactions in respect of the Club Cabana Property and the Sai Garden Premises were completed and the sale proceeds were appropriated towards repayment of outstanding dues to IL&FS being the lender and mortgagee in respect of the Club Cabana Property and the Sai Garden Premises. It is not out of place to mention that when the petitioners mentioned C A. No. 63 of 2003 on April 4, 2003 the petitioners was given an option to find a buyer for the properties. The petitioners had advertised for sale on April 19, 2003. However, the petitioners were unable to procure a buyer and cannot now raise an objection to the sale of these properties. The apprehension of the petitioner that the respondents were likely to purchase the property through their nominees and sell the same at an under value is completely baseless. The commercial reality of property market in India is that no purchaser is ready and willing to invest in properties enmeshed in litigation. It is submitted that the Castlerock and Facade are special purpose vehicle floated by the Rajan Raheja group. Mr. Rajan Raheja is cousin of petitioner No. 1 and respondent No. 2 who had separated from the family business around 34 years ago and the SPV's are unconnected with these respondents. The respondents have not disclosed the name of the buyer in the notice in view of the specific stipulation in the order of this Bench dated October 25, 2002 that the identity of the buyer need not be disclosed. It is reiterated that in the board meeting held on July 5, 2002 the board had resolved to dispose of the Club Gabana Property and the Sai Garden Premises at a minimum, price of Rs. 750 sq.ft. and Rs. 10 crores. Further these respondents say and submit that, from the above, it is evident that the petitioners have failed to make out any case against these respondents for grant of reliefs in the said company petition; pertinently the record clearly shows that despite the fact that the pleadings have been completed in the said company petition, the petitioners are reluctant to proceed with the hearing of the same and have been taking out multifarious and vexatious, proceedings for the same and/or. similar reliefs, in an effort to ensure that hearing of the said company petition is delayed and dragged. In support of their contention, they relied upon the following decisions : (i) In the matter of Pallav Sheth v. Custodian, (2001) 107 Comp Cas 76; : (2001) 7 SCC 549, paragraphs 38 and 41. (ii) Narne Rama Murthy v. Ravula Somasundaram : (2005) 6 SCC 614, paragraph 5. (iii) Golcha Advertising Agency v. State of Maharashtra : (1990) 2 Bom. CR 262.
(3.) RESPONDENTS Nos. 5 to 7 filed their reply. Shri K. G. Munshi, learned counsel appearing for the respondents submitted that the application filed by the applicants deserved to be dismissed on the ground that the applicant made baseless and bald allegations against these respondents without any material proof. Further It is stated that these respondents have objected to C. A. No. 63 of 2003 filed by the same applicants and the contents of the said objections may be read and treated as reply to this application. It is stated that respondents Nos. 9 and 10 are not nominees of these respondents for acquiring the properties known as Club Cabana and the Sai Gardens. Learned counsel further submitted that the applicants prayed this Bench to set aside the sale of properties to respondents Nos. 9 and 10 on the basis that the said sale is fraudulent is not correct on the ground that the application itself is not maintainable and have not established any fraud committed by the respondents. In support of his contention, learned counsel relied upon the decision of the Privy Council reported in (i) Bal Gangadhar Tilak v. Srinivas Pandit, AIR 1915 PC 7 at relevant page 13 wherein it is held : "Under the contract law of India, as well as ordinary principles, coercion, undue influence, fraud, and misrepresentations are all separate and separable categories in law. It is true that they may overlap or may be combined. But in the present case, it is impossible to discard what ground or grounds are really taken up. There is a well known rule of pleading expressed in the frequently quoted language of Lord Selborne Wallingford v. Mutual Society, (1880) 5 AC 685 (HL), at page 697 that : 'with regard to fraud, if there be any principle which is perfectly well -settled, it is that general allegations, however strong may be the words in which they are stated are insufficient even to amount to an averment of fraud of which any court ought to take notice'." (ii) In the matter of Afsar Shaikh v. Soleman Bibi AIR 1976 SC 163 paragraphs 15 and 16. (iii) In the matter of Varanasaya Sanskrit Vishwavidyalaya v. Dr. Rajkishore Tripathi, AIR 1977 SC 615, paragraphs 8 and 9.;