S.Balasubramanian, - (1.) IN this order I am considering CA 318 of 2005 filed by Group the petitioners, CA 341of 2005, CA 10/2006 and CA 134 of 2006, all filed by Group A the respondents. Since all these applications are inter connected, I am disposing of all these applications by this common order.
(2.) Before dealing with these applications, it is necessary to give a brief of the circumstances under which these applications happened to be filed. Group B hereinabove had filed a petition under Sections 397/398 of the Companies Act, 1956 (the Act) alleging oppression and mismanagement in the affairs of M/S Hind Samachar Limited (the company). The company is a family company comprising close relatives as shareholders. Petitioners' group styled Group and Respondents' group, styled as Group 'A', each hold shares in the company. There had been certain dispute before two groups consequent to which certain memorandum of family settlements providing for joint and equal participation in the management of the company were entered into, the terms of which were also incorporated into the Articles of the company. Yet, disputes did not end and this petition happened to be filed. Since the company is essentially a family company, this Board advised the parties to resolve the disputes amicably by dividing not only the company but also all other family businesses and assets equally so that there was a complete parting of ways between the two groups. It was agreed that Group B would prepare two equal lots and Group A would have the first option of choosing one lot. Accordingly, in the hearing held on 14.2.2000, Group B gave a proposal of dividing-the assets and businesses of the family including the company into two lots-Lot 1 containing the Jalandhar and Ambala Units and the Lot 2 containing Delhi and Jaipur Units. Thereafter, Group B gave a modified proposal on 7l March, 2000 again dividing the assets and businesses of the company into Lot 1 and Lot 2 with the option to Group A to choose one of them. However, instead of exercising the option to choose one lot, Group A filed an application under Section 8 of Arbitration & Conciliation Act which was dismissed by this Board. Appeal proceedings initiated were dismissed and finally the present petition was disposed of by this Board by an order dated 17th May, 2004 with the following directions: "Accordingly I direct that there shall be a division of the company with Group B taking over the complete control of Jalandhar and Ambala units and Group A taking over Delhi and Jaipur units. This will be along with the respective assets and liabilities identifiable with each unit. All common assets and liabilities will be apportioned equally either in specie if possible or compensated by cash. The company will be with Group B as they will be controlling the Jalandhar unit and Group A may incorporate a separate company with a different name. Since both Group s hold equal shares in the company, there has to be equality not only in terms of monetary value but also in all other respects like areas of distribution etc. I find that besides the company, both Group s have equal interest in four other partnership firms, another private limited company and a Trust all of which have dealings with the company. In the lots prepared originally by Group B, all these entities were also included in the division. Since I am directing division of the company with a view to put an end to the state of stalemate and to ensure parting of ways, it is advisable that both Group s agree for complete division of all their interests not only in these entities but also all other assets and properties of the family. I find from the lots prepared by Group B that each and every asset/liability of not of the company but also other entities and the family has been covered including territorial division of areas of distribution of different publications. While the first lot includes Jalandhar and Ambala Units, the second lot includes Delhi and Jaipur Units. Since the first choice of choosing a lot was with Group A, it is but natural that Group B, while preparing the lots would have ensured equality. This being the case, if Group A are agreeable to take the 2nd lot which includes Delhi and Jaipur units, the disputes would come to an end. Otherwise, to ensure equal division, I have to appoint an independent person, preferably, a retired High Court or Supreme Court Judge to supervise and complete this exercise. Accordingly, the matter is fixed for further consideration on 14th July, 2004 at 2.30 p.m. at which time Group A should indicate as to whether they are willing to take the 2nd lot as given by Group B on 7th March 2000, or they would like to have the division done equally by an independent person (with Jalandhar and Ambala with Group B and Delhi and Jaipur with Group A), In the later case, both the sides should also indicate whether they are willing for including all the firms as well as other family interests in the division so that there would be a complete parting of ways between the two groups. They will also indicate the name of a retired Judge mutually acceptable to both Group s failing which I shall appoint one and give further directions. This order was taken on an appeal before Punjab & Haryana High Court wherein the parties had agreed to settle the disputes amicably. Accordingly, the court passed the following order on 19.10.2005: The appellants, as well as, Group A have decided to settle the matter amicably. It has been agreed, that the appellants will be entitled to Lot-2, in terms of the enclosures accompanying the letter dated 7.3.2000 constituting proposals formulated by Group A(herein) and available on the record of the Company Law Board. It goes without saying, that Lot-1, as determined by the enclosures to the aforesaid letter dated 7.3.2000, shall be retained by Group A. The afore stated arrangement shall entail that the assets and the liabilities of the company and the firms under Lot-2 located in the territories of Delhi and Jaipur shall fall to the share of the appellants; and the assets and the liabilities of the company and the firms under Lot-1 in the territories of Jalandhar and Ambala shall fall to the share of Group A. Additionally, the appellants have exercised their option to accept Rs. 2.4 crores under paragraph (xx)(I) of the modified proposal. This amount has been agreed to be deposited by Group A with the Company Law Board, by way of Bank draft, for onward transmission to the appellants, within six weeks from today. In order to implement the settlement agreed to by the parties described in the foregoing paragraph, we consider it just and appropriate to relegate the parties to the Company Law Board, which will enforce the implementation of the aforesaid settlement. The Company Law Board is expected to complete the exercise, as expeditiously as possible, but certainly within a period of three months from today. Parties in person or through their representatives, to appear before the Company Law Board on 27.10.2005 during its afternoon session. Parties shall maintain status quo in respect of the lot which falls to the share of the rival parties, till final implementation at the hands of the Company Law Board. Respondent No. I has also agreed to execute declarations under the Press and Registration of Books Act, 1867, as and when requested to do so by the appellants. Such declarations shall be furnished by respondent No. 1 within two weeks of the said request. Needless to mention, that the aforesaid request shall pertain to territories exclusively assigned to the appellants. Likewise, respondent No. 1 shall be entitled to execute such declarations on behalf of Group A, without reference to the appellants within the territories assigned to Group A. The instant settlement has been recorded at the instance of the learned Counsel for the revival parties, who have obtained the consent of their clients. -" In view of the above, the impugned order passed by the Company Law Board is set aside and stands modified as above. Disposed of accordingly.Order dasti on payment of usual charges.
(3.) CONSEQUENT to the order of the High Court, Group B filed CA318of 2005 stating that the amount of Rs. 24 crores as directed by the High Court would be deposited before this Bench at the time of hearing and that till such time the settlement was worked out, the amount should be kept in an interest bearing deposit. It was further stated in the application that several clauses to the modified proposals given on 7.3.2000 had become either redundant or unworkable owing to lapse of time and therefore appropriate directions were required to be given in this regard. It was further sought in the application that Group B should be permitted to avail banking facility of Rs. 12.5 crore sanctioned by Vijaya Bank to meet the company's working capital need and that appropriate directions should be given to the Estate Officer, Chandigarh Administration to permit Group B to acquire and take possession of 4 plots allotted to the company without imposition of any penalty. This application was mentioned on 1.12.2005 when Group B lodged a demand draft for Rs. 18.87 crores and also a letter addressed to UBI, Jalandhar to draw a DD in favour of CLB for Rs. 5.13 crores. I directed that the amount of Rs 18.87 crores should be deposited in State Bank of Patiala in an FD for 45 days in the name of CLB. Directions were given to Group A to file their replies. In their reply, Group A contended that by not paying the*full amount of Rs. 24 crores and also by asking the CLB to keep the amount of Rs. 18.87 crores in a fixed deposit, Group B had acted in breach of-the High Court directions. Further, Group B cannot be allowed to borrow money in the name of the company, as in terms of Clause (xx)(iii) of the proposal dated 7.3.2000, the company has to be wound up after discharging all the liabilities. In their reply, they had also referred to their letter dated 11.11.2005 addressed to Group B, pointing out that the proposal dated 3.2.2000 and modified by letter dated 7.3.2000 provide that Group which chooses lot-2 would exercise option in respect of various other assets. Accordingly, they had conveyed their exercise of options. They had also objected to other prayers in the application. The application was heard on and I had reserved the order.;