S. Balasubramanian, Chairman - (1.) SHRI Krishnadas Pal, petitioner in C. P. No. 33 of 1998, claiming to hold along with his associates, 25.77 per cent, of the issued capital of M/s. Calcutta Chemicals Company Limited (company) has filed this petition under Sections 397, 398, 399, 402 and 406 of the Companies Act, 1956 (Act), alleging acts of oppression and mismanagement in the affairs of the company. When SHRI Sarkar, senior advocate on behalf of the petitioner, mentioned this petition on June 24, 1998, he also sought for certain interim orders. SHRI P. C. Sen, senior advocate and SHRI S. N. Mookherjee, counsel appearing for respondents Nos. 1 and 11, respectively, raised a preliminary objection on the maintainability of the petition on various grounds. While granting the limited interim prayer relating to the proposed extraordinary general meeting of the company scheduled for June 26, 1998, we adjourned the matter for hearing the preliminary objections. At the same time, we also allowed M/s. Henkel Spic India Limited to be impleaded as a respondent. The hearing of the preliminary objections was fixed at Chennai. In the meanwhile, the petitioner filed another petition, viz., C. P. No. 37 of 1998 in terms of the same sections as of C. P. No. 33 of 1998 (second petition). The petitioner also filed an application for consolidation of both the petitions or in the alternative, prayed for treating the second petition as an amendment to the first petition. When the maintainability of the petition was heard at Chennai, we formed a prima facie opinion that the maintainability could not be decided in isolation without considering the facts of the case and accordingly, fixed the hearing on the applications for consolidation/amendment and also the petition at Calcutta.
(2.) When the matter was taken up for hearing at Calcutta on August 24, 1998, we advised counsel to argue on the maintainability of the petition, consolidation/amendment and also on the merits of the case so that a composite order could be issued. Agreeing with our suggestion, counsel argued on all the matters. Before detailing the arguments of counsel, it is necessary to sum up certain facts which have led to the filing of these petitions. The subsidiaries of M/s. Shaw Wallace Limited (SWC) hold about 55 per cent. of the issued capital of CCL. CCL became a sick company some time in 1990 and was referred to the BIFR. It came out of sickness due to waiver by SWC of about Rs. 8.5 crores owed by CCL to SWC. In 1995 SWC had proposed to disinvest all these shares along with its other interests in CCL, more particularly in view of its financial difficulties. Originally, it had entered into an MOU with M/s. Henkel by which the latter was to buy the interest of SWC in CCL together with the consumer product division of SWC for a sum of Rs. 42 crores, which included a price of Rs. 2.5 per equity share held by it in CCL. In a petition under Section 397/398 filed in the matter of SWC (C. P, No. 30 of 1996), when this matter came before the Company Law Board, it passed an order that there should be complete transparency in the sale of the shares held by SWC/its subsidiaries in CCL and that any proposed sale should have the approval of the Company Law Board nominees on the board of SWC. In compliance with our directions, with the approval of the Company Law Board nominees, SWC issued a public notice inviting offers to buy majority shares held directly or indirectly by SWC together with certain other interests in CCL and certain assets and liabilities of its Consumer Products Division (DIL). The notice also specified that the sale would be conducted through an invitation of sealed tender and would be evaluated as per norms listed in the tendered documents. M/s. Prudential Capital Markets Limited were appointed as the manager for sale of assets. In pursuance of this invitation, 11 parties including M/s. Henkel and Shri Krishnadas Paul (the petitioner herein) purchased the tender documents. In the tender documents, the assets proposed to be sold were classified into two groups, group A relating to CCL and group B relating to DIL. In group A relating to CCL, there were five sub-groups as follows : A-1 : 443, 124 equity shares of CCL, A-2 : 14,497, 9 per cent. cumulative preference shares and 15,681, 7 per cent. cumulative second preference shares of CCL. A-3 : All right, title and interest of SWC to/in the Aramusk Brand. A-4 : The right and/or benefit to distribute CCL products which are otherwise available to SWC. A-5 : Non-competition agreement.
(3.) IN the same way group B also had five sub-groups with which we are not concerned in the present proceedings. The tender document also specified that the reserve price for group A was Rs. 30 crores and that the persons desirous of bidding would submit a preliminary bid along with a bid deposit of Rs. 10 lakhs. It further provided that after the preliminary bids were received, the first five bidders would be entitled to conduct a limited due diligence test before submitting the final and binding bid. The final and binding bids were to be evaluated purely on a price criterion. It is also stipulated in the tender that the winner of the bid for each group would have to deposit 10 per cent. of the bid amount in escrow. It is also mentioned in the tender that M/s. S. B. Billimoria and Co. have been appointed as expert valuers inter alia to allocate the final bid price as between the five bloc of assets in group A and group B.;