G.C.Jain,J. - (1.) -
(2.) RAMESH Chandra Bhalla, Naresh Chandra Bhalla, SudeshChandra Bhalia, Avinash Chandra Bhalla and Prakash Chander Bhalla arebrothers. They were carrying on business as shareholders and Directors in threecompanies, namely, (i) 'M/s. H.R. Bhalla and Sons (P) Ltd. ;(ii) M/s.SelfastAir Systems (P) Ltd. and (iii) M/s. Mechanical Movement Pvt. Ltd. Certain disputes and differences aruse among the brothers and by anagreement dated 7/04/1984 they appointed Sh. P.N. Khanna as a solearbitrator to adjudicate those disputes. Learned arbitrator made an interimaward on 25/12/1984. The interim award, so far as it relates toM/s. H.R. Bhalla & Sons (P) Ltd, (for short 'M/s. H.R. Bhalla'), provided asunder :- " 4. Shree Romesh Chander Bhalla and Shree Prakash ChanderBhalia (who ultimately shall be the continuing shareholders andDirectors of H.R. Bhalla & Sons (P) Ltd) shall be responsible alongwith the other three brothers for procuring M/s H.R. Bhalla & Sons(P) Ltd. transfer of three fifth of land & buildings at Bahadurgarh toa wholly owned subsidiary company (itself being its holdingcompany). Thereafter the shares in that subsidiary company heldby H.R. Bhalla & Sons (P) Ltd. shall be transferred to Shree NareshChander Bhalla, Shree Sudesh Chander Bhalla and Shree AvinashChander Bhalla and/or their nominees, at such time, as the lattermay be advised to be the appropriate time for the purpose. Theshare transfer deeds of subsidiary company duty signed in blankshall be handed over to the Arbitrator immediately at the time oftransfer to the subsidiary company. It is, however, made clear thatall the five brothers shall be responsible for and shall share in equalproportion all or any liability for stamp duty, taxes or any otherfinancial liability that may arise on account of the arrangementsmentioned in this para. 5. H.R. Bhalla & Sons (P) Ltd. shall also be made to transfer3/5th of the machinery & plant and furniture to the said subsidiarycompany.Shree Romesh Chander Bhalla and Shree Prakash ChanderBhalla shall be responsible for procuring from the company H.R.Bhalla & Sons (P) Ltd. payment of gratuity that may be due toShree Sudesh Chander Bhalla. Shree Sudesh Chander Bhalla shallalso be entitled to receive four month salary as compensation. 6. As soon as the land and buildings and machinery etc is transfarred as stipulated in paras 4 & 5 above .and the show room hasbeen disposed of and its proceeds apportioned and paid as providedherein. Shree Naresh Chander Bhalla, Shree Sudesh ChanderBhalla, and Shree Avinash Chander Bhalla shall resign from theDirectorship of H.R. Bhalla & Sons (P) Ltd. and shall trnasfertheir shares to Shree Romesh Chander Bhalla and Shree PrakashChander Bhalla or their nominees at full face value. The resignation letters and the share scrips together with transfer deedswhich will be in possession of the arbitrator, shall be delivered byhim to Shree Romesh Chander Bhalla for being deposited by him. 7. The share capital of H.R. Bhalla & Sons (P) Ltd. andits reserses, if any, shall be divided into five parts in proportion tothe shares held by each of the five aforesaid brothers and theamount so allocated to Shree Naresh Chander Bhalla, Shree SudeshChand Bhalla and Shree Avinash Chander Bhalla, shall be payableto them in proportion to their respective holdings in that company.The parties aforesaid shall prepare an agreed scheme as to howand when it should be paid to them or otherwise adjusted. In casethey fail to prepare an agreed scheme, they shall report to thearbitrator, for his decision in this matter. 8. The show room of H.R. Bhalla & Suns (P) Ltd. situated inDarya Ganj shall be sold by 31.3.1985 and the sale proceeds beutilised and divided in accordance with a scheme as envisaged inpara 9 hereafter. 9. All assets and liabilities of M/s. H.R. Bhalla & Sons(P) Ltd. including both Engineering and leather divisions are to beshared by the five brothers in proportion to their respective sharesholding. Immediately after the date of this Award the parties here toshall submit to the arbitrator a mutually agreed and acceptablestatement and scheme of division of the assets and liabilitiesincluding those mentioned in paras 7 & 8 above. In case nomutually acceptable scheme is furnished, complete lists of assetsand liabilities of HRB shall be furnished to the arbitrator who willthen decide the manner in which and time when the division ofsuch assets and liabilities shall take place. It also provided that the parties shall maintain status quo with respectto all the companies till 31/03/1985. Learned Arbitrator made his final award on 24/04/1986. Asregards M/s. H.R. Bhalla it provided :- " 5. NCB, SCB & ACB shall get all assests of the EngineeringDivision of H.R. Bhalla & Sons (P) Ltd. including all plantsmachinery. Dies. Jigs, Spares, furniture, fixtures, telephone, allEngineering, stocks, finished, semi-finished, raw material, all ofwhich at present are lying in the factory premises "Forward works"T-3, Industrial Area, at Bahadurgarh and telephone connection atNCB's residence. They shall also be responsible to pay or otherwisemeet all the liabilities of the Engineering Division of that Company,a list of which is annexed herewith and is marked Annexure "A".They shall also be entitled to recover any recovrerable outstandingsin favour of the Engineering Division of H.R. Bhalla & Sons (P) Ltd.(for details see Annexures "A-1" and "A-2"). SCB shall also getone scooter, which is already in his possession. 8. RCB & PCB shall within two months from the date of thisaward, arrange transfer and conveyance, by M/s. H.R. Bhalla &Sons (P) Ltd. of a portion of the factory premises known as"Forward Works" at T-3, Industrial Area, in Bahadurgarh enclosedwithin red coloured line in the plan, Annexure "B", to and infavour of NCB, SCB & ACB (in equal shares), in considerationof adjustment as per this Award of all their remaining claims. 9. NCB, SCB & ACB, shall deliver their resignations fromthe Directorship of H.R. Bhalla & Sons (P) Ltd. on the announcement of this Award. They shall also deliver share scrips, togetherwith transfer deeds, transfering the shares of H.R. Bhalla & Sons(P) Ltd. to RCB & PCB and or their nominees for a considerationof Re. 1.00 per share only. 11. RCB land PCB shall continue to be the exclusive shareholders (and thus the owners of the business and assets) of M/s.H.R. Bhalla & Sons (P) Ltd. which company continues to owninter aha the tenancy rights of the showroom on Netaji SubhashMarg, New Delhi and of the portion of the factory premises knownas "Forward Works" at T-3, Industrial Area, Bahadurgarh, enclosedin Blue on the plan annexed herewith as Annexure "B", and allother business and assets not specificaly transferred to NCB, SCB &ACB, by this Award. " On 21/05/1986 Ramesh Chandra Bhalla and Prakash ChanderBhalla filed a petition (Suit No. 1091A/86) against the remaining threebrothers under Section 14 of the Indian Arbitration Act. It was prayed thatthe Arbitrator be directed to file the original award for necessary action inaccordance with law. Notice was issued to the learned Arbitrator for 12/08/1986 tofile the award. The award was actually filed in Court on 8/10/1986.
(3.) IN those proceedings on 26/05/1956, i.e. beto.c the award was filedin Court, the applicants Ramesh Chander Bhalla and Prakash ChanderBhalla filed an application (IA 3551/86) under Section 41 (b)and Schedule11 read with Section 18 of the Arbitration Act, 1940 real with Order 39-Rules1 and 2 and Section 151 of the Cods of Civil Proedure, for temporaryinjunction restraining respondents 1 to 3 from : (a) acting as Directors ofM/s. H.R. Bhaila a, ; Sons (P) Ltd.;(b) from holding any meeting of the Board of Directors or generalbody meeting of the shareholders of u/s. H.R. Bhalla andSons Pvt. Ltd;(c) from passing any resolutions in respect of the conduct and.management of the affairs of M/s. H.R. Bhalla and Sons Pvt.Ltd.:(d) from giving any effect or taking any steps in pursuance ofresolutions, if any, passed by any .meeting of the Board ofDirectors held by them; and(e) from interfering in the management of u/s. H.R. Bhalia andSons Pvt. Ltd. They also sought an order directing the respondents to cancel andrescind any acts, steps or actions alleged to have been taken in pursuance ofany alleged Meeting of Board of Directors of H.R. Bhalla, as though thealleged meeting had never been held and also to cancel the instructions issuedby respondents 1 to 3 to Canara Bank, Oriental Bank of Commerce, DaryaGanj in respect of accounts of M/s. H.R. Bhalla with further orders restrainingthem from issuing any further instructions. Jagdish Chandra, J. allowed this application. and granted interimreliefs claimed by the petitioners vide oriJci- dated one 5, 1986. It wasobserved "the award is prima facie evidence of the largest position regardingthe rights of the parties and normally there is hardly any justification for thecourt to deviate from the same unless and until the award is set-aside. Thetwin questions of balance of convenience and irreparable loss must also findfavour in accordance with the award and in favour of the parties in whosefavour the award is and in this case as the dispute is only in respect ofM/s. H.R. Bhalla & Sons (P) Ltd. which has been ordered to be given in theaward to the petitioners as against the respondents, these two questions standanswered in favour of the petitioners." ;