SUNIL AMBWANI, J. - (1.) HEARD Shri P.V. Kapoor, Sr. Advocate assisted by Shri Dhruv Wahi, Shri Saral Srivastava and Ms. Namrata Kapoor for STARLINGER and Co. Ges.m.b.H, Sonnenuhrgasse 4, A -1060 Vienna, Austria, the appellant and Shri Ravi Kant, Sr. Advocate assisted by Ms. Bindu Saxena, Shri Yatindra Shukla and Shri Saurabh Srivastava for M/s Lohia Starlinger Limited, D -3/A, Panki Industrial Estate, Kanpur and other respondents.
(2.) THIS appeal under Section 10F of the Companies Act, 1956 arises out of an order dated 12.12.2006 passed by the Company Law Board (CLB), Principal Bench, New Delhi in the Company Petition No. 62 of 2005, on a Company Application Nos. 365 and 324 of 2006 by which the CLB held that the issues raised by the application filed by the appellant are the matters to be decided on conclusion of main proceedings and permitted the respondent company to implement the decision taken in AGM dated 30.9.2006 relating to amendment of the objects clause of the Memorandum of Association with the stipulation that till the disposal of the petition it shall not commence any business other than automotive parts and electrical accessories as indicated in para 5 of its application CA 365 of 2006. The facts giving rise to the appeal are as follows: That the appellant is a company organized and existing under the laws of Austria having its registered office at Sonnenuhrgasse 4, A -1060, Vienna, Austria. It is engaged in the manufacture of 'Circular Weaving Machines' and machinery for plastic processing, packaging and textile industries for last 167 years. M/s Lohia Engineering Works, a firm incorporated having its registered office at 73 -A, Fazal Ganj, Kanpur, India entered into a contract dated December 14 th, 1980 with Maschinenfabrik Starlinger & Co., the company incorporated under the laws of Austria (now the appellant) to form a new company by the name of Lohia Starlinger Ltd., the respondent or any other company mutually agreed upon for undertaking the manufacture of the machinery for production of PP/ HDPE Woven fabrics, described in the agreement as follows: I. CIRCULAR WEAVING MACHINE, TYPE HD4 with necessary accessories like Creel, winding units etc. II. Additional equipments (a) Take -up units model FIL 23 to prepare bobbins From the tapes; and III. Other auxiliary machines like fabric cutting machine, stitching machine, sack printing machine, baling machine etc.
(3.) THE parties to the contract agreed that Starlinger will hold 40% of the equity shares in the new company and the balance 60% will be held by Lohia, their friends and Indian public. The clauses 4,7, 11, 16, 19, 21, 25, 27, 28 and 31 of the agreement relevant for this appeal are quoted as below: 4. STARLINGER grants to the NEW COMPANY exclusive right to manufacture the said MACHINERY in India and market the same. On the other hand Lohia shall not manufacture and market similar equipment of other companies without the agreement of STARLINGER. 7. STARLINGER will also provide comprehensive technical data regarding metal analysis, heat treatment properties, requirements of castings, forgings and other special purpose components, roller, hearings, gears and electrical equipments. 11. STARLINGER shall to be best of their ability and knowledge give the new company all the information and data which are required for the manufacture and marketing of the said Machinery. In case the New Company requires further information or clarification regarding such information and data, then STARLINGER shall use its best efforts to furnish the same to the New Company as early as possible. 16. That New Company shall be free to sub -licence to other Indian companies; the know -how and technology, if necessary. However, such sub -licensing will be subject to the Approval of all the parties concerned including STARLINGER and Lohia and subject to the approval of the Government of India. 19. In consideration of the services to be rendered by STARLINGER the New Company shall pay to STARLINGER a royalty of 5% (five percent) subject to Indian taxes for a period of five (5) years from the date of commencement of commercial production of the said machinery by the New Company. 21. The royalty shall be calculated on the basis of the net ex -factory sale price of the products exclusive of excise duties, minus the landed cost of the imported components irrespective of the source of procurement, including ocean freight, insurance, customs duty etc. 25. The New Company is bound to keep correct and accurate records of the Machinery manufactured and delivered and shall render to STARLINGER an account of the machines sold and delivered or exported by them every six (6) months. STARLINGER shall have the right to examine and verify such records by an authorised representative of STARLINGER or any independent chartered accountant. 27. That New Company can market their products as Licensee of STARLINGER. 28. The New Company shall be free to export their products to all countries except Brazil and Austria where STARLINGER have already got necessary arrangements. However, in order not to have a clash of interest, it is agreed that the New Company will route all their exports through the worldwide sales organization of STARLINGER. 31. All disputes, differences and disagreements arising in connection with this Agreement shall be settled mutually as far as possible, failing which the same will be rendered to the International Chamber of Commerce, Zurich and finally settled under the Rules of the said Arbitration court of the Chamber shall be final and binding on the parties thereto.;