Decided on December 09,2016



Rajeswara Rao, Member - (1.)The Company Petition bearing No. 83 of 2012 was initially instituted in the then Hon'ble Company Law Board, Chennai. Upon the constitution of National Company Law Tribunal (NCLT) Bench at Hyderabad for the States of Andhra Pradesh and Telangana, the case was transferred to this Bench as it falls under the jurisdiction of this Bench. Hence we are deciding it.
(2.)The Company Petition (which referred to as petition herein under) has been filed by Demerara Distillers Limited u/s. 397 & 398 r/w. Section 111, 237, 402, 403 and Schedule XI & other applicable Provisions of the Companies Act, 1956 (which is referred to as the Act hereinafter) by inter-alia seeking a declaration that the acts of the respondent No. 2 & 3 are prejudicial to the interest of the Respondent No. 1 Company and are oppressive against the petitioners; to declare that the Respondent No. 2 and 3 have failed in their fiduciary duties towards the Respondent No. 1 Company and direct to reimburse the amounts siphoned by them to the Company etc. by following the ratio of the Apex court as laid in the case of Dale and Carrington.
(3.)The brief facts leading to filing of CP No. 83/2012 and, the present C.A. No. 163/2012 are as follows:-
a) Demerara Distillers Private Limited (CIN: U27106AP 1996 PTC024798) (hereinafter referred to as DDPL for brevity), the first respondent in CP, was initially incorporated on 31.07.1996 as TMT Metallurgical Industries Limited, under the Companies Act, 1956, and the name was later changed to Demerara Distilleries Limited on 15.01.2001. Later, the Company was converted into Private Limited on 04th September, 2009. The main objects of the Company are to carry on business as manufacturers and repairers of and, dealers in export and import of all varieties of steel, carbon steel etc.; to manufacture, sell, deal in distribute, import, export in all kinds of distillery products, liquors, aerated or stilled, alcoholic or otherwise etc. Presently the Company is doing business of distilleries and breweries manufacturing.

b) The Authorised share capital of the Company is Rs. 15 Crores (Rupees Fifteen Crores only) divided into 1,50,00,000 equity shares of Rs. 10/- (Rupees Ten) each. The issued, subscribed and paid up capital is Rs. 11,56,04,400/- (Rupees Eleven Crore Fifty Six Lakhs Four Thousand Four Hundred only) divided into Rs. 1,15,60,440/- (One Crore Fifteen Lakhs Sixty Thousand Four Hundred Forty only) equity shares of Rs. 10/- (Rupees Ten) each.

c) Demerara Distillers Limited, Guyana (hereinafter referred to as DDL-G), (the Petitioner of CP No. 83 of 2012) is a company registered under the laws of the Republic of Guyana, having its registered office at 44B High Street, Kingston, Georgetown, Guyana. It is a shareholder of Demerara Distilleries Private Limited (DDPL), by holding 57, 80,220 equity shares of Rs. 10/- each fully paid amounting to 50% of the total paid up capital of the Company.

d) A Joint Venture Agreement (hereinafter referred to as JVA for brevity) was entered into on the 17th October, 2002 by and between DDL-G and Kanda & Associates, a group of investors having their principal place of Business at 5-3-118, 2nd Floor, 21st Century Commercial Complex, Nampally, Hyderabad-500 001. By virtue of this Agreement, they have jointly registered a company under Companies Act, 1956, under the name and style of DEMERARA DISTILLERS LIMITED, hereinafter referred to as JVC (Joint Venture Company). DDLG and Kanda & Associates have agreed to subscribe 50% each in JVC and, several conditions were mentioned in the Agreement. The relevant conditions to the present issue are Clause 14(f) under General Conditions; and clause 15(d) under Miscellaneous.

"Clause 15(d) Miscellaneous reads under: "All disputes, questions of differences etc. arising in relation to this agreement shall be referred to a single arbitrator in India in case the parties agree to it, otherwise, each party will appoint one arbitrator in India in accordance with and subject to the provisions of the Indian Arbitration and Conciliation Act, 1996, and the arbitration proceedings will be held in Hyderabad, India only".

e) Due to the failure of DDL-G, in its contractual obligation under the JVA, the DDPL suffered huge losses. The Kanda (Applicant No. 2 herein) used to fund the company continuously from his own sources. It is further stated that Kanda & Associates presently consists of T.G. Veera Prasad (Applicant No. 3 herein; Mrs. T.G. Aruna and Mr. Naag Rohit, wife and son of Mr. T.G. Veera Prasad respectively. As such the business of DDPL has come to a standstill and, they are suffering unbearable hardship, loss of profits and severe financial crisis and mental agony.

f) The DDL-G has agreed to the proposal of terminating the JVA, in order to mitigate further losses and, to get amicable settlement and decided to work out an easy and expeditious way to wind up the affairs of DDPL vide their letter dated 18th January, 2012, addressed to the Board of Directors, DDPL. In pursuance to this letter, Kanda & Associates by accepting the said proposal of DDL-G, has addressed a letter dated 20th February, 2012 to DDLG and requested to convene Board meeting for giving effect to termination of JVA and, also stated that termination would be carried out in terms of JVA. Kanda and Associates rep by BS Kanda and TGV Prasad, have also addressed a letter dated 22nd February, 2012 to the Board of Directors, DDPL requesting to convene a Board meeting immediately to carry on proposal of termination of JVA,

g) As per the said JVA, all issues and differences between the parties can be resolved through Arbitration as mentioned supra. So the DDPL by taking the first initiative got issued legal notice dated 9th July, 2012 through their counsel to DDL-G U/s. 21 of Arbitration and Conciliation Act, 1996 for appointment of Arbitrators by giving details of claims/Compensation against DDL-G and also informed about approaching ICADR, Hyderabad for appointment of Arbitrator. It is also mentioned therein that Kanda and Associates presently consisting of Mr. TG Veera Prasad, Mrs. T.G. Aruna Kumari and Mr. Naag Rohit

h) ICADR has appointed Sri Justice TNC Rangarajan, a retired judge of High court of AP as Arbitrators and thus DDLG was called upon to appoint their own arbitrators, within 30 days from the date of receipt of copy of notice, failing which they would move the Hon'ble Chief Justice of India for appointment of Arbitrator on their behalf as provided under Arbitration and Conciliation Act, 1996.

i) Since DDLG failed to respond to any of efforts made by the DDPL to take appropriate action(s) to give effect to decision of termination of JVA, DDPL along with Mr. T.G.V. Prasad, Mrs. TG Aruna Kumari and Mr. Naag Rohit (Kanda's Associates) have filed Arbitration Petition No. 11 of 2013 before the Apex court, seeking relief U/S. 11 of Arbitration and Conciliation Act, 1996 for appointment of Arbitrator. After considering the various contentions made by the parties, the Apex court, by an order dated 24th November, 2014, has appointed Hon'ble Justice Sri. B. Sudarshan Reddy, a former judge of Apex court as Sole Arbitrator.

j) Though the DDL-G is a party to the said Arbitration Case (Civil) No. 11 of 2013 and also seriously contested the said petition, DDL-G has filed the present C.P. No. 83.2012 by seeking intervention of this Tribunal U/s. Section 397/398 R/w. other Sections of the Companies Act, 1956,

k) Pursuant to said CP No. 83 of 12, the present CA No. 163 of 12 (herein after referred to as Application for brevity) is filed by DDPL and other respondents of CP by seeking the relief as mentioned supra, under Section 8 of Arbitration and Conciliation Act, 1996.


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