MATHUR, J. - (1.) BOTH the special appeals under sec. 18 of the Rajasthan High Court Ordinance are directed against the judgment of the learned Company Judge dated 5/6. 9. 94 where by the learned Judge sanctioned the purported scheme of reconstruction - cum - family arrangement of Western Indian States Motors Ltd. the original respondent No. 1 (hereinafter referred to as the Company ). The grievance of the appellant inter alia in D. B. Special Appeal No. 30/94 is that the learned Company Judge by the impugned order has passed the order in terms of the compromise as is being done in a suit without satisfying that the interest of all the parties concerned i. e. the Company, its employees, share- holders and creditors was taken care of. In another appeal being D. B. Special Appeal No. 24/94, the grievance of the appellant Smt. Rajani Sanghi inter alia is that the Company Petition filed by her as a share-holder and creditor being Company Petition No. 2/92 and 3/92 were directed to be heard along with the Company Petition No. 6/86, still the learned Company Judge disposed of the Company Petition irrespective of the fact that both the company petitions were not listed and they were not on board. It is also submitted that her deceased husband Ashok Kumar Sanghi who was third respondent in the Company Petition died on 1. 2. 90 but without taking his legal representatives on record the Company Petition was disposed of. She also filed an application along with her minor daughter Meenakshi for impleading her a party, but the same was erroneously rejected by the learned Company Judge. Thus, the impugned order sanctioning the scheme of reconstruction has been passed at her back in violation of principles of natural justice. The another significant development during the pendency of the special appeal is that while on 2. 3. 2000 the sixth respondent Vijay Kumar Sanghi filed an application to transpose him as second appellant. On 4. 11. 2000 appellant Mahendra Kumar Sanghi has filed an application seeking permission to withdraw the appeal. There is resistance by the respondent No. 6 Vijay Kumar Sanghi in the matter of grant of permission to withdraw the appeal. It is submitted in alternate that he may be substituted as appellant in place of M. K. Sanghi.
(2.) BRIEFLY stated the facts of the case are, thus: The first respondent, the Western Indian States Motors Ltd. is a public limited company. The share capital of the Company Rs. 25 Lacs is divided into equity shares of Rs. 1000/- equity shares of Rs. 1000/- each. In the year 1985, Company allotted company's shares to its existing share-holders in the ratio of 2:1. Thus, the Company has issued and allotted 5000 equity shares as bonus shares to its share-holders, raising the paid up capital of the Company to Rs. 15 Lacs. though it is a public limited Company as such the family pedigree is not relevant, still the fact remains that all the shares are held by members of the Sanghi Family i. e. the petitioner and the respondents No. 2 to 5 (in the Original Company petition and their family members) Thus, it would be convenient to acquaint with the family pedigree, which is given as follows:- Moti Lal Sanghi Died 1960 N. K. Sanghi (Raj.) Died 1984 Smt. Uma Sanghi R. 2. A. K. Sanghi (Delhi) R. K. Sanghi Wife Smt. Pushpa (petitioner in Company Petition) M. K. Sanghi (Bom.) R. 4 Appellant Vijay Sanghi R. 5 Ajay Sanghi Ashok Died 1. 2. 90 Wife Rajni R. 3 Akshaya Wife Rachana The eldest son of Shri Moti lal Sanghi namely Shri Narendra kumar Sanghi died on 19. 10. 84. During the life time of Shri N. K. Sanghi the Company showed net profit of Rs. 22. 7 Lacs for the Years 1983. It is alleged that since Smt. Uma Sanghi the widow of late Shri N. K. Sanghi assumed the control of the Company as Director, the affairs of the Company are in mess and the Company has gone from bad to worst. The Company has suffered huge losses and is heavily indebted. According to the Original petitioner among others the creditors of the Company are as follows:- (a) Oriental Bank of Commerce - Rs. 25 lacs (b) Indian Overseas Bank - Rs. 25 Lacs (c) Rajasthan State Industrial & Investment Corporation Ltd.- Rs. 30 Lacs It is also averred that the tax in huge sum recoverable from various departments is due against the Company. Serious allegations of mismanagement and misappropriation of Company Account has been levelled. it is also alleged that the annual general meeting of the Board has become long over due. The Company has not submitted its annual audit report. It is, thus, inter alia prayed that to remove all the Directors of the Company and appoint new Directors or in alternate order winding up of the Company. During the pendency of the Company Petition the original third respondent Shri Ashok Sanghi died on 1. 2. 90 as such his wife and minor daughter Meenakshi also filed company petitions being No. 2/92 & 3/92 as a share-holder as well as a creditor (under Sec. 433 (e) read with Sec. 439 of the Companies Act ). That the petitioner in the company Petition namely Shri R. K. Sanghi, Smt. Pushpa Sanghi and the second respondent Smt. Uma Sanghi wife of late Shri N. K. Sanghi, Amrit Kumar Sanghi, Akshey Kumar Sanghi and Smt. Rachna Sanghi appeared in person before the learned Company Judge on 5. 9. 94 and submitted a scheme known as scheme of reconstruction cum family settlement. The scheme was signed by aforesaid persons present in the court. A statement was made by Shri R. K. Sanghi that the consent of his son Nitin Sanghi and daughter Mrs. Deepa Kejriwal with respect to the family settlement shall be filed within two weeks. It was further submitted that Shri Amrit Kumar Sanghi will send consent of his sons Vijay Kumar Sanghi and Ajay Kumar Sanghi, his wife Smt. Mithlesh Kumar Sanghi and daughters Dipika Sanghi and Ritu Sanghi within two weeks. Mr. A. K. Rajvanshy appearing for Mrs. Rajani Sanghi opposed the said scheme of reconstruction. At this state, it would be convenient to acquaint with the gist of the scheme of reconstruction given as follows:- (a) It was agreed that land measuring 1. 1 acres with show room and workshop building situated at Station Road opposite Khasa Kothi, Jaipur shall be transferred to a new company known as Burlington Trade Centre (Pvt. Ltd.) (hereinafter referred to as BTC) in which the petitioners Shri R. K. Sanghi and Smt. Pushpa Sanghi and their family members are the share-holders and the Directors for the following considerations:- (i) BTC will repay loan of Oriental Bank of Commerce on behalf of the Company to the tune of Rs. 1 behalf core. (ii) BTC shall pay the dues of Income-tax, sales-tax, land & building tax, Provident Fund, Employees State Insurance and gratuity and compensation to old employees pertaining to the United Motors of Rajasthan to be paid by the transferee on behalf of the Company Ltd. in case account of non-payment of the dues, the show room has been attached by the authority or Court. (iii) BTC shall pay the dues of electricity/water supply/telephone exchange, municipal taxes etc. relating to the show room building to be paid by the Company. (iv) 50% of the stamp duty subjected to the limit of Rs. 15 Lacs should be paid by the transferee on behalf of the Company and in addition the other liabilities of the show room shall also be cleared. (v) For the purpose of transfer the value of the land has been assessed at. 1. 20 Crores. The BTC shall pay Rs. 1. 20 Crores to the Company after the adjustment on mentioned in preceding paras. If the total amount paid by the transferee is less than Rs. 1. 20 Crores then the balance will be paid to the Company. But if the sum exceeds from Rs. 1 Crores then the balance would be paid by the Company to the transferee. (vi) BTC shall repay the loan in the sum of Rs. 1 Crore on behalf of the Company to M/s. Oriental Bank of Commerce. (b) Shares of the Company held by Shri A. K. Sanghi and his family members shall be transferred in favour of Smt. Uma Sanghi. Further Shri R. K. Sanghi agreed to pay a sum of Rs. 40 Lacs to Shri A. K. Sanghi and his family members on behalf of Smt. Uma Sanghi. (c) Against the requisition of the land sought to be transferred belonging to the Company other property at Bani Park shall be surrendered to the Government under Urban and Land Ceiling. (d) Shri A. K. Sanghi and his family members, who have filed a petition before the Delhi High Court for making the award of the Arbitrator dated 3. 12. 87 as the rule of the court shall withdraw the said proceedings unconditionally. The learned Company Judge disposed of the Company Petition bearing No. 6/86 in terms of the aforesaid scheme of reconstruction cum family settlement by order dated 5. 9. 94. An application was made for correction of typographical mistake in the order dated 5. 09. 1994. It was prayed that in Para 12 a statement may be included to the effect that Shri R. K. Sanghi and his family members shall transfer 505 shares of the Company in the name of Smt. Uma Sanghi or her nominees. A permission was also sought to submit the names of the nominees of Smt. Uma Sanghi in whose favour share of the Company and India Motors Pvt. Ltd. from A. K. Sanghi and his family members and Shri R. K. Sanghi and his family members could be transferred.
(3.) THE fourth respondent Shri Mahendra Kumar Sanghi filed an appeal against the order of the learned Company Judge sanctioning the purported scheme of reconstruction cum family arrangements of the Company inter alia on the ground that a petition under Section 397 and 398 of the Companies Act could not be compromised merely at the will of even all the parties thereto (unlike a suit) without the court being satisfied that the compromise was in best interest of the Company. According to appellant the company had several outstanding and large liabilities including claims from Rajasthan Industrial Corporation Ltd. (Rs. 30 Lacs) and a suit filed by the Indian Overseas Bank (over Rs. 25 Lacs), liabilities of the Income-tax Department, Provident Fund Commissioner etc. An allegation has also been made that the assets of the Company have been sought to be siphoned away and taken out of the reach of its creditors by the device of the "scheme for reconstruction" at a gross under valuation. It is submitted that the property sought to be transferred at Jaipur is the subject of equitable mortgage in favour of the Oriental Bank of Commerce in respect of which the said Bank of Commerce in respect of which the said Bank has filed a suit for recovery of mortgaged debt exceeding Rs. 1 Crore and the sale of the property for the recovery thereof and in respect of which debt of the Company the appellant has given a personal guarantee to the Bank and as such the bank and appellant ought to have been given opportunity of being heard before recording the scheme for reconstruction by the learned Company Judge. THE appellant has also filed an application under Order 41 Rule 27 C. P. C. seeking certain documents to be placed on record. Some legal grounds have also been raised to the effect that as per the requirement of Section 391 the learned Company Judge was required to direct to convene the meeting of the share-holders and the creditors before sanctioning the scheme. Objection has been filed by the original petitioner Shri Rajendra Kumar Sanghi with respect to the maintainability of the appeal. It is averred therein the similar settlement was done before the Bombay High Court in a Company Petition No. 128/85 with regard to other concern Sanghi Motors (Bombay Pvt. Ltd. , Bombay ). THEre also shares were transferred by Shri R. K. Sanghi and his family members in favour of the appellant Shri M. K. Sanghi and his family members in lieu thereof the property of the Company mentioned in Para 3 of the Scheme of Reconstruction was transferred on its book value which was far less than the market value. however, the appellant did not raise any objection in the said proceedings because he was beneficiary of the scheme of reconstruction. THEre also no notice was given to other parties including the fourth respondent. Averments have been made with respect to certain payments to the creditors. Smt. Rajni Sanghi wife of late Shri Ashok Sanghi has also filed an appeal under Section 18 of the Rajasthan High Court Ordinance read with Section 391 (7) of the Companies act against the order of the learned Company Judge sanctioning the scheme of reconstruction inter alia on the grounds that she had also filed a Company Petition being No. 3/92 and her minor daughter Miss Meenakshi Sanghi filed Company Petition No. 2/92 and the said company petitions were directed to be heard along with the instant Company Petition No. 6/86, but the learned Judge without hearing the said company petitions has sanctioned the scheme which has caused serious prejudice to her. it is averred that her late husband Shri Ashok Sanghi was a party to the Company Petition No. 6/86. He died on 1. 2. 1990 but no steps were taken by the original company petitioner to bring the legal representatives of late Shri Ashok Kumar Sanghi on record. it is also submitted that in the instant Company Petition No. 6/86 an application was filed on her behalf as well as on behalf of her minor daughter Meenakshi to implead them as party in the Company Petition but the learned Judge erroneously dismissed the same. The petitioner has also raised certain legal grounds inter alia that the scheme or reconstruction does not contain a single word regarding any meeting of share-holders/creditors, passing of resolution of the Company etc. The learned Judge has also not recorded any satisfaction with respect to bonafides of the scheme. The contentions have also been raised with respect to the bonafides of the scheme. On 4. 11. 2000 the appellant Mahendra Kumar Sanghi submitted an application pointing out certain developments during the pendency of the appeal whereby third party's rights have been created in the subject property putting the assets and properties beyond the reach of the Companies and the Firms. According to the appellant it has become impossible to restore status quo if the impugned order is set aside. Thus, a prayer has been made to permit him to withdraw the appeal. ;