ULTRAFILTER GAMBH Vs. ULTRAFILTER INDIA PRIVATE LIMITED

JUDGEMENT

(1.) Aggrieved by the order dated December 12, 2001, passed by the Company Law Board, Chennai in Company Petition No. 57 of 1998 (Ultrafilter (India) P. Ltd. v. Ultrafilter GmbH, 2002 112 CompCas 93, directing the petitioner-company therein to purchase the shares held by the respondent therein, among consequential reliefs, the respondent has filed the present appeal.

(2.) The first respondent is a private limited company. It was incorporated in December 1985, for the manufacture of fiiter equipment. The second respondent holds 51.82 per cent. of the shares. The appellant holds 26 per cent, of the shares. Respondent No. 1 and the appellant, initially entered into a technical collaboration agreement on February 17, 1986, by which the appellant was to provide technical know-how and assistance for the manufacture of industrial filters by the company. Thereafter a shareholders partnership agreement dated October 16, 1986, was entered into between the appellant and the second respondent by which the appellant was to subscribe to 26 per cent. shares in the company for a sum of Rs. 7.8 lakhs. This agreement also provided that the company and the appellant would enter into a name protection agreement, a distributor agreement, a trade mark registered user agreement along with an amendment to the articles of the company. Accordingly, the appellant acquired 26 per cent. of the shares of the company. The company started manufacturing filters in the name and style of ultrafilter. The use of filters developed into the requirement and use of filters along with the dryers. Hence the company started manufacturing its own desiccant type of dryers to be sold along with the filters manufactured by it. As far as the other type, viz., fridge dryers are concerned, the same were being imported and sold along with the filters. The company consulted the appellant and on the recommendation of the appellant, the company started importing friulair dryers from Italy for being sold along with the filters being manufactured by the company. At the same point of time, a competitive dryer, manufactured by Sabroe was being marketed by one M/s. Pace Equipment, Bombay. Hence, there was a competition between the company marketing its filters with friulair dryers and Pace Equipment marketing filters along with Sabroe dryers. By a letter dated October 20, 1997, the appellant informed the company that the technical collaboration agreement had come to an end on February 16, 1991 and as such the company should not use the word utrafilter in any of the products manufactured by the company under the technical collaboration agreement. Through this letter, the appellant also issued a notice of termination of the trade mark registered user agreement as on December 1, 1998. In spite of negotiations between them, no amicable settlement resulted. Various communications ensued between them. It was alleged that the appellant has commenced businesses along with the competitors resulting in a damage to the company. That the appellant was acting in an oppressive manner, adverse to the interests of the company. Under these circumstances, Company Petition No. 57 of 1998 was filed before the Company Law Board, Chennai under sections 397, 398, 402, 403 and 406 of the Companies Act, 1956, by the respondents, seeking to restrain the appellant from interfering with the conduct of the business of the company and to restrain the appellant, from doing any act or thing which would be in competition directly or indirectly with the business of the company, to restrain the appellant from claiming any right or to do any business in India under the name and style of ultra-filters either as a trade mark or as a part of a corporate name in India and to amend the articles of association or in the alternate, to direct the appellant to sell its 26 per cent, of the shares held in the company and other consequential reliefs.

(3.) the appellant entered appearance and contested the petition. The Company Law Board by the impugned order, granted relief to the respondent by directing the respondent/company to purchase the shares held by the appellant on a fair market value to be determined by the statutory auditors of the company on the basis of the balance-sheet as on March 31,1999 and on such determination, the respondent was directed to pay the consideration within six months thereafter. Aggrieved by this order, the respondent before the Company Law Board, is in appeal.