2010 (7) TMI 816 - Board - Companies Law

Summary

Issues:
Enforcement of consent order dated February 27, 2008, interim reliefs sought by Ramesh group against Suresh group, interpretation and implementation of paragraphs 17 and 24 of the consent order.

Analysis:
The applicants, Ramesh group, sought enforcement of a consent order dated February 27, 2008, passed by the Company Law Board under sections 397/398 of the Companies Act, 1956. The order settled properties between Ramesh group and Suresh group, family members of Piyarelall Agarwal, who were conducting joint family businesses. Disputes led to company petitions filed for oppression and mismanagement. The consent order was challenged by Suresh group in a section 10F appeal before the Calcutta High Court, which interpreted the order on March 22, 2010. The current applications aimed to enforce specific paragraphs of the consent order and sought interim reliefs to prevent dealing with Suresh group properties until resolution.

The main contention revolved around the liabilities and indemnity clauses outlined in paragraphs 17 and 24 of the consent order. Ramesh group argued that Suresh group should bear liabilities up to March 31, 2006, and both groups should indemnify each other for business actions. Ramesh group calculated various amounts totaling Rs. 38,20,60,692.37, seeking restraint orders against Suresh group to prevent dealing with properties or risk rendering the consent order fruitless. They relied on legal precedents to support the enforceability of consent orders by the Company Law Board.

On the other hand, Suresh group's counsel contended that the order was not a money decree, and the liabilities were declaratory, suggesting that a suit might be necessary to determine the actual amounts owed. They cited legal cases to argue that the clauses in question did not automatically entitle Ramesh group to immediate relief. The Board acknowledged the validity of both arguments but emphasized the need to interpret the consent order accurately to determine enforceability.

The Board referred to the principles established in previous cases, highlighting the distinction between attachment and injunction proceedings. It noted that without a clear interpretation of the liabilities and indemnities, no immediate relief could be granted against Suresh group properties. The Board emphasized the importance of proving the claims and calculations before deeming them as decreed amounts. As the parties had completed pleadings, the Board directed them to present arguments in the main application to interpret the consent order effectively.

Ultimately, the Board concluded that the interim reliefs sought by the applicants were not granted at that stage. The decision was based on the need for a definitive interpretation of the consent order and the lack of proven claims and calculations to support immediate relief against Suresh group properties. The Board highlighted the parallel obligations on both parties and the necessity for a comprehensive understanding of the consent order before granting any relief.