9911796707
TMI Blog1994 (4) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... tor. Gurcharan Singh, his wife, Smt. Jaswant Kaur, his daughters, Miss Soniya and Miss Ramanjit Kaur, as also his son, Gurpreet Singh, filed Company Petition No. 79 of 1987 under section 155 of the Companies Act, 1956, for rectification of the register of members. This petition was fixed against Raghbir Cycles Private Limited, Raghbir Singh and his sons, Manjit Singh, Kanwaljit Singh, Paranjit Singh and Harjit Singh. This petition was filed way back in July, 1987, and at that time Paranjit Singh and Harjit Singh were admittedly minors and were sued through their father, Raghbir Singh, as their natural guardian. It is, inter alia , pleaded that the petitioners hold the following shareholding in accordance with the books of the company : 1.Gurcharan Singh 600 shares (although he is entitled to 2,100 shares in accordance with the allotment of 1,500 shares which was made on July 22, 1985, as evidenced by the return of shares made by the company to the Registrar of Companies). 2.Smt. Jaswant Kaur, wife of S. Gurcharan Singh 2,375 shares. 3.Miss. Soniya 2,640 shares. 4.Gurpreet Singh minor 3,250 shares. 5.Miss. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the credit of the three finance companies, i.e., Sethi Finance Company, Sikri Finance Company and Sachdeva Company, were washed off by allotting the shares to Shri Narinder Singh Sethi, proprietor of Sethi Finance Company, Shri Devinder Singh, proprietor of Sikri Finance Company and Shri Sampuran Singh, proprietor of Sachdeva Finance Company. It is pleaded that these shares were never applied for by these allottees and the same were subsequently got transferred by Raghbir Singh, respondent No. 2, in the names of Kanwaljit Singh, Paranjit Singh and Harjit Singh, respectively. The total number of shares allotted were 37.336 with the following break up : Sardar Narinder Singh 12,256 shares. Sardar Sampuran Singh 11,980 shares. Sardar Devinder Singh 13,100 shares. 37,336 shares. The allotment was made on July 4, 1985. It is alleged that Gurcharan Singh who was the director of the company never attended such a meeting authorising such allotment. The transfers were also pleaded to be in violation of the articles of association of the company which have been reproduced at pages 7, 8 and 9 as under : "11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e register of the members as holder by transfer of the said shares purchased by him or her. ( d ) In the event of the whole of the said shares not being sold under the foregoing sub-clauses hereof, the vendor may at any time within six calendar months after the expiry of the said 14 days, transfer the shares not so sold to any person (subject to the provisions of clause 15 hereof). ( e ) The provisions hereinbefore contained shall not apply to a transfer merely for the purposes of effecting the appointment in the name of new trustees, nor to a transfer by executors or administrators of a legatee under the will of, or, to the husband, wife or next of kin of a deceased member, nor a transfer by a trustee to a beneficiary provided that is proved to the satisfaction of the board that the transfer bona fide , falls within one of these exceptions." It is further pleaded that no notice whatsoever was given to the petitioners in compliance with article 12( a ) reproduced above nor were they asked if they were willing to get these shares which were sought to be transferred by the allottees who themselves were fictitious. Narinder Singh and Sampuran Singh are brothers-in-law of respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltimate balance-sheet did not reflect the correct state of affairs. On June 30, 1986, 9,100 shares were allotted to the following persons: "1,500 shares by Raghbir Singh to self. 1,500 shares to Manjit Singh, his son. 1,700 shares to Kanwaljit Singh, his son. 2,700 shares to Paranjit Singh, his minor son. 1,700 shares to Harjit Singh, his another minor son." The aforesaid allotment, it is pleaded, was made in the meeting which was never attended by petitioner No. 1 nor was any notice issued to him. It is further pleaded that the above devices were adopted by respondent No. 2 and his sons, respondents Nos. 3 to 6, with a view to obtain a majority holding in the equity capital of the company and defeating for all times to come, the right of petitioner No. 2 who was a shareholder of the company to the extent of 50 per cent, at the time of its inception. The above devices were adopted by respondent No. 2 in league and in consultation with Shri D. C. Gupta, who was the auditor of the company. He never looked into the fictitious entries which had been made. On the other hand, he himself got 10 shares allotted to the Punjab Management Consultants Private Limited of which he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Gurpreet Singh 400 Sh. Manjit Singh 500 Miss. Sonia 300 Sh. Kanwaljit Singh 550 Miss. Ramanjit 300 Sh. Harjit Singh 500 Sh. Paranjit Singh 100 2,950 1,350 B/f 2,950 B/f 1,350 June, S. Raghbir Singh 500 1977 3,450 1,350 June, 1978 B/f 3,450 B/f 1,350 June, 1979 B/f 3,450 B/f 1,350 June, 1980 B/f 3,450 B/f 1,350 June, 1981 B/f 3,450 B/f 1,350 Smt. Hardip Kaur 400 S. Gurpreet Singh 600 S. Manjit Singh 450 Miss. Sonia 350 S. Kamaljit Singh 500 Miss. Ramanjit 300 S. Harjit Singh 500 S. Paranjit Singh 500 5,850 2,600 June, 1982 B/f 5,850 B/f 2,600 June, 1983 B/f 5,850 B/f 2,600 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h had ceased to be the director of the company with effect from June 24,1987. The relationship of the parties was admitted and it was pleaded that Smt. Chanan Devi held 1,500 shares of the company and she died on November 2, 1984. The shares of the late Smt. Chanan Devi were transmitted in the name of Paranjit Singh in accordance with the will executed by her. Application for transmission of 1,500 shares of Smt. Chanan Devi, after having been endorsed by the Registrar of Companies, was filed with the company along with the photostat copy of the will for and on behalf of Paranjit Singh which was considered by the board of directors in their meeting held on October 15, 1986, in which the petitioner was present himself and the transmission was approved by the board of directors of the company. It was further pleaded that the company was doing excellent business and wanted to expand business and go for the export of the product of the company in a big way and as such the company needed finances. The company obtained finances from the firms, Sethi Finance Company, Sikri Finance Company and Sachdeva Finance Company. All the said firms are the sole proprietorships and are in the control o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,100 shares Jaswant Kaur, wife of Gurcharan Singh 2,375 shares Miss Soniya 2,740 shares Gurpreet Singh minor 3,250 shares Miss Ramanjit Kaur 2,685 shares 13,150 of Rs. 100 each. The shareholding aforesaid did not include the shares of Smt. Chanan Devi, mother of petitioner No. 1 and respondent No. 2 who, it is pleaded, were equally entitled to receive half of the shareholdings in their names and which shares have been fictitiously transferred by respondent No. 2 in the name of Paranjit Singh through a forged will dated January 10, 1984, alleged to have been executed by Smt. Chanan Devi. The initial shareholding of the company was divided into two groups of the share holders of the company, one headed by Raghbir Singh, respondent No. 2 and the other by petitioner No. 1. The shareholding of the group of petitioner No. 1 in the year 1983 was as under : Shareholding of the group Shareholding of group of of petitioner No. 1 Raghbir Singh, respondent No. 1 1983 6,050 shares 9,000 shares. (Additional 1,500 shares of Smt. Chanan Devi, mother of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh, proprietor of Sethi Finance Company, Sardar Devinder Singh, proprietor of Sikri Finance Company and Sampuran Singh, proprietor of Sachdeva Finance Company. Narinder Singh, Devinder Singh and Sampuran Singh had neither the capacity to deposit the amounts as alleged and as reflected in the books of account of the company nor had they applied for the allotment of any shares to them in the equity share capital of the company. The interest which was paid by bearer cheques was received by persons other than the drawee of the cheques and mostly by respondent No. 2 or his sons, namely, Manjit Singh and Kanwaljit Singh, after June 30, 1985, these credit entries were converted into share capital of the company in the respective names of the proprietors of the finance companies. The return of allotment of 37,336 shares filed with the Registrar of Companies as on July 4, 1985 was placed on the records of the case. These shares, it is pleaded, were subsequently got transferred, i.e., 12,251 shares, in the name of Narinder Singh were transferred in the name of Kanwaljit Singh son of Raghbir Singh. 13,000 shares in the name of Devinder Singh were transferred in the name of Paranjit Sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit account a sum of Rs. 25,000 was transferred to Paranjit Singh as gift. It is pleaded that the said petitioner never made any gift nor could any gift be made by a minor and the same money was utilised for facilitating the purchase of shares by Manjit Singh and Paranjit Singh, sons of Raghbir Singh. Similarly, from the fixed deposit account of Miss Soniya, petitioner, a sum of Rs. 25,000 was transferred to Paranjit Singh on February 29, 1984, and a sum of Rs. 5,000 was transferred to Manjit Singh on December 24, 1983, from the current account. Miss Soniya, it is pleaded, never made any such gift and these transfers were made with a view to show credit entries to facilitate the purchase of shares by Paranjit Singh and Manjit Singh. Various other amounts from the accounts of other petitioners were also likewise withdrawn. There is a complaint of not holding general meetings after December 31, 1985. There is also a complaint that the balance-sheet of the company has not been passed in accordance with section 210 of the Companies Act, 1956. Further, with a view to defeat the purposeful profitability of the company, respondent No. 2, Raghbir Singh, started another concern by the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., Ludhiana (Nickel scrap) 20. Om Sales Corporation, Ludhiana (Steel scrap) 21. R. S. Steel Corporation, Ludhiana do. 22. Ravi Industries, Ludhiana do. 23. R. R. Steel Industries, Ludhiana do. 24. R. S. Steel Traders, Ludhiana do. 25. Ludhiana Rolling Mills, Ludhiana (Steel scrap) 26. Antarctic Industries, Ludhiana do. 27. Arti Steels, Ludhiana do. 28. Vijay Foundry Works, Ludhiana do. 29. Grover Foundry Works, Ludhiana do. Similarly, coal quota was never received in the factory but the same was sold at the railway siding. By this, the money is pocketed by respondent No. 2 and instead of coal, rice husk was used for firing the boiler. There is no need to go into other allegations and suffice it to say that it is pleaded that the assets of value of over Rs. 2 crores have been found with Raghbir Singh and his two sons, which have been siphoned off from the assets of the company by illegal and objectionable activities and have been utilised by Raghbir Singh and his two sons for their private ends by taking either fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting ex parte injunction, vide order dated November 24, 1987. 1,500 shares of Rs. 100 each belonging to Smt. Chanan Devi were transferred by virtue of will executed by the late Smt. Chanan Devi and it is pleaded that the said will was never questioned by anyone. The will was executed on January 10, 1994 (?). The correct picture of the respective shareholding of the share holders of the company from its inception has been given at pages 9, 10 and 11 of the reply and the allegations of the petitioners that petitioner No. 1 and respondent No. 2 were entitled to the transmission of 1,500 shares in equal halves, after the death of Smt. Chanan Devi have been refuted. The other allegations of the petitioners as have been noticed above have also been refuted in a detailed written statement which is accompanied by several documents. After these two petitions had matured for arguments and arguments in fact had been heard for about 8/9 days, the parties to this litigation filed two applications, one under rule 9 of the Companies (Court) Rules, 1959, for appointment of an umpire to decide the disputes between the parties. The same was filed on behalf of the petitioners. The other application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll come up on January 29, 1993, to await the decision of the arbitrator/umpire." Shri D. S. Tewatia, retired Chief Justice of the Calcutta High Court and now a senior advocate practising in the Supreme Court, vide his letter dated January 27, 1993, addressed to the Registrar (Judicial) of this court sent the award as envisaged in the order of this court dated October 28, 1992, along with the minutes of the proceedings. It is on receipt of this award that the applications referred to in the beginning of the judgment which are being dealt with and shall be disposed of by this order were filed by the parties to this litigation. Before, however, the objections made out in the application filed by the respondent are noticed, it shall be useful to see as to how the arbitrator proceeded in the matter. The first meeting was held by the arbitrator on November 8, 1992, Shri L. M. Suri, advocate, appeared for the petitioners and Shri J. S. Narang with Mr. P. S. Chhina, advocates, appeared for the respondents. Learned counsel appear ing for the parties agreed before the arbitrator to appear before him on November 21, 1992, for filing their respective claims. On the adjourned date, i.e., No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of hearing, parties with their counsel appeared before the arbitrator but the matter was adjourned to January 16, 1993, to enable them to file rejoinders to the respective replies and for consideration of the application for inspection filed on behalf of Shri Gurcharan Singh. With regard to the restraint order, it was observed by the arbitrator that an order to that effect had already been passed in C. A. No. 19 of 1991 in Company Petition No. 134 of 1987 on May 3, 1991, and that being so it was ordered that the said order be reiterated. The matter was, however, taken up on January 17, 1993, when both the parties were present with their respective counsel. Counsel submitted rejoinders to each other's respective replies to the respective claim petition of each party. The hearing was adjourned to January 24, 1993, on which date it was ordered by the arbitrator that only Gurcharan Singh and Raghbir Singh, i.e., the concerned parties would appear without their counsel to make efforts at reconciliation. On the next date of hearing, Gurcharan Singh and Raghbir Singh placed documents before the arbitrator. They made joint statements to the following effect : "The arbitrator/umpir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law and the beneficiary named therein shall acquire no benefit thereunder. IV.As per document submitted before me by Shri Raghbir Singh, respondent, which depicted the share position of the respective families (headed by the petitioner and the respondent) from the year 1984, up to date, the two brothers to begin with held 50 shares each in Raghbir Cycles Private Limited. Thereafter, the parity changed and the ratio of the respective shareholding of the two families fluctuated. In the year 1983, the ratio came to be Raghbir Singh and his family 60 per cent, and Gurcharan Singh and his family 40 per cent. In the year 1985, Raghbir Singh and his family held 16,250 shares 58 per cent, and Gurcharan Singh and his family held 11,650 shares, i.e., 41 per cent. Up to this point the parties are ad idem. Further addition to the above shareholding positions is in dispute. In this regard, I decide and direct ( i )That out of 1,500 shares held by Smt. Chanan Devi in Raghbir Cycles Private Limited, 750 shares shall belong to Shri Gurcharan Singh and shall be deemed to have belonged to him from the moment of her death. ( ii )That 37,336 shares allegedly acquired by the three sons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase which means that if even after the reduction of shareholding position of Shri Raghbir Singh and his family in the said company as detailed earlier, he and his family is left with more than 60 per cent, shares then the shares in excess of 60 per cent, shall be offered to Shri Gurcharan Singh, petitioner, to be purchased by him if he is willing to purchase. In the alternative, the share capital limit can be increased to such an extent that it would enable Shri Gurcharan Singh to gain 40 per cent, shareholding in the said company. The option would be of Shri Gurcharan Singh or as the High Court directs. The register of members shall be rectified accordingly and shares shall be allotted/transferred accordingly. ( v )There shall be only two directors of Raghbir Cycles Private Limited, viz ., Shri Gurcharan Singh and Shri Raghbir Singh or their respective nominees provided that the parity is maintained between the two families in question. ( vi )Out of the two cinemas owned and operated by Raghbir Cycles Private Limited, Arora Palace Cinema shall be run and operated under the direct supervision of Shri Gurcharan Singh in his capacity as the director of the said company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned party with immediate effect." Date : January 27, 1993. (Sd.) D. S. Tewatia, Arbitrator/Umpire. It is now time to examine the objections preferred by the respondents against the award. It is the admitted position between the parties that if the objections are accepted, the two company petitions would revive and shall have to be disposed of on the merits, whereas if the objections are rejected, the applications filed by the petitioner for making the award a rule of the court shall have to be accepted thus resulting in making the award a rule of the court and thereby rendering the company petitions infructuous. The objections as culled out from Company Application No. 45 of 1987 reveal that it is either the procedure in conducting the proceedings that has been styled to be against law or the unworkability of the decision contained in the award that has been mainly canvassed for accepting the objections. During the course of hearing, not for a moment was the impartiality with which the arbitrator proceeded with the matter questioned. However, the first objection as contained in the petition is that the arbitrator has misconducted the arbitration proceedings inasmuch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the two families. In clause VI, the arbitrator has handed over the management of Arora Palace Cinema to Gurcharan Singh in his capacity as director of the said company. The said two provisions in the award are contrary to the statutory provisions of the Indian Companies Act, inasmuch as the group holding the majority of shares has been placed at par with the group of shareholders holding the minority of shares. It is also pleaded that a base has been laid for creating a deadlock in the company. It was known to the arbitrator that the two brothers, Raghbir Singh and Gurcharan Singh, who were made directors were not on speaking terms and, therefore, would not sit together to decide about the affairs of the company. It is also pleaded that there is no provision in the Companies Act according to which the business of the company can be divided amongst the directors for management. There has to be prepared only one annual balance-sheet of the company and all the accounts of the company are to be recorded in one set of books. The management as a whole vests in the board of directors and there is no provision to make it obligatory for Gurcharan Singh to render accounts to the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an individual. Gurcharan Singh, it is pleaded, is owner of shares of the company along with his family members and the arbitrator has stated that he will continue to own 40 per cent, of the shares. In spite of this, the company's property has been given to Gurcharan Singh which is beyond the scope of Company Petitions Nos. 79 and 134 of 1987, and the order of reference made by this court. The award is also asked to be rejected on the ground that one of the properties in dispute was a godown at 12, Ganesh Chander Avenue, Calcutta, which was claimed by the company as its property on rent but it has been grabbed by Gurcharan Singh. Gurcharan Singh has admitted that the tenancy rights were of the company Raghbir Cycles Private Limited and he was prepared to return the said premises if the company starts its business at Calcutta. The learned arbitrator has not given any award with regard to this item of the company. Similarly, no award has been made with regard to one S.C.O. at 3, Bentick Street, Calcutta, in spite of the fact that claim had been laid by Raghbir Cycles Private Limited and various documents had been placed on record in support of this claim. The matter with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under section 155 of the Companies Act and they were represented by their father throughout. In fact Raghbir Singh had attended to the affairs along with his sons but did not show any inclination for any further representation by any of the parties. In so far as the objections that the arbitrator has misconducted himself by picking up the percentage of shareholdings of the parties in the year 1983 and 1985 ignoring the latest position of 1986 is concerned, it is pleaded that the allegations of the petitioners all through were that Raghbir Singh and his sons had suddenly increased their shareholding in 1985 to the detriment of Gurcharan Singh and his family and the umpire had tried to peg down the shares of the parties to 60 : 40 ratio. In fact the correct ratio should have been 50 : 50 as both the brothers had equal shares in the company. It was denied that Gurcharan Singh did not challenge the allotment of 9,100 shares. His main case was that Raghbir Singh and his sons could not increase their shareholding to the detriment of Gurcharan Singh and, therefore, the entire gamut but ( sic ) was of allotment of shares to increase the percentage of shares of Raghbir Singh. It is denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly ignored the said premises. The shop at 3, Bentick Street, Calcutta, also did not belong to Raghbir Cycles Private Limited and, therefore, the umpire rightly ignored this property. It was within the scope and ambit of the court's jurisdiction to decide about the will inasmuch as all the disputes between the parties were referred to the umpire. It is further pleaded that the rights in the properties in clauses VII, VIII and IX belong to Gurcharan Singh and do not require any registration. It is also pleaded that Raghbir Singh has wrongly referred to the requirements of section 17(1)( e ) of the Registration Act. As the award was being filed in this court, therefore, the same would not form part of decree and would not require any registration. I have heard Mr. G. Ramaswamy, the learned senior advocate appearing on behalf of the objector as also Mr. Hira Lal Sibal, the learned senior advocate appearing on behalf of the petitioners who want that the award may be made rule of the court and have carefully perused the entire records. Before, however, the specific points raised by learned counsel appearing for objectors are noticed, it shall be useful at this stage to examine the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir award on the impugned items and even if, in fact, the interpretation is erroneous, the court cannot touch the award as it is within the jurisdiction of the arbitrators to interpret the contract. Whether the interpretation is right or wrong, the parties would be bound ; only if they set out their line of interpretation in the award and that is found erroneous can the court interfere". Apart from the existence of an error apparent on the face of the award, another angle from which a non-speaking award can be considered by the court is that when there is error in excess of jurisdiction or that the error is within the jurisdiction, the award cannot be challenged, ( sic ) Only in a case of total denial of hearing, the award can be set aside but technical rules of evidence do not apply to arbitration proceedings. A Division Bench of the Bombay High Court in Rashtriya Chemicals and Fertilizers Ltd. v . Mohindersingh and Company, AIR 1985 Bom 381, held that (headnote), "It is true that an award is liable to be set aside if there is total denial of hearing but technical rules of evidence do not apply to arbitration proceedings." A party to arbitration proceedings cannot be permitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de rule of the court, the restrain on the parties as made out in the order appointing arbitrator, i.e., that the parties shall not call into question the award of the arbitrator in any court, would be of no consequence and it shall be open to the parties to challenge the award under the known modes of challenging the same under the provisions of the Arbitration Act. Whereas, Mr. Sibal, learned counsel for the petitioner-applicant, asking for making the award rule of the court, accepts the latter part of the contention as noticed above and concedes that even though it has been mentioned in the order appointing an arbitrator that the award cannot be called into question, it is still open to the parties to this litigation to raise objections, seriously contests the first contention and styles the same not only impermissible in the facts and circumstances of the case but also one which borders on a plea that can be well termed dishonest. The facts and circumstances that are available, however, in my considered view, debar the objectors from asking for acceptance of objections and of the rejection of the award on the plea that the order appointing the arbitrator and consequent award r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, be said that the order passed by me on the applications of all the interested parties to the company petitions, referred to above, was not under the provisions of the Arbitration Act or that the award was also outside the provisions contained in the Arbitration Act. That apart, having asked for appointment of an arbitrator in writing and having participated before the arbitrator without raising any kind of objection, whatsoever, would not permit objectors to contend that the order passed by this court appointing the arbitrator and the award itself were not under the provisions of the Arbitration Act. The conduct of objectors amounts to acquiescence! The Division Bench of the Bombay High Court in Rashtriya Chemicals and Fertilizers Ltd. v. Mohinder Singh and Co., AIR 1985 Bom 381, relying upon N. Chellappan v. Kerala State Electricity Board, AIR 1975 SC 230, K. N. Co-operative Society v. Union of India, AIR 1973 SC 1338, and NES and T Corporation v. State of Punjab, AIR 1963 Punj 56, held that, "a party cannot sit back on an objection during the hearing before the arbitrator and raise it later after finding himself faced with an adverse award ; such conduct wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing order was passed : "Both the parties are present with their respective counsel. Counsel submitted on record rejoinders to each other respective replies to the claim petitions of each party. The hearing is adjourned to January 1, 1993, for 11.30 a.m. on which date only S. Gurcharan Singh and S. Raghbir Singh, who are the concerned parties, would appear with out their counsel to make efforts of reconciliation. To come upon January 24, 1993, at 11.30 a.m." On the adjourned date, i.e., January 24, 1993, the joint statement of parties, i.e., Shri Gurcharan Singh and Shri Raghbir Singh was recorded. It was stated by them that the arbitrator/umpire is requested to give award on the basis of material already submitted before him by either party as they did not wish to adduce any evidence, documentary or oral. The proceedings sheet of the arbitrator duly sent by him along with the award does not show that the case was taken on January 16, 1993. As mentioned above, it was taken only on January 17, 1993. It was on the said date that the case was adjourned to January 24, 1993, and not for February 6, 1993. As mentioned above, the joint statement of the parties concerned, i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the whole day was spent with the two parties who had presented their cases respectively and that none of the parties desired the help of their counsel to refer to the documents. The assertion of the objectors that the arbitrator had heard the parties behind each other's back, has been denied by saying that it was incorrect that the arbitrator/umpire had misconducted the proceedings like a conciliator. From the proceedings, as referred to above, as also the pleadings of the parties, all that can perhaps be made out is that on January 24, 1993, when the arbitrator tried for reconciliation, he might have heard the parties separately as well as jointly. It is from this background that the contention of learned counsel that Gurcharan Singh and Raghbir Singh were heard separately and not in the presence of each other, has to be appreciated. The facts of Payyavulu Vengamma's case, AIR 1953 SC 21, would reveal that one "P" died leaving behind his widow, his undivided brother, a son of another predeceased brother and his son by his predeceased wife. The deceased had purported to make a will under which he had made certain provision for maintenance and residence of the widow. The widow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt No. 1 in addition to the averments contained in his written statement and it is futile for defendant No. 1 to contend that in obtaining the statement exhibit No. 5 from him the arbitrator merely obtained from him a narration of what was already found in his written statement. In so far as the facts of the present case are concerned, it is proved on records of the case that on January 24, 1993, both the parties were heard jointly as well as separately. The date was fixed for endeavouring a settlement between the parties by way of conciliation. In the very nature of things, thus, the arbitrator was to hear them separately as well as jointly. It is in this manner only that he had to acquaint himself of the differences between the parties and, thus, attempt settlement, if possible. The facts of this case are, thus, entirely different and, therefore, the judgment of the Supreme Court in Payyavula Vengamma's case, AIR 1953 SC 21, strongly relied upon by learned counsel, cannot come to the rescue of the objectors. The facts of Bakhtawar Lal's case, AIR 1986 All 160, reveal that as a matter of fact it was found that the arbitrator had heard the appellant behind the back of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Singh. It is throughout the case of the parties that the two brothers, i.e., Raghbir Singh and Gurcharan Singh, are the heads of the two groups. Referring to the pleadings contained in the application under Order 23, rule 3 read with section 151 of the Code of Civil Procedure and rule 9 of the Companies (Court) Rules, 1959, which, it is significant to mention, was filed jointly by Gurcharan Singh and others, petitioners and Raghbir Cycles (P) Ltd. and others, it shall be seen that in paragraph 2 of the application it has been pleaded that the petitioner, Gurcharan Singh, and the respondent, Raghbir Singh, are the heads of their families in respect of their shareholding in Raghbir Cycles Pvt. Ltd. and both the brothers, i.e., Gurcharan Singh and Raghbir Singh, might be able to reconcile their disputes vis-a-vis Raghbir Cycles Pvt. Ltd. and Overseas Cycles Co. In para graph 3, it has been further mentioned that both the brothers are agreeable that an umpire might be nominated by this court and that the decision given by the umpire upon reconciliation shall be binding upon both the brothers including the members of their families, (emphasis supplied) Coming now to the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solute and exclusive property of Shri Gurcharan Singh, petitioner." The precise objection of learned counsel is that the house in question is company property and, thus, could not be given to Gurcharan Singh by the arbitrator as the parties while asking for arbitration had not agreed that the property of the company be divided or distributed nor was the same permissible in view of the order passed by this court vide which arbitrator was appointed. It is further the contention of learned counsel that the two company petitions, one of which was for rectification of the register and the other for winding up of the company, could not even remotely have within their ambit and scope ordering the transfer of a house to an individual which belongs to the company. By referring to section 443 of the Companies Act, learned counsel contends that the power of the court of hearing a winding up petition is to either dismiss it, with or without costs ; or to adjourn the hearing conditionally or unconditionally; or to make any interim order that it thinks fit ; or to make an order for winding up the company with or without costs or any other order that it thinks fit. That being the only power wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed with either of the points noticed above and all these objections, as noticed above, deserve to be repelled. The applications filed by the parties asking for appointment of an arbitrator and the contents thereof have already been noticed above. The order that emanated from the two applications has also been reproduced. A conjoint reading of the pleadings as also the orders passed by this court would clearly manifest that all kinds of disputes were referred to the arbitrator and the order passed on that count was most comprehensive. With regard to all matters, be it increase of shares by one party in clandestine manner or the will executed by Smt. Chanan Devi, the parties to this litigation were having disputes, both, civil and criminal, pending in various courts in the country and it is for that precise reason that it was specifically mentioned in the order appointing the arbitrator that the entire disputes between the parties shall be decided by Shri D. S. Tewatia, senior advocate, who will act as an arbitrator as also umpire. It was further ordered that in view of the agreement arrived at between the parties the proceedings in all the disputes inter se (civil and criminal) pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are the will executed by Smt. Chanan Devi to be invalid or other things, as have been noticed above, it cannot be said by any meaningful argument that there was no dispute between the parties on the said matter. When the parties to the litigation had agreed voluntarily to refer the entire disputes (emphasis supplied) to the arbitrator, then it is not the scope of the company petitions which is relevant but it is the scope of reference which is more pertinent. It was the dispute with regard to the companies known as Raghbir Cycles Private Ltd. and Overseas Cycles Limited which was to be decided by the arbitrator. It was specifically mentioned in the order appointing the arbitrator that it would be open to the parties to place necessary evidence before the arbitrator/umpire to show that the other properties even though individually owned were acquired through the funds of the company and it was open to the arbitrator to go into the dispute with regard to the said properties. Mention in the orders that ambit and scope of both the petitions, i.e., Company Petitions Nos. 79 and 137 of 1987 would be before the umpire/arbitrator for decision, did not mean that it is only the prayers c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h regard to the Arora Palace which is a cinema hall and reference to which has been made in clause ( vi ) of paragraph ( iv ). The same reads thus : " Out of the two cinemas owned and operated by Raghbir Cycles Pvt. Ltd., Arora Palace Cinema shall be run and operated under the direct supervision of Shri Gurcharan Singh in his capacity as the director of the said company." The argument is that there is one generator set and one A. C. plant for the two cinemas owned by the company, known as Arora Palace and Mini Arora Palace. There is only one entry point, one booking window and inasmuch as the Arora Palace Cinema is to be run and operated now under the direct supervision of Shri Gurcharan Singh, it would cause problems in the working of the two cinemas. The non-workability of the cinemas on the counts noticed above has been denied in the pleadings. This court is not able to understand as to how there will be any difficulty in running the two cinemas only because Gurcharan Singh in his capacity as director of Arora Palace, has been given the right to operate the said company under his supervision. His supervision cannot possibly mean that he would order the running of the generat ..... 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