9911796707
TMI Blog2005 (1) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... ch i.e. 61.67 per cent of the total issued and paid up capital of the company. In April, 1988 the Pune Municipal Corporation PMC issued a tender for providing a passenger rope-way system within the city limits of Pune between Nehru Stadium and Parvati Hill. The said tender was accepted by the company. On 5-7-1991, the agreement was executed between the company and the said PMC in respect of the said project amounting to Rs. 6.5 crores. It is the case of the appellants herein that in view of the said project entered into, Rashid Group required a financial partner and accordingly an agreement was executed on 19-6-1993 between the appellant Nos. 1 to 4 representing Rashid Group and Lokhandwala Group. Under the terms and conditions of the said agreement Lokhandwala Group agreed to invest in the company to the extent of Rs. 125 lakhs to execute and implement the said rope way project and in consideration of the said investment, Lokhandwala Group were allotted 19,170 equity shares of Rs. 100 each sometime in October, 1993. A further finance was brought in by Lokhandwala Group of a sum of Rs. 2,28,200. On 10-12-1993, the Rope-Way Project was commenced and the work was undertaken. On 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the company. The dispute between the Jain Group and the Appellant continued in respect of the breach of the terms and conditions of the finance arrange- ment by and between the parties. Time and again meetings were called of the Board of Directors and even an Extraordinary General Meeting of the company was called to resolve the dispute pertaining to the differences and disputes between the parties. On the other hand, the arbitration proceedings continued and ultimately on 25-2-1998, the arbitration proceedings were concluded. Ultimately, a notice was issued by the respondent No. 1 on 14-2-1998 making various allegations against the company and the Rashid Group. The said Rashid Group and the said company duly replied to the said allegations. On 31-3-1998, the arbitration award was passed in favour of the company and against the Pune Municipal Corporation for a sum of Rs. 2.97 crores with interest at the rate of 18 per cent per annum from the date of the award till the date of payment. Now, the disputes between Rashid Group and Jain Group intensified and allegations were levelled against each other. The appellant No. 2 herein ultimately filed a suit being Suit No. 2493 of 1998 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by this Court, it is necessary to set out the prayers of the said suit which are as under : "( a ) that the Defendant No. 1 be ordered and decreed to specifically perform its obligation under clause 20 of the Finance Agreement dated 20th November, 1995 and relinquish their share holding in the capital of Defendant No. 1 in favour of the Plaintiff as a nominee of the Rashid group unconditionally; ( b ) that Defendant Nos. 1 and 5 to 9 be restrained by an order and permanent injunction of this Hon ble court from in any manner interfering with the management of Defendant No. 2 Company and/or representing themselves as shareholders of Defendant No. 2 Company; ( c ) that Defendant Nos. 5 to 8 be restrained by an order and permanent injunction of this Hon ble Court from in any manner representing themselves as Directors of Defendant No. 2 Company and from interfering with the management of Defendant No. 2 Company; ( d ) that it be declared that the meetings purportedly held by Defendant Nos. 1 and 5 to 9 to transact any business relating to Defendant No. 2 Company were illegal and therefore void and the resolutions passed in such meetings are also void ab initio and did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, submitted that the said order must be operative. He further submitted that in view of the fact that the said order is made operative subject to the decision in the suit he is not even inclined to press the said suit. He, however, submitted that at the present juncture he is willing to withdraw the said suit in so far as prayer clause ( a ) of the suit is concerned. According to him, once prayer clause ( a ) of the suit is not pressed and given up, the order of the Company Law Board must operate automatically. The learned counsel for the appellant has submitted that the order impugned provides for transfer of the shares from the Jain Group in favour of the Rashid Group. The order further provides that the said shares have to be evaluated by the statutory auditor of the company by taking into consideration the assets of the company as on 31-3-1999. According to the learned counsel for the appellant, under the order impugned the shares are ultimately required to be transferred by the Jain Group to the appellant herein. The learned counsel for the petitioner contended that this is one of the known methods for resolving the disputes between warring shareholders in a company wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the respondent that the appeal should be dismissed by this Court even if the same is not present by the appellant because it does not raise any substantial question of law which is necessary as a condition precedent for exercising jurisdiction under section 10F of the Companies Act, 1956. The learned counsel for the respondent thereafter contended that in fact if the order impugned in the appeal is allowed to be implemented by accepting the undertaking given by the appellant herein then in that event, the said order is likely to prejudicially affect the interest of the respondent for two reasons. Firstly, because the order provides for a valuation of the assets by a statutory auditor and that the statutory auditor of the company is a man of the appellant herein. He would not do justice in appropriate valuation of the shares which is required under the order passed by the Company Law Board and which is impugned herein in the present appeal. Secondly, it has been contended that the order impugned provides for 31-3-1999 as a cut-off date for evaluating the shares of the respondent company which is sold by the respondent herein. It has been contended that if the date of 31-3-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the fact that the appellants are not pressing their appeal, it is not permissible for me to go into the academic question of law whether in the present case the substantial question of law is raised or not. In that view of the matter, I refrain myself from going into the aforesaid question of law as in my view the same does not arise in the present case for consideration. In the present case, the appellants are seeking dismissal of appeal on the ground that they are not interested in prosecuting the same. The only prayer of the appellant is that the order impugned herein must be made operative and implementable. The respondents have not challenged the said order. Thus, I am of the opinion that it is not permissible for me to refuse to permit implementation of the order which is not any more under challenge by either of the parties. 11. The learned counsel for the respondents has contended that the said impugned order is subject to the final outcome of the suit and the suit is still pending and not yet disposed of. It is therefore contended by the learned counsel for the respondents that the order which is impugned in the present appeal is not implementable till the hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany Law Board becomes operative in favour of the respondents herein. Thus, in my view, there is nothing wrong in permitting the appellant to withdraw the appeal and/or dismiss the same as not pressed at the same time directing the order to be implemented against the appellants subject to undertaking to give up prayer ( a ) as mentioned hereinabove. I also further record the further undertaking of the appellant that as and when transfer of shares takes place as per the impugned order the appellant will also withdraw the said suit as the same becomes ultimately infructuous as the prayers pertains to the preventing of interference with the management by the respondent in the said company and/or injuncting the respondent from representing as directors of the said company cannot survive. In the aforesaid position, I am of the opinion that the contention of the respondent that the appeal should be dismissed and the order should not be implemented till and until the disposal of the suit is unsustainable and cannot be accepted. A litigation between the parties must come to an end and once the Company Law Board has taken a recourse to the final resolution of the issue by providing for valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the valuer in place of statutory auditor any other independent chartered accountant named by the Court. The appellant agreed to the same. The respondent took time to consult the client and on the next date I was informed that the respondents are not accepting the said suggestion offered by the client of changing the valuer in place of the said statutory auditor of the company. In so far as the next contention of the respondent pertaining to the assets of the company is concerned and whether the award is included in the assets of the company I offered to the respondent that they can raise the said issue before the valuer while the valuation process is undertaken. If they do not agree with the decision of the valuer then it will be open for them to challenge the same in accordance with law. However, even the said suggestion is rejected by the learned counsel for the respondent herein after taking instructions from their client. In the aforesaid circumstances, it is not possible to alter the impugned order passed by the Company Law Board at the instance of the respondent who has not challenged the same. 14. In the aforesaid circumstances, I do not see any merit in the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X
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