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TMI Blog2006 (3) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 56 of 1996) before the Company Law Board, New Delhi under the provisions of sections 397 and 398 of the Companies Act, 1956, complaining inter alia of having been ousted from management of the companies and seeking a role in such management. Various interim orders were passed. On 9th January, 1997, the Company Law Board removed the respondent No. 2 as Chairman and Managing Director of the Company and appointed a retired Judge, Justice A.N. Varma as the Chairman of the Company. In 1998, pursuant to another interim order passed by the Company Law Board, the MMS Group was put in joint management of the Company. The creditors of the Companies including the company's bankers, namely Syndicate Bank initiated proceedings against the company inter alia for recovery of outstanding dues. The matter was ultimately resolved bet-ween the parties with the persuasion of the Company Law Board and praiseworthy efforts of the Chairman, Justice A.N. Varma. The terms of the family settlement were set down in a Memorandum of Family Arrangement and Transfer Document. 3. By an order dated 19th August, 1999, the Company Law Board recorded the history of the disputes between the parties and the procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /incomplete), by mutual agreement and following the completion of the said Schedules the parties shallforthwith execute the Memorandum of Family Arrangement. And both parties shall take all necessary steps to implement the settlement contemplated under the said documents which must be completed by 30th September, 1999. The Memorandum of Family Arrangement and the Transfer Document Relating to the Assets of Ram Bahadur Thakur Ltd. set out the entire agreement the parties and there are no understandings and/or arrangements other than expressly stated in these documents." 4. Paragraph 8 of the Order is also of some consequence and is quoted verbatim:- "Time shall be of the essence in affecting the settlement. If either party fails to perform it's obligations undertaken pursuant to the Memorandum of Family Arrangement or the Transfer Document relating to the Assets of Ram Bahadur Thakur Ltd., within the time specified therein, the aggrieved party shall be at liberty to approach us for appropriate orders/directions and for expediting the final disposal of the petition and the various Interim Applications. After the completion of all the transactions both sides shall appear before us f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t liable to pay the accrued gratuity liability amounting to Rs. 8.5 crores or the portion attributable to the 5 estates agreed to be sold to the MMS Group amounting to Rs. 4.74 crores. It was stated that they had already paid several amounts to the respondent No.1 and were entitled to deductions in terms of the agreement. They sought for enforcement of the order of the Company Law Board dated 19th August, 1999 as a decree. 10. The CBS Group contested the submissions before the Company Law Board and stated that they were still interested in working out the settlement provided the MMS Group adhered to the terms of the agreement. According to the CBS Group if the MMS Group had paid their outstanding liability of Rs. 3.6 crores directly to the Syndicate Bank, the CBS Group could have paid the balance of Rs. 4 crores demanded by the Bank and the 5 sale estates could have been transferred free of all charges and the MMS Group would have become absolute owner of the estates. It was also stated that because of the failure of the MMS Group to clear their dues, the Bank had got a decree from the Debt Recovery Tribunal and the properties of the Company had been attached. 11. The Company Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard was correct that the same was not in contemplation of the parties and accordingly dismissed the appeal. 13. Learned counsel appearing on behalf of the appellant has submitted that the Court could not refuse to implement the consent order dated 19th August, 1999. It was stated that the Company Law Board while dealing with an application under section 634A sits as an executing Court and in such a situation its powers are curtailed to the extent that it is bound to take the judgment as it stands. The Executing Court can interpret the decree and proceed with its execution as interpreted but could not refuse to execute it. It was argued that the legal effect of the consent order is that it is binding on the parties and could not be set aside except on very limited grounds, none of which was present. It was submitted that even if there was an ambiguity in the consent order that could have been interpreted. There was in fact no mistake of fact that had arisen either with respect to the agreement or the consent order. As far as the issue of the liability of the MMS Group under clause 4.1.1.11 of the Transfer Document to pay the gratuity which had accrued to the employees of the estat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he interpretation of the clauses which are called into question before us are those which dealt with : (a)The sequence in which the clauses in the agreements were to be implemented; (b)The requirements of the completion notice; (c)The quantification of the liabilities undertaken to be borne by the MMS Group; (d)The consequence of the failure of either of the parties to abide by the terms of the MOFA and Transfer Document. 16. The Company Law Board and the High Court did not decide questions (a), (b ) or (d). As far as (c) was concerned the question was limited to the interpretation of Clause 4.1.1.11. That Clause reads:- "Any statutory dues or dues in respect of labour and executives employed at the Sale Estates accrued up to 31st May, 1998". 17. The 'sale estates' are the five estates which were to be transferred by the respondent No. 1 to the MMS group. As we have noted learned counsel for the appellants submitted that although they had an arguable case on the incorrectness of the finding of the High Court which held that the MMS Group was liable to pay the gratuity liability, they were agreeable to concede this point so that the differences between the parties could be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order cannot be described as an interim order in the sense that the issues decided thereby could be reopened. 21. Under section 634A which provides for enforcement of orders of the Company Law Board, "Enforcement of orders of Company Law Board.-Any order made by the Company Law Board may be enforced by that Board in the same manner as if it were a decree made by a Court in a suit pending therein. . ." 22. The words 'any order' used in the opening of the section, indicates that all orders made by the Company Law Board on an application under sections 397 and 398 are enforceable like decrees without any limit on the nature of the order passed by the Company Law Board - Lyallpur Bank Ltd. v. Ramji Dass AIR (32) 1945 PC 60. 23. A "decree" under the Code of Civil Procedure has been defined as meaning : ". . . the formal expression of an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final". 24. All decrees whether preliminary or final are susceptible to execution. (vide section 36 of the Code of Civil Procedure.) 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stands until and unless it is discharged on an appeal" (- Charles Hubert Kinch v. Edward Keith Walcott AIR 1929 PC 289). 29. It is nobody's case that the order dated 19th August, 1999 was a nullity. The respondents had filed an application for recalling the order dated 19th August, 1999. The Company Law Board dismissed that application. An appeal has been filed before the Patna High Court which is said to be pending. However, it has not been drawn to our attention by the respondent that the application for recall was founded on the submission that the order dated 19th August, 1999 was a nullity. In the absence of such an issue being raised and decided, the Company Law Board was bound to execute the order. If the Board found that the decree or any of its terms called for interpretation, it was within the Board's jurisdiction to interpret that particular term and to execute the decree on the basis of such interpretation. As was said by this Court in Topanmal Chhotamal v. Kundomal Gangaram AIR 1960 SC 388, 390, if a decree is ambiguous, it is the duty of the Executing Court to construe the decree - Central Bank of India v. Rajagopalan AIR 1964 SC 743, 748. 30. Both the Company Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1976] 1 SCR 202, 122, 123, 125. The courts lean heavily in favour of family arrangements and, "matters which would be fatal to the validity of similar transactions between strangers are not objections to the binding effect of family arrangements". This view has been reiterated recently in Amteshwar Anand v. Virender Mohan Singh [2006] 1 SCC 148. 33. In our opinion both the Company Law Board and the High Court erred in refusing to execute the order dated 19th August, 1999 under section 634A of the Companies Act. They have thereby failed to exercise the jurisdiction with which they were vested. The failure is heightened given the nature of the order which they were bound to execute. They have erroneously proceeded upon principles applicable to contracts alone and have ignored the fact that the agreement between the parties had culminated in a consent order of the Company Law Board. The plea of the respondents that this Court should not interfere in the matter under Article 136 by reason of any alleged misconduct on the part of the appellants in managing the 5 estates is unacceptable. The appellant's alleged lack of efficiency in running of the five tea estates is not a material con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues could be said to have been fairly raised by the parties before it. We make it clear that whatever interpretation may be put by the Company Law Board on the clauses of the MOFA and Transfer Document, the Board must implement the clauses as interpreted. 36. Moreover Clause 4 which relates to the payment of the purchase price by the MMS group specifically mentions the total amount payable by them to the respondent No.l namely Rs. 7,24,67,708.90 less certain deductions. As far as the deductions are concerned, some of the clauses have quanti- fied the deductions, whereas others have left them undetermined in the sense that no quantum has been mentioned. In the first category are Clause 4.1.1.1 to Clause 4.1.1.5. Under Clauses 4.1.1.6 to 4.1.1.11 the amounts were required to be determined. This exercise will have to be carried out by the Board. The figures mentioned in Clauses 4.1.1.1 to 4.1.1.5 and 4.1.1.11 were also subject to verification under Clause 4.1.1.12 by the independent auditor appointed by the Company Law Board. The Company Law Board had by order dated 19th August, 1999 appointed Mr. M.C. Joseph, Chartered Accountant. We have not been told whether the independent au ..... X X X X Extracts X X X X X X X X Extracts X X X X
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