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TMI Blog2008 (9) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... question. - C.A. NOS. 5471-5472 OF 2008 & SLP NOS. 19235-19236 OF 2005 - - - Dated:- 3-9-2008 - ALTAMAS KABIR AND V.S. SIRPURKAR, JJ. Ms. Tasneem Ahmadi, Sudhir Kumar Gupta and Mithir Kumar Chaudhary for the Appellant. Ramesh Singh, Ankur Saisgal, Gaurav Singh, Ms. Rashmi Rekha, Ms. Bina Gupta and Garima Prashad for the Respondent. JUDGMENT V.S. Sirpurkar, J. - Leave granted. 2. A common Judgment of High Court of Madhya Pradesh at Gwalior in Miscellaneous Company Appeals filed by the Respondents herein is in challenge before us. These Appeals were filed by the Respondents against the order of the Company Law Board (CLB) arising out of the applications filed by the appellants herein under sections 397 and 398 of the Companies Act (hereinafter referred to as the Act ) alleging mismanagement of the company by the Respondents. Both the parties have already completed one round of litigation up to this Court and have come up before us in the second round. The factual matrix leading to the filing of the present appeals before us dates back to July, 1995 when the appellants herein filed the petitions under sections 397 and 398 of the Act. The facts are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. However, before that, respondent No. 8 Mrs. Radhika Srivastava filed an application C.A. No. 262 of 1998, challenging the order dated 10-6-1996 and praying for its recall. It was alleged in the application that respondent No. 8 had no knowledge of the compromise and that she was kept in dark about the settlement arrived at. She also further contended that the petition under sections 397 and 398 of the Act was not maintainable since as per section 399 of the Act, the petitioner had to have 10 per cent of the total issued share capital which would include preference shares. According to respondent No. 8, the petitioner did not have the shareholding of 10 per cent. Hence the petition under sections 397 and 398 of the Act before the CLB itself was not maintainable. 7. This application was replied to by the present appellants, more particularly, the appellant No. 3 Mrs. Nini Srivastava, wherein, it was stated that the petition filed before the CLB under the provisions of sections 397 and 398 of the Act was on behalf of the appellant No. 3 herself and also as the trustee of J.K. Srivastava Family Trust (referred to as the "Trust" hereinafter) and since the Trust had 1029 prefer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e finding of maintainability, while the other two appeals were by the respondents (herein), whereby their prayer for recall of order dated 10-6-1996 and the finding on the consent was rejected by the CLB. All the three appeals were dismissed by the learned Single Judge of the High Court by its order dated 30-6-2000. The learned Single Judge upheld the findings of the CLB on the maintainability of the petition and dismissed the appeal filed by the appellants. The learned Judge, however, observed that since the original petition itself was had to be not maintainable, nothing survived in the appeal filed by the respondents herein, challenging the other findings of the CLB. 11. The appellants filed Letters Patent Appeal against the order of the learned Single Judge. The Division Bench, however, dismissed the appeal filed by the appellants vide its order dated 10-8-2001 and observed that since the appellants had filed a fresh application before the CLB, the CLB should decide the subsequent application on its merits ignoring the observations made by the CLB as well as the learned Single Judge about the number of shares held by the Trust, and should further decide the case on merits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us through all the orders and firstly contended that the learned Single Judge has completely ignored the findings given by the CLB on the questions other than the maintainability of the petition. She pointed out that the CLB had very categorically found that the respondents had given consent for settling the matters amicably and accepting such consent, the CLB had passed the final order. She also pointed out that the CLB had also fixed the valuation of the shares at Rs. 6,000 per equity share, though the Chartered Accountants appointed by the CLB had initially fixed the price at Rs. 6,340 per equity share. She also pointed out further that the petition filed by Mrs. Radhika Srivastava (C.A. No. 262 of 1998) was fully dealt with and the objections raised by Mrs. Radhika regarding her not even having consented to the agreement, was rejected. Her further contention for recall of the order dated 10-6-1996 was also rejected by the CLB. It was only her objection regarding the maintainability, which was entertained by the CLB holding that the petition under sections 397 and 398 of the Act was not maintainable. But, however, since this Court has held the petition to be maintainable, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e weeks. In the fourth paragraph, the CLB then refers to the written submissions before the valuer as also the revised report of 8-10-1997 and the ultimate value computed by the valuer per equity share of Rs. 100 each being Rs. 6,340. It also made a reference to C.A. No. 264 of 1997 seeking for recalling the order of the Bench of valuation of the shares and for abandoning the valuation process and to proceed with the petition in accordance with law. It then made a reference to the hearing which took place on 15-12-1997, wherein, the request was made by the respondents to file objections to the valuation report as also to the further developments dated 20-12-1997 etc., and ultimately to the instructions by the CLB, wherein, the CLB had advised the parties to send notes to the Bench stating specifically the points on which they had reservations on the reports of the valuer, so that the Bench itself could take up the matter with the valuer. After referring to the fact of the parties, sending the details of their petitions, the CLB ultimately referred in this paragraph the possibility of settling the prices between the parties. 18. In paragraph 5, the CLB referred to the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties are settled and till such time, no payment need be made for the shares. The CLB observed that : "this argument also deserves to be rejected as no such reference is found in the order dated 10-6-1996. Further, after this order, a few hearings took place and at no point of time this issue was raised by the respondents." It further went on to hold : "Thus it is clear that even if there has been an agreement to settle the other disputes, it was to be after the shares of the petitioners are bought out by the respondents." The CLB then referred to the proposal by the counsel of the petitioners to refer all other disputes to the arbitrator to be appointed by the CLB and observed : "We think that it is a very fair proposal as the same would put an end to all the disputes between the parties and a time frame of 9 months for completion of the arbitration proceedings should be sufficient and that on expiry of 9 months, the respondents should pay the consideration for the shares irrespective of the fact whether the arbitration proceedings are concluded or not." In paragraph 10, the CLB referred to the valuation arrived at by the Chartered Accountants. The CLB ultimately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petition under sections 397 and 398 of the Act on account of the provision of section 399(3) of the Act. It specifically held in its judgment dated 26-10-2004 that the CLB had incorrectly held the said petition to be not maintainable. This Court found specifically that the objection regarding the applicability of section 399(3) of the Act could not hold water, and it was categorically declared that the 3rd appellant (herein) had the necessary authority to file the appeal on behalf of the Trust and she as well as the Trust had more than 10 per cent of the share capital along with the appellant Mrs. Nini Srivastava. Thus, it is clear that the order of the CLB only on the question of maintainability was held to be erroneous. It is to be noted that no other aspect and the finding in that order were even touched by this Court. Since this Court remanded the whole matter to the learned Single Judge before which the appeals against the order of the CLB were filed, on this background, when we consider the judgment now passed after remand, by the learned Single Judge, it is seen that the learned Single Judge has miserably failed to decide any questions whatsoever. The parties were at issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive parties with the time frame. 24. As regards the contentions raised by Ms. Ahmadi, learned counsel for the appellants as also the contentions raised by the opponents, we have already held that it would not be feasible for us to consider the merits of the appeals filed by the parties against the order of the CLB. We have pointed out that in its order, the CLB had considered number of questions raised by the parties vide their objections and independent applications filed from time to time. Barring the question of tenability which is finally decided upon - this Court had not considered any other questions covered in those appeals and had left the same to be decided by the Single Judge. We, therefore, would not go beyond the directions of remand, earlier issued by this Court. That would be neither a proper nor an appropriate course to follow. However, we must clarify that it would be open for the High Court to go into the question as to whether the parties hereto were bound by the terms of compromise, which have been affirmed by the CLB. In that, the High Court would also be bound to consider the tenability of the appeals filed by H.K. Srivastava Group. We have clarified th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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