9911796707
TMI Blog2010 (5) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 (Deepak Lohia v. Kamrup Developers (P.) Ltd. [2003] 116 Comp. Cas. 188 ), which was affirmed by the company judge of this court in Company Appeal No. 1 of 2002 vide judgment dated January 29, 2004, first against the interest payable on such amount then against the principal, with a further prayer for injunction and appointment of receiver till the entire amount is paid. By order dated July 19, 2005, passed in C. A. No. 99 of 2005, registered on the basis of the application filed by respondent No. 1, praying for waiver of interest on the amount payable to the appellant in terms of the aforesaid order dated December 31, 2001, which is the subject-matter in Company Appeal No. 4 of 2005, the Company Law Board restricted the payment of interest at 20 per cent, per annum up to August 31, 2002, with a further direction to pay the same by September 15, 2005. Since the aforesaid orders under challenge in these appeals arise out of C. P. No. 82 of 2000, both are taken up together for hearing and disposal, as agreed to by learned counsel for the parties. 2. The facts relevant for the purpose of the present appeals may be summarised as under: (i) The appellant had filed an application und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company. A further allegation that the Agarwal group was not holding the annual general meetings or the board meetings of the company, was also made. (ii) The said application was resisted by the Agarwal group denying reaching of any understanding between the parties to maintain the parity in the shareholding or in the representation in the board of directors as projected by the Lohia group. According to the Agarwal group, the understanding was that they would hold the majority shares. The allegations of mismanagement as well as of not holding the board meetings and the annual general meetings were also denied. (iii) The Company Law Board on consideration of the materials placed on record as well as the respective cases projected, took the view that it was the understanding and intention of the parties to have equal shares and representation in shareholding of the company as well as in its board. It was also found by the Company Law Board that the induction of the additional directors belonging to the Agarwal group as well as the allotment of additional shares to the said group were in breach of the agreement and understanding between the parties, and therefore constituted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining respondent No. 1 company and others from selling, dealing with and/or encumbering arid/or disposing of any flats, shops or office spaces in the building constructed ; for appointment of receiver and/or special officer in respect of the- office spaces, shops and flats in the said building and to take possession; to direct such receiver and/or special officer to sell the office spaces, flats, shops, etc., in the said building, which remain unsold, by public auction, etc., and to realise the sale proceeds and hand over the same to the appellant for disbursement to the entities mentioned in annexures P4 and P5 in C. P. No. 82 of 2000 and to disclose to the appellant all particulars with regard to the dealings and transactions in respect of the flats and office spaces in the said building, basically contending that despite the order passed by the Company Law Board on December 31, 2001, 'which had been upheld by the High Court vide judgment and order dated January 29, 2004, respondent No. 1 company did not pay the entire dues payable except making payment of Rs. 50,00,000 and leaving a balance of Rs. 81,18,136 including interest in so far as the entities concerned in annexure P4 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the interest due and payable and the remaining against the principal amount due and payable under the order dated December 31, 2001, passed by it. (viii) Another application was filed by respondent No. 1 company before the Company Law Board, which was registered and numbered as C. A. No. 99 of 2005, praying for recording that all amount due and payable by it to the present appellant, pursuant to the order dated December 31; 2001, passed in C.P. No. 82 of 2000, have been paid and there is no other amount due and payable by respondent No. 1 company and/or by respondent No. 3 Shri Ashok Kumar Agarwal and they are not liable to make any further payment to the appellant or his associates (Lohia group), contending, inter alia, that pursuant to the aforesaid order dated December 31, 2001, passed by the Company Law Board, the entire amount towards the principal in respect of the entities in annexures P4 and P5 to the main application, has been paid and keeping in view the status of the project in question and the investment made therein by the Agarwal group, a prayer was made to pass an order waving the payment of any interest by the applicants therein and/or by the company to the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal preferred by the contesting respondents' under section 10F of the Act before the High Court having been dismissed, and when the appellant filed the application in C. A. No. 41 of 2004 for execution of the order dated December 31, 2001, passed by the Company Law Board. According to learned counsel, the Company Law Board though has no power to review its order, it has reviewed its earlier order thereby restricting the payment of interest at 20 per cent, up to August 31, 2002, i.e., the date by which the Company Law Board had directed the contesting respondents to pay the principal and the interest accrued thereon, which amounts to favouring the defaulter in making the payment pursuant to its order dated December 31, 2001. According to learned senior counsel, even the answering respondents knew that they are liable to pay interest till the date of actual payment and as such in the application filed in C. A. No. 99 of 2005 they prayed for waiver of the interest payable. 5. Relating to the order dated June 15, 2004, which is under challenge in C.A. No. 8 of 2004, it has been submitted that since the direction contained in order dated December 31, 2001, passed by the Company Law B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... berty given to approach the Company Law Board in case of any difficulty in implementing the order, had approached the Company Law Board in C.A. No. 99 of 2005 and the Company Law Board having taken into consideration the entire facts and circumstances of the case has restricted the payment of interest up to August 31, 2002, by which date the answering respondents were directed to pay certain amount with interest, however, rejecting the prayer of the answering respondents to waive the payment of interest totally as directed earlier. Mrs. Hazarika submits that the application filed by the appellant in C.A. No. 41 of 2004, from its contents and the prayer made therein, is not an application for enforcement of the order dated December 31, 2001, passed by the Company Law Board, which in any case being an interim order and understood as such by the appellant, there is no question of enforcing the same. According to Mrs. Hazarika, what the Company Law Board intended in its order dated December 31, 2001, being to compensate the appellant, and the contesting respondents having paid the appellant the substantial amount pursuant to such order, the appellant has in fact been compensated. It ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in C. P. No. 82 of 2000, by restricting the payment of interest at 20 per cent, up to August 31, 2002, only, after the said order dated December 31, 2001, has been affirmed by the High Court in an appeal preferred by the contesting respondents under section 10F of the Act and in the absence of any challenge to the liberty given to the parties to approach the Company Law Board in case of difficulties in implementing the award, by the appellant ?" 11. The Company Law Board in a proceeding initiated under section 397 of the Act is empowered to make such order, as it thinks fit, with a view to bringing to an end the matters complained of, provided, it is of the opinion that the company's affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members and winding up the company would unfairly prejudice such member or members, though otherwise the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up. While dealing with an application under section 398 of the Act, the Company Law Board, with a view to bringing to an end or preventing the matters compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... group to surrender the company to the Agarwal group, subject to payment of the value of the shares held by the Lohia group and return of the investment brought into the company by the said group along with interest thereon at 20 per cent, per annum, having held that the company's affairs are being conducted in a manner oppressive to Lohia group. By the said order, the entire principal and the interest was directed to be paid on or before August 31, 2002. While disposing of the said application filed under section 397/398 of the Act, a further order, however, was passed by the Company Law Board granting liberty to the parties to approach it, in case of any difficulty in implementing the order and for any consequential directions. From the nature of the said orders passed by the Company Law Board, it is, therefore, evident that first part of the order, i.e., requiring the Lohia group to surrender subject to payment of value of the shares held by the said group and return of all investments brought into the company by the Lohia group along with interest thereon was passed in exercise of the jurisdiction conferred on it by section 397/398 of the Act and the second part, i.e., granting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 002. Such interest was-directed to be paid from the date of receipt of the funds by the company till the date of payment. The Agarwal group unsuccessfully challenged the said order in the High Court in an appeal under section 10F of the Act. The Agarwal group, therefore, subject to the order that may be passed by the Company Law Board, in view of the liberty given to the parties in case of any difficulty in implementing the said order and for any consequential directions to be passed thereon, which order was passed in exercise of the jurisdiction conferred by section 402 of the Act, is bound to pay the principal and the interest as awarded by the Company Law Board and such order relating to the payment of principal and interest takes the character of a decree passed by a civil court under the- provisions of the Civil Procedure Code for the purpose of its enforcement under section 634A of the Act. 16. There being no specific direction in the said order dated December 31, 2001, passed by the Company Law Board relating to the mode of payment of the amount and how any amount paid pursuant to such order is to be appropriated, the money paid by Agarwal group to Lohia group is first to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been dealt with in this judgment. An application was also filed by the Agarwal group, registered and numbered as C. A. No. 99 of 2005, where the Company Law Board has passed the order dated July 19, 2005, restricting the payment of interest up to August 31, 2002, keeping in view the difficulties faced by the Agarwal group in payment of interest while, however, rejecting the prayer of the Agarwal group to totally wave the interest payable under order dated December 31, 2001. 19. The contention of the appellant (Lohia group) that the order dated December 31, 2001, having been affirmed by the High Court in Company Appeal No. 1 of 2002 vide its judgment dated January 29, 2004, the Company Law Board cannot pass the order dated July 19, 2005, its order having merged with the order passed by the High Court in appeal, cannot be accepted as the High Court did not interfere with the order passed by the Company Law Board giving the liberty to the parties to approach it again in case of any difficulties in implementing the order and reserving its jurisdiction to pass further order. Such liberty having been given by the Company Law Board, in exercise of its power conferred by section 402 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any limit on the nature of the order passed by the Company Law Board. In the instant case, a liberty, however, was granted to the parties to approach the Company Law Board in case of any difficulties in implementing the orders. Such liberty granted by the Company Law Board by the said order dated December 31, 2001, as noticed above, has not been challenged by the appellant (Lohia group) and, therefore, the direction for payment of principal and interest naturally has to be subject to the further order that may be passed by the Company Law Board. There is no doubt that the direction for payment of principal and interest, subject to the subsequent modification that may be made pursuant to such liberty granted, is executable by the Company Law Board or by any other court under section 634A of the Act. 22. In view of the above, while allowing the appeal being Company Appeal No. 8 of 2004, Company Appeal No. 4 of 2005 stands dismissed. The amount paid by the Agarwal group pursuant to the order dated December 31, 2001, passed by the Company Law Board in C. P. No. 82 of 2000 shall first be appropriated against the interest payable up to August 31, 2002 and the remaining amount shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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