9911796707
TMI Blog2009 (5) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the Company from pursuing its lawful object and carrying out profitable projects by withholding funds contrary to the Investment Agreement, etc., have invoked the equitable jurisdiction of the Company Law Board under sections 397, 398 and 402 of the Companies Act, 1956 ( the Act ), seeking the following, among other, reliefs:- (a)to declare that acts of the respondents 2 to 5 as oppressive to the shareholders of the Company and constitute acts of mismanagement and to put an end to such acts; (b) to direct the second respondent to transfer its investments and shares in the Company to the petitioners at the price already agreed to by the respondents; (c)to remove the respondents 3 to 5 from the office of director and appoint such other person or persons as this Board may deem fit; (d)to direct the respondents 2 to 5 to compensate the Company for the losses caused due to their acts of oppression and mismanagement in the affairs of J the Company; and (e)to restrain the respondents 2 to 6, their men, agents, and other group companies from in any manner dealing with the Consortium partners of the Company; 2. The facts in brief, leading to the instant litigation, as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y under the guise of the MOU, which is neither valid in the eyes of law nor enforceable in a section 397/398 proceeding. With these contentious and substantial issues, involving the port projects of national importance, the rival parties are before me. 3. Shri Vedandam Srinivasan and Shri Sudipto Sarkar, learned Senior Counsel, while initiating arguments in support of the petitioners, submitted: The petitioners, being qualified Engineers from IIT Madras and possessing MBA with rich and unique experience in the port development and management sector formed the Company in February 2006, with 100% of shares equally held between them for development of infrastructure projects in the Sea Port Sector in India and Overseas. In terms of an Investment Agreement executed between the second respondent, the petitioners and the Company on 26.05.2906, 70% of shares of the Company came to be divested at par in favour of M/s Infrastructure Project Development Fund, a scheme managed by the second respondent, a 100% subsidiary of the sixth respondent (SREI), in consideration of providing necessary funds for development, of port projects, which may be undertaken by the Company. The petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Agreement, upon receipt of which the promoters are at liberty to exercise the purchase option and execute a binding purchase contract and shall settle the consideration in the specified manner. The promoters, by virtue of clause 16.1.2, cannot engage in any other business, save those explicitly specified therein, without the consent of the second respondent. Clause 17.1 dealing with the pre-emption rights of the petitioners to sell their ordinary shares and the mechanism thereto, will show the confidence, which the second respondent reposed on the petitioners and further establish that the second respondent will not remain in the Company, if the petitioners are desirous of leaving the Company. Maytas and NCC having pre-qualified to develop a Port at Machilipatnam in Andhra Pradesh, against a tender of the Government of Andhra Pradesh, approached Creative Infrastructure (Creative) a firm owned by the petitioners, in order to strengthen the technical qualification of the bid submitted to Government of Andhra Pradesh. Nevertheless, the petitioners asserted even before incorporation of the Company, in terms of e-mail dated 05.02.2006 of SREI representative that they would not joi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I and the Company were incurred by the Company. The e-mail dated 05.02.2006 sent by P. Kishore, representing SREI would show that it was solely due to the petitioners that SREI was allowed to participate in the Machilipatnam Port Project. The Board minutes dated 04.06.2007 would disclose that the Machilipatnam as well as the Subarnarekha project was awarded to the Company and that these two port projects are the projects of the Company. The Service Provider had acknowledged the receipt of the first payment on account of the Machilipatnam Port Project, from the Company, as borne out by an e-mail dated 15.07.2006 of the former. Maytas in its e-mail dated 11.04.2007 requested the first petitioner to expedite the issue of bank guarantee of ₹ 4.9 crores to be given by SREI in favour of Andhra Pradesh Government, especially when Maytas already furnished the bank guarantee for the entire amount of ₹ 10 crores. The third respondent in his e-mail sent on 24.04.2007 assured the first petitioner that SREI would give the bank guarantee after formation of the Special Purpose Company for undertaking the Machilipatnam Port Project. The Machilipatnam Port Project without the committed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral withdrawal by SREI of its commitment in nominating the Company as its investment vehicle, towards funding the project, without the knowledge and consent of the petitioners, constitutes a deliberate act of oppression, thereby completely depriving the Company and the petitioners of the rights over the Machilipatnam Port Project and by virtue of section 39 of the Contract Act, 1872, the petitioners may put an end to the Contract and any benefit derived by the second respondent on account of the Machilipatnam Port Project, must be restored in favour of the petitioners, in the light of the principles embodied in section 64 of the Contract Act. These acts of the second respondent, as a majority shareholder are grossly against the interest of the Company, amounting to fraud against the minority shareholders and mismanagement in the affairs of the Company. The second respondent, therefore, must account for the benefit enjoyed out of the Machilipatnam Project and compensate the losses suffered by the Company. Where the directors were guilty of a breach of duty in securing a contract in their own favour, they could not retain for themselves the benefit of a contract which belonged in eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat happened to 49% of shares of the second respondent in the Machilipatnam Port Project. The second respondent would have relinquished its interest in the Machilipatnam Port Project, in which case the second respondent shall part with any benefit derived on account of such relinquishment, in favour of the Company. The main object of inducting the second respondent, as a shareholder of the Company was for infusing funds to implement all its projects, as and when required by the petitioners and the Company, in terms of the Investment Agreement. The second respondent was offered shares of the Company worth ₹ 35 crores for a mere ₹ 7 lakhs on the understanding that the second respondent would finance the projects of the Company as stipulated in the Investment Agreement to which the Company is a party and accordingly the second respondent is bound to extend the project development expenses as unsecured loans in order to identify, procure, develop and operate the port projects. Any breach of the Investment Agreement results in its termination. The Government of Orissa awarded the Subarnarekha Port Project to the Company mainly on account of the petitioners' technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us on the Company and the petitioners, that the Company could not fulfil its commitments under the various agreements and arrangements reached by the Company for the purpose of implementation of the projects. The second respondent stopped since July 2007 providing any funds to the Company for its operations, bringing the business operations to a grinding halt and the Company faces the danger of losing the projects awarded to it. Any further continuance of association of the respondents 2 to 5 with the Company will cause irreparable losses to the petitioners and the Company and therefore, there were deliberations between the petitioners, the representatives of the second respondent and SREI, as borne out by exchange of e-mails on record, which culminated into a Memorandum of Understanding dated 14.11.2007 between the petitioners and the second respondent, whereby the second respondent had agreed to sell its investments in the Company to any prospective investor to be brought in by the petitioners, after necessary due diligence by 31.01.2008 and the payment was to be made by 28.02.2008 at a consideration to be mutually agreed upon. This MOU was to be in force till 28.02.2008 and in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed the completion of due diligence to the satisfaction of M/s Clear Waterfund, the prospective investor, who was ready to complete the transaction and payment as per clause 3 of the MOU and awaited the response of the third respondent to the transaction. The first petitioner in his e-mail sent on 20.01.2008 to the Managing Director of SREI pointing out the default on the part of SREI to give a bank guarantee of ₹ 4.90 crores for the Machilipatnam Port Project; (ii ) payment in favour of DPR parties by SREI Capital Markets and (iii ) inability to infuse funds into the Company in a timely manner, requested for the exit of SREI from the Company, in terms of the MOU at the agreed price of ₹ 52.50 crores well before 28.02.2008 and expressed the preparedness to complete the transaction by 31.01.2008, whereas the second respondent reneged from the MOU, with a view to make unlawful gains and the Managing Director of SREI, in his e-mail dated 23.01.2008 sent to the first petitioner, apart from recognising the professional experience of the petitioners reiterated that SREI is committed to continue its investments in the Company and proceed ahead with the projects. The parties h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignatory for operating the bank account on behalf of the Company. The third respondent had signed all the financial statements on behalf of the second respondent, including the minutes of the Board meeting, approving the annual accounts of the Company for the year 2006-2007 and every important document, including the Shareholders Agreement with Maytas and NCC for the Machilipatnam Port Project. The third respondent was present at every hearing before the CLB, instructing learned Counsel representing other respondents also. The third respondent filed a joint reply with the respondents 2, 4 5. The third respondent was present, while the Advocate Commissioner took the inventory of records at the registered office of the Company and signed the inventory of documents on behalf of the second respondent. The legal notice dated 31.01.2008 calling upon SREI to complete the exit formalities, as voluntarily agreed under the MOU led to the unlawful locking of the registered office of the Company at the instance of the second respondent. The petitioners were, therefore, constrained to lodge a police complaint on 05.02.2008 against the respondents 3 and 4 for unlawfully locking the main doo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny law has developed seamlessly from the law of partnership, which was treated by equity, like the Roman societas, as a contract of good f aith. One of the traditional roles of equity, as a separate jurisdiction, was to restrain the of strict legal rights in certain relationships in which it considered that this would be contrary to good faith. These principles have, with appropriate modification, been carried over into company law. The respondents lacked utmost good faith , which is expected from every member of a partnership towards every other member, in view of the rule as regards the duty of utmost good faith, laid down in Needle Industries (India) Ltd. v . Needle Newey (India) Holding Ltd. AIR 1981 SC 1298. Furthermore, no narrow legalistic view should be taken and technical pleas should not be permitted to defeat an action under section 397 and at the same time broad and liberal interpretation must be given to the Court's powers, as observed by the Supreme Court and, therefore, the second respondent should not be permitted to continue to be shareholder of the Company. The parties in the present case, though expressly excluded, in terms of clause 25.1 of the Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment, the requirements of land for undertaking the Subarnarekha Port Project. The first petitioner in his communication dated 14.02.2008 requested the Principal Secretary, Government of Orissa to make necessary arrangement for alienation of the land for the port purposes and further requested to allot in favour of the Company quarry in Nilangari area and other possible locations which are close to the port location. The Government of Orissa by a communication dated 29.04.2008, advised the Collector, Balasore, to take necessary action for alienation of land in favour of the Company for the port purposes, in response to which, the Collector in terms of a communication dated 18.08.2008 advised the Tahasildar, Baliapal, to process the proposal on filing of requisition for allotment of Government land for development of port at Subarnarekha by the Company. In the meanwhile, the first petitioner had taken up the issue of encroachment of Government land, with the Collector of Balasore District by forwarding on 23.06.2008 a copy of the Report on Encroachment of Government Land under alienation for development of the Port prepared as desired by the Collector. The petitioners in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The second respondent was to fund 38% of shares of the SPV to undertake Machilipatnam Port Project, though the Company, but did not keep up the commitment. The second respondent not being solvent enough to meet the fund requirements failed to fulfil their obligations under the Investment Agreement, towards funding the projects and therefore, cannot charge the petitioners with breach of the terms and conditions of the Investment Agreement. The petitioners are dependent upon the projects, which cannot be implemented without the involvement of the petitioners, while the second respondent is an investor and can survive without the projects, undertaken by the Company. The respondents have convened a Board meeting on 21.05.2008, during the pendency of the present proceedings, despite the objections of the petitioners and passed several resolutions, thereby causing prejudice to the interest of the Company as well as the petitioners, and therefore, must be declared as null and void, as claimed in C.A.No.92 of 2008. The petitioners can no longer co-exist with the second respondent for lack of mutual trust and confidence in implementation of the Port Projects and therefore, the most eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri S N Mookherjee, learned Senior Counsel appearing for the respondents 2 6, while vehemently opposing the Company Petition submitted: The averments contained upto para 6.6 of the Company Petition are narration of facts relating to the Subarnarekha and Machilipatnam Port Projects. The allegations forming part of paragraph nos. 6.7, 6.8, 6.10, 6.12 to 6.19 6.21 of the Company Petition deal with the purported understanding between the parties in relation to the Port Projects. The main grievances of the petitioners as stated in paras (h) (i) at page 20 of the Company Petition are on account of non-fulfilment of the commitments of the second respondent under the Investment Agreement dated -26.05.2006 and the consequent breach of the MOU dated 14.11.2007. The petitioners are claiming by way of interim reliefs to induct an equity investor of their choice in the place of the second respondent and remove respondents 3 to 5 from the Board of the Company on account of the alleged breach of the stipulations contained in the Investment Agreement. The Supreme Court observed in Sangramsingh P. G aekwad and others v. Shantadevi P. Gaekwad (Dead) by Lrs and others AIR [2005] SC 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore, there is no fiduciary relationship between the petitioners and SREI. SREI has not derived any benefit and no relief has been claimed against SREI. SREI being one of the leading infrastructure companies, is a market leader in infrastructure financing business in the area of power, ports, etc. and a leading Non-Banking Finance Company in India. The Company is a joint venture company formed by the petitioners as well as the respondents and further the respondents were actively involved in preparation of the Shareholders Agreement as well as the Investment Agreement, as borne out by the e-mails sent on 14.12.2005, 23.12.2005, 12.03.2006, 16.03.2006, 21.03.2006, 22.03.2006 and 03.05.2006 exchanged between the first petitioner and the respondents. By virtue of article 37, the general management of the business of the Company is in the hands of the Managing Director, which shall subject to the control and supervision of the directors. After formation of the Company, the respondents have remitted the share application money of ₹ 7 lakhs to the Company for fresh allotment of shares and acquired 70,000 equity shares of the Company, and not by way of any transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e obligations of the second respondent under the Investment Agreement are conditional on the Company's and promoters' continued compliance with the requirements as set out in clause 7.2, dealing with the insurance cover for all its assets, appointment of auditors, management of the Company and execution of service agreements. The project development expenses include the fixed organisational expenses agreed to by the Board of the Company and not the petitioners, as per the Investment Agreement. The Board has to be restructured from time to time in a manner acceptable to the second respondent in due consultation with the promoters, (clause 7.3.1) The Managing Director shall always be one of the promoter directors of the Company. The second respondent would appoint the Director (Finance), Chief Financial Officer and Company Secretary (clause 7.3.2). The budget must be approved by the Board, (clause 7.4) The Company and the promoters shall consult and advise the second respondent on all the issues which are likely to affect the value of the second respondent's shareholding. The promoters shall not implement any decision, which would affect the value of the second respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms and conditions set forth in the Investment Agreement. The second respondent has met all the expenses towards implementation of the projects, which were approved by the Board. All payments necessary for the project of the Company have been promptly made, after receipt of due request from the petitioners and there has been no delay on the part of the respondents in releasing payment for the project of the Company. The respondents have been always ready and willing to bear all the costs of the Company with regard to the Subarnarekha Port Project. The funds released in terms of the Investment Agreement by the second respondent should be used for the sole purpose of meeting the project development expenses of the Company, whereas the petitioners demanded from time to time exorbitant sums of money from the respondents and mismanaged large sums of money, obtained from the respondents, without the approval of the Board of the Company. The petitioners have not furnished the exact nature and details of the financial commitments to ensure that respondents are not unnecessarily subjected to huge financial commitments. The respondents never refused to give a bank guarantee of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Agreement. Shri Rajesh Sirohia, by way of yet another affidavit dated 01.04.2009, affirmed, inter alia, that (i) the respondents 2 to 6 are willing to perform all the obligations under the Investment Agreement and the assurances given to this Bench in terms of the earlier affidavit filed, pursuant to the directions of this Bench; (ii) the respondents are ready and willing to provide necessary finance to the Company to ensure operation of the Subarnarekha Port Project in terms of the Concession Agreement. The petitioners failed to withdraw the present proceedings, despite the unequivocal undertaking given on behalf of the second respondent to fund the Company as per the terms and conditions of the Investment Agreement, thereby rendering infructuous several of the interim orders already passed by the Bench. The parties have acted upon the aforesaid CLB order and therefore, the petitioners cannot now seek to enforce the MOU in the present proceedings. In view of this, the petitioners are not entitled to proceed any further with the main petition and therefore, the prayer for the exit of the second respondent from the Company does not merit any consideration and consequently, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which will be fatal to any transfer of shares, as held by the Supreme Court in V.B. Rangaraj v. V.B. Gopalakrishnan and others- AIR 1992 SC 453. The MOU does not specify any price. The buyer has to agree for the sale as well as price. The mode, manner and the time schedule are yet to be agreed. The MOU never had the approval of the Company or the second respondent. The MOU was subject to an agreement between the prospective investor and the parties to the MOU, which never materialised. The MOU is not for the benefit of the Company. The MOU between two group of shareholders concerning transfer of shares does not relate to the conduct of affairs of the Company as held in Government of West Bengal v. Chatterjee Petrochem (Mauritius) Co. [2008] 143 CC 837 and the terms of the MOU are not incorporated the articles. The Company not being a party to the MOU is not bound by the MOU and the case of oppression based on the MOU, being the sheet anchor of the petitioners' case must fail, as observed by the Supreme Court in Shanti Prasad Jain v. Kalinga Tubes Ltd. (supra) The buyer is not a party and hence not bound by the MOU, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners from taking up the project with the Jindal Steel to the exclusion of the respondents; (vi) to disclose all the correspondence exchanged between the petitioners and the Government of Orissa concerning the Subarnarekha Port Project and the land acquisition documents. The petitioners, with a view to ensure paramount interest of the Company urged in C.A.No.26 of 2008 (correct C.A. No. 160 of 2008) for passing of appropriate orders, as prayed for in C.A.No.136 of 2008 and constituting a Project Co-ordination Committee having one member each from the petitioners group and the respondents group, with an independent person for the purpose of proper and timely implementation of the Subarnarekha Port Project. Any correspondence with the Government of Orissa and any work which may be undertaken in the name of the Company in relation to the Subarnarekha Project must be undertaken only by the Project Co-ordination Committee which will not only benefit the Company but also the public at large. The petitioners are misrepresenting and distorting the facts to the Government officials as well as the local residents of the Subarnarekha Port site, behind the back of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the Machilipatnam Port Project, inspite of the efforts of the respondents to help the Company by expressing their willingness to invest in the Machilipatnam Port Project through the Company. The petitioners were involved to a limited extent as advisors, in the Machilipatnam Port Project on account of their technical knowledge of port projects as borne by a letter dated 24.05.2006 of Maytas sent to the Government of Andhra Pradesh stating that an MOU has been entered into with M/s Creative for advising Maytas in port development. The petitioners can only claim consultancy fee at the prevailing market rate for their involvement in the Machilipatnam Port Project and are not entitled for any other relief or benefit relating to the Machilipatnam Port Project, without Maytas, NCC, Machilipatnam Ports Private Ltd. and SARAT being parties to the present proceedings. The petitioners have not carried out any work in relation to the Machilipatnam Port Project entitling them to any fees. The tendering expenses relating to the share of SREI and the Company combine were not incurred by the Company. Maytas has no grievances against the respondents for not giving any bank guarantee in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f oppression on the part of the respondents, as contemplated in section 397 of the Act. It is now well-settled that a case for grant of relief under sections 397 and 398 of the Companies Act must be made out in the petition itself and the defects contained therein cannot be cured nor the lacuna filled up by other evidence oral or documentary proof as held in Sangramsingh P. Gaekwad and others v. Shantadevi P. Gaekwad (Decd.) by lrs. And others (supra) . The act of oppression must be harsh and continuous affecting the proprietary rights as shareholders. In English law all that the petitioner had to establish was a case of unfairness coupled with prejudice to himself and there is no need to establish oppression or establish just and equitable winding up and therefore, the authority on the English law would not be of any assistance for the construction of sections 397 398 of the Act and only those parts of English judgments which are applicable to our law can be adopted as held in Vaishnav Shorilal Puri and another v. Kishore Kundan Sippy and others [2006] 131 CC 690 and Bagree Cereals (P.) Ltd. and others v. Hanuman Prasad Bagri and others [2001] 105 CC 465. The petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents copies of all the correspondence so far exchanged between Government Authorities and the petitioners in connection with the land requirement for the development of the Subarnarekha Port Project; and (b) endorse henceforth copies of any correspondence which may be made with Government Authorities, directed the respondents not to correspond directly with Government Authorities in connection with the Subarnarekha Port Project. The petitioners failed to comply with the aforesaid directions, compelling the respondents to issue a legal notice dated 24.12.2008 calling upon the petitioners (a) to act in accordance with the order dated 18.09.2008 of the Bench; and (b) to obtain copies of the relevant correspondence from the Government of Orissa, invoking the provisions of the Right to Information Act. Nevertheless, the petitioners have suppressed many material documents, correspondence received from and/or send to the Government of Orissa and thereby, they are not acting in a bona fide manner and in the interest of the Company. The Principal Secretary to Government, Government of Orissa, by a letter dated 14.02.2008 addressed to the first petitioner called for information regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he hearing on the main Company Petition came to be concluded, this Bench by an order dated 03.12.2008 directed that neither of the parties shall precipitate the issues, being subject matter of the Company Petition, till pronouncement of the order. The petitioners, despite the directions of the Bench, have written to Government of Andhra Pradesh and Maytas on 05.01.2009 and 07.01.2009 respectively, misrepresenting the facts behind back of SREI, and thereby acted in gross violation of the orders dated 18.09.2008 and 03.12.2008. The petitioners have also sent representations dated 07.01.2009 22.01.2009 to Government of India, making serious false allegations relating to the purported Accounting Fraud Mis-representation of Maytas, SREI NCC Ltd on account of Machilipatnam Port Ltd , the Special Vehicle Company, formed for implementing the Machilipatnam Port Project. The petitioners are acting with malafide intentions and oblique motives, thereby causing enormous prejudices, suffered by the respondents. In these circumstances, the respondents have prayed for, inter alia, punishing the petitioners for committing contempt of these orders and for directing the petitioners to withdr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company by electing his own men to the Board of directors of the company and that no direction for sale of shares of a majority to minority or minority to manage the Company shall be given save only in exceptional cases. Moreover, the second respondent has huge funds, whereas, the petitioners do not have such financial backup to fund the projects. No third party investor has undertaken to perform the obligations of the second respondent, while there are several other experts to implement the port project work. The second respondent is willing to work with the petitioners, and in the light of the decision in Tea Brokers (P) Ltd. and others v. Hemendra Prosad Barooah ( supra) if the parties cannot work together, the general body may decide the course of action and no order for sale of the shares of the majority be made on the lines of several decisions cited supra. The CLB has to consider the interest of the Company and the claim of the majority shareholders and grant appropriate reliefs. 5. Shri Mookherjee, learned Senior Counsel, while distinguishing the cases cited on behalf of the petitioners, submitted: In Cook v. G.S. Deeks and others (supra) the directors had derive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners. 6. Shri P.H.Arvindh Pandian, learned Counsel, appearing for the respondents 3 to 5 submitted: The petitioners have claimed reliefs against the respondents 3 to 5, being directors of the Company in terms of para 8 of the Company Petition, thereby enforcing the MOU for their exit under the pretext of section 397/398 proceeding, as sought to be made in para 4 of the Company Petition. The exit process of the second respondent shall have the approval of the Board of directors of the Company. The grievance and relief flowing from the agreement must be agitated in a competent civil court having jurisdiction over the matter as held in R. Easwaran and others [2007] 137 CC 605. The specific performance of the MOU can lie only in a competent court of law as held in Ramesh Chand Goyal and another v. Himalaya Communications Ltd. and others Satish Chand Jain and others v. Ramesh Chand Goyal and others [2006] 129 CC 297. Under, the terms of the Investment Agreement, the entire rights in regard to the projects are vested with the second respondent, which cannot be taken away, by misusing the process of the CLB. The project organisational and development expenses sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds reportedly brought in by the petitioners have not been approved by the Board of directors of the Company. The status report on the projects produced along with the Company petition has not been placed before the directors and the respondents 3 to 5 have been kept in dark in regard to the affairs of the Company. The charges of the petitioners that the respondents 3 to 5 locked the registered office of the Company, thereby preventing the petitioners and the Company from carrying on the business operations are not supported by any materials. The police complaint dated 05.02.2008 lodged by the Manager of the Company on the instructions of the petitioners would show only his suspicion over the respondents 3 4 in locking the registered office of the Company. The categorical claim in para 6.19 of the petition is that the second respondent, upon receipt of the legal notice instead of performing the obligations under the MOU, illegally locked the registered office of the company, while the police complaint is against the respondents 3 4. The petitioners, for the first time approached the Board in February 2008, with a circular resolution for changing the registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which ultimately kept separately in the registered office under the lock and key of both parties, at the intervention of the Advocate Commissioner. The petitioners raised disputes on the modalities of taking possession of the registered office premise, which led to unnecessary complication in receiving the inventoried records by the petitioners. The petitioners, in terms of clause 16.1 were to devote their full attention to the business of the Company and develop its interest, whereas, the records found in the registered office of the Company would establish the contrary, sacrificing in the interests of the Company. 7. Shri Sudipto Sarkar, learned Senior Counsel, in his rejoinder, while reiterating plea of exit of the second respondent from the Company, on account of the oppressive acts of the respondents in the affairs of the Company and not solely under the guise of the MOU dated 14.11.2007 pointed out as to how the cases cited on behalf of the respondents are inapplicable to the facts of the present case. Accordingly, the MOU related to sale of shares of the second respondent, in which case the Company need not be a party to the MOU. In this context, the observations of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra). cannot be of any assistance to the respondents in the light of directions of the High Court. In the present case, the respondents obtained majority holding from the petitioners, upon which the majority has been responsible for stopping the operations of the Company and thereby acted against the interest of the Company, in which case, they cannot seek acquire the shares of the petitioners at a fair value and continue to be in the management of the Company and therefore, the decisions in (a) Combust Technic (P.) Ltd., In re; ( b) Tea Brokers (P.) Ltd. and others v. Hemendra Prosad Barooah (c) Yashovardhan Saboo v. Groz-Beckert Saboo Ltd. and others and (d) M/s. Dale and Carrington Invt . (P.) Ltd. and another v. P.K. Prathapan and others ( supra) cannot go in support of the respondents. The Supreme Court in Sangramsingh P. Gaekwad and others v. Shantadevi P. Gaekwad (Dead) by Lrs and others ( supra) observed that (a)'section 210 of the English Act, theTanguage of which has been closely followed by section 397 of the Act, warrants the Court in looking at the business realities of the situation and does not confine them to a narrow legalistic view; (b) in a given case, the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he MOU dated 14.11.2007, which is neither valid in the eyes of law nor concerned with the affairs of the Company and any redressal for breach of contractual obligations aiming at the exit of the respondents from.the Company, at a price of ₹ 52.50 crores, could only be subject matter of a civil suit, but not of a section 397/398 proceeding. The petitioners, apart from the purported failure on the part of the second respondent to fund the Company for its port projects, in breach of the Investment Agreement are aggrieved of (a ), depriving the Company of its rights over the Machilipatnam Port Project; (b) closure of the registered office of the Company; (c) unlawful interference in carrying on the day-to day operations of the Company; (d) deliberate non-cooperation in shifting of the registered office for effective functioning of the Company; (e) freezing of operation of the bank account of the Company etc. None of these wrongful actions, claiming to be burdensome, harsh and oppressive is found flowing from the MOU dated 14.11.2007 and any relief, even if it is warranted to arrest any such grievances safeguarding the interest of the Company, does not arise out of the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersonal guarantee and non-discharge of the mortgage properties, were as a result of breach of the contractual obligations arising out of an agreement dated 24.10.2003 and the consequential reliefs were found stemming out of the aforesaid agreement. This Board in M. Thimme Gowda and others v. SPR Sugars (P.) Ltd. and others (supra) concluded that the entire grievances and reliefs claimed by the petitioners were flowing from a share purchase agreement. The charges formed part of the decision in R. Easwaran and others v. Easwar oil Industries (P.) Ltd. and others ( supra) and the consequent reliefs were pursuant to breach of the contractual obligations which arose from an agreement dated 04.10.1975. It is undoubtedly clear that the grievances and the reliefs in the case before me do not flow in entirety from the MOU dated 14.11.2007 and therefore, the facts of the present case are distinguishable from the aforesaid cases cited on behalf of the respondents. The present complaint not being wholly made as regard violation of statutory or contractual right, the decision in Sangramsingh P. Gaekwad and others v . Shantadevi P. Gaekwad (Dead) by Lrs and others does not go in aid of the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d respondent would appoint the Director (finance)/Chief Financial Officer as well as Company Secretary (clause 7.3.2). The promoters and the Company are bound to keep informed the second respondent on issues, which are likely to affect the value of the second respondent's shareholding. The second respondent's consent is required at any general meeting of the shareholders inter-alia for setting up by the promoters any competing business or disposal, transfer or acquisition of any part of the business into a separate company, a subsidiary or to any other person, any transfer of shares by the promoters and their affiliates, commencement or discontinuance of any litigation, which is material in the context of the Company's business, appointment of new directors, election of a Chairman of the Board, any alteration to the rights of any class of shares etc. (clause 8.1). The promoters in terms of clause 8.4, shall maintain a minimum of 30% of the issued and paid up capital of the Company at all times during the subsistence of the Investment Agreement. Clause 11.7 stipulates that the promoters of the Company are bound to indemnify the second respondent and its affiliates agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty fails to purchase the ordinary to sell its ordinary shares from the second respondent, the promoters are bound to withdraw the offer to sell their shares to such third party. The second respondent is free to ell its ordinary shares in the manner prescribed in clause 17.4, in which event the promoters shall have the option to purchase the same from the second respondent. If the promoters do not purchase the shares, the second respondent is free to transfer its ordinary shares to the third party. However, he promoters do not have any right to purchase the ordinary shares of the second respondent in the event of any material breach by the Company or he promoters or any event mentioned in clause 15.2.2. The petitioners are unequivocally described through out the Investment Agreement as the promoters of the Company, while at the same time, the second respondent has been uniformly treated as an investor. The rights of the second respondent, as an Investor have been amply protected ensuring the return of its investment made in the Company, as rightly pointed out by learned Senior Counsel appearing for the petitioners. The letter and spirit of the Investment Agreement, as evident from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nia) on BOOST basis , ought to have played a key role in consideration of the proposal of the Company in respect of the Subarnarekha Port Project by Government of Orissa. The cumulative impact of the petitioners' technical expertise as well as SREI's, financial strength, to my mind, resulted in awarding of the Subarnarekha Port Project in favour of the Company, as distinctly reflected in the Memorandum of Understanding entered into on 18.12.2006 between the Government of Orissa and the Company, the relevant portion of which runs thus AND WHEREAS Creative Port Development Pvt. Ltd. have extensive BOT experience in Port Development and Joint venture partners who have strong financial background in the infrastructure sector . There cannot be any parallel views on this aspect. Maytas, NCC, SREI and SARAT collectively called Consortium entered into a MOU dated 08.02.2006 with Creative Infrastructure, on account of the port development experience possessed by Creative and its promoters, to develop the Machilipatnam Port Project as advisers and assist the Consortium in the final bid preparation in connection with the Machilipatnam Project. By virtue of the second MOU entered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of its letter no. MIPL/RFP/01 dated 22.04.2006, did not include Creative Infrastructure, as a part of the Consortium, the former by a communication dated 08.05.2006 called for a definite commitment from Creative Infrastructure on account of the fact that main capability of the Consortium for port development has been claimed from Creative Infrastructure with whom only a MOU has been signed by the Consortium. SREI, therefore, in its communications dated 19.05.2006 and 15.03.2007 categorically committed that Our share in this project would be undertaken through a Special Purpose Port Development Vehicle named Creative Port Development Company Private Limited (CPDP), wherein M/s Ramani Ramaswamy and R. Rangarajan (joint promoters of Creative Infrastructure) holds substantial stake as individual investors and prime promoters of the company. Therefore the owners M/s Ramani Ramaswamy and R. Rangarajan of M/s Creative Infrastructure would have a direct commitment in the development of Machilipatnam port. This is further to the already signed MOU between Creative Infrastructure and the Consortium for the development operation of the Port and forwarded to Government of Andhra Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SREI would contribute 38% equity capital of VAJRA, formed for implementing the Machilipatnam Port Project. The aforesaid unequivocal commitments of Maytas, and SREI, acted upon by the petitioners and Government of Andhra Pradesh would undoubtedly show that the Company upon induction as an additional member, formed part of the Consortium, in terms of the MOU dated 08.02.2006, despite the fact that the Company is not a party to the Consortium Agreement and further that SREI's portion of equity (38%) into VAJRA the Special Purpose Company for the Machilipatnam Port Project would only be through the Company. The Managing Director of SREI in his e-mail sent on 23.01.2007 to the first petitioner acknowledged that the Machilipatnam Port Project is the project undertaken by the Company. The Board minutes dated 04.06.2007, to which the first petitioner and the third respondent are parties and the appreciation accoladed on the first petitioner by the Managing Director of SREI in terms of an e-mail dated 23.01.2008, in identifying the port projects, would reveal that the Machilipatnam Port Project is the project awarded to the Company. Nevertheless, SREI requested on 06.11.2007 Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 called upon the third respondent and the Managing Director of SREI to arrange for the bank guarantee of ₹ 4.90 crores in favour of Government of Andhra Pradesh and strategic expenses on account of the Machilipatnam Port Project. SREI had sanctioned an amount of ₹ 14 lakhs incurred by the Company on account of the Machilipatnam Port Project, as borne out by the Email sent on 05.07.2007 by the third respondent to the Company. The third respondent in his Email sent on 04.11.2007 assured the first petitioner to furnish the bank guarantee and reimburse other expenses, upon formation of the SPV between Maytas, NCC and the Company, SREI. The exchange of the aforesaid correspondence will clinchingly evidence the association of the Company and its business interest, in implementation of the Machilipatnam Project, thereby belying the stand of the respondent, taken in the matter of the Machilipatnam Port Project. SREI valued its port projects at ₹ 5,833 millions and its shares at ₹ 44 per share, as appearing in the website of SREI as at 27.12.2007. SREI was to subscribe 38% of the equity of VAJRA, the Special Purpose Vehicle Company incorporated for implementation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early indicates the decision already taken by SREI and SARAT for sale of their equity shares held in VAJRA in favour of Maytas and NCC on the terms and conditions elaborately set out therein. In this context, Form No. 2 dated 22.09.2008 filed by VAJRA with the Registrar of Companies containing details of the names of the allottees and the number of shares allotted to such persons, without the name of SREI or the Company confirms the serious doubts expressed by the petitioners, on the current interest of SREI in the Machilipatnam Port Project, which has not even remotely met by the respondents, despite the duly reposed on them save the mere allegations that SREI continues to be a part the Consortium of Machilipatnam Port Project and that SREI has not entered into any agreement with Maytas to exclude SREI from the Machilipatnam Port Project made in C.A.No.8 of 2009 after conclusion of hearing of the main petition. Against the above background, SREI in the event of retaining its interest as asserted, must reimburse to the Company, by virtue of section 82 of the Indian Trusts Act, 1882, 30% of pecuniary advantages and benefits enjoyed from and out of the Machilipatnam Port Project and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Port Project as agreed in the Investment Agreement could be appreciated from the culled out facts, set out here below: SI. No DATE COMMU NICATI ON FROM TO PURPOSE 1. 20.03.2006 (Vol II Pg 35) Email Company B.K. Choudhary ofSREI Sent the estimate for the project preparation amounting to ₹ 17 lakhs. 2. 08.09.2006 (Vol II Pg 3) Email Company Third Respondent (a) Monthly report for August 2006. (b) Expense statement for July August 2006. 3. 04.10.2006 (Vol II Pg 4) Email Company Third Respondent Utilisation statement and budget Vs actual expenses statement for the month of September 2006. 4. 31.10.2006 (Vol I Pg 162) Email Company Third Respondent The operating budget required for 6 months (Rs.50.14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. 20.02.2007 (Vol-I Pg 169) Email Company M.D of SREI Requested ₹ 50 crores towards strategic expenses and BG margin. 15. 21.02.20 07 (Vol-I Pg 171) Email Company Third Respondent Forwarded a status report on the Company which included the funds requirement till January 2008 on account of the projects. 16. 26.02.2007 (Vol-l Pg 160) Email V.K. Gupta representing SREI Company Final budget prepared for the Company giving details of funds required, for the period from January to March 2007 (Rs. 45.10 lakhs). 17. 17.04.2007 (Vol-I Pg 159) Email Company Third Respondent ( a ) Funds required for the period from April 2007 to June 2007 (Rs. 47.65 lakhs) (b) Project related expenses for the period from January to March 2007 (Rs. 89.70 lakhs) (c) The particulars of funds requirement for the project related expenses in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20.01.2008 (Vol-I Pg 186) Email Company M.D of SREI Pointed out the default under the Investment Agreement on account of refusal to give a bank guarantee of ₹ 4.90 crores for the Machilipatnam Port Project, payments to DPR parties and infusement of funds in a timely manner. 28. 20.06.2008 (Vol-OR Pg 180) Email Company M.D of SREI Pointed out the refusal to give a bank guarantee of ₹ 4.90 crores for Machilipatnam Project, defaulted payments to DPR parties by SREI Capital Markets and the inability to infuse funds in a timely manner. 29. (Vol-I Pg 179) Statement of DPR studies outstanding payments till 25.01.2007 aggregating to ₹ 30.88 lakhs. A careful scrutiny of the aforesaid transactions in the Company's affairs would reveal that the Company was sending periodical statements to SREI furnishing the details of utilisation as well as requirement of funds, on account of implement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mance Guarantee to be given for Subamarekha, as it is on MOV route . It is, therefore, far from doubt that the second respondent did not choose to furnish the bank guarantee in favour of the Government of Orissa in accordance with the undertaking given in the Investment Agreement and ultimately the petitioners by themselves had to arrange for the bank guarantee of ₹ 1 crore and the overdraft facility of ₹ 1 crore against mortgage of flats owned by them at their risk, in order to ensure smooth implementation of the Subamarekha Port Project. These financial obligations, other than the disputed strategic expenses, which came to be undoubtedly bestowed on the second respondent by virtue of the terms and conditions as agreed to by the second respondent in terms of the Investment Agreement are not found to be duly honoured at the relevant point of time and cannot be disowned for want of any approval from the Board of the Company by virtue of the principles of waiver, exercised by the second respondent. It is absolutely relevant to point out that- 70% of the paid up capital of the Company worth about ₹ 35 crores, as putforth by Shri Vedandam Srinivasan, learned Senior Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is found that the grievances of the petitioners herein and the reliefs claimed thereto are not flowing in entirety from the MOU dated 14.11.2007. Any breach of good faith which the petitioners and the respondents owed to each other, as held in Ebrahimij v. Galleries Ltd. and other (supra) would entitle the petitioners for an order of winding up of the Company on just and equitable ground, which would ihowever, unfairly prejudice the Company, in implementing the port projects involving several thousands of crores of rupees and, therefore, alternate reliefs under sections 397 are absolutely needed to safeguard the interest of the j Company and its shareholders. The serious disputes attributed towards the MOU dated 14.11.2007 shall be examined with reference to the whole of facts, as brought out before the Bench. The Email of the first petitioner sent on 05.09.2007 to the Managing Director of SREI discloses the discussions and the understanding reached for buying back of 70% shares of the second respondent held in the Company, by the petitioners at a price of ₹ 35 crores, which shall be inclusive of all liabilities/bonds due to SREI/the second respondent from the Company. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the MOU dated 14.11.2007 agreed for a total consideration of ₹ 52.50 crores in respect of the stake sale of the second respondent's portion of investment in the Company, which shall be inclusive of all equity, preference shares, convertible bonds issued and funding/work undertaken by SREI Capital Markets for the DPR in respect of the Subarnarekha Port Project. The amount of ₹ 52.50 was to be paid as per mutually agreed break up. In view of these negotiated conclusions, the Board of directors at the meeting held on 20.01.2007 resolved that no performance guarantee need be given by SREI for Subarnarekha Port Project as it is on MOU route . The extract of Board minutes dated 07.11.2007 reflecting the consent of the Board of directors of the Company which empowers the petitioners (a ) for applying and availing from Axis Bank a bank guarantee for ₹ 1 crore, being a pre-condition to sign the Concession Agreement in respect of the Subarnarekha Port Project; and (b) for availing an overdraft facility to an extent of Rs.l crore from Axis Bank7 to meet pre-operative expenses and working capital requirements of the Company, would confirm the conscious decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of the balance sheet of the Company as on 31.03.2007; (f) committed SREI's portion of the equity into the Special Purpose Company for the Machilipatnam Port Project through the Company, in terms of his Email dated 21.06.2007; (g) approved the Board minutes dated 30.06.2007 adopting the balance sheet as at 31.03.2007; (h) approved the Board minutes dated 30.06.2007 convening the first annual general meeting of the company on 31.07.2007, (i) operated jointly the overdraft account maintained by the Company with the Axis Bank; (j) conveyed the sanction of an amount of ₹ 35 lakhs towards Chennai office and other expenses as per his Email dated 05.07.2007, (k) involved in finalising the terms of the exit formalities by SREI from the Machilipatnam Project for ₹ 50 crores in terms of his Email dated 30.10.2007 sent to Maytas; (l) involved in preparation of the draft Share Purchase Agreement for sale of the holding of SREI in VAJRA, the Special Purpose Company in favour of Maytas-NCC Combine, as borne out by the Email dated 03.11.2007 sent by the third respondent to Maytas; (m) withdrew the commitment made on behalf of SREI to invest in the Special Purpose Company throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the parties, in reaching the understanding as per the MOU that assumes utmost importance and none else and therefore, the decision in Mediator Company v. The State of West Bengal and others (supra ), will not have any influence on the facts of the present case- Accordingly, the MOU dated 14.11.2007 would indicate the unequivocal intention and decision of the second respondent to disinvest its investments in the Company in favour of the petitioners at a consideration to be mutually agreed upon between the petitioners and the second respondent. The MOU contemplates, inter alia, that the petitioners will get the Concession Agreement signed with the Government of Orissa for the Subarnarekha Port Project, as agreed therein. It is not under dispute that the petitioners (a) furnished the bank guarantee of ₹ 1 crore in favour of Government of Orissa; (b) availed over draft facility from the bank against mortgage of their flats; and (c) ensured execution of the Concession Agreement between the Company and Government of Orissa and thereby acted upon the MOU. These developments have taken place pursuant to and consequent upon the MOU dated 14.11.2007. The respondents are, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent land in favour of the Company for development of the Port Project and in the event of any private land which may be required will be acquired by the Company at the cost of the Company. Any land re claimed by the Company during implementation of the project will become Government land and shall be subject to lease charges payable by the Company. In this context, I do not and rather need not, in a section 397 proceeding, venture into the interpretation of the relevant provisions of the Orissa Government Land Settlement Act 1962 and the rules framed thereunder, to determine whether an application for settlement of Government land in connection with the Subarnarekha Port Project shall be in Form-1. It is apparent from the records that the petitioners have taken certain steps towards land requirement for implementing the Subarnarekha Port Project, by taking up the matter with Government of Orissa, in terms of various communications produced before the Bench. Nevertheless, the Board of the Company is expected to exercise its utmost care and due diligence in taking appropriate steps to meet the land needs for timely implementation of the Subarnarekha Port Project. I do not see any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents will be appropriately dealt with by the Competent Authority. The Advocate Commissioner's report would disclose the controversies erupted between the parties in taking possession of the registered office of the Company, in terms of the order dated 11.04.2008 of the Bench, which could not be mutually resolved and ultimately the premises continue to remain till date closed, thereby causing immense hurdles in carrying on the affairs of the Company. There are innumerable documents found in the registered office of the Company as per the inventory taken by the Advocate Commissioner, to most of which the respondents have been denied the right of inspection on the ground that those records are unrelated to the affairs of the Company. The existence of mere unrelated documents in the registered office, without any prejudices shown to have been suffered either by the respondents or the Company do not need any interference, as urged by the respondents. Nevertheless, the registered office could not become functional, inspite of the directions of this Bench sheerly on account of lack of mutual confidence between the petitioners as well as the nominees of the second respondent. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents, thereby not satisfying the rules of pleading as laid in Order 8 Rule 3, 4 and 5 of the Code of Civil Procedure. The respondents 3 to 5, who owed a duty to the Company to act in its paramount interest, failed to act for the benefit of the Company, thereby sub-serving the interest of the second respondent, which disapproved in Scotish Co- operative Wholesale Society v. Meyer ( supra). It is already found that the respondents 3 to 5 have not acted in the interest of the Company and that their wrongful acts constituted acts of oppression in the affairs of the Company and therefore, they cannot take shelter under AES OPGC Holding (Mauritius) and another v. Orissa Power Generation Corporation Ltd. and others and P.S. Offshore Interland Services (P) Ltd. and another v. Bombay Offshore Suppliers and Services Ltd. and others (supra) . The conduct of the respondents 3to 5 was found to be lacking in probity and utmost good faith, expected towards the petitioners in the light of the rule as regards the duty of utmost good faith-and, therefore, not entitled to invoke any assistance from the decision in Needle Industries (India) v. Needle Newey (India) Holding Ltd. (supra). The cumulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment in relation to the Subarnarekha Port Project etc, and reiterated in the subsequent applications, namely, C.A Nos. 160 161 of 2008, wherein a Project Co-ordination Committee is sought to be formed by the CLB, and not complying with orders of the CLB, which led to C.A. No.8 of 2009 to punish the petitioners for committing contempt. In these circumstances, in the absence of any consensus spontaneously forthcoming from both the parties, any order for joint management of the Company, in the hands of the petitioners and the second respondent cannot ensure the smooth implementation of the Subamarekha Port Project or any other project. The relationship between the parties has become so acrimonious that the respondents came out with prayers (C.A No. 118 of 2008) for opening as well as fixing of office hours for the registered office of the Company and for inspection of documents kept in the safe custody and for joint operation of the bank account maintained by the Company. These would show that there is no scope for smooth running of day-to-day operations of the Company without interference of the Bench. The Board meetings, though one of the statutory requirements, could not be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kha Port Project, came to be executed on 11.01.2008, on the initiative taken by the petitioners, as agreed between the petitioners and the second respondent, in terms of the MOU dated 14.11.2007. The efforts said to have been putforth by the respondents in obtaining the Concession Agreement are not borne out, by any materials placed before the Bench, save that the third respondent has witnessed the execution of the Concession Agreement by the first petitioner, on behalf of the Company, of which no mileage can be gained, as claimed by the respondents. The registered office of the Company came to be closed and remains to be closed without access to any one whomsoever and without being shifted to a different place to safeguard the interests of the Company and its shareholders, and the operation of the bank account stands suspended, as a result of the prejudicial actions of the respondents 3 to 5. The efforts taken by the petitioners for operationalsing the registered office by shifting to a new premises have been stalled by the respondents 3 to 5. These acts of the respondents 3 to 5 are not found to be in the interest of the Company. While giving directions for the exit of any group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, thereby enabling the respondents to meet the charges levelled against them before Government of Andhra Pradesh. 9. view of my foregoing conclusions and in exercise of the powers under sections 397 and 398 read with section 402 of the Act and with a view to regulate the conduct of the affairs of the Company, I direct as under: (i) The second respondent shall transfer its shares and all other interests held in the Company to the petitioners at a consolidated price of ₹ 52.50 crores, or at a fair value as at 31.03.2008, whichever is higher. The fair value shall be determined by an independent Expert Valuer, appointed by the Bench. The second respondent shall exercise either of the options, by filing an appropriate affidavit, before the Bench Officer, within 30 days of the receipt of the copy of the order, towards due completion of the exit formalities of the second respondent from the Company: (ii)The respondents 2 to 6 shall ensure reimbursement, in favour of the Company, 30% of all benefits enjoyed by SRE1 from and out of the Machilipatnam Port Project as at 31.03.2008, which shall be ascertained by the Expert Valuer; (iii)The petitioners shall forthwith reconst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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