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TMI Blog2022 (7) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... ether interim relief is to be granted in the Interim Application such a prima facie determination would be necessary. It is to be noted that the Minutes of Discussion has admittedly been executed by the Plaintiffs and the Defendant Nos. 1 and 2. It had been executed after rounds of negotiations spanning a few years and the Minutes of Discussion was arrived at in order to settle the disputes between what is described in the Minutes of Discussion as disputes between three families, namely the Gujarat family, Maharashtra family and Andhra Pradesh/Telangana family - It would be necessary to advert to the concluding paragraph in the Minutes of Discussion which comes after Clauses 1 to 9 thereof have been executed by the Plaintiffs and Defendant Nos. 1 and 2. The concluding paragraph which has been further executed by these parties has been differently interpreted by Mr. Virag Tulzapurkar and Mr. Ravi Kadam in their oral arguments on behalf of the Plaintiffs and Defendant Nos. 1 and 2 respectively. The Minutes of Discussion cannot be contemplated to be a mere compromise of the proceedings before the NCLAT. The Minutes of Discussion is a contract in the nature of a family settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentitle the Plaintiffs from being granted the interim relief sought. The Minutes of Discussion is a family settlement and requires to be specifically performed, the relief sought for by the Applicants/Plaintiffs to restrain the Defendant Nos. 1 and 2 from taking any steps which would defeat the Applicants rights under the Minutes of Discussion and/or relief prayed for in the captioned Suit are required to be granted. This, particularly considering the fact that the Defendants are acting contrary to the Minutes of Discussion by seeking relief of buyout and sellout on fresh valuation of shares and other assets before the NCLT. Defendant Nos. 1 and 2, their servants/agents or any other person directly or indirectly acting for or on behalf of Defendant Nos. 1 and 2 are restrained by temporary injunction from acting in any manner contrary to the Minutes of Discussion and/or defeating the Applicants rights under the Minutes of Discussion and/or the reliefs prayed for in the captioned Suit - Application disposed off. - INTERIM APPLICATION NO. 571 OF 2022 IN SUIT NO. 44 OF 2021 - - - Dated:- 30-6-2022 - R.I. CHAGLA J. Mr. Virag Tulzapurkar, Senior Counsel a/w Mr. Navroz S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashtra Division ) and Defendant Nos. 1 and 2 are in control of the operations in the State of Gujarat ( Gujarat Division ). 4. The shareholding pattern of Defendant No. 3 Company is as under : Parties/ Group (%) of current Shareholding Andhra Pradesh Group (represented by Plaintiff No.1) 32.33% Maharashtra Group (represented by Plaintiff Nos.2 to 4) 37.70% Gujarat Group (represented Defendant Nos.1 to 2) 19.31% Plaintiff No.1 s Aunt 6.07% Other shareholders 4.59% The Plaintiffs and their family members, therefore, constitute approx. 70% of the Defendant No.3 s shareholding. 5. The Defendant Nos. 1 and 2 had filed a Company Petition No. 428 of 2018 on 19th March 2018 before the National Company Law Tribunal ( NCLT ) under Sections 241, 242 and 244 of the Companies Act, 2013, seeking to restrain the alleged oppressive acts of the Plaintiffs against Defendant Nos. 1 and 2. The Defendant Nos. 1 and 2 had take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en signed by the Plaintiffs and the Defendants. Various submissions have been made as to the interpretation of these words, which will be gone into herein below. 8. Thereafter, correspondence was exchanged between the parties with regard to drawing up of the family settlement agreement and scheme of arrangement (demerger), the letter to be filed with the NCLT and withdrawal of the existing Company Petition filed by the Defendants herein. The correspondence exchanged between the Plaintiffs and the Defendants after execution of the Minutes of Discussion were marked as without prejudice and certain objections have been raised by the Defendants as to the Plaintiffs reliance upon such correspondence. However, it is an admitted position that a draft of family settlement agreement as well as scheme of arrangement (demerger) were exchanged between the parties. 9. There were certain disputes between the Plaintiffs and the Defendants with regard to the managing of the Gujarat Division, which had faced losses and which the Plaintiffs alleged were attributable solely to the Defendant Nos. 1 and 2 s action, rather inaction and which thus led to the degradation of the Gujarat Division s pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned payment was to ensure that the Defendant No. 3 Company was not declared NPA by the Banks. Further correspondence was exchanged between the Advocates for the Plaintiffs and the Defendants on 8th September and 9th September 2020 on the binding nature of the Minutes of Discussion. 11. On 9th September 2020, the Advocates for Defendant Nos. 1 and 2 in a letter addressed to the Plaintiffs stated that since execution of Minutes of Discussion, the circumstances have changed. It was stated that the Plaintiffs do not wish to proceed with the settlement discussions for implementation of Minutes of Discussion in its true spirit and intent and that the Minutes of Discussion was arrived at a depressed valuation. Nevertheless, Defendant Nos. 1 and 2 were willing to discuss settlement terms on the basis of principles underlying the Minutes of Discussion. 12. In view of the refusal of Defendant Nos. 1 and 2 to implement the Minutes of Discussion, the captioned Suit was filed by the Plaintiffs on 25th January 2021 before this Court inter alia seeking specific performance of the Minutes of Discussion. 13. An Affidavit dated 27th January 2021 was filed before the NCLT recording the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on 17th February 2022. 22. The Plaintiffs filed the present Interim Application on 11th February 2022 inter alia seeking temporary injunction restraining the Defendants from directly or indirectly taking any steps towards valuation of the Defendant No. 3 Company and/or buyout of the shareholding in the Company. 23. Mr. Virag Tulzapurkar, the learned Senior Counsel appearing for the Applicants/Plaintiffs has made submissions in support of the relief sought for in the present Interim Application filed in the captioned Suit and has also filed the written submissions on 27th April 2022. 24. Mr. Virag Tulzapurkar has submitted that it has been stated in paragraph 3.6 of the Plaint that the Defendant Nos. 1 and 2 have grossly been mismanaging the affairs of the Gujarat Division as a result of which, it has been losing, and have now lost, all dealerships and is making severe losses. As opposed to the Gujarat Division, the Maharashtra Division, Andhra Pradesh/Telangana Division of the Defendant No. 3 Company has consistently been making profits. He has submitted that the Defendant Nos. 1 and 2 had filed Company Petition No. 428 of 2018 before the NCLT alleging oppression and mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is applied to shut out plea of the person who being a party to family arrangement seeks to unsettle a settled dispute and claims to revoke the family arrangement under which he has himself enjoyed some material benefits. 28. He has also relied upon the decision of Hari Shankar Singhania Ors. Vs. Gaur Hari Singhania Ors. (2006) 4 SCC 658 paragraph 42 onwards in support of his contention that a family settlement is treated differently from any other formal commercial settlement, as such settlement in the eye of the law ensures peace and goodwill among the family members. Such settlements are governed by a special equity principle where the terms are fair and bona fide, taking into account the well being of a family. Technical considerations should give way to peace and harmony in the enforcement of family arrangement or settlements. 29. He has also relied upon the decision of Shivanand Vassudev Salgaocar Ors. Vs. Dattaraj Vassudev Salgaoncar 2014 SCC OnLine Bom 1250 in particular, paragraphs 47 to 51, 64 to 67, 76 and 77 in support of his contention that the family settlement is required to be given effect to and one party cannot be allowed to scuttle the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Discussion were not with reference to the subsequent execution of such formal documents and thereafter the withdrawal of existing Company Petition filed by the Defendants. 33. Mr. Virag Tulzapurkar has thereafter, referred to the conduct of the parties subsequent to the execution of the Minutes of Discussion and has submitted that this demonstrates that the parties understood and treated the Minutes of Discussion to be a final, binding and concluded contract. He has thereafter referred to the correspondence exchanged subsequent to the execution of the Minutes of Discussion, which was towards execution of the formal family settlement agreement as well as the scheme of arrangement (demerger) in implementation of the Minutes of Discussion. He has submitted that the exchange of drafts of the virtually finalised formal family settlement agreement between the parties/their respective advocates were as per the terms of the Minutes of Discussion and in any event a mere formality. 34. Mr. Virag Tulzapurkar has submitted that the pleadings before the NCLT in the Miscellaneous Application No. 1008 of 2020 and the Rejoinder Affidavit filed therein which made reference to the settlem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by sale of liquid investments of Defendant No.3. vi. A funding of Rs.1.5 Crores and subsequently of Rs.3 Crore towards payment of salaries and wages of the employee of the Gujarat Division of Defendant No.3 Company from the cashflows of other two divisions. vii. A payment of an amount of approx. Rs.3.95 Crores towards payment of interest of Hinduja Leyland Finance Ltd./ Kotak Mahindra Bank Ltd. for Loan Against Property (LAP) taken for the Gujarat Division from the cashflows of other two divisions. 36. Mr. Virag Tulzapurkar has submitted that the Defendant Nos. 1 and 2 have acted in furtherance of the Minutes of Discussion by unanimously approving the buy-back of shares, which resulted in the increase of their own shareholding. They have only disputed one of the aforementioned steps as being in furtherance of the Minutes of Discussion i.e. the payment of Rs. 56 Crores in discharge of the bank liabilities. He has submitted that this payment was in the interest of Defendant No. 3 Company and presuming that the payment was to prevent the Defendant No. 3 Company from being declared as NPA, this is hardly relevant when the payments were made in good faith and in continua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in Kollipara Sriramulu Vs. T. Aswathanarayana AIR 1968 SC 1028 Para 3 in support of his submission that the understanding of the parties that the final, binding and agreed terms would be put into the form of a more formal document cannot prevent the Minutes of Discussion from constituting a concluded, valid and binding contract. He has also relied upon the decision of the Court in England, namely Branca Vs. Cobarro [1947] K.B. 854, W. J. pgs. 856-858 and W.J. Rossiter, George Curtis Ors. Vs. Daniel Miller, House of Lords (1878) 3 App. Cas. 1124 pages 1132, 1143, 1144, 1148 and 1149 in this context. 40. Mr. Virag Tulzapurkar has thereafter made submissions on there being no bar, jurisdictional or otherwise to the filing of the present Suit or grant of interim relief as sought for by the Plaintiffs. He has submitted that there is no merit in the challenge of the Defendants to the powers/jurisdiction of this Court to entertain the present Suit and grant reliefs as sought for by canvassing that the NCLT is seized of the Company Petition and thus, the present Suit is therefore not maintainable. He has submitted that there is no section in the Companies Act, 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decision has held that the a provision seeking to bar jurisdiction of a Civil Court requires strict interpretation. The Court, it is well settled would normally lean in favour of construction, which would uphold retention of jurisdiction of the Civil Court. The burden of proof in this behalf shall be on the party who asserts that the civil court s jurisdiction is ousted. He has submitted that the NCLT and NCLAT are Tribunals of limited jurisdiction as conferred by the statute and not Civil Courts. Only a Civil Court has jurisdiction to grant specific performance of a contract. NCLT/NCLAT are not empowered under the Companies Act, 2013 to grant specific performance nor does the Companies Act, 2013 confer any power on the NCLT/NCLAT to do so. In support of his submission that NCLT/NCLAT cannot decide the issues relating to enforcement of contractual provisions between the parties and/or the issue as to whether the agreement is valid, binding and subsisting which can only be decided by a Civil Court after examining the evidence and conducting a trial in the matter, he relied upon the following decisions :- (i) Chatterjee Petrochem (India) Private Limited Vs. Haldia Petrochemica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as accordingly, submitted that since the Minutes of Discussion is a valid and binding family settlement, it is required to be given effect to and accordingly, the relief sought for in the present Interim Application to restrain the Defendant Nos. 1 and 2 from taking any steps which would defeat the Applicants rights under the valid and binding family settlement be granted and which would include restraining the Defendant Nos. 1 and 2 from taking any steps towards the valuation of the Defendant No. 3 Company and/or buy-out of inter alia of the Defendant Nos. 1 and 2 s shareholding in the Defendant No. 3 Company. 45. Mr. Ravi Kadam, learned Senior Counsel appearing for the Defendant Nos. 1 and 2 has submitted that by the present Interim Application taken out in the captioned Suit, the Plaintiffs are seeking to disable the Defendant Nos. 1 and 2 from applying for and the NCLT from granting reliefs which are exclusively within its powers and in exercise of its jurisdiction under Sections 241 to 244 of the Companies Act, 2013. The Applicants/Plaintiffs have filed the present Suit with an attempt to harass and pressurize the Defendants into accepting unfair and prejudicial terms, pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne whether the dispute before it is settled by a valid and lawful compromise. He has submitted that the Plaintiffs are obligated to file an application under Order XXIII Rule 3 of the CPC (read with Rule 11 of the NCLT Rules) before the NCLT based on the alleged compromise contained in the Minutes of Discussion. Considering the fact that the Minutes of Discussion has contemplated disposal of the proceedings brought by the Defendant Nos. 1 and 2 before the NCLT, an application ought to have been filed before the NCLT in the pending Company Petition. He has submitted that the Plaintiffs contention that NCLT does not have power to order specific performance of the Minutes of Discussion is misconceived. He has submitted that under the proviso to Order XXIII Rule 3 of the CPC, the Court or authority is expressly empowered to decide the question of whether an adjustment or satisfaction has been arrived at when one party asserts and the other party denies a compromise / agreement. 47. Mr. Ravi Kadam has submitted that under Section 424(1) of the Companies Act, 2013, the NCLT is not bound by the provisions of the CPC. Thus, the NCLT has wide powers which include but not limited to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment Corporation of India Ltd. Vs. Grapco Industries Ltd. Ors. (1999) 4 SCC 710. 50. Mr. Ravi Kadam has thereafter submitted that under Section 430 of the Companies Act, 2013, it is provided that the Civil Court does not have jurisdiction in respect of any matter which the NCLT is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the NCLT. From a plain reading of the provisions under the Companies Act, 2013, it is clear that the NCLT would have exclusive right to deal with and adjudicate upon all matters (including, valuation) for the purpose of deciding an oppression and management case and granting all reliefs including valuation and buyback. Section 242(2)(b) of the 2013 Act has specifically conferred a power upon the NCLT to direct the purchase of shares or interest of any member of the company by other members or by the company. Once the NCLT has the power to order a purchase of shares, and, as a consequence, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Discussion and has submitted that from a plain reading of these clauses, the document styled as a Minutes of Discussion would require a detailed mechanism of family settlement to be arrived at which would be subject to finalization, discussions and execution of further documents/agreements between the parties including the filing of a demerger scheme before the NCLT. The Minutes of Discussion is only an understanding and without prejudice to the parties rights. He has submitted that all the shareholders of the 1st and 2nd Defendants group namely, the Kamdar Group, who are parties to the Company Petition are not signatories to the Minutes of Discussion. Equally, they are not parties to the Suit. In their absence, there can be no settlement of the Company Petition qua them or the Suit. He has submitted that the Minutes of Discussion envisaged the payment of INR 245 crores to the Kamdar Group. In Clause 1, sub-clauses (g), (h) and (i) reference is made to the payments proposed from the common kitty . The Minutes of Discussion does not have any other reference to or explanation of the term common kitty , making it evident that the Minutes of Discussion was not a binding or con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the NCLT. In fact, the Plaintiffs at proceedings before the NCLT admitted that the settlement discussions between the parties had failed and accordingly, proceeded with the hearing before the NCLT on that basis. 56. Mr. Ravi Kadam has submitted that there has been other breaches and repudiation of the Minutes of Discussion by the Plaintiffs. He has referred to the clause in the Minutes of Discussion which had contemplated the date for demerger of Defendant No. 3 Company and implementation and execution of a scheme of demerger as 1st April 2020. Admittedly, no such scheme of demerger was filed either before 1st April 2020 or otherwise. He has further drawn reference of paragraph 4 of the Minutes of Discussion which provides that Pune property was supposed to be given to the Defendants in lieu of money (which was also borne out by the draft scheme). However, at 592nd Board meeting of the Defendant No. 3 Company held on 15th December 2021 (Agenda No. 31), it was resolved to sell the property at the instance of the majority Sanghvi Group, i.e., the Plaintiffs herein. This is contrary to the draft family settlement agreement, where the Pune property was agreed to be transferred an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 59. Mr. Ravi Kadam has relied upon the decisions of the Supreme Court in Peacock Plywood (P) Ltd. Vs. Oriental Insurance Co. Ltd. (2006) 12 SCC 673 and Oberoi Constructions Pvt. Ltd. Vs. Worli Shivshahi Co-op Hsg. Society Ltd. (2008) SCC Online Bom 102 in this context. 60. Mr. Ravi Kadam has further submitted that certain shareholders of Defendant No. 3 Company were neither consenting parties nor signatories to the Minutes of Discussion and thus, the Minutes of Discussion cannot be effected/performed without the consent of such outside shareholders, which was never taken. The only response offered by the Plaintiffs in their rejoinder submissions in the Company Petition is that, the Petitioner Nos. 2 to 5 therein had given a power of attorney dated 18th March 2018 in favour of the Petitioner No. 1 therein which allowed him to inter alia compromise any of the aforesaid proceedings . This cannot explain why though the Defendant No. 1 (Petitioner No.1 in the Company Petition) was entitled to compromise the Company Petition and bind the other Petitioners therein, in a Suit for specific performance of that alleged compromise (i.e. the Minutes of Discussion), the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out and moved by the Plaintiffs being perversely conscious of the fact that Defendant No. 2 is 99 years old and that the delay is only likely to benefit them and defeat the Defendants cause before the NCLT. The Plaintiffs were well aware of the orders passed by the NCLT as well as the Supreme Court directing the NCLT to expedite the hearing of the Company Petition and despite being aware of the orders had belatedly filed, served and moved the Interim Application exactly one day before hearing of the Petition in the NCLT. 62. Mr. Ravi Kadam has submitted that this is not the case of mere delay and that the Plaintiffs have abandoned their rights and had acquiesced before the NCLT, despite the alleged settlement in terms of the Minutes of Discussion. The Plaintiffs have categorically taken a stand before the NCLT that there was no settlement arrived at between the parties. The Plaintiffs thus, acquiesced for the NCLT to consider the prayer for valuation by participating in the proceedings before the NCLT, the NCLAT and the Supreme Court without demur. The Plaintiffs cannot fall back of their contention that the Interim Application was moved on the premise of the Overview Note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther discussions which failed to fructify between the parties. Thus, this decision is not applicable to the facts of the present case. 65. Mr. Ravi Kadam has thereafter, distinguished the other decisions on family settlement relied upon by the Plaintiffs, namely, Kale Vs. Dy. Director of Consolidation (supra), Hari Shankar Singhania (supra), Shivanand Vassudev Salgaocar (supra), Arun P. Goradia Vs. Manish Jaisukhalal Shah Ors. 2009(1) Mh.L.J. 611 and Commissioner of Wealth Tax, Mysore Vs. Her Highness Vijayaba (1979) 2 SCC 213, which are the cases where there was an admitted family settlement entered into between the parties and it was in that context, the Supreme Court has held that the family settlements are governed by a special equity and will be enforced, if honestly made. 66. Mr. Ravi Kadam has also distinguished the decisions relied upon by the Plaintiffs in support of their contention that the Civil Courts are not barred from considering Suits in all cases. He has submitted that most of these decisions are prior to the enactment of Section 430 of the Companies Act, 2013 where there is now an express bar to Civil Court s jurisdiction where specific powers are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NCLT have not signed the Minutes of Discussion and therefore, the Minutes of Discussion is not enforceable. He has submitted that the Defendant Nos. 1 and 2 have not pleaded this in their case Affidavit in Reply dated 22nd February 2022. The Defendant Nos. 1 and 2 have signed Minutes of Discussion in respect of capacity of Gujarat family and the Plaintiff No. 1 has signed the Minutes of Discussion in a representative capacity of Andhra Pradesh and Telangana family and Plaintiff Nos. 2 and 3 have signed the said Minutes of Discussion in a representative capacity of the Maharashtra Family. This is clear from the Minutes of Discussion which records the presence of the parties in the meeting. The Gujarat family has itself considered Defendant Nos.1 and 2 as their representatives. A comparison of the shareholding at the time of the execution of the Minutes of Discussion would show that the entire Gujarat family is before the Court and Minutes of Discussion can be performed against the family as a whole. The Defendant No. 1 is a joint shareholder with all members of the Gujarat family. The Gujarat Group also consist of Anjana Infinity LLP in which the partners are all members of Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Defendants namely Oberoi Constructions Pvt. Ltd. (supra) itself has noted that correspondence marked without prejudice may have to be interpreted in different situations. Further in Peacock Plywood (P) Ltd. (supra) the Supreme Court has held that there are circumstances in which correspondence is initiated with a view to settlement but the parties do not intend that the correspondence should be without prejudice. It may be that the parties positively want any subsequent Court to see the correspondence and always had in mind that it should be open correspondence. He has submitted that it is a settled position of law that the reliance on a document which is without prejudice would not render the earlier acceptance on the admissibility of the document nugatory. In this context, he has placed reliance upon the decision of the Supreme Court in ITC Limited Vs. Blue Coast Hotels Limited Ors. (2018) 15 SCC 99 73. Mr. Virag Tulzapurkar has thereafter, dealt with the contention of the Defendants that the Plaintiffs themselves have repudiated the said Minutes of Discussion by filing Miscellaneous Application No. 1008 of 2020 and referring to the said Minutes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no merit in the Defendants contention that there is delay in filing the captioned Suit and seeking interim relief. He has submitted that delay by itself is no ground to deny the relief, where, as in this case, no prejudice has been caused to Defendant Nos.1 and 2 by any such alleged delay. The Defendants have not even made an effort or endeavour to show any prejudice that would be caused on account of such delay, none has been alleged. He has submitted that the question of delay, if at all is required to be balanced against the likelihood of the plaintiffs ultimately succeeding in the action and where the strength of the plaintiff prima facie is strong, the plaintiffs delay (assuming there is delay) in filing the action would not disentitle the Plaintiffs to the relief. In this context, he has relied upon the decision of the Supreme Court in Mademsetty Satyanarayana (supra) and A.R. Madna Gopal etc Vs. Ramnath Publications Pvt. Ltd. 2021 SCC OnLine SC 300 . He has further relied upon in the context of delay in the cases of The Lindsay Petroleum Company (supra), Dehri Rohtas Light Railway Company Limited (supra) and Hari Shankar Singhania Ors. (supra). 77. Mr. Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntiffs in support of the submission that Sections 420 to 424 of 2013 Act indicated only the procedure to be followed by the NCLT does not address Defendants arguments under Order XXIII Rule 3 of the CPC or Sections 420 or 424(1) of the Companies Act, 2013. He has submitted that NCLT s orders are not toothless and the Plaintiffs could have gone before the NCLT to seek an enforceable order. In Embassy Property Developments Pvt. Ltd. (supra) the context was of Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016, whose role the NCLT currently exercises. It was not in the context of far broader powers vested in the NCLT under the Companies Act, 2013. The Supreme Court has distinguished this judgment in the case of Gujarat Urja Vikas Nigam Limited Vs. Amit Gupta (2021) 7 SCC 209. 81. Mr. Ravi Kadam has distinguished the decisions of this Court in Sekura Roads Ltd. (supra) relied upon by the Plaintiffs in support of the contention that the NCLT has no power to grant specific performance. He has submitted that in this case, Section 430 of the Companies Act, 2013 did not apply as the NCLT could not be asked to extend the application, of long stop date in the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m for the Defendants that there is an express bar under Section 430 of the Companies Act, 2013 and which would bar such Suit being determined by a Civil Court as NCLT is empowered to determine whether the dispute before it is settled by a valid and lawful compromise. 84. It is to be noted that the Minutes of Discussion has admittedly been executed by the Plaintiffs and the Defendant Nos. 1 and 2. It had been executed after rounds of negotiations spanning a few years and the Minutes of Discussion was arrived at in order to settle the disputes between what is described in the Minutes of Discussion as disputes between three families, namely the Gujarat family, Maharashtra family and Andhra Pradesh/Telangana family. It is further recorded in the first sentence of the Minutes of Discussion that Minutes of Discussion and the mechanism of the family settlement agreed to between the participants .. . The Minutes of Discussion thereafter, contemplates a scheme of demerger of the Defendant No. 3 Company whereby the Defendant Nos. 1 and 2 s entitlement to the Gujarat Division along with its assets and liabilities and monies/ other assets have been valued at Rs. 245 Crores, based on valuat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Ravi Kadam on behalf of the Defendants that the words without prejudice to the others rights and remedies available to the parties are to be read as the Minutes of Discussion not being of a binding nature would in my prima facie view be destructive of the plain language of the words used. Further, it is clear from the other clauses in the Minutes of Discussion, in particular, clauses 6, 7 and 8 that the Minutes of Discussion was to be given effect to and was to be treated as a full and final settlement and that no claim from the Gujarat family of any sort would be considered. 86. There have been further arguments canvassed by Mr. Ravi Kadam on behalf of the Defendants that the Minutes of Discussion can only constitute an agreement to enter into an agreement and for which he has relied upon the words the detailed understanding and the mechanics would be documented by way of a family settlement agreement and scheme of arrangement (demerger) to be filed with the NCLT and thereafter, the withdrawal of the existing Company Petition filed by the Gujarat family. It is necessary to note that the Minutes of Discussion has not been made conditional on the documentation of a family ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the word provisional . When the word provisional is linked up with the word until , the whole thing seems to me to fall into shape. My reading of this document is that parties were determined to hold themselves and one another bound. They realized the desirability of a formal document, as many contracting parties do, but they were determined that there should be no escape for either of them in that interim period between the signing of this document and the signature of a formal agreement, and they have used words which are exactly apt to produce that result and do not, in my opinion, suggest that the fully legalized agreement is in any sense to be a condition to be fulfilled before the parties are bound. The word until is certainly not the right word to import a condition or a stipulation [Pg. 858] (Emphasis supplied) 88. Further, in W.J. Rossiter, George Curtis Ors. (supra) the House of Lords has held as under :- I pause there for the purpose of pointing out to your Lordships that in these conditions there are to be found the terms and the detailed terms of a contract, such as might reasonably be expected to be proposed with regard to sales of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade; those who had full power to accept it did it, in terms, by their fully authorized agent. The purchaser thinks they are making a fresh condition; they answer that they are not, and again accept it, simply and absolutely, as he had asked them to do. I cannot conceive that anything remained but to carry out the bargain which was then and thus consummated [Pg.1148 Pg.1149] (Emphasis supplied) 89. It can be seen from the case of Branca Vs. Cobarro (supra) that there was a provisional agreement, and it was held that unless the parties make the provisional agreement subject to what they call a fully legalized agreement , the parties are determined to hold themselves and one another bound to the provisional agreement. The fully legalized agreement cannot in any sense be a condition to be fulfilled before the parties are bound. Similarly, in the decision of the House of Lords in W.J. Rossiter, George Curtis Ors. (supra), the parties had in correspondence stipulated the terms of the contract and though there was a stipulation that the purchaser would be required to sign a contract embodying these conditions, this was considered to be an obvious and natural term. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e party asserts and the other party denies a compromise/agreement. He has further relied upon the wide powers of NCLT including Section 424(1) of the Companies Act, 2013, which provides that the NCLT is not bound by the provisions of the CPC. 92. In my prima facie view, the Minutes of Discussion cannot be contemplated to be a mere compromise of the proceedings before the NCLAT. The Minutes of Discussion is a contract in the nature of a family settlement and it is clear from the Minutes of Discussion that the Defendant No. 3 Company is considered to be a family run company, as the three divisions described as families, namely Gujarat Division, the Maharashtra Division, Andhra Pradesh/Telangana Division had run the Defendant No. 3 Company, as a family venture. It is clear from the Minutes of Discussion that the settlement arrived was among these three families/divisions. The Minutes of Discussion also records that the mechanics of the family settlement agreed to between the participants are provided for in the Minutes of Discussion. Thus, the Minutes of Discussion cannot be contemplated merely as a compromise of the NCLT proceedings and in fact, categorically records a settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... although no contract has come into existence, the conduct of a party has been such that he is estopped from denying the existence of a valid and enforceable contract. In the present case, it would appear from the conduct of the Defendants that the Defendants have acted in implementation of the Minutes of Discussion and thus, will be estopped from denying the existence of a valid and enforceable contract by way of Minutes of Discussion. 95. The submission of Mr. Ravi Kadam to the effect that there has been a repudiation by the Plaintiffs of the Minutes of Discussion and for which he has placed reliance upon the proceedings, namely Miscellaneous Application No. 1008 of 2020 filed by the Plaintiffs before the NCLT whereby they have sought modification of an earlier order dated 6th April 2018 and in order for the Board of Directors of Defendant No. 3 Company including the Defendant Nos. 1 and 2, to take decisions and be in effective management of Defendant No.3 Company cannot be accepted. The Miscellaneous Application No. 1008 of 2020 which had been filed by the Plaintiff Nos. 2 to 4 before the NCLT cannot be considered, as an application to take control over the Gujarat Division, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utes of Discussion by proposing to sell the Pune property. In my view, the Plaintiffs have acted in conformity with the terms of the Minutes of Discussion and in particular, Clause 4 thereof which contemplates sale of the Pune property and that if the sale proceeds of the Pune property is less than Rs. 40 Crores, Andhra Pradesh and Telangana family would compensate the Gujarat family for the shortfall upto maximum of Rs.20 Crores. Further, if the sale proceeds of the Pune property is more than Rs. 40 Crores, the amount in excess of Rs.40 Crores would be on account of Andhra Pradesh and Telangana family. 99. Now it will be necessary to consider the submissions of Mr. Ravi Kadam for the Defendants that there is an express bar under Section 430 of the Companies Act to the Civil Court entertaining the Suit, the subject matter of which the NCLT or NCLAT is empowered to determine. 100. In this context, it would be necessary to extract Section 430 of the Companies Act, 2013:- Section 430: Civil court not to have jurisdiction. 430. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. (supra) as under :- 31. NCLT and NCLAT are constituted, not under the IBC, 2016 but under Sections 408 and 410 of the Companies Act, 2013. Without specifically defining the powers and functions of the NCLT, Section 408 of the Companies Act, 2013 simply states that the Central Government shall constitute a National Company Law Tribunal, to exercise and discharge such powers and functions as are or may be, conferred on it by or under the Companies Act or any other law for the time being in force. Insofar as NCLAT is concerned, Section 410 of the Companies Act merely states that the Central Government shall constitute an Appellate Tribunal for hearing appeals against the orders of the Tribunal. The matters that fall within the jurisdiction of the NCLT, under the Companies Act, 2013, lie scattered all over the Companies Act. Therefore, Sections 420 and 424 of the Companies Act, 2013 indicate in broad terms, merely the procedure to be followed by the NCLT and NCLAT before passing orders. However, there are no separate provisions in the Companies Act, exclusively dealing with the jurisdiction and powers of NCLT. (Emphasis supplied) 104. Thus, it is clear from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent jurisdiction to try all types of civil disputes would be apposite. 106. It is further of significance that the Courts have held that the NCLT/NCLAT does not have jurisdiction to deal with the issues relating to enforcement of contractual provisions between the parties and they have no jurisdiction to decide a civil Suit of specific performance. 107. The decisions relied upon by Mr. Virag Tulzapurkar are of significance, namely Macquarie SBI Infrastructures Investments Pvt. Ltd. and Ors. (supra) and Sekura Roads Ltd. (supra). These decisions are subsequent to the enactment of Section 430 of the Companies Act. These decisions amply clarify that the Companies Act, 2013 does not confer the NCLT/NCLAT with jurisdiction to deal with the issues relating to the enforcement of contractual provisions between the parties. Further, it has been held that the NCLT / NCLAT cannot stay the specific performance Suit, one that they cannot in any case decide. Thus, in my prima facie view, the NCLT/NCLAT having no jurisdiction to grant final relief of specific performance of contract cannot grant interim relief as such relief will be outside their jurisdiction. Further, in my prima facie vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y view, there has been no right which has accrued to the Defendants by reason of alleged delay in filing the captioned Suit and seeking interim relief. 110. Considering that the Minutes of Discussion which in my prima facie view, amounts to a family settlement was being implemented in its true spirit and intent as well as the fact that it was in September 2020 that the Defendant Nos. 1 and 2 in correspondence chose not to execute the formal family settlement agreement and scheme of arrangement (demerger) as borne out from the correspondence, the Plaintiffs had no choice but to take steps in filing the present Suit on 25th January 2021 seeking specific performance of the Minutes of Discussion. The Plaintiffs, upon filing the present Suit, two days later i.e. on 27th January 2021 filed an Affidavit placing on record before the NCLT the Plaint filed in the captioned Suit. The Interim Application has also been taken out and interim relief sought in view of the Defendants filing an Overview Note in the Company Petition before the NCLT seeking their buy-out and sell-out on a fresh valuation of shares and other assets. The Company Petition was listed high on board for final hearing o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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