Company Law Board dismisses appeals, directs payment, mutual dues settled, appeals dismissed without costs

The appeals challenging the Company Law Board's order dated 16th September 2011 were dismissed. The Board directed the BKS Group to pay a lump sum of Rs. 50 lakhs to the VKS Group for unpaid salaries. However, a subsequent order on 18th October 2011 clarified that after adjusting mutual dues, neither party owed the other any amount. Both parties accepted this order, leading to the dismissal of the appeals without any costs.

---

---

Issues Involved
1. Execution of a consent order dated 9th June 2009 by the Company Law Board (CLB).
2. Entitlement to remuneration for Mr. Vijay Kumar Sekhri and Mr. Anil Kumar Sekhri.
3. Legitimacy of the decision taken at the board meeting on 12th August 2009 regarding remuneration.
4. Finality and implications of the CLB's orders dated 16th September 2011 and 18th October 2011.

Detailed Analysis

Execution of Consent Order
The appeals under Section 10(F) of the Companies Act, 1956, challenge an order dated 16th September 2011 by the CLB. The order was in response to an application by the VKS Group for executing a consent order dated 9th June 2009. The consent order was based on a memorandum of family settlement (MoFS) dated 27th March 2009, which outlined the division of assets, shares, and business interests between the VKS Group and the BKS Group.

Entitlement to Remuneration
The MoFS and subsequent Scheme of Arrangement (SoA) stipulated that Mr. Vijay Kumar Sekhri and Mr. Anil Kumar Sekhri would receive Rs. 2,50,000 each per month from Tinna Oil and Chemicals Ltd. (TOCL) and Tinna Agro Industries Ltd. (TAIL) until their remuneration was fixed by these companies. The VKS Group claimed that the BKS Group stopped paying these salaries after 9th June 2009, despite an interim order on 14th July 2009 directing continued payment for two more months. The VKS Group argued that the BKS Group owed Rs. 1,12,50,000 in unpaid salaries from 1st September 2009 to 15th July 2011.

Legitimacy of Board Decision on 12th August 2009
The CLB's order dated 16th September 2011 held that there was a legitimate expectation that TOCL/TAIL would fix the remuneration for Mr. Vijay Kumar Sekhri and Mr. Anil Kumar Sekhri. The BKS Group's argument that the board's decision on 12th August 2009 to not pay any remuneration satisfied the MoFS terms was rejected. The CLB noted that since the two individuals were not appointed as directors, the decision to fix their salary as zero was invalid. The CLB directed the BKS Group to pay a lump sum of Rs. 50 lakhs to the VKS Group.

Finality and Implications of CLB Orders
The VKS Group was dissatisfied with the order, seeking full payment of Rs. 1.12 crores, while the BKS Group contested the Rs. 50 lakhs payment directive. However, a subsequent order on 18th October 2011 clarified that after adjusting mutual dues, neither group owed the other any amount. This order was not challenged by either party, implying acceptance. The court held that the order dated 16th September 2011 had merged with the order dated 18th October 2011, rendering the appeals against the former infructuous.

Conclusion
Both appeals were dismissed as the order dated 18th October 2011, which stated that neither group owed the other any money, was accepted by both parties. Consequently, there was no need to examine the correctness of the 16th September 2011 order. The appeals were dismissed with no order as to costs.

---