TaxTMI 
TaxTMI 
2006 (4) TMI 263
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.... arbitration of the Hon'ble Mr. Justice A.N. Gupta, the then sitting Judge at Lucknow Bench. He gave an award on 1-11-1998, between the two parties namely "AKG Group" led by Shri Ashok Kumar Gupta, resident of Varanasi. Smt. Rekha Gupta (wife), Shri Sidharth Gupta (son), Km. Deepali Gupta (daughter) and Smt. Vaishali Gupta (married daughter) and his HUF known as Ashok Kumar Gupta, HUF on the first part; an "RKG group" led by Shri Raj Kumar Gupta, resident of New Delhi, Smt. Pushpa Gupta (wife), Akash Gupta (son), Km. Nidhi Gupta. (daughter) and his HUF known as Raj Kumar Gupta, HUF on the second part. In the award the arbitrator observed that "AKG group" holds 31.96 per cent and "RKG group" 31.92 per cent shares in Banaras Beads Limited, and that the company is holding shares in 13 other public limited and private limited companies. 3. The arbitrator, in para 15.08 of the award, in the best interest of the parties, directed as follows: "15.08 To ensure smooth implementation of the scheme of arrangement envisaged under this award, I direct that at the general meetings of the shareholders/creditors of Banaras Beads Ltd. convened for the purpose of consideration and approval of the ....
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....r Gupta and others, the plaintiffs from attending the meeting of shareholders of M/s. Banaras Beads Limited. The District Judge, Varanasi passed an order on 1-2-1999, in purported exercise of powers under section 9(d) of the Act of 1996, restraining Shri Raj Kumar Gupta and others from attending the meeting and permitted their presence only through Smt. Resham Devi Gupta and in her absence Smt. Vinod Kumari Gupta. 7. The meetings were held on 6-2-1999, and according to the report of the chairman the resolution to approve the scheme of amalgamation was passed by the majority of the members present and voting. 8. Shri Raj Kumar Gupta holding 14.57 per cent fully paid up equity shares and representing 17.75 per cent shares held by his wife, son, daughter and HUF (total 32.15 per cent) in opposition to the scheme on April 15, 1995, alleging that the arbitration award was not accepted by him. He had challenged, the award before the District Judge, Varanasi. He is the promoter of the company. Shri Ashok Kumar Gupta has resigned from the board of directors on 16-8-1997, and that his resignation was accepted by the board on 2-5-1998. He had no authority to represent the company, however,....
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....or to that date. 2.Respondent No. 2 and petitioner No. 1 shall ensure that whatever was being done earlier in relation to the cross transactions between the Delhi and Varanasi units will continue to be maintained and all assistance will be given by them for preparation of accounts, audit of accounts, etc. 3.Both petitioner No. 1 and respondent No. 2 will independently propose terms of settlement to put an end to the disputes between the parties and place those proposals before us by 20-7-1999. These proposals will be considered by us on 3-8-1999 at 2.30. We shall try to bring about an agreeable solution to the disputes after discussing the same with the parties directly, if necessary. 4.In the meanwhile, neither of the parties will pursue any of the legal proceedings which have been initiated by them and pending before any court or legal authority." (S. Balasubramanian) (Dr. A.K. Doshi)' 11. Shri R.P. Agarwal submits that the meetings were held in accordance with law and the scheme has been approved by 83.25 per cent of the shareholders of the transferor-company, which included 38.62 per cent by proxy and 32.08 per cent through attorney. The meeting of the shareholders of the....
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....ning the meeting did not restrict a class of shareholders to be represented only through attorneys nor such an order could be passed unless the parties had agreed for such an arrangement. The fact that the nominees were also named for proxies makes the position worse, as the award gagged the shareholders' voice in the meetings. 15. Shri Navin Sinha further submits that interim measures directed by the court under section 9 of the Act of 1996 cannot extend to giving directions with regard to the meeting convened by the High Court under section 391 of the Companies Act. The interim measures for protection and preservation of the properties, interim custody or sale of goods or to secure the amount in dispute in the arbitration do not include intervening in or modifying the orders of the High Court. Section 9 of the Arbitration and Conciliation Act, 1996, is quoted as below : "9. Interim measures, etc., by court.-A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court- (i)for the appointment of a guardian for a minor or a person of unsound mind for the purposes ....
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....ures of protection'. The order passed by the court should fall within the meaning of the expression 'an interim measure of protection' as distinguished from an all-time or permanent protection. The court under section 9 only formulates interim measures so as to protect the right under adjudication before the Arbitral Tribunal from being frustrated." (p. 160) 18. In First Appeal from Order No. 809 of 1999 challenging the order of the District Judge, Varanasi, rejecting the application under section 34 of the Act of 1996, this Court has passed the following order : "Since Mr. R.P. Agarwal has appeared on behalf of respondent No. 1. No notice need be served upon respondent No. 1. Let notices be served on respondent Nos. 2 to 5 through court as well as personally outside the court and through their learned counsel representing them in the learned trial court within one month and file an affidavit of service on the next date of listing. The scheme formulated by the arbitrator shall be subject to the consideration of the High Court on its merit and the parties may participate in the proceedings before the High Court without prejudice to their rights and contentions and the operation....