TaxTMI 
TaxTMI 
2008 (9) TMI 549
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....nd. The factual matrix leading to the filing of the present appeals before us dates back to July, 1995 when the appellants herein filed the petitions under sections 397 and 398 of the Act. The facts are as under. 3. This is a family dispute amongst two brothers, namely, J.K. Srivastava and H.K. Srivastava, both of whom have expired. Their Legal Representatives are before us. J.K. Srivastava Group (appellants herein) filed Company Petition No. 27 of 1995, dated 1-7-1995 before the Company Law Board under sections 397 and 398 of the Act alleging that M/s. Gwalior Sugar Company Ltd., which is a family concern, was being mismanaged by H.K. Srivastava Group. 4. The Company Law Board, on the basis of the aforementioned petition and the replies thereto by the respondents, was initially of the opinion that this being a family concern, the disputes should be resolved amicably and passed an order dated 22-1-1996 calling upon the parties to make efforts for compromise. The relevant extracts of the order are as under :- "In view of the close relationship between the parties, we suggested to the counsel for both the sides that they should try to work out an amicable settlement between ....
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....97 and 398 of the Act was on behalf of the appellant No. 3 herself and also as the trustee of J.K. Srivastava Family Trust (referred to as the "Trust" hereinafter) and since the Trust had 1029 preference shares and since she had an authority to represent the Trust and file petition on its behalf, the petition was perfectly legal. It was also contended that the respondent No. 8 Mrs. Radhika Srivastava was fully aware of this situation since she had participated in the proceedings in which there had been 25 hearings over three and a half years till then. By an order dated 6-11-1998, the CLB directed the appellants to file the consent/authority, if any given by the Trust to Mrs. Nini Srivastava for filing the petition under sections 397 and 398 of the Act. On 9-11-1998, the appellants brought on record an affidavit dated 9-6-1995 and one affidavit of Mr. V.K. Srivastava dated 12-6-1995 was also brought on the record. A detailed reply was also filed to the application filed by Mrs. Radhika Srivastava that Mrs. Nini Srivastava, the 3rd appellant herein, was appointed as a trustee of the Trust on 24-8-1994 and she enjoyed the authority/consent to file the petition vide communication date....
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....lication on its merits ignoring the observations made by the CLB as well as the learned Single Judge about the number of shares held by the Trust, and should further decide the case on merits. 12. All these appellate judgments of the learned Single Judge as well as the Division Bench were challenged by the appellants before this Court and this Court allowed these appeals vide its judgment dated 26-10-2004. The Court specifically held that the third appellant Mrs. Nini Srivastava had the necessary authority to file the appeal on behalf of the Trust and she as well as the Trust had more than 10 per cent of the share capital of the Company in control, and as such, there was no bar under section 399(3) of the Act and also the Regulation 18 for the petition under sections 397 and 398 of the Act. 13. Accordingly, the matter was remanded back to the learned Single Judge. The learned Single Judge, however, came to the conclusion that the CLB had not decided any other matter on merits, since it had taken the view that the original petition under sections 397 and 398 of the Act for mismanagement of the company were not maintainable. The learned Single Judge, therefore, without expressi....
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....ntertained by the CLB holding that the petition under sections 397 and 398 of the Act was not maintainable. But, however, since this Court has held the petition to be maintainable, it is obvious that the other findings were also very much alive in that order. She further pointed out that appeals were filed before the learned Single Judge in the first round, precisely against those findings. She, therefore, urges that the learned Single Judge was in error in ignoring all these findings and refusing to decide the appeals which were against those findings. The learned counsel carries the arguments further and suggests that this Court now should put an end to the controversy by upholding the order of the CLB regarding the consent agreement on the part of the respondents. She has also relied on a number of decisions, which pertain to the effect of the party even having consent for the compromise. 15. As against this, the respondents, however had supported the order of the learned Single Judge, saying that all the questions were open before the CLB and the learned Single Judge is right in remanding the matter further for re-hearing and re-decision on all the other questions. 16. On....
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....f their petitions, the CLB ultimately referred in this paragraph the possibility of settling the prices between the parties. 18. In paragraph 5, the CLB referred to the contentions of the respondents about the valuation made by the valuer through Mr. Vijay Gupta, counsel for the respondents, mainly to the effect that the valuation was vitiated, as the person who had done the valuation on behalf of the valuers was earlier a director of the Board of a company in which one petitioner was a director. In paragraph 6, the arguments of the advocate for the petitioner were dealt with to the effect that the consent terms recorded was an independent one without having any connection with the disputes between the parties and, therefore, they should be independently implemented. The CLB also referred to the readiness on the part of the petitioners to settle all the disputes, as also to settle the other disputes through arbitration. The CLB also referred to the further arguments that, however, the payment for the shares held by the petitioner should be independent of the arbitration. In paragraph 7, the reply on the part of the advocate for the respondents was referred to, while in paragraph....
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....e of the fact whether the arbitration proceedings are concluded or not." In paragraph 10, the CLB referred to the valuation arrived at by the Chartered Accountants. The CLB ultimately recorded a finding :- "Thus on the basis of the valuation report, we consider that the a sum of Rs. 6,000 per equity share would be an appropriate value for these shares and Rs. 100 each for the preference shares." 19. It is then that the CLB considered the objections and prayers raised by respondent No. 8 in C.A. No. 262 of 1998 including the contention that the petition under sections 397 and 398 of the Act was not maintainable as the petitioner did not hold 10 per cent of the share capital. The CLB firstly held that the prayer of the 8th respondent for recall of the order dated 10-6-1996 on the ground that she was not a party to consent agreement, had to be rejected. 20. The CLB took into consideration the various facts that the respondent No. 8 had kept quiet on large number of hearings, though, her counsel was present all through. It also made a reference that no explanation was given as to why respondent No. 8 had waited for nearly an year to present this application (C.A. No. 262 of....
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....dgment now passed after remand, by the learned Single Judge, it is seen that the learned Single Judge has miserably failed to decide any questions whatsoever. The parties were at issues on all the aspects of the order passed by the CLB besides the finding of the CLB on the maintainability of the petition. This Court specifically held that the objection regarding the maintainability, more particularly, raised by the respondent No. 8 was not tenable and the petition under the Companies Act was perfectly maintainable. This Court had deliberately not expressed on any other aspect of the matter. A careful scanning of the order passed by this Court shows that this Court had decided the matter only on the question of applicability of section 399(3) of the Act and had come to a clear conclusion that the petition under sections 397 and 398 of the Act was perfectly maintainable. In short, this Court had left it to the learned Single Judge to decide every other question dealt with by the CLB in its order since the appeals against those questions were pending before the learned Single Judge and since those appeals were not decided at the first instance by either the Single Judge or the Divisio....