Sh Vivek Bansal vs Rm Ispat Private Ltd. & Others
2012 Latest Caselaw 4071 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                 Date of Judgment:11.07.2012.

+      CO.A(SB) 32/2009


       SH VIVEK BANSAL                                  ..... Appellant
                    Through                Mr. Vibhu Bhakru, Sr. Advocate
                                           with Mr. Rahul Sharma, Adv.

                         versus


       RM ISPAT PRIVATE LTD. & OTHERS ..... Respondents
                     Through   Mr. Hemant Chaudhri, Adv. for
                               R-2.
                               Mr. Avtar Singh and Ms.
                               Meenakshi Sharma, Advocates
                               for respondents No. 3 to 6.


       CORAM:
       HON'BLE MS. JUSTICE INDERMEET KAUR


INDERMEET KAUR, J. (Oral)

1 This appeal has assailed the order of the Company Law Board

(CLB) dated 09.06.2009 wherein the petition filed by the petitioner

(Vivek Bansal group and hereinafter referred to as the 'petitioner')

under Sections 397 & 398 of the Companies Act whereby directions qua

the main reliefs prayed for by the petitioner had been deferred in view of

the defence set up by the respondent (Anil Bansal group and hereinafter

referred to as the 'respondent No. 2') that a family settlement dated

21.02.2006 had been entered into between the parties pursuant to which

the petitioner group had given up all rights in the company in dispute

(R.M. Ispat Pvt. Ltd and hereinafter referred to as the 'company') and

this family settlement admittedly being sub-judice and the subject

matter of an appeal pending before the Allahabad High Court; the

Company Law Board did not think it fit to pass any order on the reliefs

claimed by the petitioner.

2 Record shows that the company (M/s R.M. Ispat Pvt. Ltd.) was a

company incorporated under the provisions of the Companies Act, 1956

having its registered office at 4973/21, Phatak Badal Beg, Hauz Qazi,

Delhi. The authorized share capital of the company was Rs.75,00,000/-

made up of 7,50,000 equity shares Rs. 10/- each; the issued subscribed

and paid up capital of the company was Rs. 71,06,000/- made up of

7,10,600 equity shares of Rs.10/- each all fully paid up. The object of

the company was to set up rolling and rerolling mill plants both cold and

hot and also the business of manufacturer/dealers/traders of all varieties

of steel, low carbon mild and plain carbon.

3 Contention of the petitioner is that he has more than 1/10th shares

in the company and as such a petition under Sections 397 & 398 of the

Companies Act was maintainable; he was a promoter director of the

company and was looking after the financial affairs of the company. The

allegations are largely leveled against respondent No. 2; contention is

that respondent No. 2 (cousin brother of the petitioner) has been taking

advantage and has unlawfully and illegally siphoned off the funds of the

company by under invoicing the goods; cash sales have remained

unaccounted; the petitioner was constrained to write a letter to the

Bankers of the company i.e. State Bank of Bikaner and Jaipur (C-72,

Connaught Circus, New Delhi) where the bank at the request of the

petitioner had frozen transactions in the said account; records of the

company are being fabricated and unauthorizedly respondent No. 2 in

connivance with respondent No. 3 has altered the composition of the

Board of Directors by inducting their nominees; contention being that

since 16.07.2005 there are in fact only two directors in the company

namely the petitioner and respondent No. 2. All these acts of the

respondent No. 2 amount to a oppression and mis-management qua the

petitioner; present petition was accordingly filed.

4 In the reply filed to the said petition (by respondent No. 2), at the

outset, the defence of the respondent was that the parties had arrived at a

family settlement which was incorporated in a Memorandum of a

Family Settlement dated 21.02.2006. Attention has been drawn to the

aforenoted document. This document has been allegedly entered into

between respondent No. 2 and the father of the petitioner namely Arjun

Das Bansal. In terms of this settlement, the shares of respondent No. 2

and his family in Kunal Pipes (India) Pvt. Ltd. stood transferred in the

name of Arjun Das Bansal and his family and the factory at Durg would

belong exclusively to him for which Mr.Arjun Das Bansal and his

family would pay Rs. 40 lacs to respondent No. 2; the factory in

Ghaziabad in the name of R.M. Ispat Pvt. Ltd. shall belong exclusively

to respondent No. 2 and his brother Sunil Bansal. Attention has also

been drawn to the Award dated 26.06.2006 which had been pronounced

by the sole Arbitrator Suresh Chand Garg which was an adjudication of

this family settlement dated 21.02.2006; in terms of this Award, Arjun

Das Bansal and his family members would transfer their shares in the

Company M/s R.M.Steel Pvt. Ltd) in the name of Mr.Anil Kumar

Bansal or his nominated person.

5 Respondents No. 3 to 6 have supported the stand of respondent

No. 2.

6 Admittedly both the family settlement and the Award are the

subject matter of an appeal before the Allahabad High Court. Cross

appeals have been filed by both the parties. The Allahabad High Court

had passed an interim order qua the assets of the company. Today this

Court has been informed that the sole asset of the company in fact has

since been sold at the behest of the secured creditors; the monies of the

company are lying in the current A/c of the company in its Bank. Both

the rival parties are at ad-idem on the submission that this fund of the

company, till the final disposal of the inter-se disputes between the

parties, be directed to be kept in a fixed deposit account in order that it

can earn interest which would be beneficial to either party who is

entitled to the said amount. Accordingly, the Manager, State Bank of

Bikaner and Jaipur, C-72, Connaught Circus, New Delhi is directed to

keep the money lying in the above said account i.e A/c No.

51055448052 in an interest bearing FDR till further orders.

7 It is an admitted position that in the proceedings pending before

the Allahabad High Court, the family settlement dated 21.02.2006 is the

subject matter of challenge; the objections filed against the Award dated

26.06.2006 had been allowed by the first Court and an appeal against the

allowance of the said objections is also the subject matter of hearing

before the Bench of the Allahabad High Court. The proceeding pending

before the said court contain evidence led before the first Court. The

Allahabad High Court would thus be in a better position to appreciate

the controversy between the parties relating to the family settlement on

which evidence has also been led as also the objections against the

Award which was also qua this family settlement whereby the petitioner

had agreed to transfer his share-holding his share in the company (R.M.

Ispat Pvt. Ltd.) in favour of respondent No.2. It is not in dispute that if

this family settlement dated 21.02.2006 is up-held by the Allahabad

High Court, the present petitioner would have no locus in the company;

he would remain an outsider, petition under Sections 397 & 398 of the

Companies Act would not be maintainable.

8 In this factual scenario, the order of the Company Law Board

holding that till the disposal of the appeals pending before the Allahabad

High Court (where the said issue is pending) are decided no relief can

be granted, does not in any manner suffer from any infirmity.

9 The scope of Sections 397 & 398 of the Companies Act has come

under judicial scrutiny on various occasions. In order that the Court may

make an order under Section 397 of the Act, the Court must be satisfied,

firstly that the company's affairs are being conducted in a manner

oppressive to any member of members, secondly that the facts would

justify the making of a winding up order on the ground that it was just

and equitable that the company should be wound up and thirdly that a

winding up order would unfairly prejudice the applicant or applicants. A

mere inefficient or a careless conduct of a director cannot give rise to a

claim for relief under Section 397. Mere unfairness would also not

constitute an oppression. In the present case, as has been noted supra a

private agreement (i.e. the memorandum of family settlement) alleged

by respondent No. 2 qua the petitioner which was also the subject matter

of an Award and both the aforenoted documents i.e. the private

agreement as also the Award being the subject matter of cross appeals

pending before the Allahabad High Court in which proceedings

extensive evidence has been led by the parties, the CLB in this factual

background had rightly noted that the main reliefs claimed for by the

petitioner cannot be granted; the defence of respondent No. 2 qua the

family settlement dated 21.02.2006 would necessarily have to be

answered and if this is done, the entire proceedings before the Allahabad

High Court where the evidence has been led on this issue would become

infructuous. The order of the CLB not in this background suffers from

no infirmity.

10     Appeal has no merit. Dismissed.




                                             INDERMEET KAUR, J
JULY 11, 2012
A