Delhi High Court
Guptajee Charitable Trust vs Bharat Carpets Ltd. And Ors. on 1 May, 2012
Author: A.K.Sikri
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Co. App. No.6 of 2012, Co. App. No.7 of 2012, Co. App.
No.8 of 2012, Co. App. No.9 of 2012, Co. App. No.10 of
2012 & Co. App. No.11 of 2012
Reserved on: February 08, 2012
% Pronounced on: May 01, 2012
1) CO. APP. 6/2012
GUPTAJEE CHARITABLE TRUST ..... Appellant
Through: Mr. T.K. Ganju, Sr. Adv. with
Mr. A.K. Thakur and
Mr. Aditya Ganju, Advs.
VERSUS
BHARAT CARPETS LTD. AND ORS. . . .Respondents
Through: Mr. Abhinav Vashist, Sr. Adv.
with Ms. Prema Priyadarshini
for propounder.
Mr. Rajiv Bahl, Adv. for O.L.
2) CO. APP. 7/2012
AKHILESH GUPTA ..... Appellant
Through: Mr. T.K. Ganju, Sr. Adv. with
Mr. A.K. Thakur and
Mr. Aditya Ganju, Advs.
VERSUS
BHARAT CARPETS LTD. AND ORS. . . .Respondents
Through: Mr. Abhinav Vashist, Sr. Adv.
with Ms. Prema Priyadarshini
for propounder.
Mr. Rajiv Bahl, Adv. for O.L.
3) CO. APP. 8/2012
BISHESWAR NATH GUPTA DECD THR LRS ..... Appellant
Through: Mr. T.K. Ganju, Sr. Adv. with
Mr. A.K. Thakur and
Mr. Aditya Ganju, Advs.
VERSUS
BHARAT CARPETS LTD. AND ORS. . . .Respondents
Through: Mr. Abhinav Vashist, Sr. Adv.
with Ms. Prema Priyadarshini
for propounder.
Mr. Rajiv Bahl, Adv. for
O.L.
4) CO. APP. 9/2012
PUNEET GUPTA ..... Appellant
Through: Mr. S.M. Saxena, Advocate.
VERSUS
UCC BUILDERS PVT. LTD. AND ORS. . . .Respondents
Through: Mr. Abhinav Vashist, Sr. Adv.
with Ms. Prema Priyadarshini
for propounder.
Mr. Rajiv Bahl, Adv. for
O.L.
5) CO. APP. 10/2012
SHOBHA SOMANI AND ORS. ..... Appellants
Through: Mr. S.M. Saxena, Advocate.
VERSUS
MAHARANI PAINTS (INDIA)
PVT. LTD. AND ORS. . . .Respondents
Through: Mr. Abhinav Vashist, Sr. Adv.
with Ms. Prema Priyadarshini
for propounder.
Mr. Rajiv Bahl, Adv. for O.L.
6) CO. APP. 11/12012
SMT KAILASH B MALIK ..... Appellant
Through: Mr. S.M. Saxena, Advocate.
VERSUS
MAHARANI PAINTS (INDIA)
PVT. LTD. AND ORS. . . .Respondents
Through: Mr. Abhinav Vashist, Sr. Adv.
with Ms. Prema Priyadarshini
for propounder.
Mr. Rajiv Bahl, Adv. for
O.L.
CORAM :-
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
A.K. SIKRI (ACTING CHIEF JUSTICE)
1. The respondent Bharat Carpets Ltd. (hereinafter referred to as
„the company‟) is a company under liquidation. Provisional
winding up order was passed on 23.8.1984 in CP No.50 of
1984 and final winding up order was passed on 18.5.1987.
Official Liquidator was appointed who has seized all the assets
and records of the company. Liquidation proceedings are still
pending. There have been certain attempts to
revive/rehabilitate the company and scheme under Section 391
of the Companies Act (hereinafter referred to as „the Act‟) is
pending before the Company Court which has been filed by
M/s. UCC Builders Pvt. Ltd./Respondent No.2 and M/s.
Maharani Paints (India) Pvt. Ltd./Respondent No.3 herein. All
the appellants are the propounder/ex management of the
company. They claimed that process of rehabilitation under
Section 391 of the Act does not offer any compromise or
arrangement to the creditors and members of the company.
However, no such claim has been filed by them so far. The
respondent No.2 and 3 (hereinafter referred to as the
propounder of the scheme) had moved application under
Section 536 (2) of the Act read with Rule 9 of the Companies
(Court) Rules, 1959 seeking validation of purchase of shares
after the winding up order dated 18.5.1987. In this
application, the case set up by the propounder was that a
Share Purchase Agreement/MoU/Deeds of Arrangement dated
10.3.2006 was executed between the original share holders
and propounders which is a composite agreement for purchase
of shares and for settlement of liabilities of company in
liquidation. According to the propounders, vide this
agreement, they had purchased 223600 number of shares out
of 3,50,000 equity shares of the company which represents
63.89% of equity. According to them, respondent No.2 holds
17650 (50.19%) shares whereas respondent No.3 holds 47950
(13.70%) shares of the company. In the application filed
under Section 536(2) of the Act, it was further averred by the
propounders that Mr. Puneet Gupta, one of the erstwhile
Directors/shareholders who was also a party to the MoU, had
maliciously sent revocation notice dated 10.4.2011 i.e. after a
lapse of more than five years of the MOU/Deeds of
Arrangement seeking to unilaterally revoke the MoU/Deeds of
Arrangement dated 10.3.2006. Allegations were also made
against other erstwhile Directors/shareholders who had sold
the shares vide said MoU. It was stated in detail as to how the
respondent Nos.2 & 3 had purchased the shares from time to
time from the erstwhile shareholders by the execution and
share transformation issued in their favour. Prayer was,
therefore, made to validate the transfer of shares as per the
details given in the said application in favour of the
propounders and to direct the Official Liquidator to make
necessary amendments in the captioned company register.
Since admittedly, the transfer took place after commencement
of the winding up, sub-Section (2) of Section 536 states that
such a transfer of share is void. In case, the transfer is made
after the winding up orders passed by the Court, then it can
only be validated by the Court. It means that the transfer is
treated as void but the Court which has passed the winding up
order has given the power to validate the transfer.
2. The erstwhile shareholders (appellants herein) were put to
notice of the filing of that application. Official Liquidator also
entered appearance in the proceedings. As far as OL is
concerned, he filed his reply affidavit inter alia stating that
every document annexed with the application with regard to
the purchase of the equity shares of the propounder of the
scheme appeared to be legal and proper fulfilling the
mandatory requirement of transfer and purchase of equity
shares. He also stated that the Court had the power to valid
the transfer of shares in favour of the propounders. The
appellants, however, objected to the relief claimed by the
propounders. The learned Single Judge examined the ambit
and scope of Section 536(2) of the Act. The company Court
referred to the judgment of Calcutta High Court in the case of
J. Sen Gupta Private Ltd. (In Liquidation), AIR 1962 Cal.
405 wherein the said Court has observed as under:
""12. It seems to me, therefore, upon considering various
authorities on this subject that the following principles are
doubtless applicable to sub-sec (2) of Sec. 536 of the
Companies Act, 1956:
1. The Court has an absolute discretion to validate a
transaction.
2. This discretion is controlled only by the general
principles which apply to every kind of judicial discretion.
3. The Court must have regard to all the surrounding
circumstances and if from all the surrounding
circumstances it comes to the conclusion that the
transaction should not be void, it is within the power of
the Court under Sec. 536(2) to say that the transaction is
not void.
4. If it be found that the transaction was for the benefit of
and in the interests of the company or for keeping the
company going or keeping things going generally, it
ought to be confirmed."
3. The company Court also took note of following discussion in
The Sidhur Mills Company Limited, (1987) 1 Comp. L.J. 71
(Guj.) by the Gujarat High Court in the following manner:
""12. It is trite position in law that the commencement of
winding-up proceedings relates back to the presentation
of the petition (see: section 441 of Companies Act, 1956).
It should be recalled that the winding-up petition in which
the order was made was company petition No.9 of 1979
which was presented on 22.2.1979. The winding-up
order was made by this Court on October 18, 1979. In
the circumstances, therefore, any transfer of shares of
Siddhpur Mills Co. Ltd. made after the presentation of the
winding-up Co. would be void unless as otherwise
directed by the Court. The Court has an absolute
discretion as to validating the transaction after
presentation of the winding-up petition. The discretion is
to be exercised on recognized principles which guide the
exercise of judicial discretion generally with particular
attention to the interest of the company. The Court can
validate such impugned transaction in those bona fide
cases which demand protection of equitable
consideration. (See B.B. Khanna v. S.N. Ghose 1976 Tax
L.R. 1740)."
4. From the aforesaid judgments, principle of law culled out is
that the company Court has the discretion to validate transfer
of shares executed after passing of the winding up order, but
the said discretion is not an untrammeled one, as it has to be
exercised on sound judicial principles. The Court has to keep
in view all surrounding circumstances and if it finds that same
is a bona fide transaction for the benefit of the company, then
the same should be validated. While doing so, the Company
Court also must be satisfied that there was clear intent on the
part of the purchasers to transfer the shares in question. It
was not necessary to obtain prior sanction of the Company
Court before execution of an agreement to sale and post facto
sanction could be granted. The Company Judge has also
referred to Chapter VII of the SEBI (Delisting of Equity Shares)
Regulations, 2009 (for short „SEBI Regulations, 2009‟) which
states that in case of small and delisted companies where
winding up proceedings are pending, its shares shall be dealt
with in accordance with law applicable to those proceedings.
Regulations 27(1) and 28(1) of the SEBI Regulations, 2009 are
reproduced herein below:-
"Special Provisions in case of small companies
27.(1) Where a company has paid up capital upto one
crores rupees and its equity shares were not traded in
any recognized stock exchange in the one year
immediately preceding the date of decision, such equity
shares may be delisted from all the recognized stock
exchanges where they are listed, without following the
procedure in Chapter IV.
Delisting in case of winding up, derecognition, etc.
28.(1) In case of winding up proceedings of a company
whose equity shares are listed on a recognized stock
exchange, the rights, if any, of the shareholders of such
company shall be in accordance with the laws applicable
to those proceedings."
5. On that basis, the opinion is formed that SEBI Takeover
Regulations, 1997 would have no application to the present
transfer of shares. On the basis of the aforesaid principles, the
company Court examined the facts of the case at hand. It
observed that since company was in liquidation for last 27
years, there was no question of its shares being listed on any
recognized stock exchange on the date when the alleged sale
agreement/MoU/deed of arrangement were executed. It was
more so when trading at Delhi Stock Exchange has been
suspended for last nearly ten years. As per the Company
Judge, the appellant who were initially promoters and the
family members of company in liquidation had entered into the
said MoU, etc. with the propounders in the year 2005-06, i.e.,
at a time when liabilities were far in excess of the assets of the
company and secured creditors were making efforts to recover
their debts from personal properties of the initial promoters,
i.e., Mr. R.N. Gupta and his family members. It was at that
stage that the original promoters voluntarily entered into share
purchase agreement/MoU/deed of arrangement for valuable
consideration. There was no misrepresentation on the part of
the propounders as the original shareholders were fully aware
of all facts regarding the company in liquidation as they were
all family members of Mr. R.N. Gupta (son of Mr. B.N. Gupta)
former Managing Director of company in liquidation. So much
so, they have even filed CA Nos.376-379/2006 and 593/2006
seeking permission of this Court to convey their shares in the
company in liquidation in favour of the propounders. In the
said application, categorical averments were made by all these
appellants in their individual applications that they had
consented to sell their share holding in favour of the
respondent Nos.2 & 3 and these applications were supported
by affidavits as well. Even MoU dated 10.3.2006 categorically
stated that these appellants had consented to sell their share
on consideration of percentage of face value in favour of the
propounders and receipt was also executed having received the
amount. Subsequent to the execution of these MoUs, the
propounders after acquiring the share settled the dispute with
all the secured creditors, viz., HFC and UCO bank by entering
into one time settlement with them. A sum of `183 lacs was
paid to UCO Bank by the propounders. Thereafter, the
propounders even invited claims from unsecured creditors and
agreed to repay the amounts to the said unsecured creditors
with 10% simple interest till the date of winding up order and
thereafter at the rate of 5% simple interest till the date of
repayment. It is only after the debts of secured creditors had
been settled that the members of Gupta family had second
thoughts and they withdrew the applications filed by them with
liberty to refile those applications in case they were so advised
in future. Based on these facts and events, the learned Single
Judge held that the appellants are stopped from contending
that they had either received no consideration and/or
consideration mentioned in the share purchase agreement or
MoU. In any case, the agreements/MoU etc. were binding on
the appellants. The objection of the appellants that the
documents had been obtained by fraud or misrepresentation by
suppression of material facts or any other reason has been
brushed aside observing that in that event there should have
been the agreement set aside through Court and unless they
do so it is not permissible to go behind the agreement and
ignored as void documents. It is so held by the Supreme Court
in the case of Subodh Kumar Gupta Vs. Shrikant Gupta,
(1993) 4 SCC 1 in the following manner:
"On the averments in the plaint taken at their face value the
case set up by the plaintiff is that after his father left
Mandsaur his two brothers joined hands, manipulated the
accounts and siphoned away the funds belonging to the
partnership firm. The entire dispute is in relation to what
happened at Mandsaur. Secondly, it must also be remembered
that even according to the plaintiff after his father returned to
Mandsaur there was some talk of settlement of the dispute
and consequently an agreement was executed on 26th
November, 1992 at Bhilai by which the partnership was
dissolved and it was agreed that the liabilities would be settled
within one month. Now this agreement was executed outside
the territorial jurisdiction of the Chandigarh Court. Unless this
agreement is set aside there is no question of the Chandigarh
Court entertaining a suit for dissolution of the partnership and
rendition of accounts. The plaintiff cannot wish away the
agreement by merely suiting that it is a void document. He
cannot rest content by alleging that the document has no
efficacy in law and must, therefore, be ignored. If it is the case
of the plaintiff that this document was obtained by fraud or
misrepresentation by suppression of material facts or for any
other like reason he must have the agreement set aside
through Court and unless he does that he cannot go behind
the agreement, ignore it as a void document and proceed to
sue for dissolution of the partnership and rendition of
accounts. It is not a matter of the volition of the plaintiff to
disregard the document as void and proceed to ignore it
altogether without having it declared void by a competent
Court. It, therefore, appears clear to us that no part of the
cause of action arose within the territorial jurisdiction of the
Chandigarh Court."
6. Vide impugned order, the learned Company Judge has allowed
the transfer of share treating the transaction bona fide for the
benefit of the company in liquidation entering the respondent
Nos.2 and 3 in the Register of Members. The permission is,
however, given to the appellant to raise a dispute prior to filing
a second motion petition in case they wish to challenge the
factum of transfer of share agreement. On the scheme
propounded by the propounders, notices were issued to the
share holders and the creditors which was scheduled for
11.2.2012 which was earlier scheduled for 17.12.2011.
7. Challenging that order, the present appeals are filed which
were listed for admission on 08.2.2012. However, as the
counsel for the respondents appeared on caveat as well as
counsel for the Official Liquidator was also present, with the
consent of the counsel for the parties, arguments were finally
heard on that date itself. There was no stay of the proposed
meeting of shareholders and creditors and we presume that
this meeting must have taken place.
8. Mr. T.K. Ganju, learned Senior counsel and Mr. S.M. Saxena,
learned counsel appeared for one or the other appellants to
make submissions in these appeals. The main plank of attack
of the learned counsel for the appellants was that predicated
on Section 108 of the Act, it was submitted that as per Section
108 of the Act, the transfer of shares/registration in the
Membership Register could not be ordered except on
production of instrument of transfer. Further Section 108 of
the Act required previous approval of the Central Government
as the proposed acquisition by respondent os.2 & 3 exceeded
25% of the paid equity share capital by the company.
Judgments of the Supreme Court in the case of Mannalal
Khetan and Others Vs. Kedar nath Khetan and Others,
(1977) 2 SCC 424 was pressed into service wherein the Court
held as under:
"16. The provision contained in Section 108 of the Act
states that "a company shall not register a transfer of
shares...unless a proper instrument of transfer duly
stamped and executed by or on behalf of the transferor
and by or on behalf of the transferee has been delivered
to the company along with the certificate relating to the
shares or debenturesor if no such certificate is in
existence along with the letter of allotment of the shares."
There are two provisos to section 108 of the Act. We are
not concerned with the first proviso in these appeals. The
second proviso states that nothing in this section shall
prejudice any power of the company to register as
shareholder or debenture holder any person to whom the
right to any shares in, or debentures of, the company has
been transmitted by operation of law. The words shall not
register" are mandatory in character. The mandatory
character is strengthened by the negative form of the
language. The prohibition against transfer without
complying with the provisions of the Act is emphasised by
the negative language. Negative language is worded to
emphasise the insistence of compliance with the
provisions of the Act. (See Stale of Bihar v.
Mahawjadhiraja Sir Kahemshwar Singh of Darbbhanga
and Ors. (1) MANU/SC/0019/1952 : [1952]1SCR889 K.
Pentiah and Ors. v. Mtiddala Veeramatlappa avd Ors. (2)
MANU/SC/0263/1960 : [1961]2SCR295 and unreported
decision dated 18 April, 1976 in Criminal Appeal No. 279
of 11975 etc. Additional District Magistrate, Jabalpu v.
Shivakant Shukla (3). Negative words are clearly
prohibitory and are ordinarily used as a legislative device
to make a statutory provision imperative.
xxx xxx xxx
19. Where a contact, express or implied, is expressly or
by implication forbidden by statute, no court will lend its
assistance to give it effect. (See Mellis v. Shirley. L.B. A
contract is void if prohibited by a statute under a penalty,
even without express declaration that the contract is void,
because such a penalty implies a prohibition. The penalty
may be imposed with intent merely to deter persons from
entering into the contract or for the purposes of revenue
or that the contract shall not be entered into so as to be
valid at law. A distinction is sometimes made between,
contracts entered into with the object of committing an
illegal act and contracts expressly or impliedly prohibited
by statute. The distinction is that in the former class one
has only to look and see that acts the statute prohibits; it
does not matter whether or not it prohibits a contract; if a
contract is made to do a prohibited Act, that contract will
be unenforceable. In (the latter class, one has to consider
what act the statute prohibits, but what contracts it
prohibits. One is not concerned at all with the intent of
the parties, if the parties enter into a prohibited contract,
that contract is uneforceable. (See St. John Shipping
Corporation v. Joseph Rank (7)1957 C.B. 267. (See also
Halsbury's Laws of England Third Edition Vol. 8, p/141).
xxx xxx xxx
23. The provisions contained in Section 108 of the Act are
for the reasons indicated earlier mandatory. The High Court
erred in holding that the provisions are directory."
9. It was submitted that this view has been reiterated by the
Supreme Court in the case of Claude-Lila Parulekar (SMT)
Vs. Sakal Papers (P.) Ltd. and Others, (2005) 11 SCC 73.
10. It was, thus, submitted that the provisions contained in Section
108 were held to be made mandatory and their requirement
could not be dispensed with.
11. It was also argued that once the appellants had
revoked/cancelled the Mou/Agreement, etc. on the ground that
it was void under Section 536(2) of the Act, after such
revocation, it was not permissible for the propounders to file
any such application.
12. Another submission was that the appellants as contributors
were contemplating filing of scheme as there was no scheme
for them before the Court. It was submitted that in the
impugned judgment, equality principle was violated as
contributors could not be differentiated. Findings of the
learned Company Judge were also challenged and it was
submitted that the transaction was not bona fide. It was
submitted that the mala fide of the propounders were clearly
spelt out by pointing out that the propounders had colluded
with Mr. R.N. Gupta and his wife Veena Gupta (Ex. Director of
BCL) and cornered their shares by paying them both in cash
and kind absolved them from their personal guarantees and
liabilities worth `2.93 Crores from UCO bank and HFC. As per
the appellants, illegal and false consideration had been shown
in the MoU dated 10.3.2006 entered into between R.N. Gupta
and Respondent No.2. It was also submitted that the two
appellant ladies had been duped and therefore, imprimatur of
the said application was not warranted by the learned
Company Judge.
13. Another submission of the learned counsel for the appellant
was that the validation of transfer of these shares was not in
public interest and therefore, should not have been ordered as
held in S.R. Nayak and Anr etc. v. Union of India, 1991 SC
1420.
14. Mr. Abhinav Vashist, learned Senior Counsel appeared for the
respondent/propounders and Mr. Rajiv Bahl, learned counsel
appeared for Official Liquidator to refute the aforesaid
submissions of the appellants. We will take note of the
submissions while dealing with the arguments of the
appellants.
15. Insofar as arguments based on provisions of Section 108 of the
Act is concerned, we do not find much force therein. No doubt,
provisions of Section 108 of the Act are mandatory in nature
and principle of law laid down in Mannalal Khetan (supra)
and Sakal Papers (P.) Ltd. (supra) by the Supreme Court
cannot be questioned. At the same time, we find that those
cases relate to the companies which were solvent and
functioning and not the companies in respect of which winding
up order has been passed. When we deal with the case of a
company in liquidation, the applicability of Section 108 of the
Act would be meaningless. This very issue came up before this
Court in the case of H.L. Seth Vs. Wearwell Cycle Company
(India) Ltd. and Ors., 46 (1992) DLT 599. It was held that
Mannalal Khetan (supra) would have no application to a
company which is in liquidation. We may reproduce the
discussion therein:
"(25) So, we held that the court has the jurisdiction under
Section 536(2) to validate the transfer of shares which
had taken place in the present case after the winding-up
order as the winding-up process is still continuing and the
Company has not yet been dissolved The learned counsel
for the appellant has argued that the Company Court has
no jurisdiction to direct any specific performance of the
agreement of sale of shares and that the transaction was
not complete and thus, could not be validated by the
Company Judge. He has referred to Palmer's Company
Law, 24th Edition (1937), para 4029 which state "where
the winding up is compulsory or under supervision,
transfers of shares during the winding up are avoided
unless sanctioned by the court and the court will not, if a
transfer is incomplete by reason of want of registration at
the commencement of the winding up, put the buyer on
the register. This observation has been based on the
cases, namely, Emerson's Case, L.R.(1866) 1 Ch.App
433, re.:ONWARD Building Society (supra) Sullivan Vs.
Henderson (1972) 116 Sj 969 and also Nelson Mitchell Vs
City of Glasgow Bank, 1879 6R H.L 66. It may be that if
the transaction of transfer of shares is not complete the
Company Judge may in its discretion refuse to entertain
any claim for transfer of shares. But in the present case
the parties had completed the transaction of transfer of
shares when he share certificates and the transfer forms
were duly handed over to the respondent by the appellant
and his associates and full consideration which was
agreed upon had been obtained by the transferors from
the transferees. So, the transaction of transfer of shares
was complete in the present case.
(26) It has been then contended after placing reliance on
certain observations of the Supreme Court in Munnalal
Khetan Vs . Kedar Nath Khetan and others :
[1977]2SCR190 , that provisions of Section 108 being
mandatory in nature no transfer of shares could be given
effect to unless provisions of Section 108 of the
Companies Act are complies with. The learned counsel for
the appellant forgets that Section 108 could be complied
with only if the company had not gone into liquidation. At
present there exists no Board of Directors to which the
share certificates could be presented for registration. The
learned Single Judge has given ample reasons for holding
that the compliance of Section 108 after the winding-up
order had been made is not prerequisite for directing the
registration of the transfer of shares under the orders of
the court and rightly so because the Company is now
under the complete supervision of the Company Court
and the Official Liquidator is to manage the company
under the orders of the Court. If the court in its wisdom
comes to the conclusion that transfer of shares has been
made between the parties validly and the said transfer
shares is not going to adversely affect the public interest
or the interest of the Company, there is no earthly reason
why the Company Court should not declare such a
transaction as valid and direct the registration of shares
in the names of the transfers or their nominees in the
register of the company."
16. This judgment is a complete answer to the submission of the
appellant on this aspect. In the present case, what we find is
that all these appellants had entered separate purchase
agreement/MoU/Deed of Arrangements, etc. As per the terms
of deeds/agreement, they had transferred their shareholdings
in favour of the propounders. They had even accepted the
payment in consideration of the said sale. From the discussion
contained in the judgment of the learned Company Judge,
which is already mentioned above, following pertinent aspects
clearly emerge:
a) The appellants did not dispute the execution of the
share purchase agreement/MoU/Deeds of
arrangement which took place sometime in the year
2005-06.
b) At that time, the liabilities of the company were far in
excess of the assets. Secured creditors were making
effort to recover their dues from the personal
properties of the initial promoters, i.e., R.N. Gupta
and family. Faced with such a situation, these original
promoters, i.e., the appellants had voluntarily entered
into these agreements/arrangements with the
propounders. It appears that not only they wanted to
avoid the eminent thrust of recovery of their personal
assets, but salvaged whatever they can recover in the
bargain.
17. Vide these agreements/arrangements, the appellants not only
agreed to transfer their shares for valuable consideration, but
accepted that consideration as well by executing proper
receipts. There is no dispute about the receipt of the amounts
as well. So much so, CA Nos.376-379/2006 and 593/2006
were filed by some of these appellants, viz., R.N. Gupta,
Puneet Gupta, Akhilesh Gupta, etc. In these applications, they
sought permission from the Company Judge to convey their
shares in the company in liquidation to the propounders. In
these applications, specific averments were made that they had
consented to sell their shares on a consideration of agreed
percentage of the face value of the shares and had received
such consideration and the specific amount was mentioned in
the application. The applications were supported by the
affidavits.
Pertinently, after the execution of the
agreement/arrangements, the propounders even acted on that
basis alternating their position. They settled with the major
secured creditors, viz. HFC and UCO bank by entering into one
time settlement and clearing their dues. They even invited the
unsecured creditors and agreed to pay the amounts to the said
unsecured creditors with 10% simple interest till the date of
winding up order and thereafter at the rate of 5% simple
interest till the date of repayment.
18. In the aforesaid backdrop, the learned Company Judge rightly
observed that when the claims of the secured creditors got
settled the members of Gupta family, i.e., the appellants had
second thoughts. They not only withdrew the applications filed
by them seeking transfer of shares in favour of the
propounders, the appellants terminated the agreements
thereafter. Significantly, applications were withdrawn with
liberty to refile for same relief. In this backdrop, merely
alleging misrepresentation on behalf of the propounders would
not mean that the applicants have been able to prove the
same. When we see the matter in the aforesaid perspective
other arguments of the appellants stand automatically
answered. We may also place on record that one of the
appellants, viz., Akhilesh Gupta, even conceded that he had
not revoked the MoU by virtue of which shares had been
transferred to the propounders. It is more so when the
appellants have been given liberty to challenge the factum of
share transfer agreement prior to second motion.
19. We, thus, do not find any merits in these appeals. The same
are dismissed with costs quantified at `10,000/- per appeal.
ACTING CHIEF JUSTICE
(RAJIV SAHAI ENDLAW)
JUDGE
MAY 01, 2012
pmc
