THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Application No.171 of 2010 in Company Appeal No.4 of 2002 Dated:22nd April, 2010 Between: 1. Mr.D.Suryanarayana Shastri & Ors. ….Applicants and 1. M/s.Dasika Industrial Chemicals (P) Ltd., a Company incorporated under the Indian Companies Act, 1956, having its registered office at Jagannadhapuram, Poduru Mandal, West Godavari District, represented by its Managing Director Sri D.Suryanarayana Sastry & Ors. …Respondents *** THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Application No.171 of 2010 in Company Appeal No.4 of 2002 ORDER: This Company Application has been taken out by the appellants in Company Appeal No.4 of 2002 under Rule 9 of the Companies (Court) Rules, 1959, seeking extension of time for a further period of four weeks for exercising the option by them. 2. Background facts in a nutshell leading to filing of this Company Application by the appellants in Company Appeal No.4 of 2002 are: The applicants herein filed a petition under Sections 397 and 398 of the Companies Act, 1956, being C.P.No.28 of 2001 before the Company Law Board, Additional Principal Bench, Chennai, against the respondents. The said petition came to be disposed of by the Company Law Board on 22.05.2002. Relevant portion of the order dated 22.05.2002 passed by the Company Law Board reads as hereunder: “…Though with the allotment of the impugned shares, the paid-up capital is found to be in excess of the authorized capital, we do not propose to set aside the allotment on this account alone. Though, it is an irregularity, it is found to be in the interest of the Company, especially when the respondents admittedly have settled the dues of the company’s bankers and financial institutions as borne out by the MOU dated 12.07.1998. Though the allotment is irregular, we find that it is not oppressive in nature, but it is in the interest of the Company. The rest of the allegations of the petitioners relating to manipulation of accounts, non-holding of board meetings and annual general meetings etc. are all after thought, especially the said disputes were settled by virtue of the MOU dated 12.07.1998 which enables the parties to take up with the mediator in case of any dispute among the parties. There is nothing on record that the petitioners have approached the mediator in regard to these allegations. In view of the MOU dated 12.07.1998, we do not find any substance in re-agitating the same disputes and no purpose would be served in view of the fact that the Company has already been closed as early as in March, 1999. Moreover, the second respondent has made an offer either to purchase the shares of the petitioners at par or to sell his shareholdings provided the petitioners settle the investments made by the second respondent. In the circumstances, the petitioners are at liberty to exercise either of the options by 31.07.2002 and the option exercised by the petitioners will be binding on the respondents. In case they exercise the option of selling their shares, the 2nd respondent will pay consideration for the shares at par within a month of receipt of notice from the petitioners. Likewise, in case the petitioners desire to purchase the shares of the respondents, they must pay back all the investments made by the respondents, within a month of issuing such a notice. With the above directions, the petition stands disposed of.” The applicants herein challenged the order passed by the Company Law Board by filing Company Appeal No.4 of 2002. The said Company Appeal came to be dismissed on 08.03.2007. The relevant portion of the judgment passed in the said Company Appeal reads as hereunder: “Admittedly, the 2nd respondent had parted with the amount consistent with the understanding, as per the memorandum of understanding entered into between the parties, it would be proper for the appellants to exercise their option as was given by the Company Law Board, either to sell or purchase their shares. Time is extended for them to exercise the said option, for a period of four weeks from today, and the appellants are directed to communicate their option, if they exercise the option with the 2nd respondent, within the said period.” Aggrieved by the judgment passed in Company Appeal No.4 of 2002, the appellants carried the matter to the Supreme Court by way of SLP No.8423 of 2007, which was dismissed on 04.12.2009. Hence, this instant application seeking extension of time by a further period of four weeks. 3. The 2nd applicant has sworn to the affidavit filed in support of the Company Application. It is stated in the affidavit that the applicants have not exercised their option in view of the pendency of S.L.P. and upon dismissal of the said SLP on 04.12.2009, the applicants had exercised their option on 22.12.2009 to purchase the shares of the respondents 2 and 3. It is further stated in the affidavit that unless the time granted under the order dated 08.03.2007 is extended, the applicants would suffer grave and irreparable loss and damage to their interest. 4. The respondents filed counter-affidavit resisting the application. It is stated in the counter-affidavit that the applicants failed to exercise their option within the period i.e., on 08.04.2007 and therefore, they are not entitled to seek for extension of time. It is further stated that the respondents have filed a suit for redemption of accounts against the applicants herein and the same is pending as O.S.No.23 of 2007 on the file of the Senior Civil Judge, Bhimavaram. The Company Appeal came to be disposed of in the year 2007 and subsequently, the applicants carried the matter to the Supreme Court by filing SLP and the SLP filed by them in the Supreme Court ended in dismissal. 5. Heard Sri R.Raghunandan, learned counsel appearing for the applicants and Sri V.S.Raju, learned counsel appearing for the respondents 1 to 3. 6. Learned counsel appearing for the applicants submits that the applicants were pursuing the remedy by filing SLP in the Supreme Court and therefore, they could not exercise their option within a month as directed by this Court in Company Appeal No.4 of 2002. A further submission has been made that there are no willful laches on the part of the applicants in not exercising their option within the period stipulated by this Court in Company Appeal No.4 of 2002. 7. Learned counsel appearing for the respondents submits that the application filed by the applicants is devoid of merits and therefore, it is liable to be dismissed. 8. The issue that is required to be adjudicated in this Company Application is, whether the applicants made out a valid ground for extension of time by four more weeks for exercising their option. 9. The Company Law Board directed the applicants herein to exercise their option by 31.07.2002. The applicants herein challenged the order passed by the Company Law Board by filing an appeal being Company Appeal No.4 of 2002 before this Court. The appeal field by them ended in dismissal on 08.03.2007, extending four more weeks time for exercising their option. The applicants did not exercise their option within the period allowed by this Court in Company Appeal No.4 of 2002 and instead they unsuccessfully carried the matter to the Supreme Court by filing SLP. Nearly 8 years have been lapsed as on this day. At this distance of time, I deem it not appropriate to extend further time to the applicants to exercise their option. 10. Accordingly, the Company Application is dismissed. No costs. ______________________ B.SESHASAYANA REDDY, J. Date:22nd April, 2010. cs THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Application No.171 of 2010 in Company Appeal No.4 of 2002 Dated:22nd April, 2010