THE HON’BLE SRI JUSTICE SANJAY KUMAR COMPANY APPEAL NO.9 OF 2008, COMPANY APPEAL NO.5 OF 2009 AND COMPANY APPLICATION NO.481 OF 2008 IN COMPANY APPEAL NO.5 OF 2009 DATED 15th APRIL, 2013 COMPANY APPEAL NO.9 0F 2008 Between: Suruchi Chand and others. … Appellants and M/s. Commercial and Industrial Finance Private Limited, 3-6-161, Hyderguda, Hyderabad-500 029 and others. … Respondents COMPANY APPEAL NO.5 0F 2009 Between: Suruchi Chand and others … Appellants and M/s.Kohinoor Glass Factory Private Limited, having its office at Sanathnagar, Hyderabad, and others. … Respondents COMPANY APPLICATION NO.481 OF 2008 IN COMPANY APPEAL NO.5 0F 2009 Between: Suruchi Chand and others … Applicants and M/s.Kohinoor Glass Factory Private Limited, having its office at Sanathnagar, Hyderabad, and others. … Respondents THE HON’BLE SRI JUSTICE SANJAY KUMAR COMPANY APPEAL NO.9 OF 2008, COMPANY APPEAL NO.5 OF 2009 AND COMPANY APPLICATION NO.481 OF 2008 IN COMPANY APPEAL NO.5 OF 2009 C O M M O N J U D G M E N T The Principal Bench of the Company Law Board (CLB) at New Delhi dismissed Company Petition Nos.78, 84 and 85 of 2006 and 38 of 2007 by its common order dated 29.10.2007. These Company Petitions arose under Sections 397 and 398 read with Sections 111 and 111A of the Companies Act, 1956 (for brevity, ‘the Act of 1956’). C.P.Nos.84 of 2006 and 38 of 2007 pertained to M/s.Kohinoor Glass Factory Private Limited and M/s.Commercial and Industrial Finance Private Limited respectively, private companies registered in Andhra Pradesh. C.P.Nos.78 and 85 of 2006 pertained to M/s.Mahalaxmi Glass Works Private Limited and M/s.Western India Glass Works Limited respectively, which are private companies incorporated in the State of Maharashtra. Aggrieved by this common order dated 29.10.2007, the petitioners in C.P.Nos.84 of 2006 and 38 of 2007 filed these Company Appeals under Section 10F of the Act of 1956. C.A.No.9 of 2008 arises out of C.P.No.38 of 2007 relating to M/s. Commercial and Industrial Finance Private Limited, Hyderabad, while C.A.No.5 of 2009 arises out of C.P.No.84 of 2006 pertaining to M/s. Kohinoor Glass Factory Private Limited, Hyderabad. This Court admitted C.A.No.9 of 2008 on 25.11.2008 and directed the parties to maintain status quo with regard to the immovable properties at Hyderabad and not to take any steps to alienate or alter the nature or characteristics of the lands. In so far as C.A.No.5 of 2009 is concerned, Company Application No.481 of 2008 was filed by the appellants seeking condonation of the delay of 112 days in its filing. Notice was ordered on this application on 22.07.2009. However, pursuant to the order dated 25.11.2008 passed by this Court, the appeal was numbered as C.A.No.5 of 2009. No counter was filed by the respondents opposing the condone delay application. The affidavit filed in support of the application reflects that the appellants presented C.A.No.9 of 2008 against the common order of the CLB in respect of all the four companies and took steps thereafter to rectify their mistake, as two of the companies were in Maharashtra. By order dated 15.07.2008 passed in the appeal, this Court permitted the appellants to confine and treat C.A.No.9 of 2008 as an appeal against C.P.No.38 of 2007 alone, leaving it open to them to file a separate appeal in respect of M/s.Kohinoor Glass Factory Private Limited. Thereupon, the appellants filed this appeal with a delay of 112 days. As Section 10F of the Act of 1956 provides for filing of an appeal against the order of the CLB within sixty days, extendable by a further period not exceeding sixty days; in all, 120 days, and as the reasons set forth by the appellants in their affidavit filed in support of the application commend acceptance, this Court condones the delay of 112 days in the presentation of C.A.No.5 of 2009 and the appeal is admitted. It may be noted that as regards C.P.No.78 of 2006 pertaining to M/s.Mahalaxmi Glass Works Private Limited, Mumbai, the appellants filed C.A.No.22 of 2008 and against the order in C.P.No.85 of 2006, relating to M/s.Western India Glass Works Limited, Mumbai, they preferred C.A.No.23 of 2008. Both these appeals were filed before the Bombay High Court and seem to have been renumbered thereafter as C.A.Nos. 43 and 44 of 2009. The appellants moved applications under Section 25 CPC before the Supreme Court of India in Transfer Petition (Civil) Nos.846- 847 of 2009 seeking transfer of the Company Appeals pending before the Bombay High Court to this Court. By order dated 18.01.2010, the Supreme Court refused to act upon the transfer applications and dismissed them. Transfer Petition Nos.12 and 13 of 2010 seeking transfer of Company Appeal Nos.9 of 2008 and 5 of 2009 pending before this Court to the Bombay High Court were also dismissed by the same order. The four Company Petitions were filed before the CLB alleging certain acts of oppression and mismanagement by the respondents in the affairs of the four companies. These companies were the flagship companies of the Chand Group of Companies controlled by three brothers viz., Sri Naresh Chand, Sri Mahesh Chand and late Sri Ramesh Chand, who held equal shareholding in the companies, firms and Associations of Persons of the group. The Chand Group of Companies belonged to the family of Professor Kishan Chand, who died on 13.05.1961. Sri Mahesh Chand was his eldest son while Dr.Naresh Chand and late Sri Ramesh Chand were the second and third sons respectively. Their shareholding was detailed in the Annexure to the Arbitration Agreement dated 03.01.1989. Sri Ramesh Chand was the husband of the first appellant herein and the father of the second and third appellants. He died in a car crash on 18.12.1986. As certain disputes arose after his death, the appellants, being his legal heirs, sought winding up of M/s.Mahalaxmi Glass Works Private Limited, Mumbai, before the Bombay High Court. During the pendency thereof, Arbitration Agreement dated 03.01.1989 was entered into by and between the parties. Pursuant thereto, two Arbitrators – Mr.Justice P.N.Bhagwati and Mr.Justice V.D.Tulzapurkar, retired Judges of the Supreme Court, were asked to resolve the disputes. In the Arbitration Agreement, the appellants were clubbed together as the ‘Ramesh Chand Group’. The other family members were referred to as the ‘Mahesh Chand Group’ and the ‘Naresh Chand Group’. The relevant date as per the Agreement was 18.12.1986, the date of death of Sri Ramesh Chand. The terms of the Agreement, to the extent relevant, are extracted hereunder: “WHEREAS: (a) … … (j) In order to preserve family peace and harmony and to resolve all disputes and differences between the three groups and to avoid future disputes the three groups have arrived at a family arrangement whereby the Ramesh Chand Group has agreed to go out from the aforesaid businesses and sever their connections with the aforesaid businesses, companies, firms and AOPs and WIG and to receive the value of their 1/3rd share in the said businesses including the said Hyderabad properties and the value of the interest to the extent of 28% of the Ramesh Chand Group in the business of WIG. (k) The said three groups are unable to agree upon the value of the 1/3rd share of the Ramesh Chand Group in the said businesses and the value of the interest to the extent of 28% of the Ramesh Chand Group in the business of WIG and the mode, manner and time of payment thereof and whether the payment thereof is to be made with or without interest; (l) In order to resolve the said disputes, differences the parties hereto are desirous of referring the said disputes and differences herein to the arbitration of Mr.Justice P.N.Bhagwati (Retired) and Mr.Justice V.D.Tulzapurkar (Retired). NOW THIS AGREEMENT WITNESSETH AS FOLLOWS: 1. The parties hereto declare and confirm that on the demise of Ramesh Chand on 18th December 1986 the members of the Ramesh Chand Group are the only legal heirs and representatives of Ramesh Chand. 2. The parties hereto agree, declare and confirm that each of the Mahesh Chand Group, Dr.Naresh Chand Group and Ramesh Chand Group has a 1/3rd share and interest in the aforesaid businesses including the Hyderabad properties and that the Ramesh Chand Group has a 28% share in the business of WIG. 3. The Ramesh Chand Group agrees to go out from and/or sever their connection with the aforesaid businesses including the said Hyderabad properties and the said companies, firms, AOPs and WIG on being paid the value of their 1/3rd share in the said businesses including the said Hyderabad properties and the value of the interest to the extent of 28% of the Ramesh Chand Group in the business of WIG as provided herein, with interest, if awarded. 4. The parties hereto agree to refer and hereby refer to the summary arbitration of Mr.Justice P.N.Bhagwati (Retired) and Mr.Justice V.D.Tulzapurkar (Retired), the following issues and all other connected and incidental issues :- a ) The determination of the value of the 1/3rd share of the Ramesh Chand Group in the aforesaid businesses, including the Hyderabad properties and the value of the interest to the extent of 28% of the Ramesh Chand Group in the business of WIG. (b) The aforesaid valuation shall be made as on the Relevant Date. The parties shall be at liberty to urge their respective contentions in regard to the mode and manner of such valuation, including the question as to how, in what manner and to what extent the claims, liabilities and demands in respect of the aforesaid businesses including the Hyderabad properties pertaining to the period prior to the Relevant Date which may be crystallized or raised subsequent to the Relevant Date are to be valued. [c] Whether any interest and if so, at what rate, may be awarded as from the Relevant Date and/or pendente lite and/or from the date of the award till realization. (d) The determination of the mode, manner and time of payment of the aforesaid value of the 1/3rd share of the Ramesh Chand Group in the aforesaid businesses including the Hyderabad properties and the value of the interest to the extent of 28% of the Ramesh Chand Group in the business of WIG, and interest, if any, as determined by the learned Arbitrators and by whom. 5. It is a term of this Reference that separation of the Ramesh Chand Group from the aforesaid companies, firms, and AOPs and WIG will become effective only on receipt in full of the value of its aforesaid 1/3rd share and the value of the interest to the extent of 28% of the Ramesh Chand Group in the business of WIG and interest, if any, as may be determined and awarded by the Arbitrators. 6. Until the award is made a rule of the Court, and the amount, and interest if any, awarded to the Ramesh Chand Group in respect of its said 1/3rd share and the value of the interest to the extent of 28% of the Ramesh Chand Group in the business of WIG are paid to the Ramesh Chand Group in full :- (a) no assets of any of the companies being parties of the 4th to 13th part, or firms or AOPs, or WIG shall be sold, disposed of or encumbered in any manner whatsoever save and except in the ordinary course of business and/or for the purposes of making full payment of the amount and interest, if any, awarded; (b) no party hereto shall hereafter sell, dispose of, encumber or transfer in any manner any of the shares in the Companies being parties of the Fourth to the Thirteenth part herein or in WIG save and except amongst the members of the family of the group concerned which shall not be objected to by the other parties, but intimation of the same shall be given to the other parties and (c) no party hereto shall make any change in the constitution of any of the partnerships or Association of Persons set out in the First Schedule. …… 17. From December 1989 the parties of the 2nd to the 13th part or any one or more of them shall pay a sum of Rs.50,000/- per month which sum shall be paid on or before the 15th of every month and the first of such payments shall be made on or before 15th December, 1989 and the subsequent payments on or before the 15th of every succeeding month thereafter to the Ramesh Chand Group in the manner more particularly set out hereinafter until the date of the final award. As from the date of the final award a sum of Rs.50,000/- per month shall be paid on or before the 15th of every month to the Ramesh Chand Group until the value of the one-third share in the said business including the Hyderabad properties and the interest to the extent of 28% of the Ramesh Chand Group in the business of W.I.G. with interest thereon that may be awarded by the Arbitrators is paid in full and the question as to which of parties shall be liable to pay the same shall be decided by the Arbitrators. Provided that the Arbitrators shall decide as to whether and in what manner and to what extent the liability to pay Rs.50,000/- , salary, perquisites and dividends shall be reduced on part payments from time to time towards the amount of the final award together with interest, if any, awarded. The said monthly sums of Rs.50,000/- shall be paid to M/s.Bachubhai Munim & Co, on behalf of the Ramesh Chand Group. The said sum of Rs.50,000/- shall belong to and be divided equally between Suruchi Chand, Saloni Chand and Shivani Chand. 18. The said sum of Rs.9,75,000/- as also the amount of Rs.50,000/- per month as also the amount of salaries, perquisites to Miss Saloni Chand and dividends on shares paid or made available to any members of the Ramesh Chand Group after the relevant date, shall be adjusted towards interest awarded, if any. If no interest is awarded then in respect of the value of their one-third share in the said businesses including the Hyderabad properties and their interest to the extent of 28% in the business of W.I.G. the Ramesh Chand Group will be entitled to retain the payments made under clauses 15, 16 and 17 herein and the aforesaid dividends in addition to the amount that may be determined by the Arbitrators to be the value thereof.” (emphasis added) Pursuant to the above Arbitration Agreement, the learned Arbitrators entered upon the reference and pronounced four interim awards and a final award. Three of the interim awards were dated 02.04.1994 while the fourth interim award was dated 20.02.1996. The three interim awards dated 02.04.1994 dealt with disputes between the parties as to certain Hyderabad properties, viz., the Serilingampally property, the Shiv Bagh property and the Hyderguda property respectively. The fourth interim award dated 20.02.1996 also pertained to the lands situated in Sy.Nos.18, 19, 56, 69, 77, 87, 92, 93, 94, 96, 97, 98 and 117/1 of Miyapur Village in Hyderabad, admeasuring Ac.282.17 guntas, Ac.252.00 guntas and Ac.384.00 guntas respectively. The final award dated 14.09.1996 determined the separate compensation payable to the appellants at Rs.4,51,50,000/-. The final award categorically confirmed the four interim awards published earlier. It may be noticed at this juncture that the compensation of Rs.4,51,50,000/, after effecting a deduction of Rs.9,00,000/- therefrom, was withdrawn by the appellants on 23.11.1998. The final award dated 14.09.1996 was challenged by the appellants before the Bombay High Court, but their objections were rejected and the award was made a Rule of the Court by order dated 23.01.1998 passed in Arbitration Petition No.110 of 1997. The appellants’ challenge to the said order in Appeal No.322 of 1998 met with failure when a Division Bench of the Bombay High Court dismissed it by order dated 02.04.1998. Their further appeal before the Supreme Court of India in Civil Appeal No.4060 of 1998 was disposed of by order dated 18.08.1998 with certain consensual modifications of the award - while agreeing with the Bombay High Court that the award did not call for any interference, the Supreme Court took note of the appellants’ grievance that they were denied interest for the pre-award period and as the counsel for the contesting parties agreed before it that the respondents would pay Rs.5,00,000/- to each of the three appellants in lump sum by way of pre-award interest, the Supreme Court recorded the same and directed that the award should stand modified to that extent. Parties were also directed to bear their own costs. The appellants were permitted to withdraw the amounts deposited by the respondents before the Bombay High Court with accrued interest, if any. These were the limited changes made by the Supreme Court. In effect, the final award also attained finality. The first interim award dated 02.04.1994 pertained to the Serilingampally property, being an extent of Ac.50.00 guntas (excluding Ac.10.00 guntas of acquired land) in Sy.Nos.94, 95, 96, 97, 102, 103/1 and 2. The title documents pertaining to this property were to be handed over to the appellants’ counsel, M/s.Bachubhai Munim & Co., who were to hold and hand over the same to the purchaser of the property. The appellants were to sell the said property on an ‘as is where is’ basis within three months. In default, the property was to be sold by auction. The net sale proceeds after deduction of costs, charges and expenses, were to be divided between the appellants, on the one hand, and respondents 1 to 17 and 19 to 21, on the other, in the ratio of 1:2 in full satisfaction of their respective claims in the said property. The second interim award dated 02.04.1994, pertaining to the Shiv Bagh property, allocated an area admeasuring 22,934 square metres or thereabouts in the marked plan appended thereto to the appellants in full satisfaction of their share in the property. On such allocation, their holding in the Shiv Bagh property was marked as ‘B’ and ‘E’ in the plan in Annexure-I, while the remaining land shown in ‘A’, ‘C’ and ‘D’ along with the temple and well were allotted to respondents 1 to 17 and 19 to 21 therein. The third interim award dated 02.04.1994, pertaining to the Hyderguda property, reflects that an area admeasuring 1,266 square yards, representing one-third of the entire land, was allotted to the appellants in full satisfaction of their share in the property. The remaining portion of the property, along with the structures thereon, was allotted to respondents 1 to 17 and 19 to 21 therein in full satisfaction of their claims. These respondents were required to pay the appellants one-third of the value of the structures on the property, quantified at Rs.2,00,000/-, within three months from the date of the said award. The fourth interim award dated 20.02.1996 pertained to the lands situated at Miyapur Village in Hyderabad. An extent of Ac.312.17 guntas approximately, referred to as the Baquer Khan land, was situated in Sy.Nos.18, 19, 44, 45, 56, 69, 77, 87, 92, 93, 94, 95, 97, 98 and 117/1. One third share in the said lands in an ‘as it is’ condition was to be allotted to the appellants. Taking note of the fact that part of the Baquer Khan land was sold by M/s.Commercial and Industrial Finance Private Limited, the appellants were allotted one-third undivided and undemarcated share out of the remaining Ac.282.17 guntas. However, as Ac.100.00 guntas forming part of Sy.No.45 and being part of the Ac.130.17 guntas, agreed to be sold under agreement of sale dated 08.05.1995, was also allotted to the appellants, subject to the terms and conditions of the said agreement of sale, certain terms and conditions were imposed. The remaining Ac.182.00 guntas of land, which was not the subject matter of the agreement of sale dated 08.05.1995, was to be sold by the appellants as per the terms and conditions stipulated. One third of the sale proceeds from the sale of this land, after deduction of costs, charges and expenses, was to be paid to the appellants. The award also noted that Rs.12,20,000/- was lying in deposit in the Bombay High Court, pursuant to the order dated 07.12.1995 in Arbitration Petition No.212 of 1995, and one-third share thereof was permitted to be withdrawn by the appellants in respect of their undivided and undemarcated one-third share and the balance was to be withdrawn by M/s.Commercial and Industrial Finance Private Limited. As regards the extent of Ac.636.00 guntas of the Jeelani Begum land in Miyapur, one-third undivided and undemarcated share was allotted to the appellants. This land was to be sold by them and one-third of the sale proceeds, after deduction of charges and expenses, was to be paid to them. This allotment was subject to liabilities of Rs.3,00,000/- in respect of these lands, which were to be paid by the appellants to M/s.Commercial and Industrial Finance Private Limited as and when the lands were sold at a price exceeding Rs.3,00,000/-. The award further stated that though it was styled as an ‘Interim Award’, it was final qua the matters dealt with thereunder. Para 12 of the final award dated 14.09.1996 reflects that the learned Arbitrators confirmed the interim awards passed earlier and the directions issued therein, which had been accepted by the parties. By way of the final award, the learned Arbitrators determined that for the one-third share of the Ramesh Chand Group in the businesses of M/s.Mahalaxmi Glass Works Private Limited, M/s.Kohinoor Glass Factory Private Limited and the 28% share in M/s.Western India Glass Works Limited, a sum of Rs.4,50,00,000/- was to be paid to them by way of compensation for going out of the businesses of these companies, subject to deduction of Rs.9,00,000/- paid to them pursuant to the earlier directions of the Arbitrators between 01.04.1994 and 31.12.1994. It was made clear that this payment was towards compensation for preserving of the respective businesses of the companies; for buying out the appellants to avoid obstructions and hindrances likely to be caused by them; and for carrying on the businesses by the respondents smoothly, unhindered by the presence of any of the appellants who might cause difficulties. This amount was to be paid within twelve months from the date of the award. In the event of delay, it was to carry interest at the rate of 18% per annum from the date of expiry of the period of twelve months. Para-38 of the final award is of relevance and reads thus: “The Claimants are directed to hand over to Mahesh Chand Naresh Chand groups in equal shares Preference Shares held by the Claimants or any of them in MGW, KGF and WIG together with the relative transfer deeds duly signed in blank by the registered shareholders at nil value. Such handing over shall be against full payment to the Claimants of the amount hereby awarded.” As per para-42 of the final award, the respondents were required to continue to make monthly payments in terms of the Arbitration Agreement which included salary, perquisites, etc. until the expiration of the period of twelve months from the date of the award as on which date, the liability for payment of interest would commence in the case of non-payment of the compensation amount. Such payments were directed to be in addition to the amount of compensation awarded and were to be retained by the appellants without adjustment. Upon expiration of the period of twelve months from the date of the award or upon full payment of the compensation amount awarded, whichever was earlier, the appellants ceased to have entitlement to any sum by way of monthly payments, salaries, perquisites, from the respondents. As regards the firm, M/s.Kemenar Enterprises, the learned Arbitrators determined its value at Rs.4,50,000/- and Rs.1,50,000/- thereof, representing one-third share, was directed to be paid to the appellants in addition to the compensation amount already referred to. Paras-45 and 46 of the final award are also relevant and read as under: “45. The shares held by the Claimants