Case: J.P. Srivastava and Sons Pvt. Ltd. and Ors Vs. H.K. Srivastava through L.Rs. and Ors

file the petition. If it is so, then the shares held by the Trust cannot be taken into account for the purposes of the provisions of Section 399 and as such without passing any directions in pursuance to our conclusions at paragraphs 9 and 10, we dismiss this petition. However, since we ourselves feel that the correctness of our decision needs to be tested on appeal, we also stipulate that all subsisting interim orders will continue up to 31st March, 1999 so as to provide for some time to the parties to initiate appeal proceedings. Petition is dismissed. No order on cost. 22. We have carefully seen and noted that this Court upset only the later part of the order, particularly pertaining to the maintainability of the petition under Section 397 and 398 of the Act on account of the provision of Section 399 (3) of the Act. It specifically held in its judgment dated 26.10.2004 that the CLB had incorrectly held the said petition to be not maintainable. This Court found specifically that the objection regarding the applicability of Section 399(3) of the Act could not hold water, and it was categorically declared that the 3rd appellant (herein) had the necessary authority to file the appeal on behalf of the Trust and she as well as the Trust had more than 10% of the share capital alongwith the appellant Mrs. Nini Srivastava. Thus, it is clear that the order of the CLB only on the question of maintainability was held to be erroneous. It is to be noted that no other aspect and the finding in that order were even touched by this Court. Since this Court remanded the whole matter to the learned single Judge before which the appeals against the order of the CLB were filed, on this background, when we consider the judgment 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 Company 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 Section 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 Division Bench. 23. On this background, we find that the single Judge has taken a very strange view of the matter and has proceeded to hold that the CLB had not decided the matter on merits, and, therefore, the whole matter was liable to be re-decided by the CLB. In this behalf, we must point out that the CLB had given the findings on C.A. No. 264 of 1997, C.A. No. 302 of 1997, C.A. No. 262 of 1998 as also the objections raised thereto by the appellants. It is for this reason that we have dealt with the order passed by the CLB in great details in the earlier part of the judgment. According to us, it cannot be said that the CLB had not decided all the other matters, since, it had found the original petition to be untenable. We, however, desist from dealing with any other findings of the CLB to which we have already made reference. We refuse to express anything, since this Court had expected the learned single Judge to decide all those matters covered by the appeals filed by both the parties and to decide upon the correctness of the order passed by the CLB on all the other issues excepting the issue of maintainability, which issue was already finally dealt with by this Court in the judgment dated 26.10.2004. We are, therefore, of the clear opinion that the matter should be referred back to the learned single Judge for deciding all the three appeals filed by the respective parties with the time frame. 24. As regards the contentions raised by Ms. Ahmadi, learned counsel for the appellants as also the contentions raised by the opponents, we have already held that it would not be feasible for us to consider the merits of the appeals filed by the parties against the order of the CLB. We have pointed out that in its order, the CLB had considered number of questions raised by the parties vide their objections and independent applications filed from time to time. Barring the question of tenability - which is finally decided upon - this Court had not considered any other questions covered in those appeals and had left the same to be decided by the single Judge. We, therefore, would not go beyond the directions of remand, earlier issued by this Court. That would be neither a proper nor an appropriate course to follow. However, we must clarify that it would be open for the High Court to go into the question as to whether the parties hereto were bound by the terms of compromise, which have been affirmed by the CLB. In that, the High Court would also be bound to consider the tenability of the appeals filed by H.K. Srivastava Group. We have clarified this position, as so far there has been no debate on the tenability of the appeals against the orders effected through compromise.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]17. In the first two paragraphs, the CLB referred to the facts of the petition and subsequent settlement arrived at regarding the sale of shares by the petitioner at a value to be determined by a valuer appointed by the CLB. It also referred to the appointment of M/s. Thakur Vaidyanathan IyerCompany, Chartered Accountants, New Delhi to value the shares of the company. In third paragraph, the CLB referred to the presence of Mr. Vikram Srivastava, Joint Managing Director, respondent no. 3 as also the per share value arrived at by the Chartered Accountants as per their valuer report, which was arrived at Rs.7031/- per equity share. The CLB then makes a reference to the date 5.3.1997, when the counsel for the petitioners accepted the value determined by the valuer, whereas, the respondents counsel had sought some time as also to the order dated 18.3.1997, wherein, it was held that the valuers should give hearing to the petitioners as also to the respondents within three weeks. In the fourth paragraph, the CLB then refers to the written submissions before the valuer as also the revised report of 8.10.1997 and the ultimate value computed by the valuer per equity share of Rs.100 each being Rs.6340/-. It also made a reference to C.A. No. 264 of 1997 seeking for recalling the order of the Bench of valuation of the shares and for abandoning the valuation process and to proceed with the petition in accordance with law. It then made a reference to the hearing which took place on 15.12.1997, wherein, the request was made by the respondents to file objections to the valuation report as also to the further developments dated 20.12.1997 etc. and ultimately to the instructions by the CLB, wherein, the CLB had advised the parties to send notes to the Bench stating specifically the points on which they had reservations on the reports of the valuer, so that the Bench itself could take up the matter with the valuer. After referring to the fact of the parties, sending the details of 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 8, the CLB referred to the application by respondent no. 8 being C.A. No. 262 of 1998 dated 3.11.1998. It also referred to the fact that replies were permitted to be filed to the aforementioned C.A. No. 262 of 1998, and it is ultimately in paragraphs 9 and 10 that the CLB initially dealt with the applications C.A. No. 264 of 1997 and 302 of 1997. After considering the arguments in detail, and after referring to the happenings at the earlier stage of the proceedings as also after considering a decision of the CLB in Mrs. Michelle Jawad-A1-A1-Fahoum Vs. Indo Saudi Travels P. Ltd. (1988- 30 CLA 42), the CLB observed in the present case also that:there is absolutely no reference to the private understandings between the parties in the order dated 10.6.1996 and the petitioners are not agreeable for any modification in the said consent order. Once the parties consent to certain terms of settlement and the same is recorded by a judicial forum, then the parties are bound by the said settlement terms. Therefore, there is no scope for recalling the order dated 10.6.1996 on this ground., the CLB also rejected the contention raised on behalf of the respondents that even if the consent terms were to be implemented by which the respondents would purchase the shares of the petitioners, then it could be only after the other disputes between the parties are settled and till such time, no payment need be made for the 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 Section 397 and 398 of the Act was not maintainable as the petitioner did not hold 10% 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 rejected20. 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 1998), challenging the consent terms.22. We have carefully seen and noted that this Court upset only the later part of the order, particularly pertaining to the maintainability of the petition under Section 397 and 398 of the Act on account of the provision of Section 399 (3) of the Act. It specifically held in its judgment dated 26.10.2004 that the CLB had incorrectly held the said petition to be not maintainable. This Court found specifically that the objection regarding the applicability of Section 399(3) of the Act could not hold water, and it was categorically declared that the 3rd appellant (herein) had the necessary authority to file the appeal on behalf of the Trust and she as well as the Trust had more than 10% of the share capital alongwith the appellant Mrs. Nini Srivastava. Thus, it is clear that the order of the CLB only on the question of maintainability was held to be erroneous. It is to be noted that no other aspect and the finding in that order were even touched by this Court. Since this Court remanded the whole matter to the learned single Judge before which the appeals against the order of the CLB were filed, on this background, when we consider the judgment 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 Company 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 Section 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 Division Bench23. On this background, we find that the single Judge has taken a very strange view of the matter and has proceeded to hold that the CLB had not decided the matter on merits, and, therefore, the whole matter was liable to be re-decided by the CLB. In this behalf, we must point out that the CLB had given the findings on C.A. No. 264 of 1997, C.A. No. 302 of 1997, C.A. No. 262 of 1998 as also the objections raised thereto by the appellants. It is for this reason that we have dealt with the order passed by the CLB in great details in the earlier part of the judgment. According to us, it cannot be said that the CLB had not decided all the other matters, since, it had found the original petition to be untenable. We, however, desist from dealing with any other findings of the CLB to which we have already made reference. We refuse to express anything, since this Court had expected the learned single Judge to decide all those matters covered by the appeals filed by both the parties and to decide upon the correctness of the order passed by the CLB on all the other issues excepting the issue of maintainability, which issue was already finally dealt with by this Court in the judgment dated 26.10.2004. We are, therefore, of the clear opinion that the matter should be referred back to the learned single Judge for deciding all the three appeals filed by the respective parties with the time frame24. As regards the contentions raised by Ms. Ahmadi, learned counsel for the appellants as also the contentions raised by the opponents, we have already held that it would not be feasible for us to consider the merits of the appeals filed by the parties against the order of the CLB. We have pointed out that in its order, the CLB had considered number of questions raised by the parties vide their objections and independent applications filed from time to time. Barring the question of tenability - which is finally decided upon - this Court had not considered any other questions covered in those appeals and had left the same to be decided by the single Judge. We, therefore, would not go beyond the directions of remand, earlier issued by this Court. That would be neither a proper nor an appropriate course to follow. However, we must clarify that it would be open for the High Court to go into the question as to whether the parties hereto were bound by the terms of compromise, which have been affirmed by the CLB. In that, the High Court would also be bound to consider the tenability of the appeals filed by H.K. Srivastava Group. We have clarified this position, as so far there has been no debate on the tenability of the appeals against the orders effected through compromise.