Companies Act Case Law Manish Mohan Sharma & Ors Vs Manish Mohan Sharma & Ors

CASE NO.:
Appeal (civil) 9446 of 2003

PETITIONER:
Manish Mohan Sharma & Ors.

RESPONDENT:
Ram Bahadur Thakur Ltd. & Ors.

DATE OF JUDGMENT: 21/03/2006

BENCH:
Ruma Pal & Dalveer Bhandari

JUDGMENT:
J U D G M E N T
WITH

C.A. NO.9445 OF 2003
RUMA PAL, J.
Ram Bahadur Thakur Ltd., the respondent No.1 was
founded by Chatur Bhuj Sharma and Madan Mohan Sharma.
They were first cousins, their fathers being brothers. The
shareholding of the two cousins in the respondent No.1 was
equal. Since 1992, disputes arose between the two groups,
who are referred to respectively as the CBS Group and the
MMS Group. The MMS Group is in appeal before us and the
CBS Group is represented by the respondents No.2 to 4. The
disputes related primarily to the management of the various
companies owned by the family including and in particular the
Respondent No.1.
In 1996 the MMS Group filed a company petition (No.56
of 1996) before the Company Law Board, New Delhi under the
provisions of Sections 397 and 398 of the Companies Act,
1956, complaining inter alia of having been ousted from
management of the companies and seeking a role in such
management. Various interim orders were passed. On 9th
January, 1997, the Company Law Board removed the
respondent No.2 as Chairman and Managing Director of the
Company and appointed a retired Judge, Justice A.N. Varma
as the Chairman of the Company. In 1998, pursuant to
another interim order passed by the Company Law Board, the
MMS Group was put in joint management of the Company.
The creditors of the Companies including the company’s
bankers, namely Syndicate Bank initiated proceedings against
the company inter alia for recovery of outstanding dues. The
matter was ultimately resolved between the parties with the
persuasion of the Company Law Board and praiseworthy
efforts of the Chairman, Justice A.N. Varma. The terms of the
family settlement were set down in a Memorandum of Family
Arrangement and Transfer Document.
By an order dated 19th August, 1999, the Company Law
Board recorded the history of the disputes between the parties
and the proceedings taken by each against the other and
ultimately the resolution of the differences of the parties. The
Company Law Board recorded that the Board had in the
course of hearing suggested various terms of settlement to
resolve the matters amicably between parties having regard to
their close relationship. It had expressed its opinion that in
order to achieve a fair and equitable settlement, out of the
nine tea estates owned by respondent No.1, five tea estates
together with certain other assets should be vested in the
MMS Group. The suggestion was accepted by the parties in
the settlement arrived at between them. They identified the
tea estates and other assets to be given to the MMS Group and
also quantified the share of the liability of the respondent No.1
which had to be paid by the MMS Group which came to Rs.
7,24,67,708.90 (Rupees seven crores twenty four lacs sixty
seven thousand seven hundred and eight and paise ninety
only). The order records that the Memorandum of Family
Arrangement and Transfer Document executed between the
parties would form an integral part of the order. As far as the
figure of Rs. 7,24,67,708.90 was concerned, the Company Law
Board stated that it would be subject to all deductions and
adjustments as set out in the Transfer Document. One Mr.
M.C. Joseph, Chartered Accountant was appointed as an
independent auditor for the purpose of clause 4.1.1.12 of the
Transfer Document, who would verify and certify the figures
stated therein. It was also recorded that on completion of the
settlement, the five estates and certain other assets would vest
in the MMS Group. In order to perfect their title thereto, the
Company Law Board directed the parties to execute the
transfer deeds to affect the transfer of the relevant assets.
Accordingly, the Board pursuant to powers vested in it under
Section 402 of the Companies Act 1956, directed that:-
(a) both parties fill up and complete
Schedules 1,4,7,8,11 and 12 in the
Transfer Document relating to the Assets
of Ram Bahadur Thakur Ltd. (which are
currently blank/incomplete), the mutual
agreement and following the completion
of the said Schedules the parties shall
forthwith execute the Transfer
Documents Relating to the Assets of Ram
Bahadur Thakur Ltd;

(b) both parties fill up and complete
Schedules 1 4(Part B), 5,6,7,8 and 9 in
Memorandum of family arrangement (
which are currently blank/incomplete),
by mutual agreement and following the
completion of the said Schedules the
parties shall forthwith execute the
Memorandum of Family Arrangement.
And both parties shall take all necessary
steps to implement the settlement
contemplated under the said documents
which must be completed by 30th
September, 1999. The Memorandum of
Family Arrangement and the Transfer
Document Relating to the Assets of Ram
Bahadur Thakur Ltd. set out the entire
agreement the parties and there are no
understandings and/or arrangements
other than expressly stated in these
documents.”
Paragraph 8 of the Order is also of some consequence
and is quoted verbatim:-

“Time shall be of the essence in affecting
the settlement. If either party fails to
perform it’s obligations undertaken
pursuant to the Memorandum of Family
Arrangement or the Transfer Document
relating to the Assets of Ram Bahadur
Thakur Ltd., within the time specified
therein, the aggrieved party shall be at
liberty to approach us for appropriate
orders /directions and for expediting the
final disposal of the petition and the
various interim Applications. After the
completion of all the transactions both
sides shall appear before us for the final
disposal of the petition and the various
Interim Applications. In the event of any
further difficulties in the implementation
of this order the parties shall be at liberty
to apply to us for implementation of this
order”.

In paragraph 12 of the order the Company Law Board
recorded that the order had been read out to the parties and
the parties had confirmed their consent to the terms of the
order.
In terms of the Memorandum of Family Arrangement
(referred to hereafter as the ‘MOFA’), the CBS Group was
required to give a completion notice to the MMS Group
signifying that the five estates were free from all
encumbrances and ready to be transferred by the Respondent
No.1 to the MMS group. According to the CBS Group, such
notice was given on 17th January, 2000. The notice was
objected to by the MMS Group by letters dated 18th January,
2000 and 20th January, 2000 on the ground that it was not in
terms of Clauses 7.2 and 7.3 of the Transfer Document.
On 7th February, 2000 the MMS Group filed an
application under Section 634A of the Companies Act 1956
praying for a decision as to whether the notice dated 17th
January, 2000 was valid and if so, to direct the CBS Group to
proceed with the completion as per the Transfer Document
and the MOFA. Alternatively it was prayed that if the notice
was held to be invalid the CBS Group should be directed to
handover the entire Management of the Respondent No.1 to
the MMS Group and the MMS Group should complete the
agreement. In the further alternative it was prayed that a
Special Officer should be appointed to take over the
responsibilities of the CBS Group in the Management of the
Company and should be directed to complete the agreement
between the parties.
While this application was being heard, the CBS Group
filed an application on 5th July, 2000 seeking for recalling of
the orders of the Company Law Board including the order
dated 19th August, 1999 and to take up the matter for final
hearing and to permit the respondent No.1 to sell one or more
of its assets to clear the outstandings of the Syndicate Bank or
in the alternative appoint an administrator to sell the
respondent No.1’s assets and property to clear the dues of the
Syndicate Bank and other statutory dues.
Apart from other contentions raised by the MMS Group,
it was contended by them before the Company Law Board that
they were not liable to pay the accrued gratuity liability
amounting to Rs. 8.5 crores or the portion attributable to the
5 estates agreed to be sold to the MMS Group amounting to
Rs. 4.74 crores. It was stated that they had already paid
several amounts to the respondent No.1 and were entitled to
deductions in terms of the agreement. They sought for
enforcement of the order of the Company Law Board dated
19th August, 1999 as a decree.
The CBS Group contested the submissions before the
Company Law Board and stated that they were still interested
in working out the settlement provided the MMS Group
adhered to the terms of the agreement. According to the CBS
Group if the MMS Group had paid their outstanding liability of
Rs. 3.6 crores directly to the Syndicate Bank, the CBS Group
could have paid the balance of 4 crores demanded by the Bank
and the 5 sale estates could have been transferred free of all
charges and the MMS Group would have become absolute
owner of the estates. It was also stated that because of the
failure of the MMS Group to clear their dues, the Bank had got
a decree from the Debt Recovery Tribunal and the properties of
the Company had been attached.
The Company Law Board by its order dated 18th August,
2000 noted that the MMS Group had submitted that they were
not liable to make any payments towards the outstanding
Bank dues, and that according to the MMS Group nothing
would become payable by the MMS Group to the CBS Group
in terms of the agreement after giving effect to all the clauses.
In fact according to the MMS Group, the CBS Group had to
pay an amount to the MMS Group after the adjustment of the
account. The Board noted that the only question was whether
the accrued gratuity liabilities in respect of the employees of
the 5 estates had been taken into account by the parties when
they entered into the agreements and what the parties had
intended in including clauses 4.1.1.11 in the MOFA. The
Board found that there was substance in the contention of the
CBS Group that the liabilities on account of gratuity was never
contemplated by the parties when they entered into agreement
fixing the MMS Group’s share of liabilities. Thus although
they found that the MMS Group was “legally right in claiming
the amount”, the CBS Group was justified in its stand that
this was not in contemplation of the parties. It was, therefore,
found that there was no meeting of minds and there was bona
fide dispute between the parties with regard to the
interpretation of the clause relating to the accrued gratuity
liability. In these circumstances, the Board found that it could
not pass any order on the application under Section 634A filed
by the MMS Group. As far as the CBS Group’s application was
concerned, their prayer for recalling the orders passed by the
Board was rejected. Both the applications were accordingly
dismissed but it was observed that:-
“In case the parties still desire to have the
disputes decided amicably, they are at
liberty to do so failing which the petition
will have to be heard or merits and till
that time all the interim orders including
the present arrangement in relation to
the management of the affairs of the
company will continue.”

The MMS Group carried the matter before the High Court
of Patna by way of an appeal under Section 10F of the
Companies Act, 1956. The appeal was dismissed by the
learned Single Judge holding that the clause relating to
gratuity namely clause 4.1.1.11 clearly showed that the
liability to pay the gratuity was on the MMS Group. However,
the High Court also found that the Company Law Board was
correct that the same was not in contemplation of the parties
and accordingly dismissed the appeal.
Learned counsel appearing on behalf of the appellant has
submitted that the Court could not refuse to implement the
consent order dated 19th August, 1999. It was stated that the
Company Law Board while dealing with an application under
Section 634A sits as an executing Court and in such a
situation its powers are curtailed to the extent that it is bound
to take the judgment as it stands. The Executing Court can
interpret the decree and proceed with its execution as
interpreted but could not refuse to execute it. It was argued
that the legal effect of the consent order is that it is binding on
the parties and could not be set aside except on very limited
grounds, none of which was present. It was submitted that
even if there was an ambiguity in the consent order that could
have been interpreted. There was in fact no mistake of fact
that had arisen either with respect to the agreement or the
consent order. As far as the issue of the liability of the MMS
Group under clause 4.1.1.11 of the Transfer Document to pay
the gratuity which had accrued to the employees of the estate
transferred to the MMS Group was concerned, it was
submitted that the MMS Group without prejudice to its rights
and contentions had agreed before the Company Law Board
and were still willing to take over that liability. In any event, it
was submitted that the disputed clause could be severed and
the remaining clauses of the agreement could be implemented.
Learned counsel appearing on behalf of the CBS Group
submitted that the order of the Company Law Board recording
the MOFA and Transfer Document was not a final order. It
was submitted that the parties never understood the order of
the Board dated 9th August, 1999 to have finally disposed of
the disputes. In fact after the order of the High Court, the
appellants themselves had gone back to the Company Law
Board and filed an application praying for enforcement of the
agreement after severing clause 4.1.1.11. That application was
pending. Secondly it was submitted that in terms of the
agreement, the payment of amounts in terms of the agreement
by the MMS Group to the CBS Group was to be simultaneous
with the completion. The MMS Group defaulted in carrying
out its obligation and in fact the parties therefore had the
right in terms of the MOFA to rescind the agreement. As far
as the Transfer Document was concerned, it was stated that
the CBS Group had acted strictly in terms thereof. It was
stated that had the MMS Group carried out their obligations
under the agreement, the Bank’s dues would have been
discharged. As matters now stood the Bank dues had
increased from approximately Rs. 8 crores to a demand of
about 18 crores. It was stated that in an adjustment of the
equities, the MMS Group would have to bear its share of the
Bank dues as at present obtaining. Finally it was submitted
that the appeal of the MMS Group should not be entertained
under Article 136 having regard to their conduct. Our
attention was drawn to an investigation initiated by the
Government against the 5 tea estates under the Management
of the MMS Group.
Broadly speaking, the Memorandum of MOFA and
Transfer Document provide for a Transfer of 5 tea estates by
the respondent No.1 to the MMS Group subject to the MMS
Group paying a certain amount towards its share of liabilities
of the respondent No.1. The CBS Group would get to retain
the respondent No.1 and all its other assets moveable and
immoveable including four tea estates. The interpretation of
the clauses which are called into question before us are those
which dealt with;
a) The sequence in which the clauses in the
agreements were to be implemented;

b) The requirements of the completion notice;
c) The quantification of the liabilities undertaken
to be borne by the MMS Group;
d) The consequence of the failure of either of the
parties to abide by the terms of the MOFA and
Transfer Document.

The Company Law Board and the High Court did not
decide questions (a) (b) or (d). As far as (c ) was concerned the
question was limited to the interpretation of Clause 4.1.1.11.
That Clause reads:-
“Any statutory dues or dues in respect of
labour and executives employed at the
Sale Estates accrued upto 31st May,
1998”.

The ‘sale estates’ are the five estates which were to be
transferred by the respondent No.1 to the MMS group. As we
have noted learned counsel for the appellants submitted that
although they had an arguable case on the incorrectness of
the finding of the High Court which held that the MMS Group
was liable to pay the gratuity liability, they were agreeable to
concede this point so that the differences between the parties
could be resolved. We have therefore not heard them on the
interpretation of clause 4.1.1.11. Their basic grievance was
that the Company Law Board could not refuse to execute
the order dated 19th August, 1999 and the terms of the MOFA
and Transfer Document which were incorporated therein and
that is the issue which calls for resolution by us.
In our opinion the order dated 19th August, 1999 was not
an interim order as contended by the respondents. The issues
resolved thereby could not be reopened or reargued for a
different disposal of those issues. The order was passed
expressly under Section 402 of the Companies Act which
reads:-
“402. Powers of (Tribunal) on application
under Section 397 or 398.– Without
prejudice to the generality of the powers
of the (Tribunal) under section 397 or
398, any order under either section may
provide for

(a) the regulation of the conduct of
the company’s affairs in future;
(b) the purchase of the shares or
interests of any members of the
company by other members
thereof or by the company;
(c) in the case of a purchase of its
shares by the company as
aforesaid, the consequent
reduction of its share capital;
(d) ..
(e) .
(f) .
(g) Any other matter for which in the
opinion of the (Tribunal) it is just
and equitable that provision
should be made.

The powers under Section 402 are residuary in nature
and in addition to the powers available to the Company Law
Board under Sections 397 (2) and Section 398(2) which permit
the Company Law Board to make such order as it thinks fit
with a view to bringing to an end the matters complained of
under Section 397(1) and with a view to bringing to an end or
preventing the matters complained or apprehended under
Section 398(1).
Doubtless the Company Law Board speaks of ‘final
disposal of the petition and the various interim applications’.
This was because in terms of the order itself (which included
the MOFA and the Transfer Document), various steps had to
be taken to complete the severance of the relationship finally
between the MMS Groups and the respondents. This did not
make the affirmation of the MOFA and the Transfer Document
an interim arrangement. The operative portion of the order
directed the execution of the MOFA and Transfer Document by
the parties after completion of the schedules thereto. The
entire order was passed by consent. Parties cannot resile
therefrom. Therefore the order cannot be described as an
interim order in the sense that the issues decided thereby
could be reopened.
Under Section 634A which provides for enforcement of
orders of the Company Law Board,
“Any order made by the Company
Law Board may be enforced by that
Board in the same manner as if it were a
decree made by a Court in a suit pending
therein”.

The word ‘any order’ used in the opening of the section,
indicates that all orders made by the Company Law Board on
an application under Sections 397 and 398 are enforceable
like decrees without any limit on the nature of the order
passed by the Company Law Board. ( See: Lyallpur Bank Ltd.
Vs. Ramji Das (deceased) through his sons & Anr. AIR (32)
1945 Privy Council 60).
A “decree” under the Code of Civil Procedure has been
defined as meaning
“.the formal expression of an
adjudication which, so far as regards the
Court expressing it, conclusively
determines the rights of the parties with
regard to all or any of the matters in
controversy in the suit and may be either
preliminary or final”.

All decrees whether preliminary or final are susceptible
to execution. (vide Section 36 of the Code of Civil Procedure.)
The order dated 19th August, 1999 was in fact a
preliminary decree. Final disposal of the matter or the final
decree would be after full implementation of the terms of the
MOFA and Transfer Document. The interim orders passed
relating to joint management were therefore directed to be
continued until such time.
Significantly, the Company Law Board in the order dated
19th August, 1999 had itself recorded that if there was any
difficulty in the implementation of the order “the parties shall
be at liberty to apply to us for implementation of this order”.
Yet when the application was made for such implementation,
the Company Law Board did not abide by its own direction.
Since the Company Law Board when it deals with an
application under Section 634A sits as an executing court it is
subject to all the limitations to which a Court executing a
decree is subject. It is well settled that an executing court
cannot go behind the decree, unless the decree sought to be
executed is a nullity for a lack of inherent jurisdiction. A
decree is without jurisdiction if the Court passing the decree
usurps a jurisdiction which it did not have and which could
not be waived by the parties. (See: Sunder Dass Vs. Ram
Prakash (1977) 2 SCC 662, 667; Seth Hiralal Patni Vs. Sri
Kalinath (1962) 2 SCR 747, 750; Vasudev Dhanjibhai Modi
Vs. Rajabhai Abdul Rehman & Ors. (1970) 1 SCC 670, 672;
Rafique Bibi (dead) by Lrs. Vs. Sayed Waliuddin (dead) by
Lrs. & Ors. (2004) 1 SCC 287,292). The last two decisions
have also held that the lack of jurisdiction must be patent of
the face of the decree in order to enable the executing court to
come to the conclusion that the decree is a nullity.
Furthermore, the order dated 19th August, 1999 was a
consent order. Its terms and conditions were contained in the
MOFA and the Transfer Document which expressly formed an
integral part of the order itself. A consent decree has been
held to be a contract with the imprimatur of the Court
superadded. It is something more than a mere contract
and has the elements of both a command and a contract.
(See: Wentworth Vs. Bullen 141 ELR 769; C.F. Angadi Vs.
Y.S. Hirannayya (1972) 1 SCC 191, 197). As was said by
the Privy Council as early as 1929, “The only difference in this
respect between an order made by consent and one not so
made is that the first stands unless and until it is discharged
by mutual agreement or is set aside by another order of the
Court; the second stands until and unless it is discharged on
an appeal (See: Charles Hubert Kinch Vs. Edward Keith
Walcott and Ors. AIR 1929 Privy Council 289).
It is nobody’s case that the order dated 19th August, 1999
was a nullity. The respondents had filed an application for
recalling the order dated 19th August, 1999. The Company
Law Board dismissed that application. An appeal has been
filed before the Patna High Court which is said to be pending.
However, it has not been drawn to our attention by the
respondent that the application for recall was founded on the
submission that the order dated 19th August, 1999 was a
nullity. In the absence of such an issue being raised and
decided, the Company Law Board was bound to execute the
order. If the Board found that the decree or any of its terms
called for interpretation, it was within the Board’s jurisdiction
to interpret that particular term and to execute the decree on
the basis of such interpretation. As was said by this Court in
Topanmal Chhotamal, Vs. M/s. Kundomal Gangaram and
Ors. AIR 1960 SC 388,390, if a decree is ambiguous, it is
the duty of the Executing Court to construe the decree. (see
also Central Bank of India Vs. Rajagopalan, AIR 1964 SC
743,748).
Both the Company Law Board and the High Court in fact
interpreted Clause 4.1.1.11 and came to definite, albeit
different, conclusions as to what the clause meant. It may be
that the conclusion was not what was being contended for by
the appellants. It may also be that the interpretation put on
the clause by the Board or the High Court was not in the
contemplation of the parties. Nevertheless once having agreed
to particular terms of settlement which were incorporated in a
decree, the parties concerned are bound to comply with the
terms as may be interpreted by the executing Court. Once the
interpretation is done the decree must be executed as
interpreted.
The effort of the executing Court must be to see that the
parties are given the fruits of the decree. The mandate is
reinforced when it is a consent decree and doubly reinforced
when the consent decree is a family settlement. Clauses 3.1
and 3.6 of the MOFA make it clear that the agreements were
arrived at between the parties to resolve finally long pending
disputes between the family members relating to jointly owned
assets. The clauses read as follows:-
“For the sake of resolving the disputes of
the Sharma Family and the Companies
owned by them and to regain the
harmony, peace, love and affection
amongst the two groups and for the
welfare and prosperity of the Sharma
Family and the Companies owned by
them;

The Memorandum of Family Arrangement
will also take into its fold and include the
Transfer Document Relating to the Assets
of Ram Bahadur Thakur Ltd. (RBTL),
executed as per the directions of the CLB,
Annexed hereto and marked as Schedule
5. The above mentioned Transfer
Document Relating to the Assets of Ram
Bam Bahadur Thakur Ltd. is in
implementation of and forms an integral
part of this Memorandum of Family
Arrangement.”

It has been repeatedly emphasized in several decisions
that family settlements are governed by a special equity and
are to be enforced if honestly made. This would be so “even if
the terms may have been agreed to on the basis of an error of
the parties or originate in a mistake or ignorance of fact as to
what the rights of the parties actually are, or of the points on
which their rights actually depend”. This is because the object
of an arrangement is to protect the family from long drawn out
litigation, and to bring about harmony and goodwill in the
family (see Kale Vs. Deputy Director of Consolidation 1976
(1) SCR 202,122,123,125). The courts lean heavily in favour
of family arrangements and, “matters which would be fatal to
the validity of similar transactions between strangers are not
objections to the binding effect of family arrangements”. This
view has been reiterated recently in Amteshwar Anand Vs.
Virender Mohan Singh & Ors., (2006) 1 SCC 148.
In our opinion both the Company Law Board and the
High Court erred in refusing to execute the order dated 19th
August, 1999 under Section 634A of the Companies Act. They
have thereby failed to exercise the jurisdiction with which they
were vested. The failure is heightened given the nature of the
order which they were bound to execute. They have
erroneously proceeded upon principles applicable to contracts
alone and have ignored the fact that the agreement between
the parties had culminated in a consent order of the Company
Law Board. The plea of the respondents that this Court should
not interfere in the matter under Article 136 by reason of any
alleged misconduct on the part of the appellants in managing
the 5 estates is unacceptable. The appellant’s alleged lack of
efficiency in running of the five tea estates is not a material
consideration for deciding whether the order dated 19th
August, 1999 should be enforced.
The respondent’s contention that the appellants were
not themselves willing to abide by the terms of the consent
order appears to us to be erroneous. The application under
Section 634A was for implementation of the order dated 19th
August, 1999 if necessary by appointing a Special Officer to
carry it into completion. In fact even while the application
under Section 634A was pending in the Company Law Board,
the Vice Chairman had suggested to the appellants that they
waive their claim in respect of the accrued gratuity under
clause 4.1.1.11 of the Transfer Document and a certain
portion of the interest claimed under the Transfer Document.
The appellants confirmed that they would accept the Vice
Chairman’s suggestion but would do so on the basis that a
consent order was passed in terms thereof on the same date.
This was recorded by the appellant’s advocates in their letter
dated 19th December, 2000 addressed to the Company Law
Board and its Members and the Advocate for the respondents
and has not been disputed before us as not reflecting the
correct position. This is not the conduct of a party which is not
willing to abide by the terms of the decree.
On the question whether the appellants had defaulted in
payment of purchase price simultaneously with the completion
in terms of Clause 4 of the Transfer Document, this again
relates to an interpretation of the terms of the MOFA and the
Transfer Document. According to the respondents, there was
no default on their part as the respondents were required not
only to settle all outstanding claims relating to the five estates
prior to giving of the completion Notice but also to annex the
necessary documents evidencing that the sale estates could be
transferred free from all encumbrances to the MMS group by
the respondent No.1. The Company Law Board and the High
Court have proceeded on the basis that the only dispute
between the parties was as to the interpretation of Clause
4.1.1.11. Elaborate arguments have however been addressed
to us on the merits of the four contentions noted by us earlier
by both parties. We were initially of the view that the dispute
should be resolved by us finally. However on a
reconsideration, we deem it fit to remand this issues for
determination by the Company Law Board if it is satisfied that
the issues could be said to have been fairly raised by the
parties before it. We make it clear that whatever
interpretation may be put by the Company Law Board on the
clauses of the MOFA and Transfer Document, the Board must
implement the clauses as interpreted.
Moreover Clause 4 which relates to the payment of the
purchase price by the MMS group specifically mentions the
total amount payable by them to the respondent No.1 namely
Rs. 7,24,67,708.90 less certain deductions. As far as the
deductions are concerned, some of the clauses have quantified
the deductions, whereas others have left them undetermined
in the sense that no quantum has been mentioned. In the
first category are Clause 4.1.1.1 to Clause 4.1.1.5. Under
Clauses 4.1.1.6 to 4.1.1.11 the amounts were required to be
determined. This exercise will have to be carried out by the
Board. The figures mentioned in Clauses 4.1.1.1 to 4.1.1.5
and 4.1.1.11 were also subject to verification under Clause
4.1.1.12 by the independent auditor appointed by the
Company Law Board. The Company Law Board had by order
dated 19th August, 1999 appointed Mr. M.C. Joseph,
Chartered Accountant. We have not been told whether the
independent auditor has carried out the verification.
We ourselves do not propose to go into the issues raised
by the parties, namely whether the completion notice was valid
nor the quantification of the deductions under Clause 4 of the
Transfer Document. These are issues that must be worked
out by the Company Law Board in executing the consent order
in terms of the MOFA and Transfer Document. It is
unnecessary for us to go into the powers of the parties to
rescind the settlement (assuming that such rescission were at
all possible at this stage) as neither of the groups have taken
any steps to issue any notice of rescission till today.
We note that the MOFA and Transfer Document were the
outcome of the commendable and determined efforts on the
part of the Company Law Board to bring to an end disputes
between the parties in a manner which would have been in the
interest of the respondent No.1 given the impasse between the
two blocks of shareholders and saved the parties a lot of
unnecessary harassment, expenditure and acrimony. We also
sought to bring an end the dispute by proposing measures
which might be acceptable to both. However, such resolution
does not appear to be possible. Therefore it must be left to the
Company Law Board to execute its order dated 19th August,
1999 in accordance with the settled principles of law and in
terms of the opinion expressed by us in this judgment. The
impugned decisions of the Company Law Board and the High
Court are for the reasons earlier stated set aside. The appeals
are allowed and the matter remanded back to the Company
Law Board for completing the implementation of the order
dated 19th August, 1999 by executing the same.
There will be no order as to costs.

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