JUDGMENT
Vikramajit Sen, J.
CA 641/2002 & 642/2002
1. Allowed, subject to all just exceptions.
CA 685 & 686/2002 in CP 21/1986
2. Mr. Chandiok, Learned Senior Counsel for the
Respondents, states that the applications may be allowed,
subject to all just exceptions. Ordered accordingly. The
amended applications are taken on record.
CA 639/2002, 640/2002, 707/2002 IN cp 21/1986
3. In order to fully appreciate the facts and
issues that have been brought into focus in the context of
the reliefs prayed for these applications, it is necessary
to make a precis of the annals of this family litigation.
Shri D.K. Oswal filed Petitions CP Nos. 21/1986 read
with Rule 9 of the Company (Courts) Rules, for the
rectification of the Register of Members of the Companies
which were controlled by the Oswal family. These Companies
were Akshay Finance and Trading Company, Pras Finance and
Trading Company, Arihant Investment and Trading Co., Victor
Investment and Mercantile Co., Ambar Investment and
Mercantile Co. and Adinath Investment and Trading Company.
At that point of time four Public Limited Companies were
also under the Oswal Family’s management, i.e. M/s.
Vardhman Spinning & General Mills Limited, Mahavir Spinning
Mills Ltd., Sriyans Paper Mills Ltd. and Adinath Textiles
Limited. It is not in dispute that Vardhman Polytex was
not in existence in 1987 and was, therefore, not within the
purview of those Company Petitions. In those petitions the
father of the Petitioner, namely late Shri R.C. Oswal, and
the Petitioner’s two brothers A.K. Oswal and S.P. Oswal
were arrayed as Respondents. They put up a common
response/defense in all the petitions.
4. After one year of the pendency of those
Petitions, a settlement was brought about by Hon’ble Mr.
Justice B.N. Kirpal (as the Learned Chief Justice of India
then was) in terms of his Order dated August 12, 1987. It
is not of only little significance that the opening
sentence and paragraph of this judgment reads as
follows, (underlining added for emphasis).
“This judgment will dispose of Company
Petition Nos. 21 of 1986 to 26 of 1986.”
5. A perusal of the afore-mentioned judgment
dated August 12, 1987 will make it abundantly clear that
there were two groups before the Court, that of the
Petitioner/Shri K.K. Oswal on one side and his father and
his two brothers on the other. No further fragmentation in
the second group was either pleaded or had manifested in
itself in any manner whatsoever.
6. The applications under consideration have been
moved in Co. Petition No. 21/1986 above, but I do not
propose to stand on strict technicalities and shall assume,
wherever necessary, that reference has been made to all the
erstwhile petitions viz. C.P. Nos. 21 to 26/1986. It is
imperative to mention that all the Companies in
contemplation in the earlier Petitions had their registered
offices at 205 Surya Kiran Building, kasturba Gandhi Marg.
New Delhi. The prayer contained in CP 21/1986 was as
follows:-
“Prayer
It is, therefore, most
respectfully prayed that the illegal
redemption of:-
(i) 2630 4% non-cumulative redeemable.
preference shares of the Company;
and
(ii) 30 eight percent preference share
of the Company belonging to the
Petitioners be declared illegal,
in-operative and being void in
in law and the Register of Members
of the Company be rectified by
inserting therein the names of the
Petitioners as holders of the
aforesaid shares.
Costs of Petition be allowed to the
Petitioners:
Any other order deemed fit and
proper in the circumstances of the
case be also made.”
7. Mr. Jayant Bhusha, Learned Counsel appearing
for the Applicants in CA 639/2002 and 702/2002 has relied
heavily on the previous order passed on 6.5.1986 in the
earlier proceedings so as to emphasise that the division
and severance which took place was not just between Shri
D.K. Oswal and the rest of the family, but also
individually between the father late Shri R.C. Oswal and
his three sons namely, Shri D.K. Oswal, Shri A.K. Oswal
and Shri S.P. Oswal/Respondent. This order is reproduced
verbatim since separate portions thereof have been relied
upon by the opposite parties. Mr. Bhushan has relied on
paragraph 1 which mentions that the four branches of the
family shall have 25% interest each. On the contrary Mr.
Chandiok has relied on paragraph 5 since it mentions that
the interests of Shri D.K. Oswal were being separated from
the rest of the family.
“President : Mr. Shanti Bhushan Sr. Advocate
with Mr. G.L. Rawal and Mr. K.M.
Sharma, for the petitioner.
Mr. Kapil Sibal, Sr. Advocate with
Mr. S.S. Shroff and Mr. Pinaki
Misra, for the respondent.
CP Nos. 21 to 26 of 1986
It is indeed gratifying to note
that the parties are agreed to the manner
in which the disputes between them are to
be settled.
The agreement is that the share of
each o the four branches involved in this
case, namely, the petitioner, his father
and his two brothers, should be deemed for
working the settlement as being equal.
The total value of the family’s holdings
in the various business concerns will be
ascertained and thereafter the interest of
the petitioner and his family members
shall be separated. Payments made to any
of the family members either from
investment companies or trusts or
otherwise for alleged
redemption/cancellation of shares shall be
properly adjusted.
The parties are agreed that in
order to bring about a settlement between
the parties, the various members of the
family should file in Court undertakings
by way of affidavits which would spell out
the terms of the agreement between them and
would also bind each one of the deponent.
The affidavits by way of undertakings
which would be filed by all the members of
the family would be to the following
effect:–
1. The deponent will accept that for
the purpose of settling the
dispute, the four branches of the
family, namely, the petitioner,
his two brothers and father, have
25% interest each.
2. The value of the total
shareholding of the family
determined on the basis of net
worth of the companies as on 31st
March, 1986 held in the name of
the members of the family or
thorough their investment companies
in the four companies, namely,
Vardhman Spinning & General Mills
Ltd., Mahavir Spinning Mills Ltd.,
Sriyans Paper Mills Limited
and Adinath Textiles Limited, will
be determined as on 31.3.86.
3. The value of the family’s total
shareholding as on 31st march,
1986 in the aforesaid companies
will be determined on net worth
basis by M/s. S.B. Billimoria &
Company, Chartered Accountants.
They shall value the shareholding
after giving opportunity of
hearing to all the parties. The
report to be submitted by M/s.
S.B. Billimoria & Co. will be
subject to confirmation/adoption,
with or without modification, by
the Court.
4. The deponent will undertake to
this Court that he will not
challenge, by way of appeal or
otherwise, the valuation as
finally determined by the Court.
5. Upon determination and
confirmation of the valuation by
then Court, the parties agree that
the Court shall decide the manner
in which the interest of the
petitioner is to be separated
from the interests or rest of the
family and the decision so arrived
at shall be final and binding on
all the parties. In order to
assist the Court in arriving at
this decision, the Chartered
Accountants shall not only value
the family’s total shareholdings
in the said companies but they
should also submit to the Court
their report containing
conclusions as to the net worth of
each of the four companies as on
31st March, 1986.
6. The parties undertake, when called
upon to do so by the Court, to
transfer the shares etc. in order
to give effect to the order of
separation. Any transfer of
shares necessary in the process of
settlement, will be subject to
such approvals or the Financial
Institutions as may be required
under the various agreements and
undertakings to them. The
deponent undertakes to take all
necessary steps to obtain such
approvals. In the meantime the
suits, appeals and criminal
complaints as are pending today
will be stayed till further orders
of the Courts.
Affidavits in the aforesaid terms
should be filed in Court by all the
members of Oswal Family who have shares in
their names directly or indirectly within
ten days from today and the case be listed
in Chamber on 16th May, 1986 at 4 P.M.
Sd/- B.N. Kirpal
Judge.
May 6, 1986.”
8. Even on a bare reading of the afore-mentioned
order I am unable to subscribe to the view proposed by Mr.
Bhushan that the Court had divided and partitioned the
shares of late Shri R.C. Oswal and each of his three sons
in equal shares of 1/4th each. The division that was
postulated even on 6.5.1986 was a severance of the 1/4th
share of Shri D.K. Oswal from the Oswal Family fortunes.
Though this is the tenor of the orders passed by Hon’ble
Justice B.N. Kirpal, this is apparent on a perusal of the
following extracts from the judgment dated 12th August,
1987:-
“In order to give effect to
separation of petitioners’ interests from
the rest of the family, necessary
directions have to be issued so as to
ensure that shares of Vardhman and Mahavir
held by D.K. Oswal and his associates are
transferred in favor of R.C. Oswal Group
and, at the same time, shares of Shreyans
and Adinath held by R.C. Oswal, S.P.
Oswal and Ashok Oswal and their group be
transferred in favor of D.K. Oswal and
his nominees. Appropriate directions have
also to be issued with regard to the
divesting of shares of Shreyans by
Vardhman as has been proposed by the
respondents in their written arguments.
The transfer of shares which are
involved, to give effect to the aforesaid,
as has been indicated by the respondents,
is as follows:-
“A SHARE TRANSFERS
INVOLVED FROM RESPONDENTS
TO SHRI O.K.OSWAL AND
HIS GROUP
I.
SHREYANS PAPER MILLS LIMITED
I-A:
DIRECT HOLDING OF THE RESPONDENTS:
Name of individuals
Number of shares
(a)
Shri R.C.Oswal
1
(b)
M/s. R.C.Oswal &
Sons
65,500.
(c)
Shri S.P.bswal
95,450
(d)
Smt . Banarso Devi will
a/c (Registered the name of Shri Asho Oswal
)
450
Total
1,61,401
IB.NAME OF INVESTMENT COS. WHICH
HOLD SHARES IN SHREYANS
AND WHERE SHARES ALONE WILL BE TRANSFERRED
(a)
Metro Investment & Marketing Co.
Pvt.Ltd.
14,000
(b)
Eastern Investment & Marketing Co. Pvt. Ltd.
13,900
(c)
Sanmati Investment & Trading
Co.Pvt. Ltd.
15,500
(d)
Nahar Investors & Traders Pvt. Ltd.
10,100
Total
53,550
II.
ADINATH TEXTILES LTD
IIA. Direct holding of Respondents
Name of the individual
No. of Shares
(a)
Shri S.P.
Oswal
800
(b)
M/s. S.P.
Oswal & Sons
700
(c)
Mrs. Shakun
Oswal
200
(d)
Shri R.C.
Oswal
70
(e)
M/s. R.C.
Oswal & Sons
500
(f)
Mr. Ashok
Oswal
320
(g)
M/s. Ashok
Kumar & Sons
14,600
(h)
Mrs. Manju
Oswal
4,500
“II.B.
NAME OF THE INVESTMENT COS.WHICH HOLD SHARES IN ADHINATH AND WHERE SHARES
ALONE WILL BE TRANSFERRED
Name of Investment Company
No.of shares
(a)
Amber
Investment & Mercantile Co.
400
(b)
Paras Finance & Trading Co.
50
(c)
Victor
Investment & Mercantile Co.
1,030
(d)
Arihant
Investment & Trading Co.
75
(e)
Akshay
Finance & Trading Co.
200
(f)
Adinath Investment & Trading Co.
500
(g)
Devakar
Investment & Trading Co.Pvt. Ltd.
330
(h)
Nahar
Investors & Traders Pvt. Ltd.
50
Total
3,065
II.C NAMES OF THREE PUBLIC LIMITED COS. WHICH HOLD SHARES IN ADHINATH AND WHERE SHARES ALONE WILL BE
TRANSFERRED
Name of the Company
No. of shares
a)
Santon Finance & Investment Co. Ltd.
19,995
b)
Flamingo Finance & Investment Co. Ltd.
30,000
c)
Ramaniya Finance &Investment Co. Ltd.
50,000
Total
99,995
IID NAMES OF THE FIRMS WHICH HOLD SHARES IN ADHINATH AND WHERE SHARES ALONE WILL BE TRANSFERRED
Name of the Firm
No. of shares
Registered in the name of
(a)
Amber Syndicate
25,350
Sh.D.K.Oswal 25000
Sh.R.C.Oswal 350
(b)
Paras Syndicate
30,000
Shri D.K.Oswal
(c)
Adhinath
Syndicate
30,000
Shri S.P. Oswal
85,350
III NAMES OF THE INVESTMENT COS. WHICH HOLD SHARES IN SHREYANS AND ADHINATH AND THE CONTROL OF THE SAME WILL BE HANDED OVER TO SHRI D.K. OSWAL’S GROUP.
Name of the Company
No. of shares
Adhinath
Shreyans
(a)
Achin Investment & Mercantile Co.
55,500
55,500
(b)
Levina Investment & Mercantile Co.
76,600
78,900
(c)
Ojasvi Investment & Mercantile Co.
40,500
95,000
(d)
Adeep Investment Co
17,900
30,000
(e)
Virat Investment & Mercantile Co.
36,100
30,000
Total
2,26,600
2,88,900
In order to give effect to the aforesaid
transfer, the following directions are
issued:
i) Within two weeks from today all the
parties will deposit with the Registrar
of this Court, duly executed, share
transfer deeds along with share scrips in
the manner indicated above.
ii) The Registrar shall deliver the blank
share transfer deeds duly signed as well
as share scripts of Shreyans and Adhinath
to Shri D.K. Oswal or his nominee and of
Vardhman and Mahavir to Shri R.C. Oswal
or his nominee.
iii) With the lodging and handing over of the
transfer deeds, the respondents will,
within one week thereof, ensure the
registration of the transfer of shares of
Shreyana and Adinath in favor of Shri
D.K. Oswal and his nominees and will
ensure that the Board of Directors of
Shreyans and Adhinath co-opt Shri D.K.
Oswal and his nominees as Directors of
Shreyans and Adinath and thereupon Shri
S.P. Oswal, R.C. 1 Oswal and Ashok Oswal
shall resign from the Board of Directors
of Shreyans and Adinath.
iv) Shri S.P. Oswal and Shri R.C. Oswal are
further directed to give effect to the
resolution dated 26th February, 1981
passed by Vardhman regarding the
compliance of condition No. J. attached
to the letter dated 12th November, 1981
issued by the Controller of Capital
Issues, Government of India to Shreyans
Paper Mills Limited and to sell shares of
Shreyans held by Vardhman in excess of
40% held by the promoters at the market
value of the shares. It is further
directed that these shares will first be
offered for sale of Shri D.K. Oswal and
his Group and in order to make up the
difference Shri R.C. Oswal and members
of his Group are further directed to give
to Shri D.K. Oswal and his Group
Rs. 21,75,586/- which would enable him to
purchase the said shares of Shreyans to
be sold by Vardhman.
v) Both the Groups will file appropriate
applications with the financial
institutions and see the release of
personal guarantees of the petitioner and
members of his group which may have been
given for financial arrangement extended
by the institutions to Vardhman and
Mahavir and also the release of
guarantees of R.C. Oswal and members of
his group which may similarly have been
given to the financial institutions or
other institutions for extending the
financial assistance to Shreyans and
Adinath.
vi) Both the groups are directed to take all
steps which may be necessary to give
effect to the transfer of shares and
management of Shreyans and Adinath to
D.K. Oswal and his Group and the transfer
of shares of Vardhman and Mahavir by D.K.
Oswal and members of his group in favor
of R.C. Oswal and his group.
vii) Parties are at liberty to apply to this
Court, from time to time if the need
arises, for directions or clarifications
which may be necessary in order to give
effect to the settlement of dispute
between the parties.
The Company Petitions are disposed of in
the aforesaid terms. The parties shall bear
their own costs.”
9. Although the lis had been disposed of by the
afore-mentioned orders, since some delay or difficulty
was encountered in its implementation, applications
were subsequently filed and entertained by the Court.
However, even on a perusal of the Orders dated
25.9.1987 in terms of which CA 643/1987 had been
disposed of, it will be evident that the severance
which took place in CP 21/1986 was the separation of
the share of Shri D.K. Oswal only. What was clarified
by the Court was merely that each person had an equal
shares i.e. one quarter each. This is also manifested
from the fact that from 1987 onwards, till the death of
the patriarch Late Shri R.C. Oswal, the business
ventures of the respondent group which included the two
brothers who are now adversaries in these applications
were jointly carried out by all three of them. The
contention of Mr. Bhushan that the Oswal Family
businesses were, in fact, partitioned in 1/4th share
each is accordingly rejected. Once this conclusion is
reached, it will not be possible to view the present
applications as having the character and merely
endeavoring to implement the earlier orders and
effecting a distribution of assets by metes and bounds,
so as to bring them within the parameters set down in
para (vii) of the above extracted orders.
10. What must be decided is whether this Court
possesses the requisite jurisdiction to entertain
applications which, in essence, seek to carry out
rectifications in the Register of Members of Companies
within the management of the further fragmented Oswal
Group subsequent to eh death of Late R.C. Oswal. At
the time when CP 21/1986 had been filed Section 155 of
the Companies Act vested the power to rectify the
Register of Members in the Company Judge. This
provision, however, has been repealed by the Companies
(Amendment) Act, 1988, with effect from 31.5.1991 and
its provisions have been assimilated in the amended
Section 111 with the consequence that the avenue of
relief now leads to the Company Law Board. Where a
totally new case is being put forward, the Court must
not revive a Petition which has already been disposed
of and thereby assume a jurisdiction which it to longer
possesses. No doubt, applications have been
entertained in this Petition till quite recently, but
the distinction which must be honoured is that the
Court may retain the power to pass orders which are
calculated to implement the orders previously passed by
it when it possess jurisdiction over the lis. The
present dispute, as has already been stated is
essentially different to the factual matrix and the
prayers contained in CP 21/1986, and for that matter in
all the other CPs 21/1986 to 26/1986. Mr. Bhushan has
himself adverted to the Will of Late R.C. Oswal, which
has become operative several years after the disposal
of CP 21/1986. The genesis of the present disputes can
be traced back to the allotment of 10,000 shares in
1998, and the resultant alteration of the control of
Vardhman Polytex. Mr. Bhushan has also mentioned
changes in the Board of Directors of that Company and
Mahavir Spinning and General Mills which occurred in
August 2000. Quite obviously, this has no bearing on
the facts which existed in 1986. The heading of the
applications mention that they re pursuant to the
demise of Shri R.C. Oswal.
11. Before departing from this aspect of the
case it is of extreme relevance that the Registered
Office of the companies which were within the purview
of the six petitions which had received the attention
of this Court, were all at the same address, i.e. 205,
Surya Kiran Building, Barakhamba Road, New Delhi. At
the present moment the Registered Offices have been
shifted out of Delhi to Ludhiana (Punjab) after
obtaining the approval of the Company Law Board.
12. Section 10 of the Companies Act stipulates
that the Court having jurisdiction shall be the High
Court having jurisdiction in addition to the place at
which the registered office of the company is situate.
Sub-section (3) of Section 10 is not relevant inasmuch
as it refers to winding-up petitions. However, it is
interesting to note that even in the context of the
period of six months, it has been clarified that the
location of only that registered office will be taken
into consideration which has existed in the longest
portion of the six months immediately preceding the
presentation of such a petition. The effort in these
applications is to resurrect a petition filed almost
over fifteen years ago, despite the fact that the
registered offices are located in Ludhiana since last
four years.
13. This is also how the applicants had
themselves viewed the legal position. A Scheme of
amalgamation under Section 394 of the Companies Act was
moved by the parties hereby not in this High Court but
in the High Court of Punjab and Haryana at Chandigarh.
The Scheme was approved by that Court on August 1,
2000. Thereafter, C.P. No. 49/2001 was filed by the
Applicant himself before the Company Law Board,
Principal Branch, New Delhi as recently as 25th
February, 2002. The Company Law Board had passed an
order in respect of M/s. Panchasheel Textile
Manufacturing and Trading Co. (Pvt.) Ltd., at the
instance of the applicant and directed that the
prevailing position int he said company will continue
till such time the obligations resting on the
Petitioner are discharged. An Appeal from this order
is pending in the High Court of Punjab and Haryana at
Chandigarh. It has been ordered that status quo as it
existed on 24.4.2002 shall be maintained.
14. As I see it the present applications have
been field in 2002, in an attempt to open up another
frontier in the family dispute between the two
brothers. This Court no longer possesses any
jurisdiction over these disputes.
15. CA 639/2002 and CA 640/2002 are,
accordingly rejected. CA 707/2002 is allowed. Interim
Orders dated 31.5.2002 are recalled.