TMI Blog2006 (3) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... pany 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. - CIVIL APPEAL NOS. 9445 AND 9446 OF 2003 - - - Dated:- 21-3-2006 - MRS. RUMA PAL AND DALVEER BHANDARI, JJ . C.A. Sundram, Ms. Rohini Musa, Ms. Shiva Santanam Shivanathan, Mrs. Jayshree, Ashish Wad, Neeraj Kumar, Arvind Gupta and Ms. Sumanti Chakraborti for the Appellant. A.N. Haksar and Ashok Kumar for the Respondent. JUDGMENT 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 respondent Nos. 2 to 4. The disputes related primarily to the management of the various companies owned by the family including and in particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as the figure of ₹ 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 hand over 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. 8. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 on 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. 12. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roup 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 ₹ 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. 15. 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 toward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers 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 ) to ( f ) ** **** ( g )Any other matter for which in the opinion of the Tribunal it is just and equitable that provision should be made. 19. The powers under section 402 are residuary in nature and in addition to the powers available to the Company Law Board under section 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). 20. 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 relations-hip finally between the MMS Groups and the respondents. This did not make the affirmation of the MOFA and the Transfer Document an inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. - Sunder Dass v. Ram Prakash [1977] 2 SCC 662, 667; Seth Hiralal Patni v. Sri Kalinath [l962] 2 SCR 747, 750; Vasudev Dhanjibhai Modi v. Rajabhai Abdul Rehman [1970] 1 SCC 670, 672; Rafique Bibi v. Sayed Waliuddin [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. 28. Furthermore, the order dated 19-8-1999 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 [ Wentworth v. Bullen 141 ELR 769; C.F. Angadi v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 abovementioned Transfer Document Relating to the Assets of Ram Bahadur Thakur Ltd. is in implementation of and forms an integral part of this Memorandum of Family Arrangement. 32. 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 partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 35. 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 interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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