TMI Blog2007 (3) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent No.2. There were matrimonial differences between them for a long period of time. Shri Naveen Kohli, respondent No. 2 filed a petition under section 13 of the Hindu Marriage Act, 1956 for divorce. The family court ordered dissolution of the marriage, which was solemnized on November 20, 1975 and directed Shri Naveen Kohli to pay Rs. 5 lakhs as her livelihood allowance. He deposited the amount. The High Court allowed the first appeal setting aside the divorce and the annulment of marriage. The Supreme Court by its judgment dated March 21, 2006, in Naveen Kohli v. Neelu Kohli [2006] 4 SCC 558, allowed the civil appeal with the findings that parties have been living separately for more than 10 years with large number of criminal and civil proceedings initiated by Smt. Neelu Kohli against Shri Naveen Kohli and some by Shri Naveen Kohli against her resulting into damaging the matrimonial bond beyond repair. The marriage between the parties was only in name and was wrecked beyond the hope of salvage. The public interest and interest of all concerned lies in the recognition of the fact to declare the marriage defunct de jure, which is de funct, de facto . The Supreme Court fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation on November 14, 2003, for adjournment pending decision in Civil Suit No. 1016 of 1997 filed by him restraining Smt Neelu Kohli from entering the factory premises. The Company Law Board dismissed the application on March 21, 2005 and fixed a date for hearing on which Shri Naveen Kohli filed a Company Appeal No. 2 of 2006 under section 10F in this court. By an order dated March 3, 2006, quoted as below, the company appeal was dismissed : "This appeal under section 10F of the Companies Act, 1956, has been filed against the order of Company Law Board (in short "the Board") dated February 10, 2006, by which the application C A. No. 251 of 2003 to adjourn the proceedings pending decision of Civil Suit No. 1016 of 1977 filed by second respondent in civil court, Kanpur has been rejected. Learned counsel for the appellant has made submissions, which in fact challenge the order dated September 25, 2000, passed more than five years ago, holding that the petitioner and the second respondent would be deemed to hold 50 per cent, interest each in the company and the second respondent will purchase 50 per cent, interest of the petitioners on the value of the shares to be determined by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egister of members, and not where the minority alleges oppression against majority. In the present case, the order dated September 25, 2000, has became final long ago. It is admitted that the appellant has not challenged the order. Instead Smt. Neelu Kohli, respondent No. 2, filed a Company Appeal No. 5 of 2000, which was dismissed on November 10, 2005, on the statement given by her counsel that he is not getting instructions from her. The challenge to the order dated September 25, 2000, is thus barred on the principles of acquiescence. A person who had accepted the position to allow him to run the company and to pay the valuation of 50 per cent, share to his wife, cannot be heard to say, after he has resisted the valuation to be made for five years, that the shares were actually purchased by her benami from his income. The company appeal has no merit and is dismissed." M/s. Nikhil Rubbers Pvt. Ltd., a company represented by Shri Naveen Kohli filed a special leave petition, which was dismissed by the Supreme Court on May 1, 2006. The orders of the CLB dated February 10, 2006, declaring that Shri Naveen Kohli and Smt. Neelu Kohli would be deemed to hold 50 per cent, interest e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al application in this regard". Smt. Neelu Kohli moved a recall application on June 5, 2006, praying that CLB be pleased to reconsider the issues and that the parties should not take effective steps to implement the order dated June 2, 2006. The contents of this application are relevant for the purposes of deciding the appeal and are thus quoted as below : "2. The petition was fixed for hearing on June 2, 2006, to finalise the valuation of net worth as per the valuation report submitted by the valuer appointed by the hon'ble Board. 3. That before the matter could be taken up, the hon'ble chairman was kind enough to intervene and invited the parties (petitioner and respondent No. 2) in his chamber to explore the possibility of amicable settlement, if any. 4. That the petitioner was under depression, which, probably did not enable her to envisage the implications of such decisions about the settlement, in entirety, particularly, when the matter had become complex with several factors being considered. Further, since the various matters being put in the said settlement, were not within the scope of the company petition and the petitioner alone being there, could not comprehend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent from the company despite an order being in force to the contrary, as aforesaid, was at least Rs. 60 lakhs (as against Rs. 30 lakhs considered in the terms of the settlement). The flat is situated in a posh locality of Kanpur and comprises of three bedrooms, drawing, dining, etc., with a large terrace on the top. ( e )The rental for usage of the company's premises by the respondent over a period of last 10 years has not been considered, which aggregates to Rs. 54.27 lakhs till May 31, 2006. (f)The cash in hand/bank balance of the company as on March 31, 1995 (Rs. 38 lakhs) and the profits made by the company for the year 1995-96 and 1996-97 to the extent of Rs. 70 lakhs have not been considered. ( g )All the criminal cases filed by the petitioner and also the cases pending in the Supreme Court, i.e., ( i ) review, and ( ii ) application for modification will not be withdrawn. (7) That the petitioner had always expressed her reservations throughout the discussions, bringing out the above issues very clearly, but somehow signed the order under a temporary depression without comprehending the implications and consequences. For this reason, the petitioner, imme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the settlement terms were recorded, their counsel were invited and that the chairman explained to them the various proposals made by both the parties and one finally agreed to by the parties. He observed that the petitioner Neelu Kohli also consulted one of her well-wisher, who was present. Thereafter, the order was recorded, read out to the parties and was signed not only by the parties but also by their counsel. At no time any reservation was expressed by the petitioner on the terms. He then records that after the respondent and his counsel had left, the petitioner (Neelu Kohli) met him again and expressed that the consent terms were unfavourable to her and such should be either recalled or modified to her satisfaction. Since the other side had left, she was advised that if she has any reservation on the consent terms, she could file an application and if the respondent was willing for either modification or recall, the same could be done. Now since the respondent has opposed to either recall the consent order or any modification in respect of the suggestion given by the chairman to consider any of the other alternate proposal made by the parties during the discussion on Fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers to the extent of 50 per cent, has become final. The objections to the valuer's reports were pending and that she having consented to the terms, which are beneficial to her, wants to resile from her voluntary agreement, only in order to keep the matter pending. Shri Manish Kumar further states that she never pleaded that she had not given consent to the terms offered and settled by the CLB. Her case before the CLB was that certain issues, which were brought out in discussion did not find place in the order dated June 2, 2006. Her application was duly considered by the CLB and was dismissed on the ground on which the alleged recall was sought, that she was under depression was not explained by her. She took contradictory stands before the CLB, whereas she acknowledged that the matter was listed for an attempt for arriving at a compromise. In her application before the CLB she alleged that the matter was fixed for finalisation of the valuation. The application dated March 20, 2006, filed by her son Nimit Kohli was opposed by her. She made a statement before the CLB that she had agreed to pay the share of Nimit Kohli, whatever she would get from her share. Shri Manish Kumar states ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signed by all the parties. Nimit Kohli was also a shareholder and has attained majority. The consent terms did not take into account substantial assets, which affected the jurisdiction of the Board and, that in order that the settlement was fair and equitable, it must have been incorporated and taken care of all the issues. He has relied upon Smt. Bismillah v. Janeshwar Prasad [1990] 1 SCC 207 in which the Supreme Court in a matter arising out of suit for cancellation of sale deed on the ground of fraudulent misrepresentation to the character of the document and contents, held that the distinction based on the character and contents of a document is not without its difficulties in its practical application. The defence that the document was signed voluntarily was not available, where the mistake was to the very nature and character of the transaction. The common law defence of non est factum to actions on specialities in its origin was available where an illiterate person, to whom the contents of a deed had been wrongly read executed it under a mistake as to its nature and content. He could say that it was not his deed at all. The doctrine has been extended to the cases other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assets with the help of valuer's report. INMACS Management Services Ltd. (formerly INMACS Management Services) the substituted valuer had submitted its report, to which objections were filed by both the parties. The valuation in terms of the order dated December 22, 2000, was to be based on the balance-sheet as on March 31, 1997. M/s. Nikhil Rubbers Pvt. Ltd. ("the company") was incorporated on February 25, 1985. Smt. Neelu Kohli and Shri Naveen Kohli were the first directors of the company. The company started business in the year of manufacture of saddlery products. The company was doing well, but for the differences in personal relationship between the directors. Shri Naveen Kohli set up M/s. Navneel Elastomers, a proprietorship concern, in April, 1994, which was functioning in the same premises of M/s. Nikhil Rubbers Pvt. Ltd. and commenced production in 1995. The Company Law Board originally fixed balance-sheet as on March 31, 1997, as the date of valuation but since no final balance-sheet was available it fixed balance-sheet as on March 31, 1995, in which complete assets and liabilities were communicated and audited, as the basis for valuation with liberty to both the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and pet rubber products with in-house mold making and tool room facilities. The rent receipts of Navneel Elastomers did not mention any area. He requested for factory map and the sales tax assessment orders from 1994-95 to 1996-97. The valuer also took into account the expenses on house No. 7/36, Tilak Nagar and Flat No. 801, Chitrakoot Apartment, 7/ 29-A, Tilak Nagar, Kanpur. The valuer in its long and detailed report assessed the value of the petitioner's share in terms of the CLB's order to be Rs. 153.22 lakhs with deduction of Rs. 9.50 lakhs withdrawn by her from the company with simple interest at 12 per cent. The value of her share in the company, which was reduced from 90 per cent, to 50 per cent., was valued at Rs. 128.76 lakhs, taking into account the bank balance as on March 31, 1995, (Rs. 38 lakhs), net profit for 1995-96 (Rs. 55.7 lakhs), net profit for 1996-97 (Rs. 14.52 lakhs) and rental from M/s. Navneel Elastomers from 1997-98 till September 2000 (Rs. 20.47 lakhs). Thereafter, the valuer valued the leased land at D-15, UPSIDC Industrial Area, Panki Site II, Kanpur, with the alternative valuations submitted by the petitioner and the respondent to be Rs. 24.95 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khs. Annexing the amount of Rs. 9.5 lakhs with interest at 12 per cent, per annum and further amount of Rs. 88,965 and Rs. 22,500 taken by her as advances and imprest as per March 31, 1995, balance-sheet was taken into consideration, her share would still be somewhere around Rs. 90 lakhs. As against these claims, the CLB found the terms of settlement of Rs. 7.5 lakhs as full and final payment as voluntary settlement by Neelu Kohli. Smt. Neelu Kohli was resisting the divorce suit. The Supreme Court annulled the marriage on March 21, 2006. On June 2, 2006, her review petition was pending. Instead of deciding the objections to the valuer's report, the chairman called both the parties to his chambers and considered the offers and counter offers put to him. He then recorded the alleged terms of settlement in his own handwriting, which is mostly unreadable and directed the parties to read them. Counsel for the parties, who came to argue the matter also found it difficult to read. The observations of the chairman that he had invited counsel and explained to them various proposals made by the parties and finally agreed to by the parties, and that the petitioner consulted one of her wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the character and the effect to the document. The court fails to conceive circumstances in which the appellant have a favourable valuer's report, which offered to her about Rs. 90 lakhs (after reducing her share from 90 per cent. to 50 per cent. and pegging the valuation to the balance-sheet dated March 31, 1995) could have signed on settlement, which would give her only Rs. 7.5 lakhs for the balance lease rentals. Further, clause 7 of the terms of the settlement left the discretion of deciding the cost of built up area to Shri Naveen Kohli, the disputant, and then the shortfall to be adjusted against the cost of construction of the compound wall or to be paid in cash. These terms coupled with clause 6 which allowed Suit No. 1016 of 1997 filed by Shri Naveen Kohli ,to continue and in which an injunction order was operative against her, clearly demonstrated that the agreement was grossly and fairly tilted in favour of Shri Naveen Kohli and that subscription of the signatures of the appellant to such a settlement not on account of her free will and consent, which she expressed immediately on the same day to the chairman. Where it is established on record that the executor of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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