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TMI Blog2010 (11) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. It is pleaded that M/s. Emm Bros. Wires and Strips Ltd. was established in the year 1989 and subsequently, another Company Emm Bros. Metals Pvt. Ltd. was established in the year 1991 and the respondent-Company in the year 1994. As per the appellant, the shareholding pattern of respondent No. 1-Company prior to 2000 is said to be as under :- S. No. Name of the shareholder Number of shares % of the total paid-up share capital 1. Jiwan Mehta 67590 15.36% 2. Ramesh Mehta 67580 15.36% 3. Raj Mehta 67580 15.36% 4. Harish Mehta 67580 15.36% 5. Mohinder Mehta 67580 15.36% 6. Ashok Mehta 67580 15.36% 7. Devi Rani Mehta 34500 7.84% Total 4,40,000 100% 3. The shareholding pattern has undergone change and as per the annual report as on 29-9-2000, the shareholding pattern is as under : S. No. Name of the shareholder Number of shares % of the total paid-up share capital 1. Jiwan Mehta 67590 15.36% 2. Ramesh Mehta 67580 15.36% 3. Raj Mehta 135170 30.72% 5. Mohinder Mehta 135170 30.72% 7. Devi Rani Mehta 34500 7.84% Total 4,40,000 100% 4. From the above table, it is clear that Shri Harish Mehta and Shri Ashok Mehta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the petition is liable to be dismissed as the appellant has not come to the court with clean hands. The appellant has concealed and suppressed the family settlement arrived at between the appellant and his brothers, which is evident from the Memorandum of Understanding. It is also alleged that the appellant has made vague and uncertain pleadings in the petition and has not alleged that the acts of majority shareholders of the respondent-company were harsh and wrongful to justify the oppression. It is explained that the business firms consisted of Shri T.D. Mehta (father) and his six sons i.e., Sarvshri Jiwan Mehta, Ramesh Mehta, Raj Mehta, Harish Mehta, Mohinder Mehta and Ashok Mehta. Shri T.D. Mehta being the head of the family, used to supervise the three businesses of the family, namely, two Brick Klins and one Ice Plant and Cold Storage in which all the six sons were partners either themselves or through their wives. In view of the growth of the family, it was decided by Shri T.D. Mehta that the time has come when the sons should be settled independently. But being a large family this was possible only in phases and in supportive manner. In the year 1989, it was decided to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehta executed the Memorandum of Understanding on 7-10-2001 a copy of which is marked hereto as Annexure R.1. 7. In terms of the said agreement it was mutually agreed between the petitioner and respondents 2 to 4 that the first respondent Company shall exclusively belong to respondents 2 and 3 and that M/s. Emm Bros. Wires and Strips Pvt. Ltd. shall exclusively belong to the petitioner and Mr. Ramesh Mehta and M/s. Emm Bros. Metals Pvt. Ltd., shall exclusively belong to Harish Mehta and Ashok Mehta. It was further agreed in the said agreement that all efforts by way of adjustment shall be made to release each others inter se from all shares/deposits/investments between the brothers in the above mentioned companies. 8. Prior to the aforesaid understanding reached between the brothers in terms of the Memorandum of Understanding dated 7-10-2001 respondent No. 4 herein on 21-6-2000 transferred 33,000 equity shares of first respondent herein in favour of respondent No. 3 herein. Similarly on 21-6-2000 Mr. Harish Mehta transferred his 34,480 shares in favour of the respondent No. 2. When the aforesaid transfers took place, the petitioner was the Director of the first respondent Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant, primarily for the reason that the appellant has not offered to refute the preliminary objections raised by the respondents in respect of the maintainability of the petition. A finding has been returned that allotment, swapping etc., except of the appellant, was made pursuant to oral understanding as early as on 27-7-2000 and that the appellant has deliberately concealed the Memorandum of Understanding from the Board. It was held though held that neither the appellant nor the respondents want to rely on the oral agreement mutually agreed between all the brothers in May, 2000 and later reduced into writing on 7-10-2001 and that the said Memorandum of Understanding had to be kept in abeyance due to non-fulfilment of the agreement and non-swapping of the shares of the appellants. It was held that the respondents' allegations that the appellant has not come to the court with clean hands, have turned out to be true and that the appellant is guilty of misappropriation. Thus, it was concluded that the Board exercising equity jurisdiction cannot ignore the well known maxim of equity that one who wants equity must do equity. Still further, the Board held that the petition suffers from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. It is contended that the fact that the Memorandum of Understanding was not given effect to, is evident from an application (CM No. 5080 of 2004) filed by respondent Nos. 2 to 4 in Civil Writ Petition No. 3765 of 2004, wherein, it has been averred as under :- "That Jiwan Mehta petitioner has concealed the fact that though a family settlement was entered into according to which, subject to his fulfilment of other conditions mentioned therein, the said house was to fall to his individual independent share, yet the said family settlement remained in abeyance on account of non-fulfilment by Jiwan Mehta of his part in the said settlement by way of payment of various amounts to the present applicants and also on account of his non-fulfilment of other obligations. Jiwan Mehta has, therefore, deliberately concealed and not placed on record the family settlement entered into. A copy of the same is attached herewith as Annexure A with this application. It is reiterated that this family settlement was not acted upon and House No. 939 Sector 8, Panchkula continues to be in the ownership of Jiwan Mehta and Ashok Mehta, who are owners in equal shares of the said house." 14. It is argued th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tanding has been rightly taken into consideration by the Board to reject the petition filed by the appellant. 16. Before the respective arguments of the learned counsel for the parties are considered on merits, it may be pointed out that since the resolution of the Board of Directors of the respondent company were not legible; the original proceedings book of the respondent-company was called for. Learned counsel for the respondents has also produced photo copies of the aforesaid minutes/proceedings, which are permitted to be taken on record. 17. The proceedings book start from the meeting of the Directors held on 7-7-2000, which records the fact that the appellant was absent from the meeting and no leave was granted to him. The second minutes of meeting are of 27-7-2000. The appellant was absent and was not granted leave though leave of absence was granted to Shri Mohinder Mehta. The minutes record the transfer of shares of Shri Ashok and Shri Harish Mehta. In the meeting of 23-8-2000, the name of Jiwan Mehta the appellant, is mentioned as the person present in the meeting, but the proceedings book is not signed by him Shri Mohinder Mehta was absent but no leave was granted. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, prima facie, the maintainability of the petition of the appellant herein. It is for the competent authority to consider and return a categorical finding on the detailed examinations of the documents. 21. The Board has held that the appellant has deliberately concealed the Memorandum of Understanding from the Board. The Memorandum of Understanding as has been mentioned above is to equally divide the family assets and assets and liabilities of Emm Bros. Wire and Strips Ltd. The assets or shareholding of the respondent-company were not subject-matter of the Memorandum of Understanding. There is no specific term as regards the transfer of the shares in the respondent-company. The relevant clauses of Memorandum of Association read as under :- "This memorandum of understanding executed on this 7th day of October, 2001 between Shri Jiwan Mehta, Sh. Ramesh Mehta, Sh. Raj Mehta, Sh. Harish Mehta, Sh. Mohinder Mehta and Sh. Ashok Mehta, all sons of late Sh. T.D. Mehta, all residents of Panchkula, hereby agreed to execute the following acts, deeds and things to formally divide the family assets and assets and liabilities of M/s. Emm Bros. Wires and Strips Ltd., Plot Nos. 6 and 7, Industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstanding touching the affairs of the respondent-company, is relevant and to what extent is to be decided by the Board but it cannot be said that non-disclosure of such Memorandum of Understanding is fatal so as to return a finding that the petition itself is not maintainable. Whether such Memorandum of Understanding is relevant to the company in question and/or whether there was oral agreement or parties have swapped shareholding de hors the Memorandum of Understanding or in terms of the Memorandum of understanding will be some of the questions, which may require adjudication by the competent authority. But non-disclosure of Memorandum of Understanding is not a fact which goes to the root of the controversy and does not conclusively decide all the question between the parties. Therefore, even if the appellant has not made any reference to the said Memorandum of Understanding in his petition, but it is not material omission, which disentitles the appellants to even for consideration of his petition on merits. 24. Learned counsel for the respondents has also relied upon an order dated 6-1-2010 passed by the High Court of Himachal Pradesh in company appeal No. 4 of 2007 (filed ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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