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2012 (7) TMI 85

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..... to do - CO.A.(SB) No. 16 OF 2007 - - - Dated:- 23-4-2012 - P.K. BHASIN, J. Pinaki Misra, Ms. Rakhi Ray and Ms. Bina Gupta for the Appellant. Jayant Bhushan, Nitesh Jain, Chetan Sharma, Atul Sharma, Sudhir Nandrajog and Abhishek Aggarwal for the Respondent. JUDGMENT 1. This appeal under Section 10-F of the Companies Act, ('the Act' in short) has been filed by the appellant Company (hereinafter to be referred as 'VLS') against the order dated 16.05.2007 passed by the Company Law Board ('CLB' in short) whereby two applications were dismissed. One of the two dismissed applications was filed by the Central Government(being C.P. No. 01 of 2004) seeking permission of the CLB, as required under Section 235(b) of the Act, to investigate the affairs of respondent no.1 Company(hereinafter to be referred as 'SUNAIR'). The other one was filed under Section 340 of the Code of Criminal Procedure by VLS(being C.A. No.172 of 2003) for proceeding against respondents no. 3-5 herein, for their having forged one Memorandum of Understanding (MoU) dated 10th March, 1995 and using it in their defence in the petition under Sections 250/397/398 of the Act (being C.P.No.45/1998) in whic .....

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..... ner by the parties:- ( i ) Rs. 22 crore (Rupees Twenty two crore only) shall be subscribed by the Promoters or their nominated companies by way of subscribing to 2,20,00,000 shares of Rs.10/- each for cash at par. ( ii ) Rs. 7 crore (Rupees Seven Crore only) shall be subscribed by VLS by way of subscribing to 70,00,000 shares of Rs. 10/- each for cash at par. (6) VLS hereby covenants and undertakes to do: ( e ) To provide interest-bearing security deposit of Rs. 10 crore to SUNAIR for the project at an interest rate not exceeding 20% p.a 7. Sunair the promoters, do hereby covenant and undertake the following obligations:- ( a ) It will be the prime responsibility of SUNAIR and/or the Promoters to do the project planning and its implementation " 4. The relevant facts as narrated by VLS in the memorandum of appeal which had led to the start of the present litigation between VLS and SUNAIR and which litigation is still pending and with no end in sight, are re- produced below:- "4.( b ) That inter alia, the principal allegation made in the said petition against the Company Sunair Hotels Ltd (Respondent No 1) and the other Respondents is that contrary to a tri .....

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..... rchaser and the first party and H.J. Consultants (P) Ltd second party .. WHEREAS the first party is willing to acquire several properties and the second party has offered several properties to the first party 1. The first party has agreed to purchase the properties listed in the Schedule-I attached hereto for a sum of Rs. 35 crores from the various sellers whose authority in favour of the second party as agent of the sellers has already been seen by the purchaser. The payment of the same shall be made as under: ( a ) An under advance of Rs. 21 crores shall be given by the first party to the second party for further disbursement to sellers as advance. This advance shall be given on or before 25/03/95. ( b ) Accordingly the balance payment will be made to the sellers against their properties before 30/09/2000. 2. Accordingly rights of the properties shall be transferred in favour of the first party nominees by the sellers only after 31/3/2000 but before 30/09/2000 4. The second party shall ensure that since all the properties belong to the same group, final price of each property shall be determined at the time of its conv .....

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..... said application that the Income Tax Department of Delhi had conducted search and seizure operations and consequent proceedings against the respondents and their related companies .. An investigation under Section 237(b) is the genuine requirement of the time to discover the magnitude of the manipulation and irregularities and illegalities of the respondent company as it involves other bodies also. The criminal complaint pending before this Hon'ble CLB in CA No. 172/2003 points out the series of irregularities which raised doubt and suspicion as to the manner in which the affairs of the company are being conducted. That the allegations made in application are very grave and require full and in depth investigation .." 10. While C.P.No.01/2004 and C.A.No.172/03 were pending disposal before CLB, this Court allowed the pending appeal of VLS vide judgment dated 16.12.2005 and after setting aside the order dated 13.06.2001 of CLB remanded back the matter to CLB for fresh decision. Non-consideration of the case with reference to the MoUs involved in the litigation by the CLB in its order dated 13.06.2001 appears to be the main reason for remand of .....

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..... Aero Ltd. and M/s H.J. Consultants Pvt. Ltd. for the purchase/sale of 13 properties of the respondent Nos.3 to 27. That throughout the proceedings of the above said petition the respondents had a clear cut stand that M/s Sun Aero Ltd. had made an advance sum of Rs.21 crores to the owners of the 13 properties and have legitimized their claim before this Hon'ble Board on the basis of the said. Memorandum of Understanding (hereinafter referred to as the MOU) dated 10.3.1995. 4. Counsel for VLS Finance Ltd argued that from the submissions of the respondent themselves, it is apparent that had there been no Memorandum of Understanding dated 10.3.1995 .During the block assessment proceedings of the above persons and their associates the statement of Shri B.C. Gupta, Shri K.C. Gupta, Shri S.K. Gupta and Shri Robin Gupta were recorded on oath under Section 131 of the Income Tax Act. All these persons voluntarily made their statement and stated that Shri S.P. Gupta, alongwith one Shri V.K. Bindal who is nephew of Shri S.P. Gupta and also their Chartered Accountant and also the Auditor of the Respondent No.1, was managing the books of accounts, for all of them has done all these transacti .....

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..... e Act . 12. CP No.1/04 of U.O.I. and C.A.No.172/03 of VLS Finance Ltd. are dismissed ." 11. VLS felt aggrieved with the said order of CLB and so this appeal was filed by it. The Central Government, however, has not challenged the rejection of its petition under Section 237(b) of the Act. 12. The main points raised in the memorandum of appeal and also urged during the course of hearing of this appeal by Shri Pinaki Misra, learned senior counsel for the appellant, are as under:- "That throughout the proceedings of the Company Petition No. 45/1998 the Respondents had a clear cut stand that M/s. Sun Aero Limited (R-2) had made an advance of Rs.21 crores to the owners of the 13 properties and have legitimized their claim before the Company Law Board on the basis of the Memorandum of Understanding dated 10.3.1995, whereas no evidence has been produced to show the payment by Sun Aero Ltd. to H.J. Consultant or the property owners. Keeping in view, that there was in fact no transfer of land rights in the first place by Respondent no.1 Company to Respondent No.2 Company, it is a clear case of notional enhancement of value of land rights of the Company and issue of s .....

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..... een dishonestly adduced as evidence before the Company Law Board. That further the said Respondents 21-23 have thereafter also filed replies/affidavits in the Company Law Board stating that the MOU dated 10.3.1995 is a false document and that they never intended to sell their properties. It is submitted that the said document i.e. the MOU dated 10.03.1995 is a fraudulent and fabricated document in as much as: ( i ) There is no agreement with the owners of the properties and H.J. Consultants. There are no letters of authority also. ( ii ) Some of the owners (Respondents 21-23) have denied agreeing to sell these properties in their reply to the petition U/s 397, 398 filed with Hon'ble Board, besides making statements confirming the above position before the Income Tax Authorities and the Delhi Police. ( iii ) The MOU dated 10th March 1995 said to have been executed between Sun Aero Ltd. and H.J. Consultants Pvt. Ltd. is not even an Agreement to Sell and does not confer any rights on Sun Aero Ltd. ( v ) The MOU dated 10.03.1995 was not mentioned in nor disclosed to the appellants at the time of execution or the MOU dated 11.03.2005, which was executed the very next da .....

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..... advocate advanced arguments and for others their learned senior counsel Shri Sudhir Nandrajog defended the impugned order of CLB. All of them had also argued the matter at great length. During their arguments these three learned senior counsel had contended that VLS had no right to file this appeal against the rejection of the petition of the Central Government and to pray for an order of investigation under Section 237(b) of the Act before this Court when the Central Government itself had not felt aggrieved; no question of law was involved in the matter and that in any event, no case could be made out by the Central Government for an investigation into the affairs of SUNAIR. In support of these submissions various judgments of the Supreme Court were also cited. 15. In order to meet the legal objections raised by the learned senior counsel for the respondents judicial precedents were then cited by Mr. Pinaki Misra regarding the appellant's locus standi as an aggrieved person to file this appeal and the scope of Section 237(b) of the Act. During the pendency of this matter other cases also between VLS and SUNAIR had come to this Court and in one of those cases, reported in ILR .....

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..... he submissions made on behalf of some of the respondents also before me that since CLB is yet to form a final opinion in C.P.45/98 as to the existence or non-existence of circumstances for an order of investigation the matter in that regard should be left to CLB itself for appropriate decision to be taken while disposing of C.P.No.45/98 after remand. 17. After having given my thoughtful consideration to the submissions advanced at the bar from both the sides I have unhesitatingly come to the conclusion that this appeal is liable to be dismissed. 18. As noticed already, at one stage C.P.No.45/98 of VLS had stood rejected after full hearing vide order dated 13.06.2001 of CLB. It appears that VLS had a strong grievance against the Central Government also that it was intentionally not coming into action for having an order of investigation into the affairs of SUNAIR and despite the fact that at one stage it itself had also decided to initiate proceedings under Sections 397/398 of the Act against SUNAIR that was not done on the ground that its files had gone missing which later on were recovered from the office of Guptas. Though not specifically alleged on behalf of VLS, but fro .....

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..... nd as far as the right of VLS to have an order of investigation is concerned, the CLB itself has clearly observed in the impugned order that C.P.No.45/98 is yet to be decided afresh after remand. It is thus clear that the CLB has not really gone into those allegations made by VLS in respect of the two MoUs in question and which allegations only were the basis of the Government's petition under Section 237(b), while passing the impugned order, and everything is still open. 20. In my view, the CLB cannot be said to have really rejected the allegations of VLS against SUNAIR and Guptas as being not well founded and final decision has been kept pending there cannot be any perversity in the impugned order. So, all the allegations made by VLS are yet to be decided afresh by CLB while disposing of C.P.No.45/98 and since VLS shall have all the opportunity of substantiating the same before the CLB it cannot have any grievance against the impugned order nor can it have any effect on its case since the CLB has not at all gone into the merits of the allegations of VLS while rejecting the Government's petition under Section 237(b) of the Act. 21. In these circumstances, this Court does n .....

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