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TMI Blog2012 (7) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ving 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 which they were impleaded being the Directors of SUNAIR and in control of its affairs and management. 2. VLS's business association with SUNAIR and respondents no.3-5 herein, out of whom respondent no. 3 is the father of respondents 4 and 5(reference to them shall hereinafter be made collectively as 'Guptas'), had started in the year 1995 under an MoU dated 11th March, 1995 but that association did not last long and litigation started between them with the filing of C.P. No. 45/98 before the CLB by VLS because of the non-fulfilment of the obligations by Guptas under the MoU dated 11th March, 1995 and acts of oppression and mismanagement by them. 3. The relevant contents of the MoU dated 11th March, 1995 are as under:- "This Memorandum of understanding (M.O.U.)-Agreement is made at New Delhi this 11th day of March, 1995 between and amongst VLS Finance Ltd.,.....Sunair Hotels Ltd..........and Shri Satya Pal Gupta, S/o Late Shri Hari Ram Gupta, Shri Kaveen Gupta, S/o Shri S.P. Gupta & Shri Vipul Gupta, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation 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 tripartite MOU/Agreement dated 11.3.1995 entered into between Respondent No.1, Respondents No. 3 to 5 and the Appellants, the Respondents 3 to 27 have not contributed any cash towards the share capital of Respondent no.1 Company and instead by a clever device, rotated the said company's funds 21 times, in a short span of 4 days, through bank accounts of entities controlled and owned by them, and thereby falsely depicted subscription to the equity share capital worth Rs. 21 crores..... ................................................................................ (d) That in the said petition the Appellant has made allegations and substantiated the same with evidence that the Respondents have fabricated the records of the Respondent No.1 and Respondent No. 2 companies and have got allotted 20991600 shares of Rs. 10/- each at par of the Respondent No.1 to the Respondent Nos. 3 to 27 without bringing in any cash consideration. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 conveyance by themselves and accordingly informed. However, the total consideration to be paid for all the properties listed in the Schedule I shall not be more than Rs. 35 crores excluding transfer charges." 7. While contesting C.P.No.45/98 Guptas also came out with the circumstances under which the MoU dated 10th March, 1995 came to be executed. The CLB after examining the entire case had dismissed C.P.No.45/98 vide its order dated 13.06.2001. That order was then challenged by VLS before this Court by filing an appeal under Section 10-F of the Act(being Co. A.(SB) No. 11/2001). 8. It appears that VLS felt that but for the introduction of the MoU dated 10th March, 1995 by Guptas in C.P.No.45/98 it would have succeeded in its petition and so without waiting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stigation....................................................." 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 C.P.No.45/98 to CLB. After remand, C.P. No. 45/98 is still pending with no end in sight, the CLB has dismissed the Central Government's petition under Section 237(b) of the Act as well as the application under Section 340 Cr.P.C. filed by VLS vide its common impugned order dated 16th May, 2007. The relevant paras of the impugned order of CLB containing the submissions made by the parties and the findings of the CLB are re-produced below:- "2 UOI's petition (CP NO. 1/04) is nothing but VLS's CA No.172/03 annexed to it and made the basis of CP seeking order under Section 237(b) of the Companies Act, 1956 into the affairs of the respondent company i.e. the Sunair Hotels Ltd. In support of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 transactions in their books of accounts. They further stated that they neither got their respective properties valued in the year 1995 nor entered into any agreement or agreed to enter into any agreement to sell with M/s H.J. Consultant Pvt. Ltd. or to authorize it or sell their properties or agree to sell their properties to any one. They were not even aware about the number of shares allotted to them or from where the money was arranged for to get these shares allotted............These facts reflect that the Memorandum of Understanding dated 10.3.1995 is a forged and fabricated document............................................. 7. Counsel for Respondent Nos. 1 to 9 argued............that it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 shares of the promoters against this asset i.e. land rights, of the company, which is unlawful. In the meanwhile, in November 2000, it had transpired that the Income Tax Department, Delhi, had conducted search and seizure operations and consequent proceedings against the Respondent Nos. 3 to 27 and all their related companies. During the block assessment proceedings, some of the Respondents made statements that were recorded on oath under Section 131 of the Income Tax Act. Respondents 21, 22 and 23 voluntarily made their statement that Shri S.P. Gupta(wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 day. Further, the said MOU dated 10.03.1995 evolved for the first time in the reply to the Company Petition. This only shows that MOU dated 10.03.1995 is an afterthought and a fabricated document which came into existence only as a defence to justify siphoning of funds mentioned in the Company Petition. Thus, the relevant information with respect to MOU dated 10.03.1995 was not disclosed to the petitioners." 13. Though in the memorandum of appeal the appellant had formulated many questions of law for the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (2003) II Delhi 463, this Court had upheld the locus standi of VLS to approach this Court and, therefore, Mr. Misra relied upon that judgment also in particular. Great emphasis was also laid by Mr. Misra, learned senior counsel, on the fact that when Guptas, who are the main contesting parties, had sought quashing of criminal cases against them lodged by VLS they themselves had taken the plea before this Court in "S.P. Gupta v. State (NCT of Delhi) [2005] 61 SCL 121" that criminal case was not the remedy against them and if VLS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed. 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 from the tenor of the points raised by it in the memorandum of appeal it appears to me to be its grievance that there was collusion between the Central Government and SUNAIR. It also appears that the Central Government in order to avoid any kind of adverse observations in this regard, either from the CLB or this Court during the pendency of various matters between VLS and SUNAIR and to save itself from the shots being fired on it also by VLS, it decided to take shelter under the application of VLS under Section 340 Cr.P.C. and only relying upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 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 not consider it to be appropriate to make any observations about any of the allegations made by VLS in the pending C.P.No.45/98 in which VLS is fighting its independent battle. There is no occasion for this Court in this appeal to undertake the exercise which CLB is expected to do and which it is yet to do. 22. In view of the aforesaid view formed by me, which is sufficient for rejection of this appeal, I need not go into various legal issues raised from both the sides during the course of hearing of this appeal. 23. This appeal is accordingly dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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