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TMI Blog2015 (12) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company Law Board ("CLB") inter alia granted ingress to Respondent No. 2 Mr. Rajinder Kumar Malhotra ("RKM") into Plant No. 2 of the Respondent No. 1 - Vidyut Metallics Pvt. Ltd. ("VMPL"), which is in possession and control of SPCPL since the year 2010/11, without SPCPL being a party to the proceedings pending before the CLB, and which is the subject matter of an Arbitration Petition pending before this Court arising out of a Business Transfer Agreement ("BTA") dated 30th December, 2010. Even in the written submissions tendered in Court by SPCPL, it is categorically mentioned that, "The Appellants' case is of possession of Plant 2 by virtue of the BTA dated 30th December, 2010 and the Supplementary BTA dated 18th March, 2011 (Appeal Pgs. 12-13)." 2. It is very necessary to point out at the outset, that SPCPL has in the above Appeal alleged that pursuant to the BTA and the Supplementary BTA it is in possession and control of VMPL's Plant 2 since 30th December, 2010 / 18th March, 2011 and is carrying on its business operations from the said Plant No.2. The contents of the Appeal are reiterated and confirmed by Mr. Sanjay Jagtap ("Jagtap"), Head Legal and Secretariat of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the said Affidavits were filed by Jagtap and Chaudhari, RKM had on 2nd/3rd February, 2012, already filed a Company Petition before the CLB under Sections 397-398 of the Companies Act, 1956 alleging acts of oppression and mismanagement by the then Directors of VMPL i.e. Shri Paresh Vyas (Vyas) and Chaudhari. This clearly demonstrates that these days, litigants show scant respect for Courts and the rule of law. They not only brazenly take a stand contradictory to that taken earlier on oath, but subsequently, and equally brazenly, also attempt to justify the same on a false and illegal premise. 3. One more fact which needs to be brought out to the forefront in this Appeal is that though SPCPL has repeatedly tried to assert in the present proceedings that it is an independent legal entity which has nothing to do with the disputes between the members of Malhotra family, the present dispute is essentially one of the many proceedings arising out of a long standing feud between Rakesh Malhotra (the son) on the one hand and Rajinder /RKM (the father) and his entire family on the other. Rakesh Malhotra ("Rakesh") who in fact has admitted in the proceedings filed before the Hon'ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrol over VMPL's assets and properties shall no longer be able to wrongfully retain charge of VMPL's assets. Rakesh therefore arranged for SPCPL to make a false claim for the first time that it is in possession and control of Plant No.2 of VMPL pursuant to the BTA of December, 2010 and Supplemental BTA dated 18th March, 2011, which is nothing but a mala fide attempt to somehow exercise control over VMPL's assets, and properties. According to RKM, the above Appeal therefore clearly constitutes an abuse of the process of this Court. 4.1 SPCPL has denied and disputed that SPCPL has made a claim of being in possession and control of Plant No. 2 of VMPL at the instance of Rakesh. SPCPL has submitted in the above Appeal filed on 3rd February, 2015 that : "4 (a) .... The Appellant is a professionally led and managed Company and none of the members of the Rakesh Malhotra family are on the Board of Directors of the Appellant"; and "5 (o) The Appellant herein came to learn of a significant family dispute within the R.K. Malhotra Family between R.K. Malhotra and his younger son Mr. Rajiv Malhotra on one side and Mr. Rakesh Malhotra on the other. The Appellant would ordinari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d about it, the Petitioner started getting very anxious and apprehensive about the same only when the disputes between the family reached the Petitioner's doorsteps and started interfering with the Business of the Petitioner. Over the last few months, the Respondent whether at the behest of RKM or otherwise has started to significantly interfere with and obstruct the Business of the Petitioner". It is pertinent to note from the purported instances set out by SPCPL in the said paragraph 16 of the Petition that the alleged obstruction commenced only from 31st December, 2014. 4.5 This Court after hearing the Learned Advocates appearing for the Parties and after going through all the papers, placed the matter on Board on two occasions to put its queries to the Advocates for the Parties and get their response to the same. In view of the above stand on the part of RKM on the one hand that Rakesh has put up SPCPL to make a false claim of being in possession and control of Plant No.2 from the year December 2010/March, 2011, and SPCPL on the other hand contending that SPCPL is in no way concerned with the disputes between RKM and Rakesh, and that Rakesh is neither on the Board of Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re incorrect to its knowledge, only to seek favourable reliefs as sought by it in the proceedings. 5. Since the disputes between Rakesh on the one hand and his father RKM and his entire family on the other qua various Companies which are hereunder referred to as the "RKM Indian Companies", has a chequered history, it is necessary to set out hereunder the relevant facts which have led to the filing of the present Appeal, which Appeal this Court has, with the consent of the Parties, decided to dispose of at the stage of admission itself. 5.1 The Super Max Group was a family-owned Group of Companies founded by RKM in the year 1949 and its business was and is that of manufacturing and selling razor blades and related products internationally. The Super Max Group Companies were held through a number of foreign holding Companies and ultimately forms part of the Lichtenstein Foundation. 5.2 RKM was and is also the effective owner of 5 Indian Companies (the RKM Indian Companies) which either manufactured products for the Super Max Group, or owned land/plant, or intellectual property rights which were used by the Super Max Group for its business. These RKM Indian Companies included VMPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SPCPL. However, since they had been the Directors of VMPL since 1993 and 2001 respectively, RKM believed that they would continue to protect the interest of VMPL and therefore allowed them to continue as Directors of VMPL. Similarly, the Directors of the other RKM Indian Companies remained unchanged. However according to RKM his son Rakesh misused the trust reposed in him by RKM and used his influence over the Directors of the RKM Indian Companies including VMPL (now employees/Consultants of SPCPL) to exclude RKM who held 99.99% of the shares of the five Companies. According to RKM, the Directors of the 5 Companies acting upon Rakesh's instructions refused to give RKM, who was the effective owner of the said 5 RKM Indian Companies, information and access to records, registers and accounts. Through these pliant Directors, Rakesh also sought to utiize the funds, assets and properties of the five Companies (including VMPL) for the benefit of SPCPL/himself. 5.7 On 2nd/3rd February, 2012, RKM either directly or through Companies belonging to him, filed four Company Petitions in the CLB at Mumbai and one at Chennai, on the ground of oppression and mismanagement, inter alia for remov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be made to any government authorities and salaries of the employees in the ordinary course of business until further orders. (ii) The Respondents shall not dispose off, transfer, encumber or create any charge on the assets of the Company including the immovable properties until further orders". Interestingly, neither Vyas nor Chaudhari (employees/consultants of SPCPL) who continued to be the Directors of VMPL, nor Rakesh who admittedly was managing the affairs of SPCPL took a stand similar to the stand now taken through SPCPL, namely that all the assets of VMPL including Plant No.2 are transferred to and/or in control and possession of SPCPL by virtue of the BTA dated 30th December, 2010 and the Supplementary BTA dated 18th March, 2011. 5.9 Instead, Rakesh obtained an ex-parte ad-interim anti-suit injunction from the Commercial Court of the Queen's Bench Division of the Royal Courts of Justice in the U.K. RKM and the other Petitioners in the Petitions filed by the Indian Companies thereafter approached the English Court and contested the matter. After hearing the parties, the injunction granted in favour of Rakesh by the UK Court was dissolved by a Judgment date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Shares of the said Indian Cos., the said Directors acting as puppets of Rakesh, had continued in control of the RKM Indian Cos. and had continued to be "obdurate & obfuscatory". That as a consequence the said RKM Cos. were exposed to considerable financial risk, severe financial distress and even possibly ruin. (iii) That considerable harm and profound prejudice was likely to occur if these state of affairs were allowed to continue. (iv) That it would be wholly inequitable to allow such a state of affairs to continue and there could not possibly be any equity in Rakesh's favour in a situation like this. The interim orders dated 9th February 2012 and 7th November 2012 were continued. 5.15 Against the said Judgment and Order dated 12th/20th August, 2014, Rakesh preferred a Special Leave Petition before the Hon'ble Supreme Court of India. Rakesh applied for a stay of the said Judgment and Order dated 20th August, 2014, inter alia on the grounds set out below: "A. Because the Petitioner is in control of the newly formed Indian Company called Supermax Personal Care Pvt. Ltd. And that if the present order is allowed to continue, the Respondent shall take control ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointed Directors immediately addressed a letter dated 25th August, 2014 to Vyas and Chaudhari calling upon them to forthwith seize and desist from acting as Directors of the Company and on and from 27th August, 2014 to hand over to them the entire charge of the Company along with all its records (statutory, financial and otherwise) including all original documents of all assets owned by VMPL. 5.18 In response to the said request made, the newly appointed Directors received a letter dated 26th August, 2014 from Vyas stating that he was replying on behalf of himself and Chaudhari and that they were unable to meet on 27th August, 2014 as it was not possible to reschedule their prior commitments. He suggested that the parties meet on 5th September, 2014. 5.19 RKM by his Advocate's letter dated 30th August, 2011, called upon Vyas and Chaudhari through their Advocates to immediately (not later than 2nd September, 2014) hand over the entire charge inter alia of VMPL along with its records (statutory, financial and otherwise) as required. No response was received to the said letter. RKM therefore by his Advocate's letter dated 19th September, 2014 whilst recording that the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vyas, Choudhari and Rakesh through their Advocates replied to the RKM Advocate's letter dated 26th September, 2014. By the said letter, they purported to contend that the Petitioner was erroneously interpreting the orders passed by this Court and the statements made by them in the Special Leave Petition filed before the Hon'ble Supreme Court of India. They also refused to give the Petitioner the 'User ID' and 'Password" with regard to the Company's on- line account. In fact, on 13th October, 2014, Vyas and Choudhari, in the name of VMPL purported to issue a public notice in the Times of India newspaper stating that they continue to be the Directors of VMPL. 5.26 According to RKM, notwithstanding the fact that the Judgment and Order of this Court dated 12th/20th August, 2014, was clear and unambiguous, only by way of abundant caution, RKM filed a praecipe before this Court seeking clarification of its Order dated 12th/20th August, 2014. The said application was disposed of by an Order dated 14th October, 2014 wherein this Court observed that it was made amply clear in its Order of 12/20th August, 2014 that it was not staying the change in the Constitution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of VMPL, on 12th January, 2015, Rakesh caused SPCPL to file Arbitration Petition (L) No. 55 of 2015 against VMPL. By the said Petition SPCPL falsely purported to contend that it was not concerned with the disputes between the Malhotra family. The reliefs sought in the Arbitration Petition related to restraining VMPL from interfering with the business of the SPCPL, from obstructing the water supply from the Peeco Plant to Plant Nos. 1 and 2. VMPL filed its Affidavit-in-Reply dated 27th January, 2015 in the said Arbitration Petition. However, till date no ad-interim/interim reliefs are granted in favour of SPCPL. 5.32 At the hearing of the said Company Application No. 296 of 2015 on 2nd February, 2015, Vyas and Chaudhari who had till then refused to hand over charge on diverse grounds, now confirmed/accepted that they had ceased to be Directors of VMPL from November,2014. However, the said erstwhile Directors for the first time now orally alleged that SPCPL (which is admittedly controlled by Rakesh) was allegedly in possession of the assets of VMPL under the Business Transfer Agreement of 2010. VMPL in response had pointed out to the CLB that only its Plant No. 1 had been leased/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between SPCPL and VMPL under the BTA and the said three Agreements had also been annexed as Exhibits-E, F and G thereto at pages 489, 514, 530. 6. As stated hereinabove, the case set up by SPCPL in the present Appeal is that pursuant to the BTA and Supplemental BTA, it is in possession and control of Plant No.2 since 10th December, 2010/18th March, 2011. In support of its case, SPCPL has, in its Appeal inter alia, stated/submitted as under: (i) That as part of the restructuring of the Supermax Group around the year 2010-2011, the entire business of shaving products, including all the business assets, which includes Plant No. 1 and Plant No. 2 was to be transferred to SPCPL. (ii) That on 30th December, 2010, VMPL entered into a BTA with SPCPL wherein VMPL agreed to sell, assign and transfer all its business, including all the business assets, licenses and employees to SPCPL. (iii) That subsequent to the BTA, SPCPL and VMPL also executed a Supplemental Agreement to the BTA dated 18th March, 2011 to carry out certain amendments/changes to the BTA. (iv) That since the Deed of Conveyance was not executed by one Harbanslal Malhotra & Sons Ltd. in favour of VMPL qua the land and Pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Part E and (b) the payroll software being used in connection with the business, as set out in Annexure-1 Part F; (ii) trademarks owned and applied for by the Transferor, as set out in Annexure -1 Part G; (iii) goodwill of the said Business; and (iv) Business Information held by the Transferor which in any way relate to the Business, if any (v) all patents, designs (registered or unregistered). Copyrights, technical information used in respect of the Business, including drawings, sketches and blue prints, designs, product manuals, specifications, data, processes, operation sheets, quality control and inspection data, instructions and other such information, details of which are set out in Annexure - 1 Part H; (hereinafter referred to as "Business IPR"); (vi) all the current assets of the Transferor including (i) all accounts receivable or portions thereof, and other rights to payments of the Transfer (billed or accrued) in respect of the customers attributable to or arising out of the Business (''Account Receivables") i.e. sold and money to be received as set out in Annexure-1 Part 1; (ii) all inventory wherever located, including all raw materials, work-in-progress, finished goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provals, certificates, permits or other evidence of authority issued by a Regulatory Authority relating to or utilized in connection with the Business or any part thereof or the Business Assets, including any and all consents and approvals required to be obtained from any Regulatory Authority under any applicable Laws for the Transferor to sell, assign and transfer, or procure the sale, assignment or transfer of the Business, to the Transferee. 1.1.33 ''Records'' shall mean and include the files, books, records, customer and supplier information and other documents relating to the Business, in the possession or control of the Transferor, in whatever form and upon whatever media they may be recorded, as set out in Annexure-4. 1.1.36 "Slump Sale" shall mean and transfer of the Business, as an inseparable whole, as a going concern on an as is where is basis for a lump sum consideration without value being assigned to the individual assets and liabilities as defined in the Income Tax Act, 1961''. (viii) That in the BTA, VMPL had also specifically represented and warranted to SPCPL that Plant No. 1 and Plant No. 2 , amongst others, comprise all the land and building leased, cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees and assets of VMPL including Plant No.2, stood transferred in favour of the Appellant . As such post the BTA, SPCPL stood possessed of Plant No.2 and its employees started operating Plant No.2. (e) That it is clear from the terms relating to transfer of Licenses (Clauses 1.1.4 (vii) read with Annexure-1 Part L (Appeal Page 178) that licenses inter alia in respect of Plant No.2 were to be transferred to SPCPL. (f) That Respondent Nos. 1 and 2 have failed to make any submissions with regard to the need for the employees and equipment in respect of Plant No. 2 being transferred to the Appellant under the BTA and purportedly leased back/seconded under the BTA. The employees were obviously transferred to SPCPL, since Plant No. 2 was to come to SPCPL. (g) That till August/September, 2013, VMPL had no knowledge of the terms of the Job Work Agreement, the Secondment Agreement and the Equipment Lease Agreement. This is in consonance with SPCPL's submission that the Agreements were not acted upon and that post the BTA the Appellant continues to be in possession of Plant No.2. (h) That VMPL or RKM has not identified a single individual who in fact exercised control or possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rakesh's mala fide (and judicially stigmatized attempt) to somehow wrongfully continue to exercise control over the assets and properties of VMPL and the same clearly constitutes an abuse of the process of the Court. 9.3 That under the BTA dated 30th December, 2010, while VMPL's Plant No. 1 is listed and included in the definition of "Business Assets" in Clause 1.1.4, VMPL's Plant No. 2 is not included. Therefore, VMPL's Plant No. 2 is not amongst the business assets required to be transferred by VMPL to SPCPL. Moreover, the BTA specifically deals with Plant No. 2 in Clause 1.1.13(d) and requires VMPL to carry out "toll manufacturing" (job work) thereat and supply the products to SPCPL. Such specific provision made in the BTA for Plant No. 2 necessarily excludes any contrary inference/submission on the basis of the General Clauses of the BTA. 9.4 That therefore Clause 6.2.2 (f) and 6.7 of the BTA which are relied on by SPCPL are not applicable to VMPL's Plant No.2. The said two Clauses only refer to VMPL's obligation to execute further documents if required to effectively transfer the "Business Assets" which term is defined in Clause 1.1.4., and which does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment Agreement make it clear that Plant No. 2 is in the possession and control of VMPL and that Plant No. 2 is being operated by VMPL and that the staff deputed/seconded from SPCPL to VMPL are operating Plant No. 2 under the supervision and control of VMPL. 9.10 That the job manufacturing activities at Plant No. 2 were and are being carried on by VMPL and not by SPCPL. The said activities were being carried on and the deputed employees were operating Plant No. 2 under the supervision of Vyas and Chaudhari, the ex-Directors of VMPL till February, 2015. Accordingly the fact that SPCPL's employees, who were seconded/deputed to VMPL under the Secondment Agreement, are operating VMPL's Plant No.2, or that SPCPL has been paying the wages/statutory dues of such seconded employees, or that such deputed/seconded employees wear the uniform of SPCPL, or the affidavits filed by such deputed employees, does not and cannot mean that SPCPL is either in possession or control of VMPL's Plant No. 2, as falsely alleged by SPCPL. 9.11 That a completely false and malafide submission is belatedly made by SPCPL, in the List of Dates and written submissions that the said three Agreements i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of VMPL in C.A. No. 2023 of 2012 in Writ Petition No. 4358 of 2001, wherein they have categorically denied that SPCPL is in occupation or possession of the suit property (Plant No.2) and asserting that VMPL has not created any third party interest over Plant No.2 or parted with possession of Plant No.2, and also the List of Assets dated 4th September, 2014, submitted by Rakesh in the UK Court wherein he has affirmed on oath that VMPL's Plant No.2, Peeco Plant and staff quarters are in possession of VMPL. 9.14 That the CLB's order dated 2nd February, 2015, falls squarely within its powers/jurisdiction under Section 403 of the Act as it in effect directs the removed/ex-Directors of VMPL to hand over charge of the Company's properties and assets to its newly appointed Directors/present management. The question therefore of the impugned Order being in violation of natural justice, or the said Order having dispossessed SPCPL does not arise. By no means the impugned Order can be said to be passed beyond the jurisdiction and control of any provisions of the Companies Act, 1956. The case-law relied upon by SPCPL also lends no assistance to them. 9.15 That the above Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are relied on by SPCPL are general provisions regarding transfer of the business and do not alter the above position or in any way detract from the specific provision made in Clause 1.1.13 (d) regarding Plant No.2. 12. Therefore, in my view, SPCPL has been unable to show a single provision from the BTA or the Supplemental BTA whereunder Plant No. 2 is either transferred to SPCPL, or the control and possession of Plant No. 2 is handed over to SPCPL. 13. SPCPL's allegation/case that it has been in possession of VMPL's Plant No. 2 since December 2010/March 2011 is further belied by the following: 13.1 Under the BTA whilst VMPL is to carry on toll manufacturing/job work at its Plant No.2 and supply such products to SPCPL (Clause 1.1.13 (d) of the BTA), its plant and machinery as also its employees stood transferred to SPCPL (Clause 1.1.4 (iv) & Cl. 6.2.3 of the BTA). Therefore, in order to implement the above Toll Manufacturing/job work arrangement, three Agreements were executed by VMPL with SPCPL viz. (a) the Job Work Agreement dated 18th March, 2011, wherein it is recorded that VMPL as a job handler agreed to manufacture and supply certain stipulated products to SPCPL, against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties recorded hereinafter, the parties hereto, are entering into this Deed which witnesses as follows: The lessor hereby grants lease and the lessee takes on lease (lease) with effective control and possession, the equipment for the fixed period with effect from the commencement date subject to the terms and conditions, covenants and agreements herein contained and part of the lessee to be observed and performed provided that all of the equipment shall be located solely at the lessee's premises located at Plot No. 153, TPS No.1, Village Naupada, Taluka & Dist. Thane. Admittedly Plant No. 2 is located at Plot No. 153, TPS No. 1, Village Naupada, Taluka and District Thane. The relevant Clauses from the Secondment Agreement set out hereinabove make it clear that Plant No. 2 is in possession and control of VMPL; that Plant No. 2 is being operated by VMPL and that the staff deputed/seconded from SPCPL to VMPL are operating Plant No.2 under the supervision and control of VMPL. In the Job Work Agreement dated 18th March, 2011 it is inter alia clearly agreed between VMPL and SPCPL that job handling activities will be carried out by VMPL AT ITS PREMISES i.e. at Plant No.2 thereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not acted upon. Again, the allegation that the Agreements were not acted upon is also belied by the fact that VMPL's ledger folio in SPCPL's books of account (produced and handed over in Court during the hearing), has regular debits for payment of "Equipment Lease Charges" and "Secondment Charges" by VMPL to SPCPL and payment of conversion charges - as per Agreement by SPCPL to VMPL. SPCPL has tried to incorrectly draw support to their contention that the three Agreements were not acted upon, from the submission of RKM that he was handed over copies of the three Agreements only in the year 2013. However, Mr. Chinoy has correctly explained that RKM was always aware that the three Agreements were required to be executed between SPCPL and VMPL for the purpose of the job work agreement, as provided in the BTA. However, since Vyas and Chaudhari at the instance of Rakesh, who admittedly controlled SPCPL, turned hostile and chose to exclude RKM, who holds 99.99% shares in the five Indian Companies including VMPL, they did not provide RKM with copies of the three Agreements, and the same were provided to him only in the course of the Company Appeal proceedings in this Court in 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. 4358 of 2001 in this Court wherein he has stated that, "I deny that SPCPL has been put in possession of the suit property (i.e. Plant No. 2) or that they are now carrying on the business from the suit property" (Para 20 of the Affidavit) and "I deny that SPCPL are in occupation and possession of the suit property...." (para 21 of the Affidavit). 18.2 Similarly, Mr. Subhash Chaudhari, General Manager - Corporate Legal of SPCPL, Respondent No. 9 herein, who has filed Affidavit/s in the present proceedings and had orally contended before the CLB on 2nd February, 2015, when the impugned Order was passed that SPCPL was allegedly in possession of VMPL's Plant No. 2 had filed an Affidavit on 28th February, 2012, as the authorised signatory of VMPL in Civil Application No. 2023 of 2012 in Writ Petition No. 4358 of 2001 categorically stating that, " I deny that SPCPL are in occupation and possession of the suit property" (i.e. Plant No. 2) [Para 10 of the Affidavit] and "I deny that the Petitioners (VMPL) have created third party interest over suit property or that they have parted with possession of the suit property to SPCPL....." [Para 12 of the Affidavit]. 18.3 As stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant 2 of VMPL and therefore as on 2nd February 2012 it is the case of RKM in the Petition that the Company (VMPL) is inter alia the owner of Plant No.2. (ii) "....... The Petitioner states that by issuing the said corporate guarantee, Respondent Nos. 2 and 3 have not only breached the fiduciary responsibilities to the Company but have also jeopardized the assets of the Company" ( Para 21 page 178 of Compilation Volume 1); (iii) "The Petitioner apprehends that under the influence of Mr. Rakesh Malhotra, Respondent No.6 (Rakesh), Respondent Nos. 2 and 3 (Vyas and Chaudhari) are likely to engage in further activities of mismanagement that may permanently impair the assets of the Company and result in irreparable loss damage and injury to the Company and its shareholders" (Para 26 pages 179-180 of Compilation Volume 1); (iii) Interim reliefs: (g) and (h): "(g) Respondent Nos. 2 and 3 (Vyas and Chaudhari) be restrained by a temporary order and injunction of this Hon'ble Board from: (i) ... .... .... (ii) selling, transferring, encumbering or charging or otherwise disposing of or alienating any of the assets of the Company including the immovable properties more pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that VMPL never made a demand for conversion charges or that there were only book entries made qua the conversion charges or that some property tax bills were paid by SPCPL, etc. All these happenings were only because Rakesh, who controlled SPCPL, also controlled Vyas and Chaudhari, who were employees/consultants of SPCPL and also the ex-Directors of VMPL and through them acted completely against the interest of VMPL and RKM. If Rakesh/SPCPL is allowed to take advantage of their own wrongs, it would amount to Rakesh/SPCPL being paid a premium on their dishonesty. 21. SPCPL has in its desperate attempt to point out that it was allegedly in possession and control of Plant No. 2 tried to pull out a sentence here and there from the pleadings filed by RKM in his several proceedings claiming that RKM has admitted the possession and control of SPCPL in respect of Plant No.2. I have gone through all the pleadings in their entirety and am satisfied that they belie the allegation that RKM has admitted the possession and control of SPCPL. On a reading of the pleadings in entirety (and not a sentence here and there) it is clear that RKM has repeatedly stated in his pleadings that Vyas and Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Chaudhari, the Directors of VMPL (who pursuant to the BTA were now employees/Consultants of SPCPL), to exclude RKM who held 99.99% of the shares of the five Companies. Through these pliant Directors, Rakesh also sought to utilise the funds, assets and properties of the 5 Companies including VMPL for the benefit of SPCPL/himself. Therefore in 2012, RKM was constrained to file Petitions in the CLB under Sections 397/398 of the Companies Act for removal of the said hostile Directors Vyas and Chaudhari. Rakesh, at whose instance the said Directors were acting, was joined as a party Respondent to the Petition. Ordinarily, employees like Vyas and Chaudhari would have straightaway submitted to the orders of the Court but Rakesh, who admittedly controlled SPCPL, wanted his way out in VMPL. He therefore left no stone unturned in opposing their removal sought by RKM. 22.1 From 2012 till 2014, Rakesh prevented/delayed the hearing of the CLB Petition/removal of the said hostile Directors by filing diverse proceedings and through the said hostile Directors continued to use and exercise control of the funds and assets of VMPL. In 2012, Rakesh filed a Suit in the UK Court and obtained a stay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be possible for the ex- Directors to hold on to the assets of VMPL. Rakesh therefore caused SPCPL to file an Arbitration Petition under Section 9 of the Arbitration and Conciliation Act, 1996 against VMPL restraining VMPL from communicating with the statutory authorities regarding Plant No.2 and against discontinuation of water supply from the Peeco Plant to Plant Nos. 1 and 2. VMPL has in its reply set out the aforesaid facts and pointed out that at the instance of Rakesh the removed/hostile Directors had wrongfully been retaining control of VMPL's Plant No.2; that under the BTA, SPCPL has no right to control or manage Plant No.2, but notwithstanding that, SPCPL had purported to file the Petition; that the said Petition of SPCPL was an abuse of the process of law and was a mala fide attempt by Rakesh to wrongfully assert control over Plant No.2. As correctly submitted by Mr. Chinoy, SPCPL in its written submissions have incorrectly alleged that VMPL has in the said Affidavit admitted SPCPL's possession of Plant No. 2. A perusal of the entire Affidavit clearly negates the said allegation. No reliefs are granted to SPCPL till date in the said petition. 22.3 On 2nd February ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his endeavour, realised that the assets of VMPL, viz. Plant No. 2, will have to be handed over to the new Directors. He has therefore put up SPCPL to file the above appeal making statements/submissions which are false and incorrect to the knowledge of SPCPL. SPCPL, which has admittedly financed the entire litigation pursued by Rakesh against his father RKM, cannot be heard to say that since they were not parties to Company Petition No. 13 of 2012 they were not aware that in the said Petition, RKM had sought protection qua the assets and immovable properties of VMPL and the same were protected by Orders dated 9th February, 2012 and 7th November, 2012 and were also continued by this Court vide its Order dated 20th August, 2014. SPCPL also cannot claim to be ignorant of the fact that Rakesh himself has in an Affidavit filed in the UK proceedings admitted that Plant No. 2 is in possession of VMPL. Being conscious of these difficulties, SPCPL in its pleadings has repeatedly stated that it was not concerned in any manner with the litigation between Rakesh and RKM. However, this falsehood, as stated hereinabove, stood exposed when in a query raised by the Court SPCPL was compelled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court on removal of Vyas and Chaudhari as Directors of SPCPL, Rakesh and the ex-Directors, as stated hereinabove, refused to accept that Vyas and Chaudhari had ceased to be the Directors of VMPL and that consequently they were required to hand over the assets of VMPL to the new Directors. Extensive correspondence was thereupon exchanged by and between the Advocates for RKM/ VMPL and the Advocates for Rakesh/ex-Directors Vyas and Chaudhari. However, in none of the letters it was contended on behalf of Rakesh, Vyas and Chaudhari that all the assets of VMPL are transferred to SPCPL or are in possession and control of SPCPL. Moreover, the oral allegation made before the CLB was directly contrary to the statements made on oath, more particularly the statement made by Rakesh himself before the UK Court that amongst others, Plant No. 2 of VMPL is in possession and control of VMPL. I therefore see no infirmity in the Order passed by the CLB dated 2nd February, 2015 and in my view the same falls squarely within the powers/jurisdiction under Section 403 of the Act as it in effect directs the removed/ex-Directors of VMPL to hand over charge of the Company's properties ..... X X X X Extracts X X X X X X X X Extracts X X X X
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