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2015 (12) TMI 421 - BOMBAY HIGH COURT

2015 (12) TMI 421 - BOMBAY HIGH COURT - TMI - Possession of plant - whether 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? - Held that:- SPCPL has failed to even prima facie establish that it is in possession of Pla .....

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jurisdiction of the CLB to pass the Order dated 2nd February, 2015 or require the CLB to join SPCPL as a party or hear SPCPL or adjudicate upon such an oral allegation. On 2nd February, 2015 the allegation that pursuant to the BTA dated 30th December, 2010, SPCPL was in possession of Plant No. 2 was orally made on behalf of Vyas and Chaudhari. Significantly no such allegation was made by Rakesh who admittedly controls SPCPL, who was a party Respondent before the CLB and who was represented by t .....

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e the CLB or before this Court or before the Hon'ble Supreme Court that the said Order dated 9th February, 2012 ought not to have been passed since allegedly all the assets including Plant No. 2 of VMPL are in possession and/or control of SPCPL from 30th December, 2010/18th March, 2011. Even after Rakesh failed to obtain a stay from the 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 .....

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over, 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 ha .....

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CLB/this Court even after the Hon'ble Supreme Court in the SLP filed by Rakesh had specifically declined to stay the same, the CLB was completely justified in directing police assistance which was required to maintain peace and order at the time of implementation of its Order by VMPL/RKM. - Company Appeal (L) No. 10 of 2015, CLB Company Application No. 296 of 2014, CLB Company Petition No. 13 of 2012 - Dated:- 30-11-2015 - S. J. Kathawalla, J. For the Appellant : Mr. Ravi Kadam, Senior Advocate .....

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deep Vora i/by M/s. Navdeep Vora and Associates, for MIDC. JUDGMENT 1. The present Appeal is filed by the Appellant- Super Max Personal Care Pvt. Ltd. ( SPCPL ) against the Order dated 2nd February, 2015, passed by the Company Law Board, Western Region Bench [ the impugned order ] on the ground that 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 .....

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e 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 SPC .....

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e 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). Similarly, Respondent No. 9 herein Mr. Subhash Chaudhari ( Chaudhari ), General Manager - Corporate Legal of SPCPL, who 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 th .....

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ow taken by Jagtap and Chaudhari on behalf of SPCPL are contradictory to the statements earlier made by them on oath before this Court on behalf of VMPL, SPCPL not being in a position to offer any legitimate explanation, unabashedly submitted before this Court that the earlier statements made by Jagtap and Chaudhari were made on behalf of VMPL and not on behalf of SPCPL, and reflected VMPL's position, thereby suggesting that false statements are made on oath by Jagtap and Chaudhari as per th .....

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mpany 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 mor .....

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( Rakesh ) who in fact has admitted in the proceedings filed before the Hon'ble Supreme Court of India that he is in charge and control of SPCPL, has, as pointed out hereinafter, as late as on 4th September, 2014, in an Affidavit filed in the proceedings before the High Court of Justice, Queen s Bench Division Commercial Court in England, furnished a Schedule of Properties in which VMPL s Plant No. 2, Peeco Plant and the staff quarters are all stated by him to be in the possession of VMPL. .....

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sary to set out at the outset that RKM has in his pleadings and through his Counsel repeatedly submitted that Vyas and Chaudhari, the ex-Directors of VMPL after being transferred as employees/consultants of SPCPL, which is admittedly controlled by Rakesh, at the instance of Rakesh, turned completely hostile to RKM, because of which RKM had no alternative but to file Company Petition No. 13 of 2012 and seek removal of Vyas and Chaudhari as Directors of VMPL and appoint new Directors in their plac .....

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at the immovable assets/properties of VMPL are in possession of SPCPL, pursuant to the BTA, as is now alleged. Instead, as submitted by RKM, his son Rakesh left no stone unturned in trying to prevent him from removing Vyas and Chaudhari, the ex-Directors of VMPL, but failed to succeed despite taking the issue right upto the Hon'ble Supreme Court. As submitted by RKM, Rakesh thereafter realised that the hostile ex-Directors (Vyas and Chaudhari) through whom he was exercising control over VMPL .....

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buse 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 di .....

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Affidavit in Sur-Sur Rejoinder dated 26th March, 2015 wherein, whilst dealing with the stand taken by RKM, that SPCPL is a Company fully controlled and managed by Rakesh (Respondent No. 5), it has stated as follows: 4. In respect of the allegation that the Appellant is a Company fully controlled and managed by Respondent No. 5, I state that the Appellant is a professionally run and managed Company and that Respondent No. 5 is not even on the Board of Directors of the Appellant, neither is he in .....

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ent No.1 (VMPL) failed to point out is the fact that on a conjoint reading of paragraph 5 (r) at Appeal : Pg. 12 read with Exhibit-K Appeal : Pg. 564 at paras 1 and 3 Appeal: Pg. 576, it is clear that the Appellant approached this Hon'ble Court clearly on the basis that theAppellant is a professionally run and managed Company and none of the Directors of the RKM Family are on the Board of Directors of the Appellant. The Appellant has also in paragraph 5 (o) at Appeal: Pg. 11 of the present A .....

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and ordinarily the Petitioner should not be at all concerned 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 purp .....

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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 Directors of SPCPL or concerned with the day to day affairs of SPCPL, one of the queries put to the Advocate for SPCPL by this Court was whether SPCPL had financed Rakesh qua any of the litigations that were fought against RKM before the CLB and/ .....

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on two occasions, the Court was informed by the Counsel appearing for SPCPL that the entire litigation fought by Rakesh against RKM (i.e. since the year 2012) has been financed throughout by SPCPL and there is no Board Resolution on record of SPCPL qua the litigation costs having been borne by SPCPL on behalf of Rakesh. 4.7 It is therefore clear that the entire cost incurred throughout by Rakesh in the fight between RKM and Rakesh is borne by SPCPL and shown by SPCPL in its accounts as legal exp .....

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Rakesh has himself admitted this fact in his SLP before the Hon'ble Supreme Court); that SPCPL is not concerned with the family disputes between Rakesh and RKM and had no alternative but to approach the Court only because, since December 2014 RKM/VMPL started interfering with the business of the Appellant; and that SPCPL is a professionally led and managed Company where Rakesh is not a member of the Board of Directors of the SPCPL and is also not concerned with the day to day affairs of SPC .....

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under 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 ultimate .....

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Veena Malhotra, wife of RKM holds 1 share of Transauto and RKM holds the rest. VMPL till date, is therefore effectively held and owned by RKM. 5.3 As a matter of policy, the Directors of the said RKM Companies comprised of employees and/or ex-employees of the Companies and no member of the Malhotra family was appointed as Director of any of the RKM Indian Companies. 5.4 In 2008-2010, RKM decided to restructure and hand over control of the Super Max Group, to his eldest son Rakesh. Accordingly, .....

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llion (approx. ₹ 240 Crores) was to be paid by SPCPL to the 5 RKM Indian Companies as consideration for the transfer/lease/utilization of their Business Assets. Of this amount, VMPL was to receive ₹ 110 crores. 5.5 On 30th December, 2010, a BTA was executed between VMPL and SPCPL for transfer of VMPL's business to SPCPL. The BTA provided that VMPL s Plant No. 1 was to be leased to SPCPL. The BTA did not provide for lease/transfer of the Plant No. 2 to SPCPL. Instead, the BTA spec .....

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Supplementary BTA as well as the Job Work Agreement, the Staff Secondment Agreement and the Equipment Lease Agreements were all executed on 18th March, 2011. Vyas and Chaudhari, who were the two Directors of VMPL had now become employees/Consultants of 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 .....

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nformation 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 removal of the hostile Directors from the RKM Indian .....

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aid Company Petition, RKM inter alia sought orders and directions for convening an Extra Ordinary General Meeting of VMPL for removal of the then Directors, Vyas and Chaudhari and appointment of new Directors in their place. Further appropriate directions and orders were also sought under Section 402 of the Act concerning the various alleged acts of oppression and mismanagement, including directions for true and fair disclosure of various payments made and liabilities incurred by VMPL with effec .....

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particularly described in Annexure 2 hereto and inter alia against Vyas, Chaudhari and Rakesh to maintain status quo with regard to the properties and assets of the Company including but not limited to bank accounts, mutual fund holdings and immovable properties. It is pertinent to note that in Annexure 2 to the Petition, Plant No. 2 of VMPL was also included. 5.8 RKM along with the Petitioners who had filed the said four Company Petitions before the CLB, Mumbai, mentioned the matters including .....

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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 S .....

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Court was dissolved by a Judgment dated 30th October, 2012. 5.10 In view thereof, the proceedings before the CLB in the said Company Petitions stood revived. However, before entering upon the defence by way of filing the written statement/reply in the Company Petitions filed by the Indian Companies, Rakesh Malhotra filed Company Applications in the respective Company Petitions under Section 45 of the Arbitration and Conciliation Act ( the Act ) and prayed that the disputes be referred to an Arb .....

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d Rakesh who admittedly is in control of SPCPL did not take a stand before the CLB that all the assets of VMPL have been transferred to and/or are in possession and control of SPCPL. 5.12 By an Order dated 31st January, 2013, the CLB dismissed Rakesh's Application for reference to arbitration under Section 45 of the Act and also permitted RKM to reconstitute the Board of Directors of the said Companies. 5.13 On 6/7th February, 2013, Rakesh filed Company Appeals in this Court impugning the Or .....

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o extend the stay on the removal of Rakesh's suborned Directors/appointment of new Directors. In paras 134 to 138 of its judgment, the Court recorded that: (i) Rakesh had betrayed the confidence reposed in him by RKM, had engineered a coup d'etat, hijacked the RKM controlled Indian Cos., and deployed their funds to further the interests of entities controlled by him. (ii) That although RKM owned and controlled 99.9 % of the Shares of the said Indian Cos., the said Directors acting as pup .....

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uity 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 .....

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ese Companies have contractual obligations with or to the SuperMax Companies, should any of the existing contracts be terminated, the consequences to the SuperMax group would be crippling. Thus Rakesh, as Petitioner in the SLP, has categorically admitted that he is in control of SPCPL and if RKM shall take control of the Indian Companies (including VMPL) and cancel all agreements mandated to be entered into by the Share Subscription Deed (SSD) the business of SPCPL will come to a standstill. It .....

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gust, 2014, does not arise, since under the BTA dated 30th December, 2010 all the assets of VMPL including Plant No.2 were transferred to SPCPL and/or the same were in possession and control of SPCPL, as now alleged. 5.16 By its Order dated 10th September,2014, the Hon'ble Supreme Court granted Rakesh leave to appeal but declined stay of the Order passed by this Court dated 12th/20th August, 2014. 5.17 At an Extraordinary General Meeting of VMPL held on 21st December, 2012, a Resolution had .....

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the newly 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 .....

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h 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'ble Supreme Court had refused to grant interim relief to the Respondents in the aforesaid SLP, once again requested Vyas and Chaudhari through their Advocates to ... at least now co-operate with our clients and hand over the assets and records (statutory, financial and otherwise) of the .....

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ported to contend that they continued to be Directors of VMPL and that their removal as Directors was in violation of the Judgment and Order dated 12th/20th August, 2014, passed by this Court. 5.22 In response to the said letter dated 22nd September, 2014, RKM by his Advocate's letter dated 26th September,2014, pointed out that Vyas, Chaudhari and Rakesh were taking a deliberately false and mischievous stand by purportedly contending that they continued to remain as Directors of VMPL. By the .....

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4, requested Vyas and Chaudhari to make arrangements to hand over charge of VMPL's property viz. Peeco Plant (Wagle Estate), Panama Headquarter (Thane) and Plant 2, VMPL (Thane) and to remove their security guards from the said plants/properties. 5.24 On 11th October, 2014, certain persons deputed by the newly appointed Directors went to the Company's Panama Head Quarter and the Peeco Plant premises along with their security guards to take charge of the same. However, they were denied en .....

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ner 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 th .....

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ing their assets. The Respondents made an application for a stay of the said clarificatory order, which was not granted. 5.27 On 17th October, 2014, RKM by his Advocate's letter once again called upon Vyas and Chaudhari to hand over charge of properties (moveable and immovable) of the Company including all its records (statutory, financial and otherwise) to the Petitioner and to withdraw the said public notice issued by them on 13th October, 2014 in the Times of India. 5.28 Instead of comply .....

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stand that the question of handing over charge of immovable properties of VMPL did not arise since pursuant to the BTA and Supplemental BTA all the immovable assets of VMPL are transferred and/or in possession and control of SPCPL, as now alleged. RKM responded to the aforesaid letter dated 27th October, 2014 by his letter dated 29th October, 2014. 5.29 In the circumstances VMPL filed Company Application No. 296 of 2014 in the CLB Petitions, inter alia to restrain Vyas and Chaudhari from holdin .....

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ari were wilfully disobeying the orders and not handing over charge. 5.31 According to RKM, realizing that the ex-Directors would no longer be able to retain control/change of the funds and assets 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 re .....

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irmed/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/transferred to SPCPL under the BTA of December, 2010. In the circumstances, the CLB passed an Order dated 2 .....

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t management of VMPL. The CLB however excluded from the purview of the order, assets which had been transferred to SPCPL under the BTA. 5.33 On 3rd February, 2015, SPCPL filed the present Company Appeal impugning the Order of the CLB dated 2nd February, 2015. In the present Appeal, SPCPL has alleged that it was in possession of VMPL's Plant No. 2. In the Appeal no particulars were stated as to how and when SPCPL had allegedly come into possession of VMPL's Plant No.2. However, in paragra .....

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ants for the appellants. The Appellants therefore possessed both these plants and no further transfer of possession was required. Thus pursuant to the BTA and the Supplemental BTA, possession of both Plant 1 and Plant 2 along with other properties mentioned therein stood transferred to the Appellant . The other agreements referred to in para 6 of SPCPL's said Affidavit, were set out in paragraph 5 of the Rejoinder Affidavit i.e. (i) the Job Work Agreement, (ii) the Secondment Agreement & .....

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t 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 Decembe .....

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tanding thereon, although VMPL operated its business from Plant No.2, VMPL did not legally own the Plant No.2. (v) That since the business was to be transferred to SPCPL pursuant to the BTA, SPCPL and VMPL entered into an arrangement of job work to enable SPCPL to carry out the business from Plant No.2. For the said job work arrangement, SPCPL and VMPL executed a Job Work Agreement dated 18th March, 2011. To take this arrangement forward, ancillary agreements i.e.. a Secondment Agreement and the .....

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Job Work Agreement with respect to Plant No. 2 was therefore entirely an interim arrangement, and the following provisions of the BTA amply reflect this intention. 1.1.3 Business shall mean the global business of manufacturing, marketing, sales, distribution and related business activities in respect of shaving products, shaving accessories, shaving preparation and post-shave products (foam, gel, balm, lotion, creams) and the specific adjacent male grooming categories carried on by the Transfer .....

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inery and other fixed assets currently operated within the Business as set out in the fixed asset register maintained by the Transferor, the summary of which is annexed as Annexure-1 Part D; (v) all Business IPR including but not limited to the (i) licenses with respect to (a) all computer software being used in connection with the Business, as set out in Annexure-1 Part E and (b) the payroll software being used in connection with the business, as set out in Annexure-1 Part F; (ii) trademarks ow .....

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tions 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 loca .....

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ry paid for but not yet purchased and in transit and any such Inventory paid for but not yet delivered or received by the Transferor that is engaged, deployed, employed or used in and forming a part of the Business, details of which are set out in as set out in Annexure -1 Part J; (vii) all the movable assets, resources, facilities, utilities and services of the Business including without limitation all movables office equipment telephone instruments, electronic installations, printers, fax mach .....

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prior to the Transfer Date, and relating to a specific liability transferred to the Transferee; (x) the benefit of all the insurance policies held by the Transferor which relate to the Business, as set out in Annexure-1 Part M ( Insurance Policies ); (xi) the benefit of all rights and claims arising from, or coming into existence as a result of, the carrying on of the Business (including, without limitation, the benefit of all outstanding insurance claims in Schedule 7 of the Disclosure Letter .....

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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 docu .....

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d and warranted to SPCPL that Plant No. 1 and Plant No. 2 , amongst others, comprise all the land and building leased, controlled, occupied or used by or in connection with the business. Article 10 of the BTA also stipulates various obligations of VMPL subsequent to the transfer, i.e. to aid and assist SPCPL before various authorities for completion of filing and other necessary formalities in order to give effect to the transfer of the business from VMPL to SPCPL. (ix) That even under the Subsc .....

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ed by VMPL (as lessor) in favour of SPCPL (as lessee) in respect of Plant No. 2 and a letter agreement in relation to the renewal of the aforesaid lease. (x) That in view thereof, it is an admitted position that the intention of the parties was to transfer the Business and the Business Assets in its entirety to SPCPL and to the exclusion of VMPL. (xi) That VMPL has filed an Affidavit-in-Reply dated 27th January, 2015 before this Court. In the Affidavit-in-Reply VMPL has inter alia admitted that .....

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business and all its assets have been transferred to SPCPL, which clearly establishes that it is SPCPL which is carrying on its business from Plant No.2 and is in possession and control of the same. (c) That a conjoint reading of Clauses 1.13, 1.1.4, 6.6, Annexure-8- Clause 5.3 and Clause 9.1 of the BTA, makes it apparent that all assets and properties used by VMPL as part of its business were agreed to be transferred by VMPL in favour of SPCPL which includes Plant No.2. (d) That post execution .....

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ons 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 Agreeme .....

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how any receipt of payment of the said charges. 8. As regards the impugned Order it is submitted on behalf of SPCPL as follows: (i) That the impugned Order violates natural justice and that failure of natural justice cannot be cured at the appellate stage as held in L.K. Ratna vs. ICAI AIR 1987 SC 71. (ii) That the impugned Order inasmuch as it provides for police assistance, seeks to pass directions in the nature of execution without the CLB having any express execution powers to do so, and thu .....

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Section 9 of the Arbitration and Conciliation Act, 1996 was pending before this Court. (vi) That as held in Superintendent and Remembrance of Legal Affairs , West Bengal vs. Anil Kumar Bhunja & Ors. (1979) 4 SCC 274, it is trite law that determination of whether a person is in possession of a property is a mixed question of fact and law and involves determination of control over the property. (vii) That the above Appeal therefore deserves to be allowed. 9. Mr. Chinoy, Learned Senior Advocate .....

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n ble Supreme Court. 9.2 The present Appeal is filed by SPCPL at the instance of Rakesh and is a part 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 .....

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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 not include VMPL s Plant No. 2. 9.5 That therefore Clauses 2.1, 5 and 9 and Annexure-8 of the BTA which are relied on by SPCPL also have no relevance. They are general provisions regarding transfer of the busin .....

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a job handler agreed to manufacture and supply certain stipulated products to SPCPL, against payment of stipulated amounts as conversion charges. (b) The Staff Secondment Agreement was executed under which the employees who had stood trnsferred to SPCPL under the BTA, were made available/deputed back by SPCPL to VMPL for operating VMPL's Plant No. 2 against VMPL paying a Secondment Fee to SPCPL. (c) The Equipment Lease Agreement was executed whereunder the plant and machinery /equipment of P .....

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ufacturing at its Plant No. 2 and supply the manufactured products to SPCPL. However, the commercial/payment terms under the three agreements have been skewed in favour of SPCPL by the said hostile ex-Directors acting at the instance of Rakesh, with the result that VMPL has made substantial losses while carrying out such job work inasmuch as the lease rentals and the staff secondment charges required to be paid by VMPL to SPCPL are higher than the conversion charges received by VMPL from SPCPL. .....

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. 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 depute .....

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Agreements have been referred to and relied upon by SPCPL itself in the present Company Appeal (and have been annexed as Exhibits-E, F and G) as Agreements entered into to take forward the job work arrangement under the BTA and have also been referred to and relied upon in SPCPL's Affidavit-in-Rejoinder. However, inasmuch as the terms of the said three Agreements clearly negate/are destructive of SPCPL's false case/allegation of being in possession of VMPL's Plant No. 2 by virtue of .....

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e case/pleadings of SPCPL, but is indicative of the fact that SPCPL is making this baseless/false submission as it is aware that its false case of being in possession of Plant No.2, is negated/contradicted by the bare terms of the said job work Agreement and the said Secondment Agreement. The said 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 re .....

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reement. 9.13 That there can be no better evidence to belie the case of SPCPL being in possession of Plant No. 2 since 30th December, 2010/18th March, 2011, than the Affidavits of Jagtap and Chaudhari dated 14th March, 2013 and 28th February, 2012 respectively, filed on behalf 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 .....

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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 therefore deserves to be di .....

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ssible that the parties may have intended to ultimately transfer Plant No.2 in favour of SPCPL, the BTA and Supplemental BTA make it clear that the business of VMPL as defined under clause 1.1.3 of the BTA is transferred in favour of SPCPL, but all the assets of VMPL are not transferred to VMPL. Though VMPL s Plant No. 1 is included in the Business Assets required to be transferred to SPCPL as per clause 1.1.4 (a) and under Clause 1-1.13(b) is required to be leased to SPCPL, VMPL s Plant No. 2 w .....

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ring (job work) at its Plant No. 2 and supply the products to SPCPL. 11. As correctly pointed out by Mr. Chinoy, such specific provisions made in the BTA for Plant No. 2 necessarily exclude any contrary inference/submission on the basis of the General Clauses of the BTA. In any event, 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 e .....

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act 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 .....

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acture and supply certain stipulated products to SPCPL, against payment of the stipulated amounts as conversion charges; (b) The Staff Secondment Agreement dated 18th March, 2011 which was executed under which the employees who had stood transferred to SPCPL under the BTA, were made available/deputed back by SPCPL to VMPL for operating VMPL's Plant No. 2 against VMPL paying a Secondment fee to SPCPL; and (c) the Equipment Lease Agreement dated 18th March, 2011 whereunder the plant and machin .....

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f Plant No. 2 are reproduced hereunder: (i) Secondment Agreement dated 18th March, 2011 between VMPL and SPCPL: 2.1 VMPL shall exercise day to day supervision and control over the deputed employees… 2.2 All the deputed employees shall be deputed solely at VMPL s premises located at Plot No. 153, TPS 1. The deputed employees shall during their deputation perform the tasks allotted to them by the representatives of VMPL and shall act under the supervision, direction, instructions and guidan .....

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…. .... .... ........ AND WHEREAS VMPL HAS AGREED TO CARRY OUT AFORESAID JOB HANDLING FOR SPCPL AS ENUMERATED BELOW: JOB HANDLING ACTIVITIES BY VMPL AT ITS PREMISES LOCATED AT PLOT NO. 153 TPS NO. 1 VILLAGE NAUPADA TAL. & DIST. THANE . (iii) Equipment Lease Agreement dated 18th March, 2011 executed between VMPL and SPCPL: …Now therefore, in consideration of the reciprocal promises and obligations a d mutual covenant between the parties recorded hereinafter, the parties hereto, .....

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pada, 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 i .....

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ies under the Job Work Agreement were being carried on under the supervision of the ex- Directors Vyas and Chaudhari by the deputed employees at Plant No.2. In the circumstances, as correctly submitted by Mr. Chinoy, 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 .....

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e to be found in the BTA or in the Supplemental Agreement pursuant to which SPCPL claims that it is in possession and control of Plant No. 2 of VMPL. 15. Again, as stated earlier, SPCPL has in its Appeal relied on the Job Work Agreement, Secondment Agreement and the Equipment Lease Agreement, all dated 18th March, 2011 and has also annexed copies of the same as Exhibits 'E', 'F' and 'G' to the Appeal. In the said Appeal, SPCPL has nowhere stated that the said Agreements w .....

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sely alleged that the said three Agreements were 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 content .....

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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 2013. This fact certainly cannot be construed to mean that the said three Agreements were not acted upon by the parties. 16. That the case of SPCPL that all the assets of VMPL were transferred to SPCPL pursuant to the BTA and Supplemental BTA is further belie .....

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the Appeals filed by Rakesh by its Order dated 20th August, 2014. However, at no point of time Vyas and Chaudhari and/or Rakesh have impugned the said Order and/or have submitted before the CLB or before this Court or before the Hon'ble Supreme Court that since all the assets of VMPL have allegedly been transferred to SPCPL or that SPCPL is in possession and control of the assets including Plant No. 2, no such orders could have been passed by the CLB or continued by this Court. 17. Again, a .....

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time took a stand that all the immovable properties of VMPL are transferred to SPCPL or are in control and possession of SPCPL as is now alleged. 18. The most glaring facts which belie the allegation of SPCPL that it is in control and possession of Plant No. 2, are, at the cost of repetition, once again set out hereunder as follows: 18.1 Mr. Sanjay Jagtap, Head Legal and Secretariat of SPCPL who has filed his Affidavit-in-Support in the above Appeal claiming control and possession of Plant No. 2 .....

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milarly, 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, .....

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n behalf of VMPL and not on behalf of SPCPL and reflected VMPL's possession thereby admitting that false statements were made on oath by Jagtap and Chaudhari as it suited their convenience and depending on the party/Company on whose behalf such statements are made. It is also sought to be contended by SPCPL that the said Affidavits were filed at the instance of the Directors/Promoters of the Company. This surely cannot be accepted since again, as stated earlier, before the said Affidavits we .....

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averred by RKM that the Company is not carrying on any business as on date and that by a BTA, the business together with all its assets and liabilities were transferred to SPCPL, thereby meaning that even Plant No. 2 was in control and possession of SPCPL. Apart from the contention of the SPCPL that they were in control/possession of Plant No.2 since 30th December 2010/18th March, 2011 being belied by the aforestated facts, as correctly submitted by Mr. Chinoy, the Learned Senior Advocate appear .....

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above, is the owner of several immovable properties, which are more particularly described in Annexure 2 hereto annexed (Para 15 page 175 of Compilation Volume 1). It is pertinent to note that Annexure 2 also includes Plant 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 breache .....

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a 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 particularly described in Annexure 2 hereto: (iii) …. …... …. (h) Res .....

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the view that SPCPL has not even made out a prima facie case of VMPL's Plant No. 2 having been transferred to SPCPL, or SPCPL being in control and possession of Plant No.2. As submitted by RKM, upon execution of the BTA, the Staff of VMPL was transferred to SPCPL. Vyas and Chaudhari who were earlier the employees of VMPL now became employees/consultants of SPCPL. However, since Vyas and Chaudhari as employees of VMPL were appointed as Directors of VMPL since the years 1993 and 2001 respecti .....

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ew Directors in their place and protection of the assets of VMPL. CLB allowed RKM to replace Vyas and Chaudhari from acting as Directors of VMPL. Rakesh impugned the orders right upto the Hon ble Supreme Court of India but failed to prevent RKM from removing Vyas and Chaudhari as Directors of VMPL. Since Vyas and Chaudhari have during the interregnum throughout denied access to RKM qua the working and affairs of VMPL and have acted as per the directions of Rakesh who admittedly controlled SPCPL .....

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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. .....

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that Vyas and Chaudhari were the two Directors of VMPL on the date of execution of the BTA of December, 2010 and were the employees/consultants of VMPL. Upon execution of the BTA, the staff of VMPL was transferred to SPCPL, Vyas and Chaudhari became employees/consultants of SPCPL. RKM reposed trust in them and allowed them to continue as Directors of VMPL. Rakesh who admittedly controls SPCPL started prevailing upon Vyas and Chaudhari and through them was dealing with the finance and assets of V .....

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d to SPCPL or SPCPL has been in control and possession of Plant No. 2 pursuant to the BTA dated 30th December, 2010 and the Supplemental BTA dated 18th March, 2011, the issue which now needs to be considered is whether, as submitted on behalf of RKM, the present Appeal filed by SPCPL is a bona fide action on the part of SPCPL or is an act of SPCPL at the instance of Rakesh who admittedly controls SPCPL. As stated earlier, RKM had decided to restructure and hand over control of Supermax Group of .....

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sferred as employees/consultants of SPCPL. RKM at this stage could have removed Vyas and Chaudhari and appointed new Directors. However, since mortal beings are unable to foresee the future, and RKM being no exception, RKM not only trusted Rakesh, but Vyas and Chaudhari as well, and continued Vyas and Chaudhari as Directors of VMPL. Rakesh misused the trust placed on him by RKM and used his influence over Vyas and Chaudhari, the Directors of VMPL (who pursuant to the BTA were now employees/Consu .....

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ty 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 e .....

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filed an Appeal (L) No. 10 of 2013 in this Court and secured orders of interim stay of their removal. Vide its Judgment dated 12th /20th August, 2014, this Court dismissed Rakesh's Appeal, and while rejecting his application for continuation of stay of removal of the Directors, severely criticized /stigmatised Rakesh's attempt to usurp and control the funds and assets of VMPL through Vyas and Chaudhari. Rakesh preferred SLP against the said Judgment and Order dated 20th August, 2014. In .....

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udgment and Order refused to hand over charge of the funds, assets and properties to VMPL's new management on diverse and untenable grounds. This again was done obviously at the instance of Rakesh. 22.2 In the circumstances, VMPL filed Company Application No. 296 of 2014 in the CLB Petition to restrain the ex- Directors from holding themselves out as Directors of VMPL and to direct them to hand over charge of the properties and records of VMPL to the newly appointed Directors. In the said ap .....

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uld no longer 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 remo .....

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ffidavit 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, 2015, the ex-Directors for the first time confirmed/accepted before the CLB that they had ceased to be Directors of VMPL from November,2014. However, the said ex-Directors for the first time orally alleged that SPCPL was in possession of the assets of VMPL under the BTA of 2010. As sub .....

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L repeatedly represented to this Court that it was not concerned with the fights between RKM and Rakesh. In answer to the contention of VMPL/RKM that Rakesh admittedly controls SPCPL, SPCPL took a stand on oath that Rakesh is neither on the Board of Directors of SPCPL nor is concerned with the day to day affairs of SPCPL. These false representations on the part of SPCPL stood exposed when this Court enquired from SPCPL whether SPCPL had financed Rakesh qua any of the litigations initiated/defend .....

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by SPCPL and there is no Board Resolution on record qua the litigation expenses having been borne by SPCPL on behalf of Rakesh. Therefore the entire litigation expense of Company Petition No. 13 of 2012 incurred by Rakesh has been throughout borne by SPCPL and is shown as the litigation expense of SPCPL. So much for the assertion on oath by SPCPL that it is an independent entity which has nothing to do with the disputes between Rakesh and RKM. I have therefore no doubt that Rakesh after leaving .....

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hat 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 .....

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h arising from the orders passed therein. The above Appeal, which is undoubtedly filed by SPCPL at the instance of Rakesh, in my view, therefore, lacks bona fides and smacks of mala fides. 23. As set out hereinabove, SPCPL has made several submissions qua the impugned order. Since as held hereinabove, SPCPL has failed to even prima facie establish that it is in possession of Plant No. 2 pursuant to the BTA/Supplemental BTA since 30th December, 2010/18th March, 2011, no question arises of the imp .....

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judicate upon such an oral allegation. On 2nd February, 2015 the allegation that pursuant to the BTA dated 30th December, 2010, SPCPL was in possession of Plant No. 2 was orally made on behalf of Vyas and Chaudhari. Significantly no such allegation was made by Rakesh who admittedly controls SPCPL, who was a party Respondent before the CLB and who was represented by the same Advocates. Again from the record of the proceedings it was clear that though by an Order dated 9th February, 2012, CLB had .....

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ve been passed since allegedly all the assets including Plant No. 2 of VMPL are in possession and/or control of SPCPL from 30th December, 2010/18th March, 2011. Even after Rakesh failed to obtain a stay from the 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 .....

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e 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 and assets to its newly appointed Directors/present management. None of the submissions .....

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