TMI Blog2013 (3) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... pression of the Appellants who are the minority shareholders of Respondent No. 1 Company and mismanagement of the Respondent Company. 2. The Appellants have submitted that the following important questions of law require determination by this Court. (1) Whether in a family Company, where there are essentially two groups of shareholders, and two Directors, and when admittedly there is deadlock with regard to the conduct of the business of the Company, the CLB ought to have granted reliefs so as to put an end to the oppression and mismanagement? (2) Whether in a family Company, where all the other Directors and Shareholders received salaries and allowances from the Company, the non -payment of salary to one Director and non -payment of allowances to the Shareholders, so also to the Group Company's staff working for those Directors and Shareholders would amount to per se acts oppressive to those Shareholders? (3) Whether the Appellants, having been specifically asked to disengage from the management of the affairs of the Company pursuant to a Memorandum of Understanding entered into between the members of the family for dividing the group companies and their assets, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement indicating shareholding of all the shareholders in the Company is reproduced hereunder: Name of the shareholder Number of shares held in Grentex Co. (P.) Ltd. (Respondent No. 1 Company) Name of the Shareholder No. of shares % of shares Shri Ravikant Kapur (Respondent No. 2) 840000 22.5201 Shri Ravikant Kapur (Huf) (Respondent No.5) 140000 3.7534 26.2735 Shri Rajeev Kapur (Appellant No. 1) 840000 22.5201 Shri Rajeev Kapur (HUF) (Appellant No. 2) 140000 3.7534 26.2735 Shri Shashikant Kapur (Respondent No. 3) 140000 3.7534 Smt. Benu Kapur (Respondent No.4) 308000 8.2574 Smt. Sharda Kapur (Appellant No.3) 168000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unilaterally and without consulting the Appellant No. 1. However, Appellant No. 1 did not object to every action taken by Respondent No. 2 as he was his elder brother. One instance of conducting the affairs of the Company unilaterally was a resolution dated 26th March, 2004 purportedly passed by the Board of Directors of the Company by which the Company had taken the Lonavala property belonging to Respondent No. 2 on leave and license basis for using the same as an Extension -office -cum -guest house for employees and guests of the Company at a monthly compensation of ₹ 9000/ and the furniture, etc. at the said Lonavala property was to be maintained by the Company. 10. According to the Appellant No. 1, he would not be sent minutes of the Meeting of the Board of Directors of the Companies of the Kapur Family immediately after a particular meeting, but would be sent the same after several reminders. By an e -mail dated 5th January, 2005 addressed by the Appellant No. 1 to the Company Secretary of the Company, Appellant No. 1 recorded that he had received copies of various minutes of the meetings purported to be held by the Board of Directors of the said companies of the K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent No.6, residential flats and commercial properties owned by Respondent No. 7, excluding the godown land and some properties belonging to Shri Rattanchand Kapur HUF at Amritsar, Punjab, Delhi, Haridwar, UP and Ghatkopar (Mumbai) which had been leased to Respondent No.8. It was also agreed that an aggregate amount of ₹ 5 crores was to be paid to the property assets group. Thereafter the Solicitors of the Kapur Family were instructed to draw up a detailed document. According to the Appellants, Respondent No. 2 asked the Appellant No. 1 to permit him to conduct the day to day business of the Company immediately after the agreement and asked Appellant No. 1 not to interfere in the same. On 2nd January 2008, Respondent No. 2 and the Appellant No. 1 circulated a note informing all concerned that as per the internal arrangement, the business assets group would be under the purview/control of Respondent No. 2 and Respondent No.4 would assist him. By the said note it was also confirmed that all functions and management related to some properties of the property assets group would be carried out by Appellant No. 1 with the assistance of his son and employee of Respondent No. 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers in Companies where returns were being filed. Though the said letter was received by the Administration Department, there was no reply. On 6th May, 2008, Appellant No. 1 addressed a letter to Respondent No. 2 requesting for an updated statement of the personal account of Appellant No. 1 with all the Companies of the Kapur Family. The Appellant No. 1 also stated that he had not been receiving the accounts and bank statements since long and wanted the same to be provided to him on a regular basis till the implementation of the Memorandum of Understanding. Appellant No. 1 did not receive any response to the said letter dated 6th May 2008. 15. On 29th May, 2008, Appellant No. 1 along with his wife and son incorporated another company named Kapotex Industries Private Limited. 16. According to the Appellant No. 1, his telephone bills were earlier paid by the Company but since about July 2008, the bills were not paid in time. The Appellant No. 1 vide his letter dated 26th August 2008 addressed to Respondent No. 2 recorded that he had requested for various payments several times but the same were not paid. Appellant No. 1 also stated that he needed cheque books of Respondent No. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the Accounts Department failed and neglected to reply. The Appellant No. 1 by his letter dated 8th November, 2008 addressed to the Respondent No. 2 called upon him to release payments of two of the employees for the month of October, 2008 and the salary of Appellant Nos. 1 and 3 and his son and one Shri Kamlesh. Respondent No. 2 was also requested to release bonus to three of the employees and to clear some of the bills set out in the said letter. 17. According to the Appellant No. 1, he was therefore systematically excluded from the business of the Company and no information regarding the Company was furnished to him despite repeated requests. Even the staff working for Appellant No. 1 was harassed by Respondent No. 2 by not paying them their dues/salaries on time including the arrears and yearly bonus as had been paid to all other employees of the group Companies. According to the Appellants, the Company did not have a proper functioning Board of Directors because there were only two Directors on the Board of the Company viz. Appellant No. 1 and Respondent No. 2. Both the Appellant No. 1 and Respondent No. 2 are permanent Directors of the Company and not liable to reti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were without a fully functioning Board. The Respondent No. 2 offered two choices to Appellant No. 1 to save the Companies, to let them run with full support by either of them i.e. (a) either Appellant No. 1 takes over the running of the business and properties, etc. and Respondent No. 2 goes out of Directorship or (b) Respondent No. 2 takes over the running of the business and properties etc. and Appellant No. 1 goes out of Directorship. The Respondent No. 2 falsely alleged that Appellant No. 1 had a deadlock with Respondent Nos. 3 and 4 for about a year which was allegedly compounded by a serious conflict of interest by Appellant No. 1 setting up a competing wool spinning business along with his wife and son. The Respondent No. 2 also stated that the long delay and change in circumstances had completely destroyed the very basis of attempting any family settlement. Further, Respondent No. 2 alleged that his work was constantly sabotaged by Appellant No. 1 and/or at his instance. The Respondent No. 2 also stated that there were many issues concerning the said Companies of the Kapur family which could not be resolved till the management was full and complete and there was a fully fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce offer to resign was taken by Appellant No. 1 in isolation and without consulting other members of the Board of Directors and thus the said resignation was infructuous. Respondent No. 2 also stated that a general meeting ought to be called. According to the Appellants, by an e -mail dated 22nd November, 2008, addressed by Respondent No. 2 to the Appellant No. 1, the Respondent No. 2 made false and frivolous allegations and on the basis of the same called upon Appellant No. 1 to resign from the Board of the Company and Respondent No.8. 24. According to the Appellants, the Appellant No. 1 by his letter dated 2nd December 2008 (few days prior to the filing of the Company Petition No. 112 of 2008 on 5th /11th December 2008) addressed to the Respondent No. 2 inter alia denied and disputed the allegations made by Respondent No. 2 against the Appellant No. 1 and his son in the three e -mails dated 13th November 2008, 15th November 2008 and 22nd November, 2008. 25. According to the Appellant No. 1, as far back as September 2006, it became evident to Appellant No. 1 that the assets belonging to the Companies of the Kapur Family would be divided and he would be going his own way. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in or about May/June, 2008 shifted the said plant to the Company's factory at Sarigam. According to the Appellants, the business of M/s. Gorashyam Enterprises thus directly competes with the business of the Company and Respondent No.8. The Respondent No. 2 has been in a competing business since the past couple of years in a clandestine and surreptitious manner inspite of being a Director of the Company and being in control of the day to day management of the Company. In fact, Respondent No. 2 also placed advertisements in the name of M/s. Gorashyam Enterprises, in the official publications of the Wool Industry Export Promotion Council. Since there was an impending division of assets, Appellant No. 1 signed the balance -sheets and profit and loss accounts of the earlier years uptill 31st March 2007 in good faith. 27. According to the Appellants, the Respondent No. 2 has thus systematically but in a fraudulent manner, taken the support of Respondent Nos. 3 and 4 to gain full control of the Company and hijack the Company and its Board of Directors. On the other hand, the Appellant No. 1 had stood Guarantor for the Company and Respondent No.8 from time to time, and was to be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce as an independent Board of Directors to assume charge of the management and affairs of the Company, in manner as this Hon'ble Board may deem fit and proper, and on such terms and conditions as may be fixed by this Hon'ble Board; (e) This Hon'ble Board be pleased to direct the Central Government to appoint Directors in respect of the Company under Section 408 (1) of the Companies Act, 1956; (f) That the Respondent No. 2 himself and/or through his supporters and/or their servants and/or agents be ordered and directed to make a full, free and complete disclosure of records of the Company with regard to the affairs of the Company, the contracts entered into between the Company and the loans given by the Company, inter alia being: i. The audited profit and loss accounts, balance sheets accompanied by the auditor's reports of the Company from 1st April, 2007 till the date on which provided; ii. Minutes of Meetings of the Annual General Meetings of the company from 30th June 2005, till date on which provided; iii. Minutes of Meetings of the Board of Directors of the Company from 30th June 2005 till date on which provided; iv. Detailed report of inflow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Court may seem fit and proper . 28. Respondent Nos. 2 and 5 filed their Affidavit -in -reply to the Company Petition dated June, 2009 before the CLB wherein they denied and disputed all the allegations made by the Appellants against them. According to them, the Appellant No. 1 voluntarily took up a back seat in the management of Respondent No. 1 Company. They further urged that having voluntarily withdrawn from the affairs of Respondent No. 1 Company, the Appellants are estopped from filing a petition under the guise of Section 397/398 of the Act alleging oppression and mismanagement of Respondent No. 1 Company. In view thereof, the grievance of the Appellants about the alleged ousting of the Appellants and the alleged oppression and mismanagement of Respondent No. 1 is nothing but a mala fide and vain attempt on the part of the Appellants to defeat the rights and powers of the Respondents. 29. According to Respondent Nos. 2 and 5, the Appellant No. 1 has, contrary to what is set out by him in the Company Petition and in complete violation/breach of his fiduciary duty, inter alia, indulged in the following: (i) carrying on and establishing competing business of Kap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the same has also commenced operations/production as on 21st March, 2009. 31. According to Respondent Nos. 2 and 5, the Appellants were at all times aware of all the facts pertaining to the setting up of M/s. Gorashyam Enterprises. However they have falsely and knowingly indulged in misrepresentation by alleging that M/s. Gorashyam Enterprises competes with the business of Respondent No. 1 Company. According to Respondent Nos. 2 and 5, upto December, 2007, Appellant No. 1 and Respondent No. 1 were handling/carrying out the following duties in respect of Respondent No. 1 Company: Appellant No. 1: the production and quality control, sales/marketing, product development and customer service in respect of yarn production of Respondent No. 1 Company; and some administrative, raw material purchases, logistics and legal matters; Respondent No. 2 the production, quality control, sales, marketing, product development and customer service in respect of wool combing and scouring of Respondent No. 1 Company; and some administrative, raw material purchases, logistics and legal matters; liaisoning with various Government bodies on behalf of Respondent No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation. 33. According to Respondent Nos. 2 and 5, though Appellant No. 1 withdrew from the management of the Business Asset Group, Appellant No. 1 however refused to co -operate with Respondent No. 2. Appellant No. 1 did not do a systematic handover of the data and information with regard to the customers and contracts of Respondent No. 1 Company which were handled by him. Respondent No. 2 despite the non-co -operative and selfish attitude of Appellant No. 1 and the current global economic downturn, independently and successfully managed the business of Respondent No. 1 Company (save and except complying with the statutory and non -statutory obligations which require a functional Board of Directors), details whereof are as under: (a) Exports (during the last three years) (Value/Quantities) PRODUCT Year wise FOB (Free on Board) Value (Rs. in lacs) 2006 -2007 2007-08 2008 -09 Total of woollen blended yarn. 587.74 1,050.41 1,010.88 Total Noils and Wool Tops 534.80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. Due to the disputes that arose within the Property Assets Group, more particularly between Appellant No. 1 and Respondent Nos. 3 and 4, Appellant No. 1 refused to implement the without prejudice proposal and with ulterior motives stalled the same. 36. Respondent Nos. 2 to 5 have in paragraph 3.13 of their Affidavit -in -reply dated 8th June 2009 set out the circumstances under which M/s. Gorashyam Enterprises was established and have in paragraph 3. 13 (c ) set out how the Appellant No. 1 alongwith his wife and son established the competing business and started indulging in under- cutting the contracts/agreements and poaching the employees and clients of the first Respondent Company. According to Respondent Nos. 2 and 5, therefore, the Appellants have of their own free will handed over the control and management of Respondent No. 1 Company to Respondent No. 2; the Appellant No. 1 has thereafter attempted to ruin Respondent No. 1 Company inter alia by starting the said competing business, poaching employees and clients and undercutting the contracts/agreements of Respondent No. 1 Company; Appellant No. 1 has and is misusing the assets of Respondent No. 1 Company towards furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Board and having approved the accounts, now at a later point of time cannot allege that the Respondent No. 2 had taken decisions unilaterally. The learned Member has therefore answered the issue No. 1 in the negative. 40. Issue No. 2 is also answered by the learned Member in the negative. 41. As regards issue No.3, the learned Member has observed that it is an admitted fact that the Appellant No. 1 and Respondent No. 2 are the Directors of the Company. One Mr. Jayprakash Shetty was also appointed as a Director of the Company about 10 years ago. However, Mr. Shetty retired after reaching the retirement age in August, 2008. The learned Member held that in view of the precarious situation of the Company, the Company has to act in accordance with its Articles of Association and also in accordance with the law, keeping in mind the paramount interest of the other shareholders of the Company. 42. As regards issue No.4, the learned Member has held that non- handing over of keys of the flats belonging to Respondent No.7 and non -payment of bills/dues to Appellant No. 1 and discriminating the staff working for Appellant No. 1 , whilst recording that the Appellants have also drawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eys of the flats and books of account of Respondent No.7; all the documents pertaining to the Property Assets Group, minutes of the meeting of the Company held during 2006 -2007, statement of the personal account of Appellant No. 1 in the books of Respondent No. 1, etc. However, he was not provided with the same. The Company received an e -mail dated 23rd October, 2008 from the Department of Company Affairs, informing it that the Company had not filed the balance -sheet and statement of profit and loss account and annual returns for the Financial Year ended 31st March 2008 with the Registrar of Companies. It is submitted that this e -mail clearly shows that Respondent No. 2 is conducting the affairs of the Company in a manner which is in contravention of the provisions of the said Act. It is submitted that for the financial year ended 31st March 2008, the accounts ought to have been placed for approval before the Board of Directors in June 2008 and the AGM ought to have been called on or before 30th September 2008. It is submitted that the Company Petition was filed on or about 11th December 2008 and the ex parte ad -interim order restraining the Company from holding any Board of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He relied on the letter written by Appellant No. 1 dated 26th August 2008 addressed to the Respondent No. 2 stating that he needed cheque books of Respondent No. 7 Company to meet various statutory compliances and for making relevant payments. He also recorded that arrears have not been paid to the staff that was working for him in the Company whereas all other staff of the Company have been paid their arrears. Thus, the staff that was working for Appellant No. 1 was being discriminated against by Respondent No. 2 and steps were being consciously taken by Respondent No. 2 to sideline Appellant No. 1 from the affairs of the Company. According to him, those working for Appellant No. 1 within the Company were not paid their salaries for the month of August, 2008. It is submitted that various bills raised by Appellant No. 1 were not paid by the Company. Even Appellant No.3 who is the mother of Appellant No. 1 and Respondent Nos. 2, 3 and 4 was deprived of her legitimate reimbursements including medical expenses. Respondent No. 2 in order to impress the court has later issued a personal cheque of ₹ 2,00,000/ to his mother towards her medical expenses and as a favour to her, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants i.e. there is no deadlock between the shareholders of Respondent No. 1 Company. The allegations made by Appellant No. 1 against the Respondents are in his capacity as a Director and not as a shareholder/member. The so -called deadlock of the Board of Directors has been occasioned by the acts of Appellant No. 1 and he cannot seek to take advantage of the deadlock created by himself. He submitted that if permitted, the Respondent No. 1 can hold a meeting and appoint Directors and have a functional Board so that corporate democracy can prevail. It is submitted that in fact the Respondent No. 1 Company had a third Director, Mr. Jayaprakash Shetty, who tendered his resignation in August, 2008. Neither has the said resignation been accepted by Respondent No. 1 nor has any Form 32 been filed with the Registrar of Companies in that regard. However, it is learnt that the said Jayaprakash Shetty has been poached by Appellant No. 1 and appointed as a Director in the competing business set up by the Appellant No. 1 i.e. Kapotex. Form No. 32 filed by appointing Mr. Shetty as a Director from 1st September 2008 is produced before the Court. It is submitted that as a continuing Director draw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant No. 1 has in October, 2011 withdrawn a sum of ₹ 38,00,000/ from the account of Respondent No. 1 Company towards his own expenses. It is submitted that the expenses claimed by Appellant No. 1 are on behalf of his son. The said expenses include expenses towards restaurant, bars, hair dressing and spas. It is submitted that the employment of the son of the Appellant No. 1 is terminated on 13th November 2008 for breach of the secrecy clause set out in his appointment letter. It is submitted that the other person mentioned in the said list is one Sashidharan. The said Sashidharan as of August 2008 withdrew from the services of Respondent No. 1 and has joined as an employee of Kapotex i.e. the competing business set up by Appellant No. 1 and his family members. It is submitted that the persons mentioned at Sr. Nos. 2 to 6 of the letter dated 10th September 2008 have at no point of time been the employees of Respondent No. 1, and therefore no question arises of paying any salary to them. It is submitted that the claims made for salaries, reimbursements etc. by the Appellants are made in their capacity as Directors of Companies and not as shareholders. The question thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant No. 1 and the Second Respondent who were the only Directors of the Respondent No. 1 Company were not able to concur on any issues, resulting in total breakdown in the functioning of the first Respondent Company. The said notice was challenged by the Appellants by filing a Company Application. By an order dated 17th March 2010, the said meeting was allowed to be conducted. However, it was ordered that the Resolutions passed at the said meeting would not be implemented. The Respondent No. 4 was elected as a Director along with two Additional Directors for the purpose of functioning of the Board of Directors of the first Respondent Company so as to enable effective discharge of the functioning of the first Respondent Company. However, due to the order passed by this Court, the new Board of Directors could not take charge. It is submitted that therefore the so -called deadlock has been occasioned by acts of Appellant No. 1 and he cannot seek to take advantage of the deadlock created by himself. It is submitted that there is no deadlock and if the principles of corporate democracy are followed, the Company would certainly be able to function without any hindrance and/or obstruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from calling the meetings. Thus, at the highest it is a matter of less than one year that Respondent No. 2 took charge of Respondent No. 1 Company. It is submitted that it is settled law that an isolated act of not calling meetings and not passing or finalizing accounts cannot amount to oppression and mismanagement as has been held by the Hon'ble Supreme Court in the case of Needle Industries (India) Ltd. v. Needle Industries Newwey (India) Holding Ltd. [1981] 51 Comp. Cas. 743. It is submitted that in the case of Chatterjee Petrochem (I) (P.) Ltd. v. Haldia Petrochemicals Ltd. [2011] 110 SCL 107/14 taxmann.com 179 (SC), following the decision in Needle Industries Ltd., it has been held that an isolated act of not calling meetings or not finalizing the accounts cannot amount to oppression and mismanagement under Sections 397 and 398 of the Companies Act, 1956. 54. Mr. Sanjay Jain, the Learned Advocate appearing for Respondent No. 9 expressed a strong grievance against the conduct of CLB in not giving an opportunity of being heard to Defendant No.9. However, he submitted that Respondent No. 9 has always remained neutral qua the affairs of the Company and are anxious that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 397 and 398 of the Act. 56. Mr. Seervai further submitted that the Respondents relied on the decision of S.P. Jain v. Kalinga Tubes, AIR 1965 SC 1535 in support of the proposition that a petition for oppression can succeed if a case is made out for just and equitable winding up of the Company. He submitted that the said Judgment was considered in Needle Industries (India) Ltd's. case (supra) and thereafter the Hon'ble Supreme Court of India held that even though the Company Petition fails and the Appeals succeed on the finding that the holding company has failed to make out a case of oppression, the Court is not powerless to do substantial justice between the parties. In this regard, Mr. Seervai has also relied on the decision in M.S.D.C. Radharaman v. M.S.D. Chandrasekara Raja [2008] 6 SCC 750. Mr. Seervai submitted that the decision of the Hon'ble Supreme Court in Hanuman Prasad Bagri's case (supra) relied upon by the Respondents is not applicable to the facts of the present case. Further the judgment has been considered in the case of M.S.D.C. Radharaman (supra) but not followed by the Hon'ble Supreme Court of India. As regards the decision in Lundie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Respondent No. 2. It is submitted that the Respondents wish to suppress the accounts from the scrutiny not only of the minority shareholders but also of the Court for reasons too obvious to labour. Mr. Seervai has on behalf of the Appellants denied and disputed the allegations that the Banking facilities of the Company had been cancelled owing to non -co -operation of Appellant No. 1 as he refused to sign for the renewal of the said facilities. He submitted that the Banking facilities were cancelled owing to non -submission of the financial accounts of the Company as is evident from the numerous letters addressed by the Bank between June 2008 and March 2011 to the Company. Mr. Seervai submitted that the payments made by the Company to the Solicitors of Respondent No. 2 and 5 are required to be recovered from Respondent No. 2 personally. Mr. Seervai therefore submitted that it is clearly established from the above facts and submissions that the Respondents by not paying salaries/reimbursements due to the Appellants; son of Appellant No. 1 and the staff working for the Appellant No. 1; not calling any Board Meeting and/or EOGM and non -finalization of accounts of the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r brother is not at all convincing. It therefore cannot be held that the said decision qua the Lonavala property of the Respondent No. 2 was unilateral. In fact, in the Appeal, the Appellants have not relied on the said instance as an act of oppression or mismanagement. 59. The Appellants have next alleged in the Company Petition that the minutes of the Meeting of the Board of Directors of the Companies of the Kapur Family were not sent to Appellant No. 1 immediately but the same were sent to him much later, after several reminders from the Appellant No. 1, as the division talks were initiated. In support of his case, Appellant No. 1 has relied on an e -mail dated 5th January 2005 addressed by him to the Company Secretary. It is stated in the Petition that Appellant No. 1 has recorded in the said e- mail that he has received copies of various minutes of meetings purported to be held of the Board of Directors of the said Companies and he has also stated that henceforth the Resolution should bear the signature of Appellant No. 1 so that the Resolutions are to his knowledge. The said e -mail is annexed as Annexure A 5, page 122 of the Petition. A reading of the said e -mail shows t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er called the 'Property Assets Group'. It was further agreed that the Business Assets Group was to be controlled by Respondent No. 2 whereas the Property Assets Group was to be controlled by Appellant No. 1 and that Appellant No.3 and Respondent Nos. 3 and 4 were also to be part of the Property Assets Group of the Appellant No. 1. However, it is an admitted fact that the draft of the detailed MoU which was drawn up in furtherance of the Agreement dated 24th December 2007 was neither finalized nor signed by the parties (Paragraph 33 of the Petition). It is only since the parties had tentatively agreed to distribute the assets of the Respondent No. 1 Company between the two groups, that on 2nd January 2008, Appellant No. 1 and Respondent No. 2 circulated a note informing all concerned that the business and production units of Respondent No. 1 and G.R. Woollen Mills including the production units of G.R. Woollen Mills at Ghatkopar, Grentex Woollen Godown, Grantex Company, Sarigam and the plant and machinery at Khopoli will be handled by Ravikant Kapur and the matters pertaining to Grenville Park A Wing and flats/Grentex Wools Pvt. Ltd. along with the leasehold land of GR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said disputes between the Property Assets Group are not resolved, the same may result in litigation. Respondent No. 4 (sister of Appellant Nos. 1 and Respondent Nos. 2 and 3) have also written a letter dated 16th April 2008 to the Appellant No. 1 making serious allegations against him and explaining why the MoU could not be worked out. 62. The Appellant No. 1 has relied on certain letters purportedly sent by him to the Respondent No. 1 Company/Respondent No. 2, between 8th January 2008 and 6th May 2008, and which according to him were ignored by the Respondent No. 2 thus constituting acts of oppression of the Appellants as minority shareholders by Respondent No. 2 and his supporters. I have perused the said letters. The letter dated 8th January, 2008 purportedly written by the Appellant No. 1 pertains to the keys of the flat belonging to Respondent No. 7 and the books of account of Respondent No.7 and does not pertain to the first Respondent Company. The letter dated 28th January, 2008 purportedly written by the Appellant No. 1 also does not concern the first Respondent Company and admittedly pertains to the Property Assets Group. The letter dated 25th February 2008 also ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter does not bear the signature of Appellant No. 1 and the question therefore of Respondent No. 2 responding to such a letter by unidentified and/or unauthorized persons does not arise. The Respondent No. 2 has further pointed out that at the time of inspection of the originals of the documents referred to and relied upon by the Appellants in the Company Petition, the Appellant No. 1 was unable to identify the signature affixed on the alleged letter dated 6th May 2008 and in fact the Appellants have through their Advocates letter dated 8th April 2009 (received on 9th April 2009) addressed to the Advocates for the Respondents contended that the name of the signatory of the alleged letter dated 6th May, 2008 is not relevant. Respondent No. 2 has therefore submitted that this itself shows that the said letter dated 6th May 2008 is not a genuine letter. The Appellant No. 1 has in his rejoinder dated 9th November 2009 only denied what is stated by the Respondent No. 2 qua the said letters. Appellant No. 1 has not produced any evidence to show that the said letters were in fact signed by him or on his behalf by an authorized signatory and the same were received by the Respondent No. 2 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in October 2008. These delays on the part of the Company / Respondent No. 2 in making payments to the employees and/or the Directors as alleged can by no stretch of imagination be termed as oppression of minority shareholders. Again, apart from the fact that there are disputes as to whether all the persons named in the letters sent by the Appellant No. 1 seeking the salary/bonus are in fact the employees of the Respondent No. 1 Company, it is very pertinent to note that the Appellant No. 1 has admittedly withdrawn monies from the Bank accounts of the Companies by using his authority as a Director of the Company and has appropriated the said sums towards the salaries allegedly due to Appellant No. 1 , the son of the Appellant No. 1 and the staff working for him. In fact, as pointed out on behalf of Respondent Nos. 3 and 4, though this Court in Company Application (Lodging) No. 14 of 2011 (Pg. 385 of the Compilation of documents submitted by Respondent Nos. 3 and 4) had not given any directions to the Company qua certain payments/reimbursements to be made to the Appellants, Appellant No. 1 has signed a cheque for ₹ 38 lakhs and after withdrawing the said amount, appropriated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e read in its entirety. The statement in the e -mail that the Companies are without a fully Functional Board is immediately followed by the statement that: the only avenue available to cure this is by due legal process in which the shareholders will have to exercise their rights, and majority wishes will have to be accepted . The two choices are thereafter offered by the Respondent No. 2 since as recorded in the e -mail, Appellant No. 1 had through his friends rebuked Respondent No. 2 on the ground that Appellant No. 1 was removed from the Company. Referring to the disputes and deadlock in the Property Assets Group consisting of Appellant Nos. 1 and 3 and Respondent Nos. 3 and 4, Respondent No. 2 also recorded in the said e -mail that the deadlock between Appellant No. 1 and Respondent Nos. 3 and 4 for about a year is now further compounded by the serious conflict of interest due to setting up of a competing Wool Spinning business by the Appellant No. 1 along with his wife and son. The deadlock as well as the setting up of a competing business coupled with long delays and change in circumstances has completely destroyed the very basis of attempting any family settlement. Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company has been held to ransom. Respondent No. 2 further recorded that in the circumstances what is required is not a Board Meeting but a meeting of the shareholders, to thrash out the issues affecting the running of the Companies including issues affecting the Company's interest and therefore a General Meeting ought to be called. Respondent No. 2 thereafter by his e -mail dated 22nd November 2008 further recorded that the Appellant No. 1 has put himself in a serious conflict of interest with his interest in the businesses of Respondent No. 1 and Grantex Woollen Mills by secretly setting up a competing business - Kapotex Industries Pvt. Ltd - and therefore obviously the Appellant No. 1 cannot look into or look after the interest of Respondent No. 1's business or the business of Grentex Woollen Mills having debarred himself and vacated his position as Director under the Act. Respondent No. 2 gave the Appellant No. 1 the choice to voluntarily step down as Director of the Respondent No. 1 Company or have the said issue dealt with in accordance with law. Respondent No. 2 also recorded in the said letter that the statutory compliances are pending and the Board is stuck bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised and implemented. The parties carried out correspondence as regards the implementation of the MoU at least upto May 2008. It is clear beyond any doubt that from 2nd January 2008, Appellant No. 1 did not participate in the day to day affairs of the first Respondent Company though he continued to be the Director of the first Respondent Company along with Respondent No. 2. Respondent No. 2 carried the entire burden of running the business/production activity of Respondent No. 1 Company as well as of G.R. Woollen Mills. At the same time, he was also conscious of the fact that tension was mounting between the members of the Property Assets Group viz., Appellant Nos. 1 and 3 and Respondent Nos. 3 and 4. He also wrote a letter on 23rd January 2008 itself to the Appellant No. 1 requesting him to resolve the disputes between the Property Assets Group and cautioned Appellant No. 1 that in the event of the said disputes between the Property Assets Group not getting resolved, the same may result in litigation. In the meantime, in May 2008, Appellant No. 1 floated a Company viz. Kapotex Industries Pvt. Ltd. to carry out business similar to that of Respondent No. 1. This conduct on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the minority shareholders i.e. the Appellants. The Respondent No. 2 also cannot be blamed solely for contravening the provisions of the Companies Act. The Appellant No. 1 has voluntarily stayed away from the day to day affairs of the first Respondent Company. However, he has continued to be the Director of the Respondent No. 1 during the period 2nd January 2008 to 5th /11th December 2008 i.e. the day on which the Appellants filed the Company Petition No. 112 of 2008 and continues to be the Director till date. Even in the note dated 2nd January 2008, jointly issued by the Appellant No. 1 and Respondent No. 2, there are no fetters provided qua the functioning of Appellant No. 1 as Director of the first Respondent Company. Despite this, the Appellant No. 1 has not called for any meeting or written a single letter to Respondent No. 2 making a grievance about not calling any meetings or qua accounts not being filed, except on 2nd December 2008 i.e. just before the filing of the Company Petition on 5th /11th December 2008. Appellant No. 1 has also not called upon Respondent No. 2 to call a Board Meeting or a General meeting of Respondent No. 1. The excuse now given that the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany in January 2008. Therefore, though I have already given my finding that the Appellant No. 1 was not specifically asked to disengage from the management of the affairs of the Company but he has voluntarily done so, I am of the view that only because the facts pertaining to the MoU are mentioned in the Company Petition, it cannot be said/contended that the Appellants cannot file the Company Petition under Sections 397 and 398 of the Companies Act, 1956. Question No. 3 set out in paragraph 2 of this Judgment is answered accordingly. 68. Mr. Seervai has submitted that in 2005, Respondent No. 2 in direct competition with the Company's business formed his personal proprietary firm viz. Gorashyam Enterprises, offering products of scoured wool, tops and yarns, carpets, etc. Respondent No. 2 unilaterally and for ulterior purposes declared his proprietary concern M/s. Gorashyam Enterprises as a supporting manufacturer of the Company without any Board Resolution for the same. However, the Registration -cum -Membership Certificate which is signed by Respondent No. 2 does not show the said M/s. Gorashyam Enterprises as the supporting manufacturer of the Company. The said Registrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar to that of the Company. It is submitted that this clearly shows that for the past two years, Respondent No. 2 in breach of the trust and confidence reposed by the Appellants in Respondent No. 2 in relation to the management and affairs of the Company and in breach of his duties and obligations which are of a fiduciary nature owed to the Company and its shareholders, including the Appellants has been directly competing with the business of the Company and such conduct is prejudicial to the interest of the Company and is also prejudicial to the shareholders of the Company. The Respondent No. 2 was diverting the funds and resources of the Company for his proprietary business for competing with the Company. 69. Mr. Seervai has further submitted that though it is alleged by Respondent No. 2 that due to the arbitrary and obstructive whims and fancies of Appellant No. 1 , Respondent No. 2 was constrained to set up his proprietary concern M/s. Gorashyam Enterprises for 'housing' the scouring/wool washing plant due to the alleged 'flip flop' attitude of Appellant No. 1, no evidence in support of the same is produced by the Respondent No. 2. It is submitted that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x months. Thus, the Advocate stated that the stop work notice issued by the Sarpanch was illegal. Mr. Seervai submits that it is evident from the above that the Respondent No. 2 wanted to set up a full fledged small scale industry on the land at Khopoli. This explains the systematic large scale purchase of land of about 7 acres. It also explains the need to register in early January 2006 Gorashyam with the Wool Industry Export Promotion Council as a merchant exporter/manufacturer exporter. It also explains why registration was sought for several products, most of which were to be manufactured in direct competition with the Company. Obviously, the import by Gorashyam of the Wool Scouring Plant was merely the first step towards the desired setting up of a full -fledged small scale industry on Respondent No. 2's personal land at Khopoli. It is submitted that till the middle of May 2008, Respondent No. 2 was trying to get NA permission and requesting for permission to construct on the land at Khopoli, which was not granted. Hence the Respondent No. 2 shifted the machinery from Khopoli to Sarigam in May/June, 2008. It is therefore submitted that the Respondent No. 2 has been in a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, on account of objection raised by the Appellant, the machinery could not be brought to the said factory. The machinery was required to be stored somewhere and in early January 2006, the Respondent No. 2 therefore purchased the land for the purpose of housing and storing the said machinery. The fact that the destination of the machinery had to be changed at the last minute due to the flip flop attitude of the Appellant No. 1 is established from the voyage notes which shows that initially the machine was to be brought to Sarigam and, later the destination was changed to Khopoli. It was due to the aforesaid arbitrary and obstructive whims and fancies of Appellant No. 1 that Respondent No. 2 was constrained to set up M/s. Gorashyam Enterprises for housing the scouring/wool washing plant. On 5th January 2006, Gorashyam was registered with the Wool Industry Export Promotion Council (WIEPC). Since the import of the said machinery was at a concessional import duty under the EPCG scheme, the said import had to adhere to the 'actual user condition' under the Foreign Trade Policy for the relevant period. Under the 'actual user condition' it was necessary for the importer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that it is indeed unfathomable that the occurrence of such a huge amount in the books of account and in the audited balance sheet signed by the Appellant No. 1 could have gone unnoticed by Appellant No. 1. The Respondent No. 1 Company had no other capital works project at that time. The Appellant No. 1 had in fact consented to the said expenses and is in any event estopped from contending to the contrary. Mr. Bharucha has further submitted that in the MOU dated 24th December, 2007 signed by Appellant No. 1 and Respondent No. 2, the plant and machinery lying at Khopoli was recognized, and was to form part of the Business Assets Group, which was to belong to Respondent No. 2. Even at this stage no objection had been raised to the plant and machinery lying at Khopoli as being an act of alleged oppression or competing business. In view of the aforesaid arrangements not fructifying the Appellants who have acquiesced to the same, have with mala fide intentions subsequently raised the competing business bogey as an afterthought to justify their setting up and running of Kapotex. In support of his submissions, Mr. Bharucha has relied on the following decisions: (i) Administrator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure its safety. In order to install and run the scouring plant/machinery a shed of minimum 250 ft. is required. The size of the existing shed was much less, roughly 100 ft. Mr. Bharucha has therefore submitted that the allegation that the scouring plant was imported by Respondent No. 2 to start his competing business is totally bogus and does not disclose an instance of oppression and mismanagement. 75. As regards the letter dated 18th May 2007 addressed by the Advocate for the Respondent No. 2 to the Sarpanch of the Gram Panchayat, Mr. Bharucha submitted that it was inter alia recorded that arrangements were being made to get financial assistance to the tune of ₹ 3 crores from financial institutions to commence the activity of wool washing/scouring within a period of six months. It is submitted that the aforesaid letter does not, at any place mention that financial assistance was required for the operations of M/s. Gorashyam Enterprises. Although preliminary talks were held with Banks for financial assistance, no bank finance was in fact drawn or sanctioned by the Banks for either Respondent No. 2 or M/s. Gorashyam Enterprises. It is submitted that in spite of having obta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Machinery for the years ended March 2006 and 2007. The said plant and machinery was imported in the name of the first Respondent Company. Thus, there was no question of the plant and machinery being imported for the purpose of starting any independent separate business by the Second Respondent, who in any case was the registered supporting manufacturer to Respondent No. 1. Since the said machine was kept at the land which was an agricultural land it was necessary to obtain permission for conversion of the said land from agricultural land to non -agricultural land which permission was granted on 12th March, 2007. It is submitted that the said machine is also shown as part of the machines of the first Respondent Company in the said MoU dated 24th December 2007 and the letter dated 2nd January 2008 and subsequently the said machine was shifted to the first Respondent Company premises some time in May/June 2008. It is submitted that the facts in the matter clearly shows that there has never been any competing business by Gorashyam Enterprises. Therefore, the allegations advanced on behalf of the Appellants that the Respondent No. 2 started a competing business in the name of Goras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apers/entries, as also any applications made by Ravi Kapur and Gorashyam Enterprises for the development of lands bearing several survey numbers as mentioned in the order. Thereafter the registers produced by the authorities were taken in the custody of the Court. The Register contains handwritten Minutes of the Meetings of the Grampanchayat in Marathi. Almost all the documents contained in the file produced before this Court are handwritten in Marathi and some of the letters are not in original but are carbon copies of the originals. Though going through these documents was time consuming, and which consequently substantially delayed the pronouncement of this Judgment, in view of the serious allegations made on behalf of the Appellants involving the judicial system, I have gone through each and every page of the documents produced and I am satisfied that as regards entry 853, there is only a clerical error to the extent of the year 2006 being wrongly shown as 2005 and the statement made by Respondent Nos. 2, 3 and 4 that the lands were purchased in 2006 were not false and/or incorrect as alleged by the Appellants. 78. I have considered the above submissions qua the allegations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties having reached such a stage and further aggravated by the fact that the Appellant No. 1 has alleged that even his said instructions were not followed by the Respondent No. 1 Company, it is difficult rather impossible to accept that the accounts of the Respondent No. 1 Company wherein the expenditure of the scouring plant imported from New Zealand and construction of shed, in all aggregating to ₹ 1.60 crores have been reflected, were signed by Appellant No. 1 in good faith on 6th September 2006 and 6th September 2007. 79. The above allegation made by the Appellants in the Company Petition viz. that the Appellants recently became aware that the Respondent No. 2 had unilaterally imported a scouring plant from New Zealand despite objections from the Petitioner No. 1 during September/October 2005 and paid for all the costs/expenses through the Company and had set up M/s. Gorashyam Enterprises for offering products of scoured wool, tops and yarns, carpets etc., is belied by the contents of the letter dated 2nd December 2008 addressed by the Appellant No. 1 to the Respondent No. 2 just a few days prior to the filing of the Company Petition on 5th /11th December 2008, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and machinery at Khopoli has been included as the assets of Respondent No. 1 Company and it is agreed that the same will form part of the Business Assets Group. This fact is also reiterated in the joint note dated 2nd January 2008 circulated by the Appellant No. 1 and the Respondent No. 2. 81. Though the Appellants have stated in the Petition that they recently came to know about the import of the scouring plant, the Appellant No. 1 has in his affidavit dated 9th November, 2009 stated that the expenses incurred for this project were objected to by him on several occasions because he was not satisfied about the need to incur huge capital expenditure by spending large amounts thereon. However, no objection allegedly raised by the Appellant No. 1 prior to the letter dated 2nd December 2008 qua the expenses incurred for this project is produced by the Appellants. These facts further go to show that the Appellant No. 1 was always aware at least of the fact that the said scouring plant has been imported in the name of the Company but is housed at Khopoli by the Respondent No. 2 and a shed has been constructed to house the scouring plant, and the expenses of importing the machiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e vagaries of nature and its general safety. The Learned Advocate appearing for Respondent No. 2 has also explained that since the import of said machinery was at a concessional import duty under the EPCG scheme, the said import had to adhere to the 'actual user condition' under the Foreign Trade Policy for the relevant period. Under the 'actual user condition' it was necessary for the importer to either use the machine in his own industrial unit or manufacture for his own use in another unit. In view of the resistance shown by Appellant No. 1 to Respondent No. 2, there was no question of housing the machinery at Respondent No. 1's factory at Sarigam. Thus the Respondent No. 2 was constrained to purchase the land near Khopoli to store the said machinery to comply with the EPGC scheme. 83. The Appellants have themselves stated in the letter dated 2nd December 2008 addressed to the Respondent No. 2 that It is a matter of record that he has declared M/s. Gorashyam Enterprises the proprietary concern of Respondent No. 2 as the supporting manufacturer of Respondent No. 1 Company. The Appellants have also relied on the advertisements of M/s. Gorashyam Enterprises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, had put up a structure and had set up Gorashyam Enterprises as his proprietary concern to function as a supporting manufacturer of Respondent No. 1 and later shifted the said machinery to the factory premises of Respondent No. 1 at Sarigam. No mala fides can be attributed to Gorashyam Enterprises for stating in one letter that it has imported the machine when the records of the Company including its accounts have at all times been transparent about the fact that the scouring plant is imported by the Respondent No. 1 Company. The Appellants have failed to establish their allegation that Respondent No. 2 in fact was or has been in competing business since the past couple of years as alleged or for any period in a clandestine and surreptitious manner, in spite of being a Director of the Company in control of the day to day management of the Company through Gorashyam Enterprises. The notice addressed by the Advocate for Respondent No. 2 also does not establish that Respondent No. 2 or Gorashyam Enterprises are wanting to set up a small scale industry to do competing business with Respondent No. 1. It is established that from its inception Gorashyam Enterprises was to only act as a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompeting with the Company did not and does not arise. Therefore the Appellants have impliedly admitted in the Petition that the business of Kapotex and Kaposta is similar to the business of Respondent No. 1, but only since Appellant No. 1 has totally withdrawn from the day to day management of the Company, carrying on similar business by Appellant No. 1 and his family members would not amount to competing with the business of Respondent No. 1 Company. The Appellants also stated in the Petition that as the draft of the detailed MoU (drawn up in furtherance of the Agreement dated 24th December, 2007) is neither finalised nor signed, the Appellants have neither relied upon nor annexed the same to the Petition. The Appellants have in the Petition admittedly not sought any reliefs qua the MoU between the parties including its specific performance. From the prayers sought in the Petition, it is clear that the Appellants have accepted that the proposed agreement has failed to materialise and the Respondent No. 2 and his supporters be restrained from taking any steps qua the running/functioning of the Company without the consent of the Appellants and without holding any meetings in the abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... go into finished products, whereas the business of Respondent No. 1 is of backward integration and is concentrating on early stage processing which is disputed by the Respondents. The fact that Appellant No. 1 has admitted that Kaposta has supplied to the customer of the Respondent No. 1 the same material (by undercutting or otherwise) which was earlier supplied by Respondent No. 1 to its said customer is enough to hold that Kapotex is doing business in direct competition with Respondent No. 1. I am therefore of the view that the Appellant No. 1 and his family members are through Kapotex carrying on business in direct competition with the Respondent No. 1 Company. I am also of the view that the Appellants have approached the CLB with unclean hands i.e. after making a representation that Kaposta/Kapotex have not commenced any production and after obtaining interim orders against the Respondents, have immediately started similar business as of Respondent No. 1, thus entering into direct competition with the Respondent No. 1. 86. Respondent Nos. 2 to 5 have also submitted that one Southern Yarns Dyers Inc., USA is a regular customer of Respondent No. 1 since 2005. Respondent No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Mr. Shetty as a Director from 1st September, 2008. A list of employees who have left the services of Respondent No. 1 and joined the business supported by the Appellant No. 1 is at Exhibit -L, page 312 of the compilation. It is also pointed out by Respondent Nos. 2 to 5 that Kapotex has managed to obtain loans and banking facilities to the tune of ₹ 8 crores from the Bankers of Respondent No. 1 in August 2008 and as such the said funds are being used by Kapotex for carrying out the competing business. The Agreement of Loan is at Page 278 of the Company Application No. 282 of 2009 in Company Appeal No. 15 of 2009 in CLB Company Application No. 57 of 2008 in CLB Company Petition No. 112 of 2008. It is submitted that it is inconceivable that Kapotex would take a loan of this large an amount if no business had been commenced or was being carried out by the said Kapotex. It is apparent that the Appellant No. 1 is using the business connection of Respondent No. 1 to further the competing business of Kapotex. 89. According to the Appellants, the customers of Respondent No. 1 had stopped dealing with Respondent No. 2 in view of his conduct. Within five months of Respondent No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Yarn by the Respondent No. 1 Company at the rate of USD 3.15 /LB till the end of December, 2008. ii. Furthermore, these Respondents submit that the invoice dated 26th March, 2009, evidences that 33,168.26 LBS of woolen yarn was supplied by Kapotex to Southern Yarn in the month of March 2009 at the rate of USD 2.85/LB ( Exhibit K @ pg. 311 of the Compilation (Part 2); iii. These Respondents submit that the aforesaid invoice pertains to a time period which is only 3 to 4 months subsequent to the date when Respondent No. 1 Company supplied Southern Yarn wool at USD 3.15/ LB. These Respondents further submit that, for Appellant No. 1 to have supplied 44, 168.26 LBS of woolen yarn to Southern Yarn in the month of March, 2009, it would have been necessary for it to have manufactured the same over a 2 to 3 month period prior to 26th March, 2009. iv. In view of the above, it follows that the distinction which is sought to be drawn by the Appellants between the prices for the years 2007 and 2009, to counter the allegation of undercutting is baseless, false and inaccurate. v. In the circumstances, these Respondents submit that Appellant No. 1 has while being a director of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t No. 1 and are poaching the staff of Respondent No. 1 Company. 93. Since Respondent No. 2 has not breached his fiduciary duty as a Director as alleged by the Appellants, question No.4 set out in paragraph 2 of this Judgment is answered in the negative. Again it is not established that the Respondent No. 2 has siphoned of or diverted funds of the Company for setting up his proprietary business and has not caused any loss to the Company. The accounts of the relevant years are signed by the Appellant No. 1. Question No. 5 set out in paragraph 2 of this Judgment is therefore also answered in the negative. 94. As regards the grievance of the Appellants that the learned Member of the CLB ought to have intervened and exercised the wide powers conferred upon it under Section 402 of the Act and passed appropriate orders for buy out/sell out in accordance with the law, I am of the view that the CLB is not bound to pass orders for buy out/sell out in every petition filed under Section 397/398 of the Act. Though the Appellants have alleged that the facts of the present case cried out for appropriate orders under Section 402 for buy out/sell out in accordance with law and have relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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