TMI Blog1998 (2) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... our presence and a draft order containing various terms of compromise was dictated in the presence of both the parties and their counsel and was also signed by the parties along with their counsel. Before the fair order could be issued, respondent No. 2 made an application for incorporating certain terms in the consent order. The fair order was issued on August 14, 1997, wherein we have also mentioned about this application. 2. This application, C. A.No. 196 of 1997, was heard on September 2, 1997. Shri Ramachandran appearing for the respondents submitted that, at the time when the amount of Rs. 2.3 crores was agreed, respondent No. 2 was under the impression that certain dues payable by the petitioner to the company as well as to the respondents would be adjusted against this amount of Rs. 2.3 crores and to make it more explicit he stated that the same should be incorporated in the consent terms. He further stated that the application for amendment was filed without much loss of time, i.e., within four days from the date of entering into the consent terms. According to him, the consent terms incorporated only the broad agreement between the parties and the parties should have l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt of Bombay. 5. In C.A. No. 202 of 1997, filed on September 8, 1997, by the second respondent, the applicant has stated that the payment of Rs. 2.3 crores was subject to the fulfilment of an understanding that had been arrived at between respondent No. 2 and the petitioner as detailed in para. 2 of the application. The parties were to reduce the understanding into writing which was also to be incorporated in the consent terms before an order on the terms of consent was issued by the Company Law Board. Thus, when respondent No. 2 signed the consent terms, he was under the impression that it was only a draft agreement to bind the parties, and the same was not to be acted upon till such time, as all the terms of understanding are incorporated as indicated in para. 2 of the application. Since the petitioner has disowned the understanding after signing the draft consent terms, the draft consent terms signed by the respondent would not be binding on the respondent inasmuch as the parties were not ad idem when the consent terms were signed. 6. Shri Srivastav, appearing on behalf of the applicant, submitted that the draft consent terms signed by the parties on July 8, 1997, is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company and as such should not be accepted by the Company Law Board. He also submitted, referring to Narayanan (S.) v. Century Flour Mills Ltd. [1985] 3 Comp LJ 209 (Mad), that any agreement or compromise entered into without the leave of the court would be void and consequently non est in the eyes of law. Since the compromise terms are against the interest of the company, entered into by the managing director, without the consent of other shareholders, the Company Law Board should not grant leave for the consent terms. 7. Adverting to his plea that in the compromise, the parties were not ad idem, he submitted that before a court records a compromise between the parties, it should examine whether the same has emerged from a willing and voluntary act of the parties and that the parties are ad idem with regard to the terms as contained in the consent terms. Any compromise which is forced on the parties loses the very essence of its being a valid and lawful agreement. He submitted that if the Company Law Board were to insist then the draft compromise reached between the parties be implemented, it would mean that it is imposing a compromise on unwilling persons which would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petition for compromise of the suit under Order 23, Rule 3, did not authorise the court to refuse to record the compromise. (iii) M. D. Boral v. D. J. P. Boral, AIR 1980 Bom 235 : The compromise order could not be set aside unless both the parties agreed. (iv) J. Pindok v. Nusserwanji, AIR 1936 Sind 99 : Aright to institute a separate suit to set aside a decree passed by consent is limited and existed only in cases where the decree incorporates an agreement which is void or voidable at the instance of one of the parties to that suit on the ground of fraud, mistake, influence or other similar grounds which would invalid a private agreement not incorporated in a decree. (v) Union of India v. Raghubir Saran, AIR 1957 All 120 : Order 23, Rule 3, does not provide an enquiry into disputed facts collateral to the terms of compromise. A partly alleging fraud cannot be allowed to void a compromise admittedly executed by it in miscellaneous proceedings. The court is bound to give effect to it forthwith, if it is lawful having regard to its own terms. 10. We have considered the pleadings and arguments of counsel. Even though the parties had decided for settling the dispute am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the first argument, that the compromise is not in the interest of the company, the ground is that, as against the net worth value of Rs. 1,500 per share, the company is required to pay a sum of about Rs. 9,200 per share. According to the respondents if such a huge sum is to be paid, it would completely erode the net worth of the company which may also result in the company losing its only business, namely, GSA agreement with Saudi Arabian Airlines. In this connection, it is relevant to point out that the consent terms themselves record that the shares would be purchased for Rs. 2.3 crores either by respondent No. 2 (MD)/his nominees or by the company. If the consent terms had recorded that the shares would be purchased only by the company, then perhaps the arguments of counsel for the respondents may have some merit. But since the consent terms record that respondent No. 2 or his nominee could purchase the shares, the company may not have to purchase the shares at all. As a matter of fact, as it is recorded in the consent terms itself as suggested by the parties, putting an end to the disputes between the parties itself would enable the company to run smoothly. Therefore, on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propose to accede to their prayers for the reason that they have already chosen an alternative remedy of approaching the Bombay High Court and they have come before us only at the last minute. 15. Before parting with this order, we also note, that, a sum of Rs. 50 lakhs has been deposited by the respondent-company in the name of the petitioner. The issue before us is whether we should order payment of this sum to the petitioner. It is relevant to note that when the respondents deposited this amount, it was made clear, as recorded in our order dated August 14, 1997, that the amount was being deposited only to establish the bona fides of respondent No. 2 that he was interested in an amicable settlement, and the same was without prejudice to the contentions of both the parties. Neither he undertook to pay this amount to the petitioner towards the first instalment nor we recorded in our order anything to that effect except to state that the same was not to be withdrawn by any one without our specific authority. Therefore, we do not consider it appropriate to order that this amount of Rs. 50 lakhs should be paid to. the petitioner. Even otherwise we are unable to order payment of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
