Company Law Board
Smt. Neelu Kohli And Ors. vs Nikhil Rubbers Pvt. Ltd. And Ors. on 15 November, 2006
Equivalent citations: [2007]137COMPCAS374(CLB)
ORDER
S. Balasubramanian, Chairman
1. The 1st petitioner is the wife of the 2nd respondent. Matrimonial differences had arisen between them, which, among other litigations among them, also resulted in the 1st petitioner filing a petition under Sections 397/398 of the Companies Act, 1956 in respect of M/S Nikhil Rubber Private Ltd. in which the 1st petitioner held 90% shares while the 2nd respondent held 10% shares. This petition was disposed of by this Board by an order dated 25.9.2000 with the direction that the 1st petitioner and the 2nd respondent should be deemed to hold 50% interest in the company and directing the 2nd respondent to purchase the interest of the petitioners on a fair valuation to be made by an independent valuer. Accordingly, a valuer was appointed, who had valued the share of the petitioners in the company at Rs. 153 lacs. The petitioners filed an application seeking for direction to the 2nd respondent to pay this consideration. The valuation report of the valuer was contested by the 2nd respondent on various grounds. During the pendency of the application, I held discussions with the parties to amidably settle not only the dispute relating to the valuation but also other disputes between the parties on a global basis which unfortunately did not fructify. In the order dated 30.11.2005, I recorded as follows "Compromise efforts have failed as the petitioner is not willing to settle the disputes on a global basis and respondents are not willing to settle the disputes in the present petition alone". Thereafter, both the petitioner and the 2nd respondent filed applications. In the hearing held on 15.5.2006, I decided that in view of further applications being filed by the parties, one more attempt should be made to resolve the disputes amicably. Accordingly, I passed the following order "Adjourned to 2.6.2006 at 2.30PM when the 2nd respondent should be present in person to attempt at a amicable settlement failing which both the applications will be finally heard".
2. On 2.6.2006, both the 1st petitioner and the 2nd respondent were present in person and they discussed the terms of compromise in my Chamber. Various alternatives were proposed by both the sides, where after, in the presence of their counsel, they agreed on certain terms of compromise. On that basis, I recorded the following consent order "The parties have agreed to settle the matter of valuation in the following manner:
1. Since the land and building are divisible, the same will be divided into two equal parts and both will take one part each.
2. All machinery of the company as per balance sheet as on 31.3.1995 will be divided equally on the basis of the book value as of that date.
3. The respondent will pay a sum of Rs. 7.5 lacs as full and final payment in respect of all claims of the petitioner in so far as the company is concerned.
4. The portion with Hanuman Mandir (front portion) will go to the respondent and the other portion to the petitioner.
5. Respondent will ensure that vacant possession will be handed over to the petitioner latest by 30.10.2006. By the same time, the amount of Rs. 7.5 lacs will also be paid to the petitioner by the respondent. The company will make application for mutation to UPSIDC within a week of handing over.
6. Both the sides will withdraw cases against each other except the suit filed by the respondent ( suit No. 1016/1997 and review application filed by the petitioner in the Supreme Court).
7. As far as the built up area is concerned, the respondent will indicate by drawing the space going to him and the space going to the petitioner. Any shortfall will be adjusted against cost of construction of compound wall or paid in cash.
8. Order read out to the parties and their counsel and have consented to the same. To report on 10.11.2006 at 4.00 PM.
3. On 6.6.2006, the 1st petitioner filed and mentioned CA 181 of 2006 pointing out that at the time when the compromise discussions took place, the 1st petitioner was under depression and could not understand the implications of the terms discussed and even her counsel could not appropriately advise her. Further certain points which were raised by her during the discussion did not find a place in the consent order. It is also stated in the application that immediately after recording of the consent order, the petitioner had separately mentioned to me about her reservation and that I had advised her to file an application. Therefore contending that the terms of settlement are one sided, more favourable to the respondent and unfair to the petitioner, she has sought for proceeding with the matter regarding the valuation.
4. This application was heard on 9.10.2006. While the counsel for the petitioner submitted that on 2.6.2006 when the consent terms were recorded, the 1st petitioner was mentally depressed due to the demise of one of her close relations a few days earlier and as such she could not comprehend the implications of the consent terms, the counsel for the respondents contended that before the recording of the consent order, both the sides were advised by the Bench to consult their advocates and accordingly, the petitioner not only consulted her advocate but also one of her well wishers who was present in the Chamber and that the order was not only read out but was signed by the petitioner and her counsel. Therefore, to state that she was in a depressed mood cannot be accepted. Further, once a consent order is passed the same is binding and cannot be recalled without the consent of all the parties to the consent terms and since the respondent is not willing for the recall of the said order, the parties should be directed to comply with the terms of the consent order.
5. I have considered the matter carefully. As recorded in the order dated 15.5.2006, with the view to explore the possibility of settlement of this long drawn litigation, I invited both the parties to my Chamber on 2.6.2006 for discussions. Both the sides were present in my Chamber without any aids and expressing their desire to settle the disputes amicably, each of them made a few alternate proposals. Finally they agreed on certain terms. With the view that they should also consult their counsel before the settlement terms were recorded, I invited their counsel and explained to them the various proposals made by both the parties and the one finally agreed to by the parties. As pointed out by the counsel for the respondent, the petitioner also consulted one of her well wishers who was present. Thereafter the order was recorded, read out to the parties and the order was signed not only by the parties but also by their counsel. At no time, any reservation was expressed by the petitioner on the terms. Only after the respondent and his counsel had left, the petitioner met me again and expressed that the consent terms were unfavourable to her and as such should be either recalled or modified to her satisfaction. Since the other side had by then left, I advised her that if she had any reservation on the consent terms, she could file an application and if the respondent was willing for either modification or recall, the same could be done. Now the respondent is opposed to either for recall of the consent order or for any modification thereto, inspite of my suggesting to him to consider any of the other alternate proposals made by the parties during the discussions on 2.6.2006.
6. From the narration of the discussions recorded above it is evident that the consent terms emerged from willing and voluntary acts of the parties and that the parties were ad idem with regard to the terms as contained in the consent terms. It is not a case of forced a compromise, in which case it may be contended that it loses the very essence of its being a valid and lawful agreement. In S. C. Nandy v. G. M. Bhattacharjee , it has been held that a final consent decree cannot be altered by the court unless the parties thereto agree to do so. Similar is the decision in M.D. Boral v. D.J.P. Boral AIR 1980 Born 235. In a recent judgment dated 21.3.2006 in Manish Mohan Sharma v. Ram Bahdur Thakur, the Supreme Court has held that when an order is passed with the consent of the parties, they cannot resile there from. An application for setting aside/recall of a consent order is limited to only in cases where the order incorporates an agreement which is void or voidable at the instance of one of the parties to the proceeding on the ground of fraud, mistake, influence or other similar grounds. In the present case, the consent order is sought to be recalled on the ground that the petitioner was in a depressed state of mind at the time of her agreeing to the consent order. Such a plea cannot be taken cognizance of in view of the fact that she did consult her counsel and a well wisher before recording of the said order. Therefore, in view of the opposition of the respondent to either for modification or recall of the consent order, the application is dismissed.
7. However, since the implementation of the consent terms in accordance with the time schedule specified in that order was kept pending due to this application, the time schedule requires extension. As per the consent order, the vacant possession of the portion allotted to the petitioner was to have been handed over to her along with a sum of Rs 7.5 lakhs by 30.1.0.2006. Now I extend the time upto 28.2.2007.