National Company Law Appellate Tribunal
Ramesh Shantilal Modi & Anr vs Modi Landscape Pvt. Ltd. & Ors on 23 March, 2023
NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH,
NEW DELHI
Company Appeal (AT) No. 92 of 2021
[Arising out of order dated 08.06.2021 passed by the National Company Law
Tribunal (Mumbai Bench, Court-II) in MA-291/2018, MA-1046/2019, MA-
3186/2019 in CP 29/2016]
IN THE MATTER OF:
1. RAMESH SHANTILAL MODI
1144, Flat No. 5, Sathe Colony,
Shukravar Peth, Pune-411002 ...... Appellant No. 1.
2. BHARAT SHANTILAL MODI
1144, Flat No. 5, Sathe Colony,
Shukravar Peth, Pune-411002 ...... Appellant No. 2.
Versus
1. MODI LANDSCAPES PVT. LTD.
Through Liquidator, Anagha Anasingaraju
Insolvency Professional, Having its office at
1-2, Aishwarya Sankul, G.A. Kulkarni Path,
Opp. Joshi Railway Museum, Kothurd, Pune,
411038. ...... Respondent No. 1.
2. RAMESH NANJI THAKKAR
C/O Ramesh Builders, 618, Sachapir Street,
Camp Pune 411001. ...... Respondent No. 2.
3. MR. NANDUBALA MAHESH THAKKAR
R/At Flat No. 17B, Sett Minar Chs Ltd; 16A,
Dr. Gopalrao Deshmukh Marg, Mumbai,
400026. ...... Respondent No. 3.
2
4. CHANDRAKANT SHIV AJIRAO GHULE
Flat No. 22, SI 072, PL 422, IRIS Garden,
Shivajinagar, Pune-411005. ....... Respondent No. 4.
5. ROHAN MUKESH THAKKAR
R/At Flat No. 17B, Sett Minar Chs Ltd; 16A,
Dr. Gopalrao Deshmukh Marg, Mumbai,
400026. ...... Respondent No. 5.
Present:
For Appellant: Mr. Krishnendu Dutta, Sr. Advocate with Mr. Rohit
Amit Sthalekar, Mr. Ashish Choudhury, Mr. Anand
Kamal, Mr. Arpit Choudhury, Advocates.
For Respondent:- Mr. Arun Pal, Advocate for R-1.
Ms. Anagha Anasingaraju, Liquidator in person.
Mr. Vivek Kantwala, Advocates for R-2.
Mr. Dhruba Mukherjee, Sr. Advocate with Mr. Kumar
Anurag Singh, Mr. Zain A. Khan, Advocates for R- 3
& 5.
Mr. Sudhir Makkar, Sr. Advocate with Ms. Saumya
Gupta, Ms. Mahima Singh, Mr. Vikram Sobti, Ms.
Palak Vashisth, Mr. Vikram Sobti, Advocates for R-
4.
JUDGMENT
(23rd March, 2023) Justice Anant Bijay Singh;
The instant Appeal under Section 421 of the Companies Act, 2013 has been preferred by the Appellants being aggrieved and dissatisfied by the order dated 08th June 2021 passed by the National Company Law Tribunal (Mumbai Company Appeal (AT) No. 92 of 2021 3 Bench, Court-II) in CP No. 29/2016 which was filed by the Appellants under Section 241 and 242 of the Companies Act, 2013, wherein the Tribunal has disposed of MA No. 291 of 2018, MA No. 3186 of 2019 and MA No. 1086 of 2019 in CP No. 29/2016 and passed an order for winding up of the Respondent No. 1 Company herein which is hereunder:
"9. To meet ends of Justice and in the interest of the Company this bench is left with no other alternative but to order of winding up of the Company and to appoint a Liquidator, accordingly, this bench appoints Ms. Anagha Anasingaraju (IBBI/IPA-002/IP-N00247/2017-18/10732) from Pune as Liquidator of this Company Modi Landscape Pvt. Ltd. The Liquidator is directed to proceed in accordance with the provisions of the companies Act, 2013 and other applicable provisions.
10. As per Section 242(3) a certified copy of this order shall be filed by the Company with the Registrar within 30 days from the date of receipt of the copy of the order.
With the above directions MA No. 291 of 2018, MA No. 3186 of 2019 and MA No. 1086 of 2019 in CP No. 29/2016 are disposed of. No Orders to Costs."
2. The facts giving rise to the instant Appeal are as follows:
i) The Respondent No. 1/Company is involved in carrying the business of Real Estate Development wherein the Appellants (Modi Group), Respondent No. 2 and Mr. Mahesh Nanji Thakker (the husband of Respondent No. 3 and grandfather of Respondent No. 5) (Thakkar Group) and Respondent No. 4 (Ghule Group) are holding paid-up equity share capital of the Company as follows;
Company Appeal (AT) No. 92 of 2021 4 Petitioner and their associates (Modi Group) 40% Respondent No. 2 and Mr. Mahesh Nanji Thakker 35% (the husband of Respondent No. 3 and grandfather of Respondent No. 5) (Thakkar Group) Respondent No. 4 (Ghule Group) 25% The Respondent No. 1 company was incorporated in the year 2006 by the Appellants (under the name of Modi Milk and Agro Products Private Limited) who were amongst the first directors of the Company not liable to retire by rotation, each holding 5000 equity shares of the Company. By the year 2010, the Company had acquired substantial assets worth Rs.46,52,24026/- as per the balance sheet dated 31st March, 2010. The Respondent No. 2 approached the Appellants with an investment proposal in the year 2010 whereupon the said Respondent No. 2 was inducted as shareholders of the company and Respondent No. 2 and Mr. Mahesh Nanji Thakker ("Deceased Director") (the husband of Respondent No. 3 and grandfather of Respondent No. 5) were appointed as Directors of the Board.
ii) Thereafter, the company purchased a piece and parcel of land admeasuring 8160 sq. mtrs. Bearing Plot No., A and Amenity Space admeasuring 13486.04 sq. mtrs. out of sanctioned layout laid on S.No.78/1 to 6 and S.No.79/1 to 6, Manjari (Bk), Yaluka Haveli, Dist. Pune from the Respondent No. 4 vide a Sale Deed dated 13th June, 2010. Subsequently, in the year 2012, the Respondent No. 4 again approached the Appellants and offered to invest in the Company Appeal (AT) No. 92 of 2021 5 company following which the Respondent No. 4 became its shareholder and was also inducted as a Director of the Company. The Appellants along with their family members are holders of 40% of the paid-up share capital of the Respondent No. 1 company.
iii) The Respondent No. 1 company entered into an Agreement for Development (First Development Agreement) dated 16th August, 2013 with Saakaar Corporation, a registered partnership firm comprising of Respondent No. 4 as one of its Partners whereby Saakaar agreed to develop the Amenity Space admeasuring 13486 sq. mtrs. Out of the sanctioned layout laid on S. No.78 (Commercial Plot). The Respondent No. 1 company also executed Power of Attorney authorizing the partners of Saakaar for the limited purpose of enabling development of the land of the Respondent No. 1 company. However, nothing in this power of attorney entitled Saakaar or its partners to execute flat purchase agreements for the units/flats that would be constructed on said Commercial Plot. The Respondent No. 1 company subsequently entered into another Agreement for Development (Second Development Agreement) dated 16th August, 2013 with Saakaar whereby its agreed to develop the land bearing S. No.78, Hissa Nos. 1 to 6, and S. No. 79, Hissa Nos. 1 to 6, admeasuring 8160 sq. mtrs. Situated at Manjri, Tal. Haveli Dist. Pune (Residential plat). In respect of the Second Development Agreement, the Company also executed a similar Power of Attorney.
iv) As per the Development Agreements, the Gross Sales Proceeds were to be apportioned between the Respondent No. 1 company and Saakaar in the ratio Company Appeal (AT) No. 92 of 2021 6 mentioned therein and the said proceeds were to be collected in an Escrow Account to be opened by the Respondent No. 1 company and Saakaar with a bank. However, the Respondent No. 2, the Deceased Director and Respondent No. 4 dishonestly and fraudulently used the Power of Attorney dated 16th August, 2013 for the purpose of dishonestly signing the Unit Purchase Agreements in respect of units/flats to be constructed on the Residential Plot. In pursuant to the Development Agreement, an advance deposit of Rs.5,00,00,000/- in each case was paid by Saakaar to the Respondent No. 1 company. Thus, aggregate deposit of Rs.10,00,00,000/- in the name of the Saakaar was required to be refunded by the Company to Saakaar on receipt of a Completion Certificate from the Collector, Pune, However, the Respondents being in majority, decided to disburse the same.
v) The Appellants thereafter requested the Respondent Nos. 2, 4 and the Deceased Director to cooperate in opening the escrow Account which the Respondent Nos. 2, 4 and the Deceased Director vide their letter dated 26th August, 2016 avoided while raising frivolous grounds. Despite requests made, the Respondent Nos. 2, 4 and the Deceased Director deliberately failed to comply with the requirements of the Development Agreements in relation to opening of the Escrow Account. Further, the Appellants came to know that the Respondent No. 4 was executing all agreements for sale of flats on behalf of the Respondent No. 1 company and that the proceeds were being deposited in a bank account in the name of Saakaar. However, Saakaar refused to give the Respondent No. 1 company the copies of the agreement for sale executed with the unit purchasers Company Appeal (AT) No. 92 of 2021 7 and the statement of bank account in which such moneys were being received by it. The Respondent No. 4 being a director of the Respondent No. 1 company as well as a partner of the Sakaar exploited his position to execute all such agreements without the knowledge of the Appellants and the Respondent No. 1 company and misappropriated the amounts receivable by the Respondent No. 1 company in respect of such agreements.
vi) The Appellants were constrained to file Company Petition No. 29 of 2016 under Section 241 and 242 of the Act seeking inter alia (i) a declaration to the effect that the conduct of the Respondents with respect to the affairs of the Company is oppressive to the Appellants, and (ii) permission to exit from the Company by directing the Respondent Nos. 2, 4 and the Deceased Director to buy all the shares held by the Appellants herein. Pursuant to the discussions and negotiations between the parties, Consent Terms (Annexure A-9 at page 171 to 195 of the Appeal) were drawn between the parties. In view of the consent terms entered, the NCLT passed an order dated 24th August, 2017 and disposed off the CP. It was also ordered that in view of non-compliance of the consent terms, the NCLT imposed a cost of Rs. 25,000/- each on both the Modis.
vii) The Respondent No. 4, being one of the partners of M/s Saakaar Corporation and, ipso facto, being responsible for complying with the stipulation of clause (gg) (iv) of the Consent Terms, did not transfer the amount of Rs.4,75,17,171/- from Saakaar Corporation into the Escrow Account [being the difference of the amounts of Rs.18,43,28,352/- (received by Saakaar Corporation) and Rs. 13,68,11,181/- (amount transferred by Saakaar into the Company Appeal (AT) No. 92 of 2021 8 Escrow Account)]. The Respondent No. 4, through Saakaar Corporation, had not only manifestly failed to comply with the aforesaid obligation under the Consent Terms, but by implication refused to perform the said compliance, which is evident from a perusal of the Legal Notice dated 10th March, 2018 sent on behalf of Saakaar Corporation and addressed to the Respondent No. 1, Modi Group, Thakkar Group and Gule Group. It has been alleged therein that six agreements are allegedly pending to be signed by the Respondent No. 1, Modi Group, Thakkar Group and Ghule Group and further it has been alleged that on account of the proceedings initiated against Saakaar Corporation in the year 2016, its reputation was badly affected among others. As a result, whereof, M/s Saakaar Corporation claimed an amount of Rs.15 crores by way of damages from the Respondent No. 1, Modi Group, Thakkar Group and Ghule Group. The said legal notice appears to rake issues and make allegations in respect of events that occurred in the year 2016 and early 2017 i.e. much before execution and filing of the Consent Terms. The Consent Terms cast obligations on M/s Saakaar Corporation and, in fact, Mr. Chandrakant Ghule, Respondent No. 4, who is the signatory to the Consent Terms and who also happens to be one of the partners of the M/s. Saakaar Corporation. Hence, it is clear that the legal notice dated 10th March, 2018 was sent at the instance and/or on the instructions and/or with the knowledge of the Respondent No.4.
viii) Pursuant to the receipt of the said notice by the Respondent No. 1, a meeting of the Board of Directors of the Company was called on 24th March, 2018. In the said meeting, all the Directors of the Respondent No. 1 company Company Appeal (AT) No. 92 of 2021 9 were present and Mr. Ramesh Thakkar was made the Chairman of the meeting. In the said meeting, it was resolved, among others, that the Respondent NO. 1 shall appoint an advocate to respond to the legal notice received by the Respondent No. 1 from Saakaar Corporation. However, there was no further action taken in the matter by the Board as a result of which, the said legal notice remains to be responded to by the Respondent No. 1. The Respondent No. 2 and the Deceased Director resigned as directors of the Respondent no. 1 company w.e.f. 31st December, 2018. This resignation came as a shock to the Modi Group especially since the Consent Terms were yet to be complied with by the parties thereto. By resigning as directors of the Respondent No. 1 company before completion of all the obligations under the Consent Terms, the Respondent Nos. 2 and the Deceased Director are manifestly in contempt of clause (h) of the Consent Terms which states that Mr. Ramesh Thakkar, Mr. Mahesh Thakkar and Mr. Chandrakant Ghule shall resign as directors of the Respondent No. 1, simultaneously on their shares being bought back by the Respondent No. 1 company and on the Respondent No. 1 conveying portions of the land as stated in para 4(a) and (b). Furthermore, the resignation demonstrates a manifest attempt to create a deadlock in the Company and defeat the execution of the consent terms only to frustrate the rights of the Appellants herein in Respondent No. 1 company.
ix) Further case is that the timing of the resignations of the Respondent No. 2 and the Deceased Director is indicative of the fact that the said Respondents intended to avoid the implications of being the directors of the Respondent No. Company Appeal (AT) No. 92 of 2021 10 1 company which has to mandatorily file its audited financial statements for the preceding 2 years and the current year. It is also no co-incidence that the resignations were filed after receipt of prosecution notice from the Income Tax department and after the Respondent No. 1 received a notice dated 5th December, 2018 from one Mr. Jagrut Vilas Harpale filed against M/s. Saakaar Corporation and the Respondent No. 1 under the provisions of RERA where it was informed that a complaint has been filed against them. The responsibilities of taking all actions and decisions on behalf of the Respondent No. 1 such as taking decisions regarding representations of the Respondent NO. 1 before the Income Tax authorities fell squarely within the purview of the Respondent Nos. 2 and 3 considering that they form the quorum for holding the board meetings. Thereafter, due to alleged breach/con-compliance of the Consent Decree by the Appellants, the Respondents herein filed a Misc. Application No. 291 of 2018 inter-alia seeking relief of contempt as contemplated under Section 241 and 242 of the Companies Act, 2013. The said contempt application is misconceived since the Respondent Nos. 2, 4 and the Deceased Director failed to perform their obligations under the Consent Decree and as such, the Appellants also were constrained to file Misc. Application bearing No. 1046 of 2019 under Contempt of Courts Act against the Respondents for contravening/violating the Consent Terms wherein the Appellants prayed for reliefs in the form of directions to be given to the Respondent Nos. 2, 4 and the Deceased Director to comply with the consent decree. The said Respondents have filed reply to the aforesaid application wherein the Respondent No. 2, while admitting that the full amount Company Appeal (AT) No. 92 of 2021 11 as per the Consent Decree had not been deposited by the Respondent No. 4 through Saakar Corporation the escrow account, stated that the same ought to be set of against the security deposit to be refunded by Modi Landscape Pvt. Ltd.
x) The Respondents thereafter also filed Misc. Application bearing No. 3186 of 2019 seeking reliefs of ending up of the Respondent No. 1 under Section 271 read with Section 273 of Companies Act, 2013 primarily on the ground that the Appellants have violated the terms of the Consent Decree. During the pendency of the said application, the Appellant filed the Order under Section 281 of the Income Tax Act, 1961 wherein it was stated that no attachment order under the IT Act was in existence and also during the course of proceedings, the parties agreed to appoint an Observer-cum-Facilitator to facilitate a voluntary compliance of the Consent Decree and to oversee and assist in its compliance. By an order dated 8th March, 2021, Hon'ble Justice Dilip Karnik, Former Judge, High Court of Bombay was appointed as the Observer-cum- Facilitator and Mr. N.D. Desai, Chartered Accountant, to assist the Observer cum Facilitator and was directed to submit his progress report within three weeks from the date of his taking charge. Thereafter, various meetings were held through video conferencing. A report thereto was submitted by the Facilitator before the Tribunal wherein it was stated that the parties could not arrive at a consensus regarding the valuation and the method of valuation of the lands and assets of the Company. However, there was consensus about the respective shareholdings of the parties, except a minor difference regarding 5% of the shares. It was suggested that one group may value the lands and assets of the Company Appeal (AT) No. 92 of 2021 12 company and the other group would have a call and put an option i.e. (i) to buy the shareholdings of the group valuing the land by paying the price proportionate to their holding or (ii) to sell his holding and group valuing the land and assets would have to buy it by paying proportionate price. Thereafter some 'without prejudice offers' were exchanged between the parties and the efforts of settlement failed and parties could not agree upon the solution.
xi) Thereafter, the Tribunal has appointed the liquidator Ms. Anagha Anasingharaju (Liquidator) to commence the liquidation proceedings. The Appellants have received a letter dated 28th June, 2021 from the Liquidator for production of certain documents in respect of Respondent No. 1, Modi Landscapes Pvt. Ltd. Thereafter, the Appellants have received another letter dated 07th July, 2021 inviting proof of debts or claims from them. Further a notice of meeting was received by the Appellants on 28th July 2021 with an agenda to determine as to who are to be the members of the advisory committee. Thereafter, by the impugned order, the Tribunal disposed of MA 291/2019, MA 1046/2019 and MA 3186/2019 in Company Petition 29/2016 and passed an order directing winding up of the Respondent No. 1 Company. Hence this Appeal.
3. The Ld. Sr. Counsel for the Appellants during the course of argument and grounds taken in the memo of appeal along with written submissions and additional written submissions submitted that after immense efforts by the parties, the Consent Terms were drawn and came to be recorded by the Tribunal on 21st August, 2017. The said Consent Decree recorded the obligations and compliances required of each of the shareholder groups of Respondent No. 1. As Company Appeal (AT) No. 92 of 2021 13 per the chronology of the respective obligations of the parties to the Consent Decree, Saakar Corporation was required to pay a sum of Rs. 18,43,28,252 in the account of the Escrow Agent. However, Saakar Corporation admittedly paid only a sum of Rs.13,68,11,081/-. The balance sum of Rs. 4,75,17,171/- as per the Consent Decree is yet to be paid. The Respondent No. 4 is a partner of Saakar Corporation and hence was sunder an obligation to comply with the consent terms. The failure to make payment of the said amount by the Respondent No. 4 through Saakar Corporation forms the basis of the entire controversy between the parties. Had this amount been deposited in the Escrow Account, the obligations to be performed by the parties would have been duly complied with. Further, the Respondent No. 2 in the reply to the Application No. 1046 of 2019 has admitted that the full amount has not been deposited with the escrow account, and stated that the same ought to be set off against the security deposit to be refunded by Respondent No. 1.
4. It is further submitted that the Consent Decree was passed in CP No. 29 of 2016 and thereby the said petition was disposed of by the Tribunal by a Consent Decree passed on the basis of the consent terms which was an enforceable agreement between the Appellants and the Respondents. Further, since the Respondent Nos. 2, 4 and the Deceased Director have failed and neglected to comply with the consent order, the Appellants filed a Contempt Petition bearing No. 1046 of 2019 which was disposed of vide impugned order i.e. winding up order. The winding up of Respondent No. 1 Company would unfairly prejudice the rights and interest of the Appellants as well as the Company Appeal (AT) No. 92 of 2021 14 Respondent No. 1 company under the consent terms and therefore, the Tribunal ought to have restored the CP No. 29 of 2016 and heard the same on merits.
5. It is further submitted that no order of winding up is to be passed if there is other alternate remedy available or where the party praying for winding up is itself acting unreasonable. This is clear from a perusal of Section 273(2) of the Companies Act, 2013. In this regard, the Appellants relied on following judgments:
• Hind Overseas (P) Ltd. v. Raghunath Prasad Jhunjhunwalla, (1976) 3 SCC 259 at page 271, Para 4 to 10;
• Laguna Holdings Pvt. Ltd. v. Eden Park Hotels Pvt. Ltd., (2012) SCC OnLine Del 5594 : (2013) 134 DRJ 91 : (2013) 176 Comp Cas 118, Para 15 to 18, 62, 74;
• Vassant Holiday Homes Pvt. Ltd. and Ors. V. Madan V. Prabhu, MANU/MH/0777/2000, Para 40, 41, 43.
Further, a consent order is also an order of the Court as has been held in the case of "Rama Narang v. Ramesh Narang & Anr., (2006) 11 SCC 114, Para 23 to 25". Thus, the NCLT ought to have directed compliance of its Consent Order dated 24.08.2017 instead of directing winding up of the company, especially when the Respondents own prayer in the Contempt Petition being M.A. No. 291 of 2019 was to have the consent decree executed. The impugned order has been passed on an Application bearing M.A. No. 3186 of 2019 (Annexure A-14, page 250 of the Appeal). Since the petition was under Section 271, no order of winding Company Appeal (AT) No. 92 of 2021 15 up could have been passed without compliance of Section 272(4) and 272(5) of the Act, which inter-alia requires the petition for winding up to be accompanied by a statement of affairs in the manner prescribed and for a 60 days period to be given to the Registrar whose views would be elicited before an order of winding up could be passed. Thus, there is non-compliance of Section 272 before the passing of the order of winding up.
6. It is further submitted that without prejudice to the above, even if the order of winding up is treated to be under Section 241 read with Section 242 of the Act, such an order of winding up could only be passed if it was preceded by a finding of oppression and mismanagement as is clear from Section 242(1) of the Act. There is no such finding in the impugned order. While considering the parallel provisions of Section 397 & 398 of the Companies Act, 1956, the Hon'ble Supreme Court in the case of "Chatterjee Petrochem v. Haldia Petrochemicals, (2011) 10 SCC 466, Para 139-140", had clearly held that without a finding of oppression and mismanagement an order of winding up ought not to be passed. The order disposing of the company petition dated 24.08.2017 was a consent order based on a compromise. The principles analogous to Order 23, Rule 3 C.P.C. were therefore applicable in view of Section 424 of the Act. A consent decree would therefore operate as an estopple and would be binding unless it was set aside by a court which passed the consent decree. In the instant case, the order dated 24.08.2017 was not recalled by the NCLT before passing the impugned order and hence the impugned order is erroneous in law. In this regard the Appellants relied on following Judgments:
Company Appeal (AT) No. 92 of 2021 16 • Pushpa Devi Bhagat v. Rajinder Singh, (2006) 5 SCC 566, Para 17; • Gujarat State Financial Services v. Amar Polyester Ltd. decided on 19th December, 1997, (1998) 1 GLR 731, Para 7-8.
7. It is further submitted that the other reason given in the impugned order for winding up of the company is the alleged deadlock in management which is equally erroneous. The Appellants hold only 40% shares versus the Respondents who hold 60%. There can be no question of a deadlock when the shareholdings are unequal. Just because there is litigation between the shareholders and the company's business comes to a standstill, would not form the basis for winding up of the company. Primarily the circumstances existed as on the date of filing of the company petition ought to be looked at to see if the winding up order could be passed. Therefore, the other reason given in the impugned order stating that the company was snot conducting business as on date is equally misconceived.
In this regard, the Appellant relied on following Judgments:
• Hind Overseas (P) Ltd. v. Raghunath Prasad Jhunjhunwalla, (1976) 3 SCC 259;
• Mohanlal v. Grain Chambers (1968) 2 SCR 252, Para 20.
8. It is further submitted that the Respondents are themselves guilty of non-
compliance of the consent terms. They have addressed a letter dated 21.02.2018 (Annexure 22, page 395-396) that they would not deposit the balance amount of 4.75 crores as per the consent terms. Thus, the Respondents themselves are guilty of non-compliance of consent terms they cannot claim relief in equity Company Appeal (AT) No. 92 of 2021 17 against the Appellants. In this regard, the Appellants relied on following Judgment.
• Needle Industries (1981) 3 SCC 333, Para 68, 73.
9. It is further submitted that Mis. Application being 3186 of 2019 filed by Respondents under Section 271 of the Companies Act, 2013 in Company Petition being CP No. 29 of 2016 which was filed under Section 241-242 of the Companies Act, 2013 seeking winding up is not maintainable in the eyes of law:
• Section 271 of Companies Act, comes under Chapter XX of the Companies Act, 2013. Section 241 and Section 242 of Companies Act, comes under Chapter XVI of the Companies Act, 2013.
• Chapter XX lays down in detail as to how, when and in what manner winding up petitions are to be filed. Further, Companies (Winding up) Rules, 2020 provides the rules and regulations for filing of petition of winding up. Rule 3 of such rules provides that the petition for winding up shall be presented in Form-WIN-1 or Form WIN-2 which shall be accompanied by statement of affairs. Admittedly, the present application has not been filed as per Companies (Winding up) Rules, 2020 and as per Chapter XX of the Companies Act, 2013.
• A separate and independent petition for winding up could have been filed as per Chapter XX of Companies Act, 2013 and Companies (Winding up) Rules, 2020 and not in form an interlocutory application in a Company Petition which was filed under Section 241-242 of Companies Act, 2013. Company Appeal (AT) No. 92 of 2021 18
10. It is further submitted that Argument of Respondent that the impugned order directing winding up has been passed in their M.A. No. 3186 of 2019 does not hold ground since:
• The petition was under Section 271, no order of winding up could have been passed without compliance of Section 272(4) and 272(5) of the Companies Act, which inter-alia requires the petition for winding up to be accompanied by statement of affairs in the manner prescribed and for a 60-day period to be given to the registrar whose views would be elicited before an order of winding up could be passed. Thus, there is non- compliance of Section 272 before the passing of order of winding up. • Companies (Winding up) Rules, 2020 further provides the manner in which an order of winding up has to be passed and contents of such order. Admittedly, the order of winding up is not in terms of Companies (Winding up) Rules, 2020.
In view of above submissions, the impugned order is fit to be set aside and the Appeal be allowed.
11. The Ld. Counsel for the Respondent No. 1/Liquidator filed Affidavit, in which he has stated following facts:
i) A commercial and residential housing project was undertaken by the Company along-with M/s. Saakaar Corporation and Thakkar group, named "SAAKAAR ALMOND PARK" ("said Project") situated at "all that piece and parcel of land or ground admeasuring 8160 sq. mtrs. bearing Plot "A" out of the Company Appeal (AT) No. 92 of 2021 19 Sanctioned Layout in respect of the contiguous block admeasuring Hectares 18 = 35 Ares formed of the lands bearing Survey Number 78, Hissa No. 1 to 6 and Survey No. 79, Hissa No. 1 to 6 situate Lying and being at Village Manjri Budruk, Pune, Maharashtra". In respect of the above-mentioned project, two Supplemental Agreements- one for the Commercial part of the said project and another for the residential part of the said project, were entered by the parties below mentioned. The Supplementary Agreement No. 9567/2017 dated 20 August 2017, entered for the residential part of the Project was signed by and between M/s. Modi Landscape Pvt. Ltd. by the hand of its three directors Mr. Ramesh Nanji Thakkar, Mr. Bharat Shantilal Modi and Mr. Ramesh Shantilal Modi being party of first part, Shri. Ramesh Nanji Thakkar, Shri Ketan Ramesh Thakkar, Shri Mahesh Nanji Thakkar, Shri. Rohan Mukesh Thakkar and Shri. Chandrakant Shivajirao Ghule together being party of second part, collectively referred as the confirming parties and M/s. Saakaar Corporation, a partnership firm being party of other part.
ii) Pursuant to this agreement, sale proceeds of the flats in the scheme were to be apportioned between party of on part Nos. (1) to (4) of the Confirming parties and No. (5) in proportion of 40:30:25.
iii) There were 31 unsold residential flats of the same project, which were to be apportioned between the to be apportioned between the parties in the same proportion of 40:35:25. Annexure A to the said agreement (Annexure- R-14 of the Affidavit) gives details of the distribution of these flats. According to this Annexure A, flat no. A902, 8-103, 8-503. 8-806 and 8-903 form part of the flats Company Appeal (AT) No. 92 of 2021 20 apportioned to the party of the first part i.e. M/s. Modi Landscape Private Limited.
iv) It is stated that around 19 September 2021, it came to my knowledge that the Appellants herein along with M/S Saakaar Corporation being the confirming party to this transaction, have sold Flat no. B-806 admeasuring about 78.48 sq. mtr, (Carpet), along with attached Terrace, admeasuring about 10.46 sq. mtr, (carpet) and enclosed Balcony, admeasuring about 13.07 sq. mtr,, (Carpet) plus/minus 3% on the Eighth Floor in the Wing/Building No. "B" in the multi storeyed ownership scheme namely "SAAKAAR ALMOND PARK" together with the attached appurtenant thereto, constructed on the said landed property, situated along with fixtures, fittings and amenities provided, constructed on the land Survey Number 78, Hissa No. 1 to 6 and Survey No. 79, Hissa No. 1 to 6 situate lying and being at Village Manjri Budruk, to one Priyanka Anil Mukkavar and Swapnil Maddalvar as per Agreement dated 29th March 2021 registered on 27th July 2021, Registration No. 1950/2021 for a price of Rs. 86,00,000/-
(Rupees Eighty-Six Lakh Only). Further, it has also come to the knowledge that the Appellants herein along with M/S Saakaar Corporation being the confirming party to this transaction, have sold flat no. B-503 Flat No. 503, admeasuring about 78.48 sq. Mtr. (Carpet), along with attached Terrace, admeasuring about 10.46 sq. Mtr, (Carpet) and enclosed balcony, admeasuring abpout 13.07 sq. mtr, (Carpet) Plus/minus 3% on the Fifth Floor in the Wing/Building No. "B" in the multi-storeyed ownership scheme namely 'SAAKAAR ALMOND PARK' together with the attached appurtenant thereto, constructed on the land Survey Company Appeal (AT) No. 92 of 2021 21 Munber 78, Hissa No. 1 to 6 and Survey No. 79, Hissa No. 1 to 6 situated lying and being at Village Manjri Budruk, to one Sheetal Sandip Raskar and Sandi Namdev Raskar as per Agreement dated 16 September 2021 registered on 16 September 2021, Registration No. 14222/2021 for a price of Rs. 80,00,000/- (Rupees Eighty Lakh Only).
v) Further the information regarding the above-mentioned sale transactions along with the sale agreements were sent to my office by the Thakkar Group in mid-September, 2021. Pursuant thereto a letter / email dated 20th September 2021 was sent to the Appellants herein and M/S Saakaar Corporation asking for the details of this transaction and who has received the proceeds and in which account. A reply has been sent to me by M/S Saakaar Corporation. The Appellants have not responded to the letter. It is settled position that these two flats, i.e. flat no B-503 and B-806 are apportioned to the company as per the supplemental agreement attached in Annexure 14 above and the proceeds of the same should be handed over to the liquidator. Accordingly, the Liquidator prayed before this Tribunal that pleased to direct the Appellants to handover the proceeds of the sale of flats to the Liquidator.
12. The Ld. Counsel for the Respondent No. 2 during the course of argument and in his Reply Affidavit along with written submissions submitted that the Appellants failed to comply with and give effect to the provisions of the Consent Terms and in view thereof the NCLT passed an order dated 20th December, 2017 inter alia stating as follows:
Company Appeal (AT) No. 92 of 2021 22 • On hearing both the sides and also on perusal of the "Consent Terms" this Bench is of the opinion that Mr. Bharat Modi and Mr. Ramesh Modi are not cooperating in fulfilling their part of commitment as agreed upon in the Consent Terms although duly signed by them on 21st August, 2017. • The NCLT further held that "In case of non-compliance this Bench shall be left with no option but to take due legal course so as to protect the business of the Company, by invoking the jurisdiction prescribed under Section 242(2) and/or under Section 425 of the Companies Act, 2013." • The NCLT even imposed a cost of Rs. 25,000/- each on Mr. Ramesh Modi and Mr. Bharat Modi, the Appellants in present Appeal.
13. It is further submitted that the Consent Terms were not complied with for various reasons and in order to resolve this situation the parties to the Original Proceedings agreed to discuss the issues before an Observer cum Facilitator appointed by the NCLT. The NCLT appointed Hon'ble Justice Mr. Dilip Karnik, Former Judge, High Court of Bombay ("Observer cum Facilitator") and Mr. N.D. Desai, Chartered Accountant, to assist the Observer cum Facilitator vide its order dated 8th March, 2021. The parties to the Original Proceedings informed the NCLT that even after several rounds of meetings before the Observer cum Facilitator the matter was not settled. In view of thereof, the NCLT vide its order dated 12th May, 2021 issued directions to the Observer to submit his report before the NCLT. In view of the above directions of the NCLT, the Observer submitted his report dated 25th May, 2021 and Chartered Accountant filed his Company Appeal (AT) No. 92 of 2021 23 report dated 24th May, 2021 to the NCLT. The above-mentioned reports inter-alia stated as follows:
• The Observer Cum Facilitator in his report stated that, "After hearing the Learned Advocates for the parties in the first and second meeting, "it appeared to me that the parties could not arrive at a consensus regarding the valuation or method of valuation of the lands and assets of the company".
• The report of Observer cum Facilitator referred to options that were considered by stating that, "I therefore suggested to the Learned Advocate that one group may value the lands and assets of the company and the other group would have a call and put option-i.e. would have an option (i) to buy the shareholdings of the group valuing the land by paying price proportionate to their holding or (ii) would have an option to sell his holding and group valuing the land and assets would have to buy it by paying proportionate price. Both the parties agreed to work on this suggestion". • However, in conclusion the report of Observer cum Facilitator mentioned that the parties were unable to reach a settlement and stated that, "Unfortunately, the efforts of settlement failed and parties did not agree upon a solution".
• The report of Chartered Accountant stated that despite sincere efforts of the Observer cum Facilitator, the parties were unable to reach any settlement and further suggested a course of action that may be adopted in the Original Proceedings by stating that, "In view of the above mentioned Company Appeal (AT) No. 92 of 2021 24 facts and circumstances, it is our view that in order to put an end to a long standing disputes between the Modi Group on one side and the Thakkar and Ghule Group on the other side and in the interest of stakeholders, under these circumstances in an unavoidable case of winding up of Modi Landscape Pvt. Ltd. in accordance with provisions of Section 242 and other applicable provisions of Companies Act, 2013 on the grounds that is just and equitable to do so considering all options have been exhausted and no other remedy is now available to the parties.".
14. The current position of Respondent No. 1 Company and justification for passing of impugned order was that the Respondent No. 1 is effectively a defunct/dormant company which is not carrying out any operation or business for the last several years and has also been in non-compliance of statutory procedures and requirements as enumerated below:
• The Respondent No. 1 company currently does not have any active real estate development projects or other business;
• Respondent No. 1 company currently only owns land parcels in or around Pune, Maharashtra;
• Respondent No. 1 company currently does not have any employees; • The financial statements of Respondent No. 1 company have not been prepared since Financial Year 2015-2016 till date and no audit of Respondent No. 1 company has been conducted since Financial Year 2015-2016 till the last financial year;
Company Appeal (AT) No. 92 of 2021 25 • It was the onus and responsibility of the Appellants to file statutory accounts and certify the same with the auditors and submit the same to the appropriate authorities which has not been done. Due to non- submission of appropriate documents the Respondent No. 1 company and its Directors/Officers stating that the Officer/Directors are in default. Further, a Strike Off Notice under Section 248(1) of the Act was received on 9th August, 2019 from the Registrar of Companies in relation to Respondent No. 1 company.
15. It is further submitted that based on the numerous steps taken by the NCLT which are hereunder:
• Hearing parties at length with respect to compliance with the terms and conditions of the Consent Terms;
• The previous orders passed by the NCLT in the Original Proceedings to ensure that Consent Terms are complied with in a timely manner; • The identification of an appropriate third party for hearing the issues between the parties and appointment of the Observer cum Facilitator in order to ensure an amicable settlement of disputes between the parties; • The Observer cum Facilitator entertaining various options for exit of any of the parties from Respondent No. 1 company as well as options of ascertaining the valuations and distribution / division of assets of Respondent No. 1 company.
It is amply clear that the National Company Law Tribunal ("NCLT") spent a considerable amount of judicial time and effort to ensure that the parties reach Company Appeal (AT) No. 92 of 2021 26 a conclusion of disputes. Since the parties were unable to reach any settlement and considering that the Respondent No. 1 company was not carrying on any operational business and had not been complying with statutory compliances, the NCLT considered it to be "Just and equitable" to pass an order for winding up the Respondent No. 1 company in accordance with relevant provisions of Companies Act, 2013.
16. The Ld. Sr. Counsel for the Respondent No. 3 and 5 during the course of argument and in his Reply Affidavit along with written submissions submitted that the several opportunities were given by the NCLT to the Appellants to settle the matter. The first opportunity relegated the Consent Terms dated 24th August, 2017, the second opportunity was under the order dated 20th December, 2017 and the third was by appointment of a Facilitator cum Observer on 8th March, 2021. How many attempts to salvage a rocking boat is to be given especially in the circumstances that are enumerated hereunder:
• There are no employees of "Modi Landscape Pvt. Ltd." (for short "MLPL") in the last more than half a decade;
• There are not annual returns filed of MLPL in the last more than half a decade;
• There is no business being conducted of MLPL in the last more than half decade;
• On the basis of pleadings made by all Shareholders and Directors mutual trust, confidence and faith is uprooted;
• There are no statutory compliances in more than half a decade; Company Appeal (AT) No. 92 of 2021 27 • There is an Income Tax liability of Rs. 1,02,00,000/- still pending on accord of MLPL which liability when fructified would relegate interest payable;
• There are Creditors to the extent of Rs. 48,00,00,000/- as per the last audited Balance Sheet i.e. 31st March, 2015 and these liabilities when fructified would relegate interest payable;
• The development rights granted have since been completed as the residential project is over and the commercial project has been distributed amongst the Shareholders/Directors and their Nominees; • There is an evident deadlock in management and looking after the affairs of MLPL.
The above demonstrates that there is inconsistency in the actual functioning of MLPL to what has been pleaded by the Appellants. It is trite knowledge that when a frustration occurs and there is no activity it is but natural that orders can be passed for ending this misery which is contemplated under the provision of Section 242 Sub Rule (1) Sub Rule (b).
17. It is further submitted that the essence of Respondent No. 2 agreeing to a settlement after taking a massive haircut was to resolve issues in his and late Mahesh Thakkar's lifetime. Mahesh Thakkar, the brother of the Respondent No. 2 agreed to the settlement as he anticipated his demise due to medical exigencies. Unfortunately, the proceedings delayed this desire and Mahesh Thakkar ultimately succumbed to his illnesses in September 2020. The last of the Thakkar Group is hinging on the Respondent No. 2 who himself is presently Company Appeal (AT) No. 92 of 2021 28 82 years old. The end result has to be achieved and therefore the need for winding up the Company. The winding up would entail payments to be made to statutory liabilities/statutory authorities/creditors and such other necessary and incidental expenses which are statutory in nature. The contractual obligations would also be fructified and achieved with such winding up. Various parcels of land of MLPL are also encumbered which do not have clear title and thus to untie the knots it is necessary that MLPL be wound up.
18. The Respondents written submissions before the NCLT dated 2nd June 2021 which ought to be relied upon as a classic example of a matter pertaining to such an impasse, deadlock and loss of confidence which is set out in the case of "warana Agro Private Limited (T. C. P No. 86 /397 - 398 /CLB /NCLT /MB /MAH /2014)" which judgment was delivered on 22nd December, 2017. The judgment is at page No. 54 to 100 of the written submissions of Respondent No.
2. The Respondent No. 2's Affidavit in reply before this Hon'ble Forum dated 29th September, 2021 also ought to be relied upon as also the arguments made by the Counsel for Respondent No. 2 on 8th February, 2023 and 22nd February, 2023 and also the written submissions of Respondent No. 2 dated 3rd January, 2022 to be relied upon.
19. In so far as the law on the issue is concerned, the NCLT and NCLAT have wide powers which can set out the invocation of the provisions as per the Companies Act, 2013 within the spectrum of the facts of each case. Thus, on the basis of the provisions of Section 242 embedded in the order dated 20th December, 2017 is now borne out to be that Section 242 was invoked in the Company Appeal (AT) No. 92 of 2021 29 impugned order which was passed on 8th June, 2021. Thus, the Application seeking winding up being an Application No. 3186 of 2019 at the necessary ingredients which would relegate the NCLT to take credence whereby the Tribunal if found to have opinion would wind up a Company which would be premise on unfair prejudice to the Shareholders and a justification for invocation of the principle of "just and equitable" the wisdom of the Legislature in incorporating he words "with a view to bringing to an end the matters" is the genesis for invocation of such a provision which is being sought for even at Appellate stage by the Respondent No. 2.
20. The Ld. Sr. Counsel for the Respondent No. 4 during the course of argument and in his reply affidavit along with written submissions/additional written submissions submitted that there are three shareholder groups in Respondent No. 1 i.e. (i) the Appellants holding 40% shares, (ii) the Respondent Nos. 2, 3 and 4 holding 35% shares and (iii) The Respondent No. 4 holding 25% shares. The Appellant filed the CP alleging acts of oppression and mismanagement in the affairs of Respondent No. 1 company. The several efforts were made by the parties to resolve the disputes. The Consent Terms were also executed. Subsequently, the Tribunal observed that there was a breach on the part of the Appellants to comply with their obligations under the Consent Terms and directed the Appellants to comply with the same. Therefore, an Observer cum Facilitator was appointed to mediate between the parties, however, settlement talks failed. Resultantly, due to the persistent failure on the part of the Appellants to bring an amicable end to the disputes, by the impugned order, Company Appeal (AT) No. 92 of 2021 30 the Respondent No. 1 company was directed to be wound up and the purpose behind which the CP was filed by the Appellants themselves is achieved. Therefore, the Appellants cannot be aggrieved by the same. Since the past several years, there has been a continuous deadlock between the Appellants and the Respondents and as a result of which the Respondent No. 1's business has come to a standstill. The parties have been embroiled in litigation pertaining to the business of Respondent No. 1 since 2016. Further, no meeting of the Board of Directors has been held since 01.04.2016. The financial statements and accounts of Respondent No. 1 have not even been prepared since 31.03.2016. As a result of the several defaults committed by Respondent No. 1 towards statutory compliances, various proceedings have been initiated against it under the Act.
21. It is further submitted that the Hon'ble Delhi High Court in its judgment passed in the matter of "Ramesh G. Bhatia v. Gopala Gases (P) Ltd. and Ors., (1994) 3 Comp LJ 435 (Del.)", admitted a petition for winding up of a company on the ground that there was a deadlock and the different groups of shareholders did not have any mutual confidence / trust between them. Resultantly, the business of the company had come to a standstill for the last several years and there appeared to be very little possibility of the business being revived. The facts of the present case fall are covered squarely within the ambit of this judgment. The Hon'ble Patna High Court in its judgment passed in the matter of "Registrar of Companies v. Shreepalpur Cold Storage Private Ltd., (1974) 44 Com Cases 479 (Pat.)", inter alia directed the winding up of a company whose Company Appeal (AT) No. 92 of 2021 31 business operations were closed for over a year and there was no hope for revival of its functioning / operations.
22. The Adjudicating Authority has intervened and granted ample opportunities to the parties to somehow revive the operations of Respondent No.1. However, after a series of protracted litigation and consistent breach of Consent Terms by the Appellants, all efforts failed. Hence, keeping in mind the guiding principles as laid down by the Hon'ble Bombay High Court in its judgment passed in the matter of "Daulat Makanmal Luthria v. Solitaire Hotels Pvt. Ltd. and Ors., (1993) 76 Com Cases 215 (Bom.)", it was just, equitable and necessary that Respondent No.1 be ordered and directed to be wound up. In fact, the same will deter any further deterioration of the value of the assets of Respondent No.1 considering the precarious situation between the groups of its shareholders. There is no doubt that the substratum of Respondent No.1 has been completely lost. The forced continuation of the operations of such a company cannot ensure any benefit to any person. The Hon'ble Bombay High Court in its judgment passed in the matter of "Majestic Infracon Private Limited v. Etisalat Mauritius Limited and Ors. (2014) 185 Com Cases 145 (Bom.)", has inter alia held that where a company is unable to carry on its main business and is found to be unable or incapable of undertaking any other business even in future in a commercially viable manner, it must be held that its substratum has gone and further that any attempt to do any business would only result in disastrous consequences plunging the company to a situation far worse than it is.
Company Appeal (AT) No. 92 of 2021 32
23. Further, in "M.S.D.C. Radharamanan v. M.S.D. Chandrasekara Raju and Anr., (2008) 6 SCC 750", the Hon'ble Supreme Court has held in the context of the Companies Act, 1956 that the jurisdiction of the Company Law Board (now NCLT) must be considered having regard to the complex situation(s) which may arise in the cases before it. No hard and fast rule can be laid down. If an application is filed under Section 433 or Section 397/398 of the Companies Act, 1956, (now Section 241/242 of the Companies Act, 2013), an order of winding up may be passed but the Company Law Board in a winding up application may refuse to do so, if any other remedy is available. The Company Law Board may not shut its doors only on sheer technicality even if it is found that unless its jurisdiction is exercised, there will be complete mismanagement in regard to the affairs of the company.
24. In "Kamal Kumar Dutta & Ors. V. Ruby General Hospitals Ltd. and Ors., (2006) 7 SCC 613, Para 30", the Hon'ble Supreme Court has held that the NCLT can order winding up in a petition under Section 397/398 of the Companies Act, 1956, if such an order is considered just and equitable in the facts and circumstances of the case, in order to bring to an end or prevent further mismanagement in the affairs of the company.
25. In "M/s World Wide Agencies Pvt. Ltd. and Anr. v. Margaret T. Desor and Others, (1990) 1 SCC 536, Para 27", the Hon'ble Supreme Court has held that composite petition under Sections 397/398 and Section 433 (f) of the Companies Act, 1956 is maintainable.
Company Appeal (AT) No. 92 of 2021 33
26. The powers of the NCLT under Section 241-242 is of the widest amplitude and diverse reliefs including that of winding up, can be granted if the facts and circumstances so warrant. It is not the interest of the Appellants alone which is important but that of the Company and its shareholders as a whole.
27. The prayer Clause 11.2 of the Company Petition makes it abundantly clear that even the Appellants did not intend to continue to remain in the business of Respondent No. 1 and sought an exit from their shareholding by seeking a direction that Respondent No. 2 to Respondent No. 4 shall purchase their shareholding in Respondent No. 1. It is an admitted position that no business is being carried out in Respondent No. 1 since 31.03.2015. The shareholding interest of each of the three groups of shareholders is such that no special resolution can be passed without the sanction / approval of each other. Therefore, the items or business which required resolutions to be passed by special resolutions cannot be undertaken by Respondent No. 1. In view of the aforesaid, there is no semblance of doubt that the Respondent No. 1 company cannot carry on any business operations. There is a complete deadlock between its shareholders and management and therefore, in order to save Respondent No. 1's assets from further depletion, it was just and equitable that Respondent No. 1 be directed to be wound up. Hence, there being no infirmity with the Impugned Order, the present Appeal does not warrant any consideration and deserves to be dismissed.
28. We have perused the pleadings made on behalf of the parties and considered the submissions of the parties.
Company Appeal (AT) No. 92 of 2021 34
29. Reliance has been placed by Ld. Counsel for the Respondent No. 2 in the case of "M.S.D.C. Radharamanan v. M.S.D. Chandrasekara Raju and Anr., (2008) 6 SCC 750", wherein the Hon'ble Supreme Court has held in the context of the Companies Act, 1956 that the jurisdiction of the Company Law Board (now NCLT) must be considered having regard to the complex situation(s) which may arise in the cases before it. No hard and fast rule can be laid down. If an application is filed under Section 433 or Section 397/398 of the Companies Act, 1956, (now Section 241/242 of the Companies Act, 2013), an order of winding up may be passed but the Company Law Board in a winding up application may refuse to do so, if any other remedy is available. The Company Law Board may not shut its doors only on sheer technicality even if it is found that unless its jurisdiction is exercised, there will be complete mismanagement in regard to the affairs of the company. The ratio laid down in the aforesaid case is applicable in the facts of the instant case.
30. In view of the aforenoted discussion, the following facts are admitted in the instant case:
• The Consent Terms were drawn between the parties. The Respondent No. 4, being one of the partners of M/s Saakaar Corporation and, ipso facto, being responsible for complying with the stipulation of clause (gg) (iv) of the Consent Terms, did not transfer the amount of Rs.4,75,17,171/- from Saakaar Corporation into the Escrow Account [being the difference of the amounts of Rs.18,43,28,352/- (received by Saakaar Corporation) and Rs. 13,68,11,181/- (amount transferred by Saakaar into the Escrow Company Appeal (AT) No. 92 of 2021 35 Account)]. Thereafter, Legal Notice dated 10th March, 2018 sent on behalf of Saakaar Corporation and addressed to the Respondent No. 1, Modi Group, Thakkar Group and Gule Group.
• The NCLT by an order dated 8th March, 2021, Hon'ble Justice Dilip Karnik, Former Judge, High Court of Bombay was appointed as the Observer-cum- Facilitator. Thereafter, Observer-cum Facilitator submitted report dated 24th May, 2021 before the NCLT which is to the following effect:
"4. After hearing the Learned Advocates for the parties in the first and second meeting, it appeared to me that the parties could not arrive at a consensus regarding the valuation or method of valuation of the lands and assets of the company. There, however, appeared to be a consensus about the respective share holdings of the parties, except a small difference regarding 5% of the shares. I therefore suggested to the Learned Advocates that one group may value the lands and assets of the company and the other group would have a call and put option- i.e. would have an option (i) to buy the shareholdings of the group valuing the land by paying price proportionate to their holding or (ii) would have an option to sell his holding and group valuing the land and assets would have to buy it by paying proportionate price. Both the parties agreed to work on this suggestion.
5. Therefore some without prejudice offers were exchanged between the parties. It was made clear that the offers will be without prejudice to rights and contentions of the parties and in the event settlement was Company Appeal (AT) No. 92 of 2021 36 not arrived at nothing contained in the offers and discussions will be used by any party in any legal proceedings.
6. Unfortunately, the efforts of settlement failed and parties did not agree upon a solution. As stated earlier, the offers, counter offers and discussions were without prejudice and were not be used in any legal proceedings and hence they are not mentioned in this report.
7. I put on record the sincere efforts made by the Learned Advocates for the parties in trying to arrive at a settlement. I received full co- operation from the Learned Advocates for the parties as well as Mr. Nitin Desai in an attempt to facilitate a settlement."
31. We observe that the Consent Terms entered between the parties in the past, pursuant thereto, the Original Petition was disposed off, thereafter, violation of Consent Terms, applications were filed before the NCLT, therefore, the NCLT appointed Observer cum Facilitator to settle the disputes, to revive the company etc. however, the parties could not arrive at any amicable settlement despite several opportunities given by the NCLT. In view of aforenoted facts, we are of the considered view that order passed by the NCLT is correct in nature to meet ends of Justice and in the interest of the Company, winding up order was passed. Keeping in view of the aforenoted background, we do not find any merit in the instant appeal. The impugned order dated 08th June 2021 passed by the National Company Law Tribunal (Mumbai Bench, Court-II) in MA-291/2018, MA-1046/2019 and MA-3186/2019 in CP No. 29/2016 is hereby affirmed. The instant Appeal is hereby dismissed. No order as to costs. I.As. if any, stand Company Appeal (AT) No. 92 of 2021 37 disposed off. Accordingly, interim order dated 01.10.2021 passed by this Bench is vacated.
32. Registry to upload the Judgment on the website of this Appellate Tribunal and send the copy of this Judgment to the National Company Law Tribunal (Mumbai Bench, Court-II), forthwith.
[Justice Anant Bijay Singh] Member (Judicial) [Ms. Shreesha Merla] Member (Technical) New Delhi 23rd March, 2023 R. Nath.
Company Appeal (AT) No. 92 of 2021