Karnataka High Court
Mr Bharat Bhushan Narang vs Mr Bhupinder Rai on 4 March, 2022
Author: P.S.Dinesh Kumar
Bench: P.S.Dinesh Kumar
COMPA No.8/2014
C/W COMPA No.9/2014
COMPA No.10/2014
COMPA No.11/2014
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 4TH DAY OF MARCH, 2022
PRESENT
THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR
AND
THE HON'BLE MR. JUSTICE P. KRISHNA BHAT
R
COMPA No.8 OF 2014
C/W
COMPA No.9 OF 2014
COMPA No.10 OF 2014
COMPA No.11 OF 2014
IN COMPA NO.8 OF 2014
BETWEEN :
1. SM KANNAPPA AUTOMOBILES PVT LTD
A COMPANY INCORPORATED
UNDER THE PROVISIONS OF THE
COMPANIES ACT, 1956 AND
HAVING ITS REGISTERED OFFICE
AT NO.2, DR.M.H.MARI GOWDA ROAD
NEAR LALBAGH
BANGALORE-560 027
2. MR. C.K. NAROTHAM
S/O LATE KESHAVA MURTHY
AGED ABOUT 79 YEARS
RESIDING AT # 15, NORTH PARK ROAD
KUMARAPARK EAST
BANGALORE-560 001
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3. MR. MOHANDAS PAI
S/O RAMAN PAI
AGED ABOUT 53 YEARS
RESIDING AT # 70, GRACE TOWERS
MILLERS ROAD
BANGALORE-560 052 ... APPELLANTS
(BY SHRI. DHYAN CHINNAPPA, SENIOR ADVOCATE FOR
SHRI. JACOB ALEXANDER, ADVOCATE)
AND :
1. SRI. BHUPINDER RAI
S/O LATE LAJPAT RAI
AGED ABOUT 64 YEARS
AND RESIDING AT # 26/14
ABSHOT LAYOUT
SANKEY ROAD, HIGH GROUNDS
BANGALORE-560 052
2. MR. VIJAY KUMAR NARANG
S/O LATE SHANTHILAL NARANG
AGED ABOUT 63 YEARS
RESIDING AT # 141, 5TH CROSS
RAJMAHAL VILAS EXTENSION
BANGALORE-560 080
3. K.M. LOKNATH
S/O LATE K. MOGAPPA
AGED ABOUT 68 YEARS
RESIDING AT KARKALLI ESTATE
SOMWARPET
COORG DISTRICT-571 276
4. SUDARSHAN KUMAR MANCHANDA
S/O LATE MUNSHILAL MANCHANDA
AGED ABOUT 64 YEARS
RESIDING AT # 40,BASAPPA ROAD
SHANTHINAGAR
BANGALORE-560 027
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5. MR. BHARAT BHUSHAN NARANG
S/O OM PRAKASH NARANG
AGED ABOUT 58 YEARS
RESIDING AT #9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
6. CHITRA NARANG
W/O BHARAT BHUSHAN NARANG
AGED ABOUT 57 YEARS
RESIDING AT # 9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
7. VAIBHAV NARANG
S/O BHARAT BHUSHAN NARANG
AGED ABOUT 33 YEARS
RESIDING AT # 9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
8. SHEETAL NARANG
D/O BHARAT BHUSHAN NARANG
AGED ABOUT 30 YEARS
RESIDING AT # 9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001 ... RESPONDENTS
(BY SHRI. S.S. NAGANAND, SENIOR ADOVCATE FOR
SHRI. S.G. PRASHANTH MURTHY, ADVOCATE FOR R1 & R2
-THROUGH VIDEO CONFERENCE;
R-3 SERVED;
SHRI. ADITYA SONDHI, SENIOR ADVOCATE FOR
SHRI. B.R. NISHCHAL DEV, ADVOCATE FOR R4;
SHRI. SRINIVAS RAGHAVAN, SENIOR ADVOCATE FOR
SHRI. ARUN SRIKUMAR, ADVOCATE FOR R5 TO R8)
....
THIS APPEAL IS FILED U/S 10F OF THE COMPANIES ACT, 1956,
PRAYING TO SET ASIDE THE ORDER DATED 26.08.2014 PASSED BY
THE COMPANY LAW BOARD, MUMBAI COMPANY PETITION NO.13 OF
2014 AND ALLOW THE APPEAL AND ETC.,
COMPA No.8/2014
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COMPA No.10/2014
COMPA No.11/2014
4
IN COMPA NO.9 OF 2014
BETWEEN :
1. MR. BHARAT BHUSHAN NARANG
S/O LATE OM PRAKASH NARANG
AGED ABOUT 58 YEARS
RESIDING AT:9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
2. MRS. CHITRA NARANG
W/O BHARAT BHUSHAN NARANG
AGED ABOUT 57 YEARS
RESIDING AT:9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
3. MR. VAIBHAV NARANG
S/O BHARAT BHUSHAN NARANG
AGED ABOUT 33 YEARS
RESIDING AT:9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
4. MS. SHEETAL NARANG
D/O BHARAT BHUSHAN NARANG
AGED ABOUT 30 YEARS
RESIDING AT:9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001 ... APPELLANTS
(BY SHRI. SRINIVAS RAGHAVAN, SENIOR ADVOCATE FOR
SHRI. ARUN SRIKUMAR, ADVOCATE)
AND :
1. MR. BHUPINDER RAI
S/O MR. LAJPAT RAI
AGED ABOUT 64 YEARS
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5
RESIDING AT 26/14
ABSHOT LAYOUT, SANKEY ROAD
BANGALORE-560 052
2. MR. VIJAY KUMAR NARANG
S/O MR. SHANTILAL NARANG
AGED ABOUT 63 YEARS
RESIDING AT 141, 5TH CROSS
R.M.VILAS EXTENSION
BANGALORE-560 080
3. S.M. KANNAPPA AUTOMOBLIES PVT LTD
(A COMPANY INCORPORATED
UNDER THE PROVISIONS
OF THE COMPANIES ACT, 1956)
HAVING ITS REGISTERED OFFICE AT
NO.2, NEW MENTAL HOSPITAL ROAD
BANGALORE-560 027
REPRESENTED HEREIN BY ITS
DIRECTOR
MR. T.M. POOVAIAH
AGED ABOUT 64 YEARS
4. MR. C.K. NAROTHAM
S/O LATE MR. KESHAVAMURTHY
AGED ABOUT 79 YEARS
RESIDING AT 15, NORHT PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
5. MR. T.V. MOHANDAS PAI
S/O MR. RAMAN PAI
AGED ABOUT 53 YEARS
RESIDING AT 70, GRACE TOWERS
MILLERS ROAD
BANGALORE-560 052
6. MR. K.N. LOKENATH
S/O K. MOGAPPA
AGED ABOUT 68 YEARS
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6
RESIDING AT KARKALLI ESTATE
SOMWARPET
COORG DISTRICT-571 276
7. MR. SUDARSHAN KUMAR MANCHANDA
S/O LATE MUNSHILALA MANCHANDA
AGED ABOUT 64 YEARS
RESIDING AT 40, BASAPPA ROAD
SHANTINAGAR
BANGALORE
...RESPONDENTS
(BY SHRI. S.S. NAGANAND, SENIOR ADOVCATE FOR
SHRI. S.G. PRASHANTH MURTHY, ADVOCATE FOR R1 & R2
-THROUGH VIDE CONFERENCE;
SHRI. DHYAN CHINNAPPA, SENIOR ADVOCATE FOR
SHRI. JACOB ALEXANDER, ADVOCATE FOR R3 TO R6;
SHRI. ADITYA SONDHI, SENIOR ADVOCATE
SHRI. B.R. NISHCHAL DEV, ADVOCATE FOR R7)
....
THIS APPEAL IS FILED U/S 10F OF THE COMPANIES ACT, 1956,
PRAYING TO SET ASIDE THE ORDER DATED 26.08.2014 OF THE
HON'BLE COMPANY LAW BOARD, MUMBAI, IN C.P. NO.13 OF 2014
[TRANFERRED FROM C.P. NO.4/111/SRB/1991 FILE IN THE CLB,
CHENNAI] AND ETC.,
IN COMPA NO.10 OF 2014
BETWEEN :
1. BHUPINDER RAI
S/O MR. LAJPAT RAI
NO.26/14, ABSHOT LAYOUT
SANKEY ROAD
BANGALORE-560 052
2. VIJAY KUMAR NARANG
S/O MR. SHANTILAL NARANG
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COMPA No.10/2014
COMPA No.11/2014
7
TH
NO.141, 5 CROSS
R.M.V EXTENSION
BANGALORE-560 080 ...APPELLANTS
(BY SHRI. S.S. NAGANAND, SENIOR ADOVCATE FOR
SHRI. S.G. PRASHANTH MURTHY, ADVOCATE
-THROUGH VIDEO CONFERENCE)
AND :
1. S.M. KANNAPPA
AUTOMOBILES PRIVATE LIMITED
HAVING ITS REGD. OFFICE AT
NO.2, NEW MENTAL HOSPITAL ROAD
BANGALORE-560 027
2. NAROTHAM C.K
NO.15, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
3. T.V. MOHANDAS PAI
8, FIRST CROSS
NEHRU NAGAR
BANGALORE-560 020
4. K.M. LOKENATH
KARKALLI ESTATE
SOMWARPET
COORG DIST.-571 276
5. SUDERSHAN KUMAR MANCHANDA
S/O LATE MUNSHILAL MANCHANDA
NO.40, BASAPPA ROAD
SHANTI NAGAR
BANGALORE-560 027
6. BHARAT BHUSHAN NARANG
S/O LATE OM PRAKASH NARANG
NO.9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
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8
7. CHITRA NARANG
W/O BHARATH BHUSHAN NARANG
NO.9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
8. VAIBHAV NARANG,
S/O BHARATH BHUSHAN NARANG
NO.9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
9. SHEETAL NARANG
D/O BHARATH BHUSHAN NARANG
NO.9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001 ...RESPONDENTS
(BY SHRI. DHYAN CHINNAPPA, SENIOR ADVOCATE FOR
SHRI. JACOB ALEXANDER, ADVOCATE FOR R1 TO R4;
SHRI. ADITYA SONDHI, SENIOR ADVOCATE FOR
SHRI. B.R. NISHCHAL DEV, ADVOCATE FOR R5;
SHRI. SRINIVAS RAGHAVAN, SENIOR ADVOCATE FOR
SHRI. ARUN SRIKUMAR, ADVOCATE FOR R6 TO R9)
....
THIS APPEAL IS FILED U/S 10F OF THE COMPANIES ACT, 1956,
PRAYING TO CALL FOR THE RECORDS IN COMPANY PETITION
NO.13/111/CLB/MB/2014 ON THE FILE OF THE COMPANY LAW BOARD,
MUMBAI BENCH, MUMBAI AND SET ASIDE THE IMPUGNED ORDER
DATED 26.08.2014 AND ETC.,
IN COMPA NO.11 OF 2014
BETWEEN :
SRI. SUDHARSHAN KUMAR MANCHANDA
NO.40, BASAPPA ROAD
COMPA No.8/2014
C/W COMPA No.9/2014
COMPA No.10/2014
COMPA No.11/2014
9
SHANTI NAGAR
BANGALORE ...APPELLANT
(BY SHRI. ADITYA SONDHI, SENIOR ADVOCATE FOR
SHRI. B.R. NISHCHAL DEV, ADVOCATE)
AND :
1. SRI. BHUPINDER RAI
NO.26/14, ABSHOT LAYOUT
SANKEY ROAD,
BANGALORE-560 052
2. SRI. VIJAY KUMAR NARANG
141, 5TH CROSS
R.M. VILAS EXTN.,
BANGALORE-560 080
3. SRI SHANTILAL NARANG
141, 5TH CROSS
R.M. VILAS EXTN.,
BANGALORE-560 080
R3 IS DECEASED AS PER ORDER
DTD.06.08.2015
R2 IS THE LR'S OF THE R-3
AMENDMENT CARRIED OUT
AS PER THE HON'BLE COURT
ORDER DTD.06.08.15 AS R3 IS DELETED
4. S.M. KANAPPA AUTOMOBILES
PVT., LTD., NO.2, NEW MENTAL
HOSPITAL ROAD
BANGALORE-560 001
5. SRI. C.K. NAROTHAM
15, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
6. SRI. G.B. CHANDRA KEERTHY
126/88, GAYATHRI DEVI
PARK EXTENSION
COMPA No.8/2014
C/W COMPA No.9/2014
COMPA No.10/2014
COMPA No.11/2014
10
MALLESWARAM
BANGALORE-560 003
7. SRI. T.V. MOHANDAS PAI
8, 1ST CROSS, NEHRU NAGAR
BANGALORE-560 020
8. SRI. K.N. LOKANATH
KARKALLI ESTATE
SOMWARPET
COORG DISTRICT-571 276
9. SRI. BHARATH BHUSHAN NARANG
9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
10. SRI. CHITRANARANG
9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
11. SRI. VAIBHAV NARANG
9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001
12. SRI. SHEETAL NARANG
9, NORTH PARK ROAD
KUMARA PARK EAST
BANGALORE-560 001 ...RESPONDENTS
(BY SHRI. S.S. NAGANAND, SENIOR ADOVCATE FOR
SHRI. S.G. PRASHANTH MURTHY, ADVOCATE FOR R1 & R2
-THROUGH VIDEO CONFERENCE;
[R3 DECEASED AS PER ORDER DTD.06/08/2015,
R2 IS TREATED AS LEGAL HEIR OF R3];
SHRI. DHYAN CHINNAPPA, SENIOR ADVOCATE FOR
SHRI. JACOB ALEXANDER, ADVOCATE FOR R4, R5, R7 & R8;
SHRI. SREENIVAS RAGHAVAN, SENIOR ADVOCATE FOR
SHRI. ARUN SRIKUMAR, ADVOCATE FOR R9 TO R12;
VIDE ORDER DTD.11.06.15 APPEAL STANDS
DISMISSED AGAINST R6)
....
COMPA No.8/2014
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COMPA No.10/2014
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11
THIS APPEAL IS FILED U/S 10F OF THE COMPANIES ACT, 1956,
PRAYING TO CALL FOR THE RECORDS OF THE CASE IN OLD CASE
NO.C.P.4/111/SRB/1991 AND NEW CASE NO.C.P.13 OF 2014, BEFORE
THE HON'BLE COMPANY LAW BOARD AT MUMBAI AND BE PLEASED TO
EXPUNGE THE OBSERVATIONS MADE AGAINST THE APPELLANT IN
PARAS 12,20,96 AND 100 OF THE IMPUGNED ORDER AS BEING
CONTRARY TO THE FACTS AND THE PLEADINGS ADVANCED BY THE
APPELLANT AND ETC.
THESE APPEALS HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 16.12.2021 COMING ON FOR PRONOUNCEMENT OF
JUDGMENT, THIS DAY, P.S.DINESH KUMAR J, PRONOUNCED THE
FOLLOWING:-
JUDGMENT
These four appeals are directed against order dated August 26, 2014 passed by the Company Law Board, Mumbai, in Company Petition No.13/111/CLB/MB/2014.
2. For the sake of convenience, parties shall be referred as per their status in the Company Petition.
3. Company Appeal No.8/2014 is by M/s. S.M.Kannappa Automobiles Pvt. Ltd.1, and its two Directors. Company Appeal No.9/2014 is by respondents 1 'the Company ' for short COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 12 No.7 to 10 in the Company Petition. Company Appeal No.10/2014 is by the petitioners in the Company petition. Company Appeal No.11/2014 is by respondent No.6 in the Company petition.
4. Heard Shri. S.S. Naganand learned Senior Advocate for the petitioners (Shri. Bhupendra Rai and Shri. Vijay Kumar Narang), Shri. Dhyan Chinnappa, learned Senior Advocate for the Company (M/s S.M. Kannappa Automobile Pvt Ltd), respondents No. 2 and 4 (Shri. C.K. Narotham and Shri. Mohandas Pai respectively), Shri. Aditya Sondhi, learned Senior Advocate for respondent No.6 (Shri. Sudarshan Kumar Manchanda) and Shri. Srinivas Raghavan, learned Senior Advocate for respondents No.7, 8, 9 and 10 (Shri. Bharat Bhushan Narang, Chitra Narang, Vaibhav Narang and Sheetal Narang).
COMPA No.8/2014C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 13 Brief facts of the case:
5. M/s. Kannappa Automobile Pvt Ltd., was incorporated on May 7, 1975 with an authorized capital of Rs.10 Lakhs consisting of 10,000 equity shares of Rs.100/- each. The issued and paid-up capital of the Company was Rs.2,00,100/-, consisting of 2001 equity shares of Rs.100/- each.
6. The Company was originally started as a 'Sole Proprietary Firm' by Shri. S.M. Kannappa. Petitioners and sixth respondent decided to take over the said business. Right from the date of incorporation, two groups were holding 1000 shares each. Shri. S.M. Kannappa, was holding one share till his death on June 3, 1986. His heirs sold the said 'one' share in favour of first petitioner. The first petitioner lodged transfer forms and the original share certificate seeking transfer of that 'one' share in his name. The Company informed that the share cannot be transferred in his name, but, transferred the said 'one' share in the COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 14 name of SM Kannappa's son, Rajashekhar. Petitioner challenged the same in this Court in Company Petition No.98/1990 and it was allowed vide common order and judgment dated August 16, 2006 holding that the transfer in the name of Rajashekar was illegal and directed the Company to enter the name of the first petitioner with respect to the said one share. The appeal filed by the Company against the order passed by the Hon'ble Company Judge stood dismissed by the Division Bench2. The Special Leave Petition3 filed against the order passed by the Division Bench also stood dismissed.
7. Petitioners learnt from the pleadings in Company Petition No.98/1990, that the paid-up capital of the Company had been increased to Rs.8,00,100/- and divided into 8001 shares of Rs.100/- each. On verification, they learnt that 3000 shares each had been allotted to sixth and 2 In O.S.A. No.51/2006 c/w. O.S.A. No.45 & 46/2006 Decided on 22.03.2012 3 SLP No.18370-372/2012 decided on 09.07.2012 COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 15 seventh respondents in the Board Meeting held on September 24, 1990. Petitioners moved the CLB4 invoking Section 111 of Companies Act, 1956 and their petition was dismissed vide order dated October 24, 1994. On appeal, this Court vide order dated February 29, 2012, based on the minutes of order filed by the parties, remitted the matter to the CLB for fresh consideration.
8. After remand, petitioners sought to amend the petition by adding certain grounds and prayers. Their prayer was rejected by the CLB5. Petitioners challenged the same in this Court in Comp Appeal No.25/2010 and this Court vide order dated January 28, 2014, set-aside the CLB's order and allowed the amendment. Respondents challenged the said order in SLP (Civil) 7258/2014. The Hon'ble Supreme Court of India disposed of the SLP6 4 Company Law Board, Madras 5 vide order dated October 17, 2012 6 vide order dated April 11,2014 COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 16 holding that the amendment shall apply from the date it was granted.
9. By the impugned order under challenge in these appeals, the CLB has directed the Company to issue shares on pro-rata basis to the petitioners with a further direction to sell the shares back to the Company at a price to be assessed by an independent valuer. Hence these appeals.
10. The substance of arguments advanced by Shri. S.S. Naganand, learned Senior Advocate for the petitioners is, the CLB was not justified in directing the petitioners to sell the shares. He contended:
• That 'issue of shares' by the Board of Directors of a Company is a fiduciary duty as laid down in Nanalal Zaver and another vs. The Bombay Life Assurance Co.
Ltd.7;7
AIR 1950 SC 172 COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 17 • The Board has acted in a mala fide manner as recorded by this Court in OSA No. 51/20068;
• A similar modus operandi was adopted in the case of M/s Prakash Coachbuilders Pvt. Ltd., as noted in the judgment of this Hon'ble Court in Vijay Kumar Narang and others vs. Prakash Coach Builders Pvt. Ltd9;
• The Company had sufficient funds. In any event, the Company did not make any request for loan/investment with the petitioners. M/s Prakash Leasing Ltd., another listed company in which Bharat Bushan Narang, Vijay Kumar Narang and Mohandas Pai were directors, lent Rs. 6,00,000/- to the Company and shares were illegally issued in favour of sixth and seventh respondents;
• Articles 6 & 7 of Articles of Association of the Company have to be read as a whole.8
ILR 2012 KAR 3489 9 2009 SCC Online KAR 641 COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 18
11. With these main submissions he prayed for allowing the appeal filed by the petitioners.
12. Substance of arguments advanced by Shri. Dhyan Chinnappa, learned Senior Advocate on behalf of the Company, and its Directors is:
• Petitioners have assailed the Board's decision to allot 6000 shares in favour of sixth and seventh respondents under Section 111(4) of the Companies Act, 1956. Initially, they did not plead the aspect of oppression. Therefore, petitioners' case under Sections 397 and 398 of the Companies Act, 1956 is barred by limitation;
• There is no agreement of parity/groups between the shareholders, nor the Company is a quasi-partnership; • The allotment of 6000 shares by the Board of Directors is in accordance with Articles 6 and 7 of COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 19 Articles of Association of the Company and the previous conduct of all parties;
• Adequate consideration was received by the Company for allotment of 6000 shares;
• There is no breach of any fiduciary duty by the Board of Directors and the allotment of share was for a proper purpose.
13. Substance of argument advanced by Shri. Srinivas Raghavan learned senior advocate for respondents No.7 to 10 is:
• Respondent No.6, after allotment of 3000 shares has transferred the same in favour of his daughter Smt. Chitra Narang. Later he has changed his version with regard to allotment of shares. He being the beneficiary cannot maintain the Company Appeal 11/2014;
• Petition under Section 397 & 398 is barred by limitation;COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 20
• Article 7 of the Articles of Association does not mandate General meeting for allotment of shares;
• There is no duty cast upon the Board to offer shares to all shareholders on pro-rata basis;
• In a petition under Section 111, it is not permissible for the CLB to enquire into the questions with regard to bona fides and motive of parties while alloting shares.
14. With above submissions Shri. Dhyan Chinnappa and Shri. Srinivas Raghavan prayed for dismissal of petitioners' appeal and to allow their appeals.
15. Shri. Aditya Sondhi, learned Senior Advocate for respondent No.6 in substance, submitted that:
• Respondent No.6 was critically ill from 2006 and 2012 and during that period, Respondent No.7 had deceptively transferred his 500 shares (in addition to the 3000 shares) belonging to the Respondent No.6 COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 21 and his family to the family members of the Respondent No.7 without his consent;
• Respondent No.6 was not involved in the business of the Company.
• In Para 12, the CLB has erroneously observed that Respondent No.6 is indirectly supporting the case of the Petitioners and made certain other observations.
16. Shri. Aditya Sondhi prayed that this Court may consider expunging the observations made against the Respondent No.6 in Para 12, 20, 96 and 100 of the CLB's order.
17. We have carefully considered the rival contentions and perused the records.
18. In nutshell, petitioners' case is, 6000 shares have been issued illegally and CLB's direction to retransfer the shares is unsustainable in law. The case of the Company and the appellants in Company Appeal No.9/ 2014 is that COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 22 the 6000 shares have been issued in accordance with law for the benefit of the Company. Therefore CLB's order holding that petitioner's are entitled for allotment of shares is not sustainable in law.
19. According to the petitioners, initially shares were issued as follows:
Shantilal Narang 500 shares Vijay Kumar Narang (Petitioner No.2) Om Prakash 500 shares Bharath Bhushan Narang (Respondent No.7) Bhupinder Rai (Petitioner No.1) 500 shares M.L. Manchanda 500 shares Sudarshan Manchanda (Respondent No.6) S.M. Kannappa 1 share Total 2001 shares
20. The one share held by S.M. Kanappa was sold on August 8, 1990 in favour of the first petitioner (Bhupinder Rai). He lodged the share certificate for transfer and the COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 23 Company declined to transfer it in his favour. First petitioner approached this Court in Company Petition No. 98/1990. This Court has directed the transfer vide order dated August 16, 2006, affirmed by the Division Bench on November 11, 2009 and confirmed with the dismissal of SLP No. 18370-372/ 2012 on July 9, 2012.
21. It was contended on behalf of the petitioners that they learnt about issuance of 6000 shares after going through the statement of objections filed in Company Petition No.98/1990. Therefore, they approached the CLB in Company Petition No.4/111/SRB/91 seeking rectification and the said petition was dismissed. Petitioners approached this Court in COM Appeal No. 5/2005 and the same was disposed off on February 29, 2012 in terms of the minutes of the order, remitting the matter to the CLB. After the remand, petitioners sought to amend the petition and to include certain grounds and prayers and the same was rejected by the CLB. However, this Court allowed the COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 24 amendment. The matter stood concluded with the Apex's Court order dated April 11, 2014 in SLP (Civil) 7258/2014, directing that amendment shall be given effect from the date on which it was granted.
22. In the backdrop of these facts, the following question of law arises for our consideration:
• Whether the direction issued against the petitioners to sell their shares originally held by them and the shares to which they are entitled on pro-rata basis out of 6000 additional shares, at a fair price to be assessed by an independent valuer is sustainable in law?
23. Though it was urged before us that CLB's direction to issue shares to the petitioners on pro-rata basis may be set aside, we have not framed a question on that aspect because, under Section 10(F) of Companies Act 1956, we have to examine only the question of law. COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 25
24. The main argument advanced on behalf of the Company and the contesting Respondents is, the Company was run by professional Directors as on September 24, 1990 when 6000 shares were issued and the Directors have taken decision in the best interest of the Company. According to Shri. Dhyan Chinnappa, the Company was in need of funds. First petitioner had left the Company and started a parallel business in the name M/s. Surya Coach Builders Pvt. Ltd., Hence, he had no interest in the welfare of the Company. Company had offered rights issue in the year 1987. The second petitioner did not even choose to apply for the rights issue. The Vijaya Bank had called upon the Company to increase the capital base. Therefore, the sum of Rs. 3 Lakhs each given by Respondent No.6 & 7 were converted into equity shares.
25. It is not in dispute that first petitioner (Bhupinder Rai) had sought for transfer of one share held by S.M. Kannappa in his favour and the same was declined COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 26 by the Company. After prolonged litigation, which ended in the Apex Court, that one share was directed to be transferred in his favour.
26. The 6000 equity shares have been issued in the meeting held on September 24, 1990. It is the specific case of the petitioners that, issuance of 6000 equity shares was learnt from the statement of objections filed by the respondents in Company Petition No.98/1990, which was presented on October 20, 1990, about one month after the date of issuance of 6000 equity shares.
27. As on the date of issuance of shares, Directors had knowledge of the fact that first petitioner had lodged 'one share' held by S.M. Kannappa for transfer in his favour and the same was declined by the company.
28. The letter written by Vijaya Bank on August 20, 1990 is produced as Annexure R1 and it reads as follows: COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 27
"Ref.No. Branch: J.C.Road
Bangalore-2
M/s. S.M.Kannappa Auto P. Ltd
Bangalore.
Date:22/8/90
Dear sirs,
Reg: Credit Limits
We are pleased to inform you that you have been sanctioned with an adhoc OLCC of Rs.10.00 lakhs for a period upto Nov,1990 against hypothecation of paid stocks with 25 to margin. Further, you are requested to furnish the following:
1) Audited financial statements as at 31.3.90;
2) You should undertake to increase the capital base and retain entire internal accruals as at 31.3.90;
3) You are requested to invest the claim amount of Rs.5.25 lakhs approx. to be received from KSRTC;
4) Stock statement should be submitted promptly;
5) You are requested to undertake to create mortgage in respect of building property at NMH Road / when the dispute is settled.
Thanking you.
Yours faithfully BRANCH MANAGER"
29. The above letter has been replied by the Company on August 30, 1990 and it reads follows: COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 28
"REF:SMK/DIR/1089/90 The Manager Vijaya Bank J.C.Road Bangalore-560002 30/08/1990 Dear Sir, Sub: OLCC Limited of Rs.10 lakhs Ref: Your letter No.OR:947/90 dated 22/08/1990 ******** With reference to the subject matter, we thank Vijaya Bank immensely for sanctioning an adhoc OLCC of Rs.10 lakhs for a period up to November 1990 and agree as follows:
a) In connection with the same, as required by the Bank. We undertake to produce the financial statement of our company as at 31st March 1990 immediately on its signing by our Auditors.
b) We undertake to increase the capital base and retain entire internal accruals as at 31.3.1990. If in any case it becomes not possible to increase the capital base, we undertake to obtain interest free loan from our shareholders/directors which will be retained to maintain the equity ratio. The same will not be returned till the Bank liabilities are discharged by us or without the consent of the bank.
c) The price increase claim amount as and when received from parties like K.S.R.T.C., will be retained in the company to build up reserves/internal accruals.
d) A stock statement will also be submitted periodically and promptly as stipulated and required by the Bank.COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 29
e) The company's building property which is under legal dispute, will be fully hypothecated as a security to the Bank on settlement of the dispute. At present, the dispute has been favourably settled in land tribunal and likely to be settled in the court shortly with similar result.
Apart from the above, we will be pleased to comply with any other stipulations put forth by the bank or to furnish informations needed. Thanking you once again, Yours faithfully, for S.M. KANNAPPA AUTOMOBILES (P) LIMITED. DIRECTOR"
30. In the above letter, para (b) is important, wherein the Company has undertaken to increase the capital base. Annexure R3 and R4 are the copies of the extracts of the account book. Annexure R3 is significant because there is record of entry of loan of Rs. 2 lakhs, 1 lakh and 3 lakhs on June 21, 1990. It was pointed out by Shri. Naganand that the receipt of these amounts have been shown as 'loan from shareholder' in the cashbook Annexure R4. He also pointed out that only these three entries made in Annexure R4 with respect to the cheques are in a different handwriting than other entries. What is significant to note is, the Company has received the COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 30 sum of Rs. 6 Lakhs from M/s Prakash Leasing Ltd., on June 21, 1990. However, on August 30, 1990 the Company has written a letter to Vijaya Bank undertaking to increase the capital base. It was argued by Shri. Naganand, that there is no reference to the sum of Rs. 6 Lakhs received in June 1990, in the said letter, which according to the Company was received from the shareholders, Respondent No.6 and 7.
31. A Board Meeting was held on September 24, 1990. Subject No.5 is with regard to issuance of further shares. The minutes recorded on this subject read as follows:
Proceeding & Conclusion & Resolutions Name of Discussion dissenting and/or not
5. To consider The Chairman stated that and note issue the Vijaya Bank, J.C.Road, of further share Bangalore-2, while capital in the sanctioning the adhoc OLCC company limit of Rs.10 lakhs (Rupees Ten lakhs only) had asked the company to increase its paid up capital and obtain personal guarantees of Sri. COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 31 S.K. Manchandra and Sri. Bharat Bhushan Narang. He placed before the meeting letters dated 01.09.90 from Sri. S.K. Manchandra and Sri. Bharat Bhushan Narang, wherein they had requested the interest free loan of Rs.3 lakhs each (Rupees Three lakhs each only) given by them during June 1990 may be converted into equity and shares of an equivalent value issued. It was stated in the letters that as Sri. S.K. Manchanda and and Sri. Bharat Bhushan Narang were being asked to give further personal guarantees they felt that it would be advisable to increase the paid up capital. The letter also contained a request that in case the Board chose not to allot shares against conversion of the loan, the loan of Rs.3 lakhs each (Rupees Three Lakhs each only) may be repaid.
Sri. T.V. Mohandas Pai requested the chairman to consider the matter at a later meeting after studying the provisions of the articles of association of the company. The chairman accordingly decided to consider the matter at the next meeting after further study.
COMPA No.8/2014C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 32
32. It is relevant to note that Vijaya Bank in its letter extracted above did not ask for the personal guarantees of Respondent No. 6 & 7. Further, as recorded in the Minutes, the interest free loan of Rs. 3 Lakhs each was requested to be converted into equity shares and the same has been done in the subsequent Board Meeting.
33. Admittedly, the loan of Rs. 6 lakhs was received from M/s Prakash Leasing Ltd. There is no material on record to show that M/s Prakash Leasing Ltd., had consented to treat the loan as having been paid by Respondent No.6 & 7. Both the Company and M/s Prakash Leasing Ltd are private limited companies and independent legal entities. It was argued by Shri. Srinivas Raghavan and Shri. Dhyan Chinnappa for the contesting Respondents that the irregularity, if any, in the loan transaction between the Company and M/s Prakash Leasing Ltd is outside the scope of this litigation and if such irregularity called for any legal action, it was for the respective parties to take suitable COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 33 action. This argument is wholly untenable in view of the startling facts of the case. As recorded hereinabove, parties were fighting for 'one share' held by S.M. Kannappa. They have litigated for that 'one share' till the Apex Court. A careful perusal of the letter written by the Vijaya Bank, Company's reply to the Bank, the account extracts and the Minutes of Meeting leads us to an irresistible conclusion that the professional Directors of the Company have allotted 6000 shares illegally in favour of Respondent No.6 and 7 by treating the loan amount received from M/s Prakash Leasing Pvt. Ltd., as consideration to the detriment of petitioners and the CLB has rightly directed the Company to issue shares in favour of petitioners on pro-rata basis.
34. Shri. Naganand, for the petitioners has placed reliance on the following passage in Nanalal Zaver and another vs. The Bombay Life Assurance Co. Ltd10:
10 AIR 1950 SC 172 (para 41).COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 34
"It is well established that directors of a company are in a fiduciary position vis-a-vis the company and must exercise their power for the benefit of the company. If the power to issue further shares is exercised by the directors not for the benefit of the company but simply and solely for their personal aggrandisement and to the detriment of the company, the court will interfere and prevent the directors from doing so. The very basis of the court's interference in such a case is the existence of the relationship of a trustee and of cestui que trust as between the directors and the company."
and argued that directors are in a fiduciary position qua the Company and therefore they are required to act with utmost good faith.
35. In the case on hand, no material is placed on record to show that the sum of Rs.6,00,000/- was paid for and on behalf of the Respondents No.6 & 7. It is not disputed that the said amount was received from M/s. Prakash Leasing Pvt. Ltd. This fortifies the argument made on behalf of the petitioners.
COMPA No.8/2014C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 35
36. Shri. Naganand has next relied on the following passage from Dale & Carrington Investment Pvt. Ltd. and Anr., vs. P.K. Prathapan and ors11 "...The fiduciary capacity within which the Directors have to act enjoins upon them a duty to act on behalf of a company with utmost good faith, utmost care and skill and due diligence and in the interest of the company they represent. They have a duty to make full and honest disclosure to the shareholders regarding all important matters relating to the company. It follows that in the matter of issue of additional shares, the Directors owe a fiduciary duty to issue shares for a proper purpose. This duty is owed by them to the shareholders of the company. Therefore, even though Section 81 of the Companies Act, 1956 which contains certain requirements in the matter of issue of further share capital by a company does not apply to private limited companies, the Directors in a private limited company are expected to make a disclosure to the shareholders of such a company when further shares are being issued. This requirement flows from their duty to act in good faith and make full disclosure to the shareholders regarding affairs of a company. The acts of Directors in a private limited company are required to be tested on a much finer scale in order to rule out any misuse of power for personal gains or ulterior motives. Non-applicability of Section 81 of the Companies Act in case of private limited companies casts a heavier burden on its Directors. Private limited companies are 11 (2005) 1 SCC 212 (para 11) COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 36 normally closely held i.e. the share capital is held within members of a family or within a close-knit group of friends. This brings in considerations akin to those applied in cases of partnership where the partners owe a duty to act with utmost good faith towards each other"
(Emphasis Supplied) and contended that the professional directors have not acted in good faith.
37. Shri. Raghavan, has relied upon the following passage from Ammonia Supplies Corpn. (P) Ltd. vs. Modern Plastic Containers (P) Ltd.12 "..There could be no doubt any question raised within the peripheral field of rectification, it is the court under Section 155 alone which would have exclusive jurisdiction. However, the question raised does not rest here. In case any claim is based on some seriously disputed civil rights or title, denial of any transaction or any other basic facts which may be the foundation to claim a right to be a member and if the court feels such claim does not constitute to be a rectification but instead seeking adjudication of basic pillar some such facts falling outside the rectification, its discretion to send a party to seek his relief before the civil court first for the adjudication of such facts, it cannot be said such 12 (1998) 7 SCC 105 (para 26) COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 37 right of the court to have been taken away merely on account of the deletion of the aforesaid proviso. Otherwise under the garb of rectification one may lay claim of many such contentious issues for adjudication not falling under it.
Thus in other words, the court under it has discretion to find whether the dispute raised is really for rectification or is of such a nature that unless decided first it would not come within the purview of rectification"
and argued that the Court has to find out whether the dispute raised is one really for rectification. This authority does not support his contention because it is not in dispute that petitioners have approached the CLB seeking rectification with a specific case that 6000 shares have been illegally issued.
38. Shri. Raghavan has also placed reliance on Sangaramsinh P. Gaekwad vs Shantadevi P. Gaekwad13 and Nanalal Zaver and another vs. The Bombay Life Assurance Company Ltd.14 and Needle Industries (India) Ltd. Ors vs. 13 (2005) 123 Comp Cas 566 (para 41,42, 55, 61, 63, 66 and 67) 14 AIR 1950 SC 172 (para 36, 41, 48 & 49) COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 38 Needle Industries Newey (India) Holding Ltd. And Ors15 and contended that Board of Directors have allotted shares for proper purpose and without malafides.
39. Admittedly the Company was managed by Professional Directors. They are required to be more prudent as they shall be dealing with the assets of the Company and the rights of the shareholders. The contention that Directors have allotted shares without any malafides has been found to be factually incorrect by the CLB and this Court can only examine a question of law under Section 10F of the Companies Act. Hence these authorities also do not support his argument.
40. Shri. Dhyan Chinnappa has placed reliance on the following passage in Hungerford Investment Trust Ltd.
vs Turner Morrison & Company Limited16 15 (1981) 3 SCC 333 (para 111) 16 C. P. No.274 of 1967, High Court of Calcutta (para 81& 82) COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 39 "As at present advised, I would hold that Article 137 of the new Limitation Act, 1963, applies to an application under Section 397 or Section 398 of the Companies Act. I would, therefore, hold that events that happened prior to November 28, 1964, will be barred by the application of Article 137 of the Limitation Act of 1963, being more than three years before the date of the filing of this petition on November 28, 1967, but others are within the limitation". and argued that Article 137 in Schedule I of the Limitation Act is applicable to cases of oppression and mismanagement and therefore CLB could not have entertained the petition.
41. In reply Shri. Naganand, placing reliance on the following passage in Shanker Dastidar v. Smt. Banjula Dastidar.17 "..The damage may continue even after the cause of action is complete. This is dependent on facts of each case. The question is to be decided on facts as to whether the cause of action is complete and it is the damage out of the injury or the cause of action that is continuing or the cause of action is not complete but is continuing and it is not the damage that was continuing. In fact, the damage may also 17 AIR 2005 Cal 121 (para 5.5) COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 40 continue along with the cause of action, but the continuation of the damage would not have the effect of cessation of the continuation of the cause of action........."
(Emphasis Supplied) contended that cause of action is a bundle of facts and in this case the damage caused by illegal allotment of shares is a continuing cause of action. He argued that as held in the underlined portion in the above authority, the illegal allotment of 6000 shares has not only deprived the petitioners of their legitimate right for allotment of shares but also benefits flowing there from.
42. It is not in dispute that petitioners approached the CLB seeking rectification. The prayer made in the Original Petition prior to amendment reads as follows:
"17. The Petitioners therefore prays that this Hon'ble Court may be pleased to declare that the said purported allotment of 6000 shares in favour of the respondents 6 and 7 at the meeting of the Board stated to have been held on 24-9-90 as void, illegal and in operating and direct rectification of the Register of Members of the Company by deleting the names of Respondents 6 and 7 from the COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 41 Register of Members to the extent of 3,000 shares each allotted to them on 24-9-90 and thus render justice."
43. In our considered view, the above prayer is self contained. Therefore, the argument that the allegation of 'oppression and mismanagement' is barred by time need not be gone into and answered.
44. The CLB has recorded reasons in para 103, for directing the petitioner to sell their shares by holding thus:
" I have given my serious thoughts to the third option mentioned above. It is true that normally, where a party is found guilty, the Board should avoid to pass an order directing the aggrieved party to sell his shares to the defaulter party, because this may amount to a premium to a dishonest party. But in the peculiar facts and circumstances of the case, in my considered opinion the third option seems to be just and appropriate. ...."
(Emphasis Supplied)
45. Thus the CLB was convinced that the transfer of 6000 shares to respondent no.6 & 7 was illegal. However, COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 42 for reasons recorded, it has directed the petitioners to sell their shares.
46. First petitioner has fought his legal battle for more than 20 years and won, commencing with Company Petition No.98/1990, ending with disposal of with SLP No. No.18370-372/2012 decided on July 9, 2012.
47. As recorded hereinabove, parties were fighting for 'one share' held by S.M. Kannappa in order to get the control over the management. On September 18, 1990, first petitioner had lodged that 'one' share and transfer forms seeking transfer in his name. His request was turned down and the share was transferred in favour of S.M.Kannappa's son, Rajashekar. Immediately thereafter, on September 24, 1990, Company has allotted 6000 shares in favor of respondent no.6 & 7.
48. The sequence of events demonstrate that allotment of 6000 shares was devised to defeat the COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 43 controlling interest of first petitioner and his associate/s over the company. Professional Directors are appointed for efficient management of the company, but the real owners of the company are the share holders. Prudential discharge of their fiduciary duties is not negotiable. They are obliged to safeguard the interest of the shareholders, but the directors in-charge, in this case have failed to do so.
49. Therefore, in our considered opinion, allotment of 6000 shares within one week from the date of first petitioner lodging his application for transfer of S.M. Kannappa's 'one' share, lacks bonafides and is manifestly illegal. Hence, the view taken by the CLB to direct the petitioners to sell their shares would amount to placing premium on the illegal act. It is settled that justice should not only be done, but also seen to be done. COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 44
50. In Dale & Carrington Investment Pvt. Ltd. and Anr., vs. P.K. Prathapan and ors18 it is held that if a finding of fact is perverse and based on no evidence, it can be set aside in appeal even though the appeal is permissible only on the question of law. The perversity of the finding itself becomes a question of law.
51. In the case on hand, the CLB has come to the conclusion that transfer of 6000 shares in favour of respondent no.6 & 7 is illegal (see para 93). We have carefully perused CLB's order and concur with its view so far its conclusion that allotment of 6000 shares in favour of respondent no.6 & 7 is illegal.
52. The direction issued by the CLB against the petitioners to sell the shares was sought to be supported by learned Senior Advocates for the respondents by placing reliance on Smt. Claude- Lila Parulekar v. Sakal Papers Pvt. 18
(2005) 1 SCC 212 (para 36) COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 45 19 Ltd. and others . The said judgment is on the facts of that case. In our view, in the facts and circumstances of this case, for the reasons recorded hereinabove, CLB's direction to sell the shares is not sustainable. Issuance of an illegal direction by the CLB is a question of law and we accordingly answer the question framed by us in the negative.
53. Now we are left with the prayer made in COMPA No.11/2014 for expunction of observations contained in paras no. 12, 20, 96 & 100 of the impugned order. Shri. Aditya Sondhi, has contended that remarks made against respondent no.6 are uncalled for and illegal; and sought for their expunction. We have carefully perused the said paragraphs. In para 12, the CLB has only recorded the facts contained in the additional reply filed by respondent no.6. In para 20, the CLB has held that respondent no.6 cannot be allowed to take inconsistent pleas; and the 19 (2005) 11 SCC 73 COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 46 pleadings contained in reply dated 24/07/1992 shall not be read and no reliance shall be placed on them.
54. In para 96, it is stated that respondent no.6 has transferred his entire shareholding to respondent no.7 to 10 and they are the majority shareholders of the Company. In para 100, there is no aspersion against respondent no.6.
55. In our view, contents of paras 12, 29, 96 & 100 cannot be construed as adverse observations against respondent No.6 and do not affect him in any manner. Therefore, in our considered view, expunction is unnecessary.
56. In view of the above, the following:
ORDER
1. COMPA No.10/2014 filed by the petitioners is allowed in part and that portion of the impugned order directing the petitioners to sell their shares held by them and the shares they are entitled to get on pro-rata basis at a fair price in favour of COMPA No.8/2014 C/W COMPA No.9/2014 COMPA No.10/2014 COMPA No.11/2014 47 respondent no.7 to 10 and all consequential directions namely direction No.(ii), (iii) & (iv) are set aside;
2. COMPA No.8/2014 filed by M/s S.M. Kannappa Automobiles Pvt. Ltd is dismissed;
3. COMPA No.9/2014 filed by respondent no.7 to 10 is dismissed;
4. COMPA No.11/2014 is disposed of with observation contained in para No.55.
No costs.
Sd/-
JUDGE Sd/-
JUDGE SPS