National Company Law Appellate Tribunal
Vipul Ltd vs Solitaire Capital India on 20 January, 2022
NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH,
NEW DELHI
Company Appeal (AT) No. 60 of 2020
IN THE MATTER OF: Status Before Status Before
NCLT NCLAT
1. VIPUL SEZ DEVELOPERS PVT. LTD.
REGISTERED OFFICE AT
14/185-14/186, GROUND FLOOR,
MAIN SHIVALIK ROAD,
NEW DELHI-110017
THROUGH ITS DIRECTOR
ALSO AT
VIPUL TECHSQUARE
GOLF COURSE ROAD
DLF PHASE 5, SECTOR 43,
GURUGRAM-122009 Respondent No. 1 / Appellant No. 1
2. VIPUL LIMITED
REGISTERED OFFICE AT
UNIT NO.201, C-50,
MALVIYA NAGAR,
NEW DELHI-110017
THROUGH ITS DIRECTOR
ALSO AT
VIPUL TECHSQUARE
GOLF COURSE ROAD
DLF PHASE 5, SECTOR 43,
GURUGRAM-122009 Respondent No. 2 / Appellant No. 2
VERSUS
1. SOLITAIRE CAPITAL INDIA
REGISTERED OFFICE AT
S-38, GREATER KAILASH-II,
NEW DELHI-110048
Page 2 of 57
THROUGH ITS AUTHORISED SIGNATORY
Petitioner No. 1 / Respondent No. 1
2. MR. SANJIV AHUJA
R/O 3A, MARGATE ROAD
SINGAPORE 438076 Petitioner No. 2 / Respondent No. 2
3. MR. PUNIT BERIWALA
R/O 15/10, SARVPRIYA VIHAR,
NEW DELHI-110016
Respondent No. 3/Respondent No.3
4. MR. RAKESH SHARMA
VIPUL TECHSQUARE GOLF COURSE ROAD,
DLF PHASE 5, SECTOR 43
GURUGRAM - 122009
Respondent No. 4 /Respondent No.4
5. M/S NATIONAL SYNTHETICS LTD.
CORPORATE OFFICE AT:
11TH FLOOR, NARAINMANZIL BUILDING,
23, BARAKHAMBA ROAD,
NEW DELHI-110001
Respondent No. 5/Respondent No.5
6. MR. VK RUSTOGI
R/O: FLAT NO. 805, TYPE A,
8TH FLOOR, CATEGORY 3, POCKET B,
SFS MULTI-STOREYED FLATS,
MOTIA KHAN, NEW DELHI - 110055
Respondent No. 6/Respondent No.6
7. M/S KARAMCHAND REALTECH PVT. LTD.
REGD. OFF: KARAMCHAND HOUSE, 72,
OKHLA ESTATE PHASE - III
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 3 of 57
NEW DELHI - 110020
Respondent No. 7/Respondent No.7
8. MR. ANIL ARYA
R/O: "RADHARANI",
3 AVENUE GULMOHAR,
WESTEND GREENS, RAJOKRI,
BEHIND NH-8, SHIVMURTI,
NEW DELHI - 110038
Respondent No. 8/Respondent No.8
9. M/S SILVERSTONE DEVELOPERS PVT. LTD.
REGD. OFF: 11TH FLOOR, NARAINMANZIL BUILDING,
23, BARAKHAMBA ROAD,
NEW DELHI-110001
Respondent No. 9/Respondent No.9
10. M/S PKBK BUILDWELL PVT. LTD.
CORPORATE OFFICE AT:
VIPUL TECHSQUARE
GOLF COURSE ROAD,
DLF PHASE 5, SECTOR 43
GURUGRAM - 122009
Respondent No. 10/Respondent No.10
11. PKB BUILDCON PVT. LTD.
CORPORATE OFFICE AT:
VIPUL TECHSQUARE GOLF COURSE ROAD,
DLF PHASE 5, SECTOR 43.
GURUGRAM - 122009
Respondent No. 11/Respondent No.11
12. M/S KST BUILDWELL PVT. LTD.
CORPORATE OFFICE AT:
VIPUL TECHSQUARE GOLF COURSE ROAD,
DLF PHASE 5, SECTOR 43
GURUGRAM - 122009
Respondent No. 12/Respondent No.12
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 4 of 57
Present:
For Appellant: Mr. Ritin Rai, Sr. Adv. with Mr. Sarojanand Jha,
Mr. Suraj Malik, Mr. Karan Sharma, Advocate.
For Respondent: Mr. P. Nagesh, Sr. Advocate, Mr. Saurabh Kalia,
Ms. Sonali Jain, Advocates for Respondent Nos.
1 & 2.
Ms. Renu Gupta, Advocates for Respondent Nos.
7 & 8.
Ms. Raveena Rai, Mr. Prateek Kumar and Ms.
Apeksha Dhanvijay, Advocates for R9.
With
Company Appeal (AT) No. 11 of 2021
IN THE MATTER OF: Status Before Status Before
NCLT NCLAT
1. VIPUL LIMITED
A COMPANY REGISTERED UNDER
THE PROVISIONS OF COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE AT
UNIT NO.201, C-50,
MALVIYA NAGAR,
NEW DELHI-110017
THROUGH ITS DIRECTOR
ALSO AT
VIPUL TECHSQUARE
GOLF COURSE ROAD
DLF PHASE 5, SECTOR 43,
GURUGRAM-122009 Respondent No. 2/Appellant No. 1
2. VIPUL SEZ DEVELOPERS PVT. LTD.
A COMPANY REGISTERED UNDER
THE PROVISIONS OF COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE AT
14/185-14/186, GROUND FLOOR,
MAIN SHIVALIK ROAD,
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 5 of 57
NEW DELHI-110017
THROUGH ITS DIRECTOR
ALSO AT
VIPUL TECHSQUARE
GOLF COURSE ROAD
DLF PHASE 5, SECTOR 43,
GURUGRAM-122009 Respondent No. 1/Appellant No. 2
VERSUS
1. SOLITAIRE CAPITAL INDIA
REGISTERED OFFICE AT
S-38, GREATER KAILASH-II,
NEW DELHI-110048
THROUGH ITS AUTHORISED SIGNATORY
Petitioner No. 1 / Respondent No. 1
2. MR. SANJIV AHUJA
R/O 3A, MARGATE ROAD
SINGAPORE 438076 Petitioner No. 2 / Respondent No. 2
3. MR. PUNIT BERIWALA
R/O 15/10, SARVPRIYA VIHAR,
NEW DELHI-110016 Respondent No. 3/ Respondent No. 3
4. MR. RAKESH SHARMA
VIPUL TECHSQUARE GOLF COURSE ROAD,
DLF PHASE 5, SECTOR 43
GURUGRAM - 122009 Respondent No. 4/Respondent No. 4
5. M/S NATIONAL SYNTHETICS LTD.
CORPORATE OFFICE AT:
11TH FLOOR, NARAINMANZIL BUILDING,
23, BARAKHAMBA ROAD,
NEW DELHI-110001 Respondent No. 5/Respondent No. 5
6. MR. VK RUSTOGI
R/O: FLAT NO. 805, TYPE A,
8TH FLOOR, CATEGORY 3, POCKET B,
SFS MULTI-STOREYED FLATS,
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 6 of 57
MOTIA KHAN, NEW DELHI - 110055
Respondent No. 6/ Respondent No. 6
7. M/S KARAMCHAND REALTECH PVT. LTD.
REGD. OFF: KARAMCHAND HOUSE, 72,
OKHLA ESTATE PHASE - III
NEW DELHI - 110020 Respondent No. 7/Respondent No. 7
8. MR. ANIL ARYA
R/O: "RADHARANI",
3 AVENUE GULMOHAR,
WESTEND GREENS, RAJOKRI,
BEHIND NH-8, SHIVMURTI,
NEW DELHI - 110038 Respondent No. 8/Respondent No. 8
9. M/S SILVERSTONE DEVELOPERS PVT. LTD.
REGD. OFF: 11TH FLOOR, NARAINMANZIL BUILDING,
23, BARAKHAMBA ROAD,
NEW DELHI-110001 Respondent No. 9/Respondent No. 9
10. M/S PKBK BUILDWELL PVT. LTD.
CORPORATE OFFICE AT:
VIPUL TECHSQUARE
GOLF COURSE ROAD,
DLF PHASE 5, SECTOR 43
GURUGRAM - 122009 Respondent No. 10/Respondent No. 10
11. PKB BUILDCON PVT. LTD.
CORPORATE OFFICE AT:
VIPUL TECHSQUARE GOLF COURSE ROAD,
DLF PHASE 5, SECTOR 43.
GURUGRAM - 122009 Respondent No. 11/ Respondent No. 11
12. M/S KST BUILDWELL PVT. LTD.
CORPORATE OFFICE AT:
VIPUL TECHSQUARE GOLF COURSE ROAD,
DLF PHASE 5, SECTOR 43
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 7 of 57
GURUGRAM - 122009 Respondent No. 12/ Respondent No. 12
Present:
For Appellant: Mr. Sarojanand Jha, Mr. Suraj Malik, Mr. Karan
Sharma, Mr. Abhimanyu Bhandari, Advocates
For Respondent: Mr. P. Nagesh, Sr. Advocate, Mr. Saurabh Kalia,
Ms. Sonali Jain, Advocates for Respondent Nos.
1 & 2.
Ms. Renu Gupta, Advocate for Respondent Nos.
7 & 8.
Ms. Raveena Rai, Mr. Prateek Kumar and Ms.
Apeksha Dhanvijay, Advocates for R9.
With
Company Appeal (AT) No. 20 of 2021
IN THE MATTER OF: Status Before Status Before
NCLT NCLAT
1. M/S KARAMCHAND REALTECH PVT. LTD.
REGD. OFF: KARAMCHAND HOUSE, 72,
OKHLA ESTATE PHASE - III
NEW DELHI - 110020 Respondent No. 7 / Appellant No. 1
VERSUS
1. SOLITAIRE CAPITAL INDIA
REGISTERED OFFICE AT
S-38, GREATER KAILASH-II,
NEW DELHI-110048
THROUGH ITS AUTHORISED SIGNATORY
Petitioner No. 1 / Respondent No. 1
2. MR. SANJIV AHUJA
R/O 3A, MARGATE ROAD
SINGAPORE 438076
Petitioner No. 2 / Respondent No. 2
3. VIPUL SEZ DEVELOPERS PVT. LTD.
REGISTERED OFFICE AT
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 8 of 57
14/185-14/186, GROUND FLOOR,
MAIN SHIVALIK ROAD,
NEW DELHI-110017
THROUGH ITS DIRECTOR
ALSO AT
VIPUL TECHSQUARE
GOLF COURSE ROAD
DLF PHASE 5, SECTOR 43,
GURUGRAM-122009 Respondent No. 1 / Respondent No. 3
4. VIPUL LIMITED
REGISTERED OFFICE AT
14/185-14/186, GROUND FLOOR,
MAIN SHIVALIK ROAD,
NEW DELHI-110017
THROUGH ITS DIRECTOR
ALSO AT
VIPUL TECHSQUARE
GOLF COURSE ROAD
DLF PHASE 5, SECTOR 43,
GURUGRAM-122009 Respondent No. 2 / Respondent No. 4
5. MR. PUNIT BERIWALA
R/O 15/10, SARVPRIYA VIHAR,
NEW DELHI-110016
Respondent No. 3 / Respondent No. 5
6. MR. RAKESH SHARMA
RESITERED OF, C-3/148, SECTOR - 36
NOIDA - 201301
Respondent No. 4 / Respondent No. 6
7. M/S NATIONAL SYNTHETICS LTD.
CORPORATE OFFICE AT:
11TH FLOOR, NARAINMANZIL BUILDING,
23, BARAKHAMBA ROAD,
NEW DELHI-110001 Respondent No. 5 / Respondent No. 7
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 9 of 57
8. MR. VK RUSTOGI
R/O: FLAT NO. 805, TYPE A,
8TH FLOOR, CATEGORY 3, POCKET B,
SFS MULTI-STOREYED FLATS,
MOTIA KHAN, NEW DELHI - 110055
Respondent No. 6 / Respondent No. 8
9. M/S SILVERSTONE DEVELOPERS PVT. LTD.
REGD. OFF: 11TH FLOOR, NARAINMANZIL BUILDING,
23, BARAKHAMBA ROAD,
NEW DELHI-110001 Respondent No. 9 / Respondent No. 9
10. M/S PKBK BUILDWELL PVT. LTD.
REGISTERED OFFICE, 14/185-14/186,
GROUND FLOOR, MALVIYA NAGAR
MAIN SHIVALIK ROAD,
NEW DELHI 110017
ALSO AT
VIPUL TECHSQUARE
GOLF COURSE ROAD
DLF PHASE 5, SECTOR 43,
GURUGRAM-122009 Respondent No. 10 / Respondent No. 10
11. PKB BUILDCON PVT. LTD.
REGISTERED OFFICE, 14/185-14/186,
GROUND FLOOR, MALVIYA NAGAR
MAIN SHIVALIK ROAD,
NEW DELHI 110017
ALSO AT
VIPUL TECHSQUARE
GOLF COURSE ROAD
DLF PHASE 5, SECTOR 43,
GURUGRAM-122009 Respondent No. 11 / Respondent No. 11
12. M/S KST BUILDWELL PVT. LTD.
REGISTERED OFFICE, 14/185-14/186,
GROUND FLOOR, MALVIYA NAGAR
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 10 of 57
MAIN SHIVALIK ROAD,
NEW DELHI 110017
ALSO AT
VIPUL TECHSQUARE
GOLF COURSE ROAD
DLF PHASE 5, SECTOR 43,
GURUGRAM-122009 Respondent No. 12 / Respondent No. 12
13. MR. ANIL ARYA
R/O: "RADHARANI",
3 AVENUE GULMOHAR,
WESTEND GREENS, RAJOKRI,
BEHIND NH-8, SHIVMURTI,
NEW DELHI - 110038 Respondent No. 8 / Respondent No. 13
Present:
For Appellant: Ms. Renu Gupta, Advocate.
For Respondent: Mr. P. Nagesh, Sr. Advocate with Ms. Sonali
Jain, Advocates for RespondentNos. 1 & 2.
Mr. Sarojanand Jha, Mr. Suraj Malik, Mr. Karan
Sharma, Advocates for Respondent Nos. 3,4,5,6
& 10-12.
JUDGMENT
Jarat Kumar Jain: J.
The National Company Law Tribunal, New Delhi, Bench - III (the 'Tribunal') vide order dated 14.02.2020 allowed the Application CA No. 83 of 2020 in CP No. 94 of 2019 filed by the Solitaire Capital India and Mr. Sanjiv Ahuja against that order the Appeal CA (AT) No. 60 of 2020 is filed by the Vipul SEZ Developers Pvt. Ltd. & Vipul Ltd.
2. The Tribunal vide order dated 04.01.2021 rejected the Application CA- 422/2019 filed by Vipul Ltd. against that order Vipul Ltd. &Vipul SEZ CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 11 of 57Developers Pvt. Ltd. and Karamchand Realtech Pvt. Ltd. have filed the Appeals CA (AT) No. 11 of 2021 and CA (AT) No. 20 of 2021 respectively. The ApplicationCA No. 83 of 2020filed by the Applicants/Petitioners Solitaire Capital and Sanjiv Ahuja seeking following reliefs:-
(a) Take on record the orders dated 17.12.2019 and 09.01.2020 passed by the Hon'ble Supreme Court in Civil Appeal No. 9400 of 2019.
(b) Decide the Application under Section 8 of the Arbitration and Conciliation Act, 1996, expeditiously in the terms of the order dated 09.01.2020 passed by the Hon'ble Supreme Court.
(c) Alternatively, grant injunction on the Sale Deed No. 3543, dated 12.05.2006 until 12.02.2020 or the disposal of the Application under Section 8 of the Arbitration and conciliation Act, 1996, whichever is later.
(d) Pass such further order (s) as this Tribunal may deem fit and proper in the facts and circumstances of the present case.
3. The Tribunal by the impugned order dated 14.02.2020 allowed the Application, operative portion of the order is under: -
"In view of the discussions made above, this Tribunal is inclined to allow the Application and the Respondents are restrained from dealing with seven acres of land registered in the name of first Respondent Company under Sale Deed No. 3543 dated 12.05.2006, in any manner whatsoever till the Application filed under Section 8 of the Arbitration and Conciliation Act, 1996 is decided and in the event, the said Application is dismissed, till the final disposal of the main CP No. 94 of 2019."
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 12 of 57
4. Being aggrieved with this order, the Appellants "Vipul SEZ Developers Pvt. Ltd. and Vipul Ltd." have filed the present Appeal CA (AT) No. 60 of 2020.
5. The Application CA 422/2019 under Section 8 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) filed by the Vipul Ltd., is rejected by the Tribunal vide order dated 04.01.2021 whereby declined to refer the matter to Arbitral Tribunal.
6. Operative portion of the order dated 04.01.2021 is as under:-
"48. In the light of the detailed discussion made above, it becomes clear that the matter complained of relates to the instances of oppression and mismanagement of the affairs of first Respondent Company. The subject matter of the petition is not capable of being referred to Arbitral Tribunal. The petitioners have a right under law to seek statutory reliefs from the NCLT, which alone could be granted in view of the statutory scheme contained in the Companies Act, 2013 and the subject matter of the company petition is outside the purview of the arbitration clause.
49..............
50. In the light of the above, we are not inclined to refer the matter to Arbitral Tribunal and the CA No. 422/2019 filed in CP/94/241-242/PB/2019 by the Applicant/Respondent No. 2 under Section 8 of the Arbitration& Conciliation Act, 1996 stands rejected"
7. Being aggrieved with this order, Vipul Ltd. and Vipul SEZ Developers Pvt. Ltd. have filed CA (AT) No. 11 of 2021 and Mr. Karamchand Real Tech Pvt. Ltd. has also filed CA (AT) No. 20 of 2021, against the same order.
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 13 of 57
8. As all these Appeals are inter-related, therefore, we are deciding these Appeals by the common Judgment. In the Judgment, the parties are referred as their original status before the Tribunal. Brief facts: -
9. The substance of the mattercomplained of by the Petitioners in Company Petition filed under Sections 241, 242, 213 of Companies Act, 2013 (in brief Act) that the Petitioner No.1 viz., Solitaire Capital India is holding 9100 shares of the issued capital in Respondent No. 1 viz., Vipul SEZ Developers Private Limited, a. Solitaire Capital India- Solitaire I - 4945 Shares b. Solitaire Capital India-Solitaire II - 4155 Shares
10. The total shareholding of Petitioner Nos. 1 and 2 is 18.2% and 16.76% of the authorised and paid up capital of the Respondent no. 1. Mr. Sanjiv Ahuja (Petitioner No. 2) is a common Director of the Solitaire Buildmart Private Limited (referred as "SBPL"), Solitaire Ventures Pte. Ltd. (referred as "SVPL") and the Investment Manager of the Petitioner No.1. Therefore, the Petitioners are eligible to file the Petition under the Sections 241 r/w 242 of the Companies Act, 2013.
11. The Respondent No. 1 viz., Vipul SEZ Developers Private Limited was incorporated on 08.02.2006 by Vipul Group of Companies, as a Special Purpose Vehicle (referred as "SPV/Respondent No.1"), to develop an IT/Tes SEZ on land identified in village FazilpurJharsa and Behrampur, Gurugram Haryana (referred as "Project").
12. The Respondent No. 1 is the subsidiary of the Respondent No. 2 which is holding 25020 shares of Rs. 10 each i.e., 50.04% of the authorised and CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 14 of 57paid-up capital of Respondent No.1. The Respondent Nos. 3 (Mr. Punit Beriwala) & 4 (Mr. Rakesh Sharma) are the directors of the Respondent no.1 and represent the Respondent No. 2 on the Board of the Respondent No.1.
13. The Respondent No. 5 (National Synthetics Ltd.) holds 16.76% of the authorised capital of the Respondent No.1. The Respondent No. 6 (Mr. V. K Rustogi) is a Director of the Respondent No.1 and is an authorised representative of Respondent Nos. 5 & 9 (Silverstone Developers Pvt. Ltd.) The Respondent No. 7 (Karamchand Realtech Pvt Ltd.) holds 7500 shares of Rs. 10 each i.e., 15% of authorised and paid-up capital of the Respondent No.1. The Respondent no. 8 (Mr. Anil Arya) is on the Boards of Respondent Nos. 1 & 7. The Respondent No. 9 has invested Rs. 5,63,47,0000 (Rs. Fifty Six Crores Thirty Four Lakh Seventy Thousand Only) in the Respondent No.1 and the same is reflected in the Balance Sheet as on 31.03.2018 of the Respondent No. 1. The Respondent nos. 10, 11, & 12 are the wholly owned subsidiaries of Respondent No. 1.
14. A Joint Development and Collaboration Agreement (JDA) dated 23.03.2006 was entered into between the Respondent No. 2 and the Respondent No. 9. The JDA dated 05.05.2006 was entered into between the Respondent No. 2 and Respondent no. 7. A JDA dated 29.08.2006 was executed between Solitaire Ventures Pvt. Ltd. (SVPL), Solitaire Capital India (Petitioner No. 1), Solitaire Buildmart Private Ltd. (SBPL), Vipul Limited (Respondent No.2), Vipul SEZ Developers Ltd. (Respondent No. 1).
15. As per the JDA dated 29.08.2006, Petitioner No. 1 and Petitioner No. 2 had agreed to participate in the development, construction, sale and CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 15 of 57management of the Project. As per the JDA, Respondent No. 2 had to contribute 150 Acres of land ("Project Land") for the Project. The detail about the contribution in terms of money to be made by the Petitioners for the Project Land is given under Clause 1.1.7 of the JDA. The said Clause provides that an amount of Rs. 47.80 Crore was to be in the form of a 'commitment Deposit", which was to be paid by the petitioners up to signing of JDA: Rs. 44.00 Crores and within one week of signing of JDA: Rs. 3.80 Crores
16. The Petitioner No. 1 along with SPVL made investment to the tune of 58.85 Crore in Respondent No. 1 and 18.2% of the paid- up capital was issued to the Petitioner No. 1 in lieu of investment made in Respondent No.
1. As per the terms of JDA the sum of Rs. 58.85 Crore was to be under the joint control of Petitioner No.1, SPVL and Respondent No.1, which was to be later converted into shares. It is alleged that the investment made by the Petitioner No.1 along with SPVL in Respondent No. 1 have been used by Respondent No. 2, 3 & 4 in connivance with each other for purchase of land owned by Respondent No. 2 and Vipul Group of companies.
17. It reflects from the record that Respondent No. 2 along with its group companies has brought in land totalling 148.05434 Acres in the Project, the detail of which is given in Annexure- B to the JDA dated 29.08.2006. However, it reflects from SI. No. 4 of Annexure-B that some portion of land including 7 Acres of land under the Sale Deed No. 3543 is owned and possessed by Respondent No.1 (formerly known as Indica Estates Private Limited). Whereas, as per the terms of the UDA dated29.08.2006, CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 16 of 57Respondent No. 2 had to bring in 150 Acres of land in the Project with his own financial resources.
18. Under para 7.35 of the Company Petition, it is mentioned that the Respondent No.1 entered into a partnership with Ritwiz Builders and Developers Pvt Ltd., (100% subsidiary of the Respondent No. 2) (hereinafter referred as "Ritwiz") on 15.05.2006 for development of a planned project over lands jointly contributed by them. Thereafter, differences arose between the parties and the partnership was dissolved w.e.f. 15.07.2006. The matter was referred to arbitration and the arbitration resolution was achieved and an Exchange Award was pronounced by the sole Arbitrator on 03.08.2006. Vide Exchange Award, Respondent No.1 and Ritwiz exchanged the prime commercial piece of land owned by Respondent No.1 with 7. 806 acres of residential zoned land of much lesser value. It is alleged that Respondent No. 2 defrauded the Petitioner No.1 and SVPL by exchanging the prime piece of land of Respondent No. 1 with Ritwiz in clandestine manner. It is worthwhile to record that in the land schedule attached with the MOU dated 13.09.2008, the 7.806 acres of land is shown under the ownership of Ritwiz Builders and Developers Pvt Ltd., which is evidencing that the purported illegal exchange which sought to vest title of the 7.806 acres of land to Respondent No.1 had not been given effect to. In other words, the prime commercial piece of land Ad measuring 7 Acres under the Sale Deed No. 3543 is still owned and possessed by Respondent No.1 company; as has been recorded under Item 5 in the Minutes of its Board Meeting dated, 11.09.2008.
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 17 of 57
19. Subsequently, in order to resolve some dispute among the parties with regard to the contribution of 148.05434 Acres of land by the Respondent No. 2, a Memorandum of Understanding (hereinafter referred as "MoU") dated 13.09.2008 was executed between the Solitaire capital India (Petitioner No.
1). Solitaire Ventures Pte Ltd (SPVL), Vipul SEZ Developers Private Limited (Respondent No.1), Vipul Limited ( Respondent No.2), Karamchand Realtech Pvt Ltd (Respondent No.7.), Silver Stone Developers Pvt Ltd. (Respondent No.9), PKBK Buildwell Pvt Ltd. (Respondent No.10). PKB Buildcon Pvt Ltd. (Respondent no.11), KST Buildwell Pvt. Ltd. (Respondent No.12) Ritwitz Builders and Developers Pvt Ltd., Entrepreneurs (Calcutta) Pvt Ltd., URR Housing Corporation Pvt. Ltd. (hereinafter referred as "Parties to the MoU).
20. As per the MoU it was agreed that the Project Land comprising approximately 150 Acres initially stated to be contributed by Respondent no. 2, would be modified to 138.568375 Acres (hereinafter referred as "Revised Project Land") and the excess payment made by the parties, if any, would be adjusted against the project expenses incurred by Respondent No. 2. Further, the Respondent No. 2 and the Vipul Group agreed to transfer their rights, title and interest in their respective land along with their permissions and licenses etc., if any, granted by the competent Authority to Vipul SEZ Developers Private Limited (Respondent No. 1). The Vipul Group agreed and confirmed that it is bound by the terms and conditions of the JDA as regards the rights, title and interests in the Revised Project Land. The parties further agreed that any piece and parcel of the land not forming part of the Revised Project Land owned by Vipul Group and Karamchand CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 18 of 57Realtech Pvt Ltd., (Respondent No. 7) shall have a right to deal with said land including but not limiting to transfer the same to any other entity at their sole discretion. It is noted that land measuring 7 acres under Sale Deed No. 3543 owned and possessed by Respondent No.1 Company was not included in the Revised Project Land, which is one of the subject matters of the present Company Petition. In other words, 7 acres of land under sale deed No. 3543 is not owned by Vipul Group and Karamchand Realtech Pvt Ltd.
21. As per the MoU a portion of land measuring 28.156 Acres was taken out of approximately 150 Acres of Project Land and 17.956 Acres was to be brought in by Respondent No.2. However, subsequent to the signing of the MoU, the Petitioners came to know that 17.956 Acres of land which was to be brought in by Respondent No. 2 was actually purchased with the money of Respondent No.1 Company, which has been admitted by Respondent No. 4 in Arbitration Proceedings. This led to the Petitioner No. 1 & SPVL to cancel the MoU through a letter dated 15.05.2015 on the ground that the Respondent No. 2 and Vipul Group of Companies are defrauding the Petitioners and other Shareholders of Respondent No. 1 Company.
22. The MoU dated 13.09.2008 which was cancelled on 15.05.2015 contained an Arbitration Clause (being Clause 13), based on which the Petitioners and the Vipul Group of Companies are contesting their claims and counter claims before the Arbitral Tribunal and Civil Suits are also filed. The facts relating to claims and counterclaims before the Arbitral Tribunal and the Civil Courts are involving huge factual detail which cannot be CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 19 of 57recorded at this juncture for deciding Application filed under Section 8 of the Arbitration Act by Respondent No. 2.
23. In the background as stated above, the matter complained of by the Petitioners in the Company Petition is summarized as under; -
(i) Instances of fraud and cheating:
There are instances of wrongfully dealing with the land owned by Respondent No. 1,10, 11, & 12 i.e., advances paid towards cost of land measuring 11.0375 acres falling under various Agreements to sell (ATS) executed with three landowners amounting to Rs. 2,26,41,251/- were debited by Respondent No. 2 to Respondent No. 1 Company on 31.12.2006. During F.Y. 2012-13, the 1.00625 Acres of land was removed from the books of accounts of Respondent No. 1 Company without the consent of Petitioners and its Board of Directors, The land was subsequently registered in the name of the Entrepreneurs (Calcutta) Pvt. Ltd., a subsidiary of Respondent No. 2. The other acts of fraud and cheating done by the Respondents in relation to the affairs of the 1st Respondent company are summarized below; -
a) The rights to the land ad measuring 10.03125 acres out of the said 11.0375 acres were transferred to Roshni Builders for a total consideration of Rs. 4,75,00,000/- and the said consideration was retained by Respondent No. 2 and further 8.62 acres was sold by three landowners within 15 days vide sale deeds dated 15.07.2016 to Roshni Builders Pvt. Ltd. and its associates for a total price of Rs. 72,09,60,000/- which approximates the circle rates, whereas the market rate was approx Rs. 120 crores. The part of the sale proceeds over and above the circle rate were likely to be illegally siphoned away in cash by the owners and Respondent No. 2 in connivance with others.
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 20 of 57
b) The Respondent No.2 has fraudulently entered into a compromise Agreement in respect of Collaboration Agreement executed with respect to 41.05 acres out of 52.06 acres of land with certain farmers despite issue of rights towards expansion of land of the project as enshrined in Clause 3.4 of the JDA.
c) The Respondent No. 1 & Respondent No. 10 to 12 have paid an amount of Rs. 5.78 Crores without the prior knowledge of and consent of the Board of Respondent No. 1 & Respondent No. 10 to 12 and/or the Petitioners towards the land advances in the F.Y. 2006-07 and no documents appear on the record in this regard.
d) The land measuring 7 acres was purchased on 12.05.2006 in the name of Respondent No. 1 Company and the consideration was paid out of the kitty of Respondent No. 1. The Vipul Group of Companies played fraud by entering into a partnership dated 15.05.2006 on behalf of Respondent No.1 with Ritwitz Builders and Developers Pvt Ltd. (100% subsidiary of the Respondent No.
2) (hereinafter referred as "Ritwiz") under the name of "Vipul Projects Ltd." for developing a part of the project land. The said partnership was dissolved on 15.07.2006 within 2 months of its incorporation. After the dissolution of the partnership a settlement dated 26.07.2006 was drawn and the settlement document was executed for the exchange of land between Respondent No.1 and Ritwiz without passing any Board Resolution. In this regard a civil suit is filed by Petitioner No. 1 & SPVL before the Ld. Civil Judge (Sr. Div) Gurugram Seeking the cancellation of the compromise Arbitral Award and Registered Exchange Award dated 03.08.2006 as null and void.
e) As per the clause of 3.2 of MoUs of 2006 and clause 3.2 of JDA the Respondent No. 2 & 3 represented and assured the Petitioner No. 1 & SPVL of having acquired 150 acres of Project land, which in reality they had never been acquired and in fact they used the funds invested by Petitioner No.1 & SPVL to complete the CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 21 of 57purchases by converting the various Agreements to Sell (ATS) into sale Deeds. In terms of the JDA Rs. 47.80 Crore was to be utilised for the development of the land and not for the purchase of land.
f) The Respondent No. 4 has falsified/ forged the accounts of Respondent No. 1 Company in respect of investment made by the Petitioner No. 1 & SPVL.
g) On 12.08.2006 Respondent No. 2 and Ritwiz applied for license on the land measuring 28.05 acres of land under Sector 71 Gurugram. In the schedule submitted along with the application for obtaining the license for grant of group housing, the 7 acres of land owned by Respondent No. 1 was included in the application for the license application, and fraudulently shown under the composite ownership of Respondent No.2 &Ritwiz. Another license application dated 06.06.2007 was filed to change the License from group housing to Commercial. The Respondent No. 4 (Mr. Rakesh Sharma) had filed affidavit dated 09.06.2010 before the Land Acquisition Collector admitting that the said land ad measuring 7 acres is owned by Respondent No.1.
(ii) Instances of Oppression and mismanagement:
The Petitioners in the Company Petition have complained that the Respondent No. 3, 4 & 8 are in majority on the Board of Respondent No.1 Company. Therefore, all the decisions made by the Respondent No. 3 & 4 in collusion with other directors of removing or selling the Project land have been for the purpose of benefiting their own companies. The acts of Oppression and mismanagement done by the respondents in relation to the affairs of * Respondent Company are noted as follows; -
a) The Board Resolution dated 13.04.2019 authorizing Respondent Nos.2,3,7, &8 to deal with 7 Acres of land purchased in the name of Respondent No.1 vide Sale Deed No. 3543 dated 12.05.2006 is a related party transaction and is void ab initio CA (AT) No. 60 of 2020, 11 & 20 of 2021.Page 22 of 57
b) Failure to give effect to Board Resolutions dated 05.11.2011, 11.12.2017, and 19.12.2018 passed by the Respondent No.1 to induct Petitioner No. 2 as a signatory to bank accounts of the Respondent No.1.
c) The Respondent Nos. 3 & 4 in collusion with other Respondents have excluded Petitioner No.2 as signatory to maintain control over all the affairs of Respondent No.1 Company and run the company as per the whims and fancies negating the rights of the shareholders of Respondent No. 1.
d) Delay in appointment of external Coordinator of the Respondent-No 1 as per the discussion held in the Board of Respondent No. 1 Company on 19.12.2018.
e) Despite several communications and requests made, the Petitioner No. 1 in an illegal manner was denied the right to inspect the books of accounts of Respondent No. 1, 10, 11, & 12 and CDs of the Board Meetings of the Board of Respondent No. 1 Company.
f) Failure to handover the secretarial records to the Petitioner No.2 in compliance with the Board Resolution dated 19.12.2018 which provides that the Secretarial records of the Respondent No. 1 is to be handed over to Petitioner no. 2.
g) The Respondent No. 2 appointed its related party i.e., Respondent No. 4, who is senior Official of Respondent No. 2 and Director of Respondent No.1 Company to deal with the legal matters of Respondent No.1 so that the affairs of the Respondent No.1 Company are conducted as per their whims and fancies.
h) One of the Director Ms. Guninder Singh (erstwhile director representing the Respondent No.2 on the Board of Respondent No.1) had applied for a license over 100 acres of land for plotted development to DTCP Haryana vide application dated 02.02.2008. The lands owned by Respondent No. 1, 10, & 11 were included in CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 23 of 57the said application without any intimation to the Board of Respondent No.1, 10 & 11.
i) Two writ petitions No. 16724 of 2008 & 1314 of 2009 were filed on 22.01.2009 on behalf of Respondent No.1 Company attaching the forged license forms in respect of the land owned by Respondent No.1 Company. Neither did the Board of Respondent No.1 nor the Petitioners have any knowledge of the said writ petitions, which was discovered in 2017 via RTI.
j) As per the terms of JDA dated 29.08.2006, SPVL (a company registered under the Singapore Companies Act) had remitted Foreign Direct Investment to the tune of Rs. 25,00,00,000 (Rupees Twenty Five Crores) as commitment Deposit/share application money to Respondent No.1. This amount is part of the overall investment of Rs. 58.85 crores made by the Petitioner No 1 & SVPL. As per the JDA the said commitment Deposit was to be converted into share capital on the satisfaction of the conditions precedent mentioned in Clause 2 of the JDA. Further, an amount of Rs. 54.17 Crores has been received by Respondent No.1 from Respondent No.9, an Indian Company which has in turn received FDI from a Mauritius Vehicle, Banyan Real Estate Fund; hence the investment from Respondent No. 9 into Respondent No.1 Company is an indirect FDI. The Respondent No. 1 did not comply with the RBI guidelines and FEMA, 1999, which ultimately will make the 1st Respondent Company to bear penalties of such violations.
24. In the premises, the main prayers made in the Company Petition by the Petitioners are as follows; -
"(u) Pass any appropriate orders, reliefs, directions under Section 241 and 242 of the Companies Act, 2013 to bring to an end the aforesaid acts of oppression and mismanagement perpetrated by CA (AT) No. 60 of 2020, 11 & 20 of 2021.Page 24 of 57
the Respondents and for necessary orders and reliefs in respect thereto, including as prayed for therein;
(v) The Respondents may be directed to not to undertake any measure or take any action against the interest of the shareholders & the Respondents may be directed not to act in a manner as if the control of the management rests with the Respondents.
(w) The Respondents may be directed to resolve all the issues in the interest of the Respondent No 1, 10, 11 & 12 in mutuality and in clear majority and not through unilateral actions and without majority;
(x) To declare three board resolutions dated 13.04.2019 or such similar resolution (s) authorizing Respondent No. 2, 3, 7 & 8 to deal with the 7 acres of land purchased through sale deed no. 3543 dated 12.05.2006 as illegal and unlawful and being a related party transaction as void ab initio & and in view of the settled law that any authority for any act which is impermissible in law is void and be set aside;
(y) To declare any action taken by respondent's w.r.t. three board resolutions dated 13.04.2019 or such similar resolution(s) authorizing Respondent No. 2, 3, 7 & 8 to deal with the 7 acres of land purchased through sale deed no. 3543 dated 12.05.2006 as illegal and unlawful and be set aside;
(z) Pass order to direct Respondents to pay & be held liable for the penalties or any other action which may be imposed due to intentional non-compliance of the FEMA Regulations and Rules; (aa) Pass order to direct Respondents to pay & be held liable for the penalties which may be levied due to non-filing of Audited Balance for the FY 2018-19 or any other subsequent balance and Financial statements;
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 25 of 57(bb) Pass order to direct the Respondent No. 2, 3 & 4 to reimburse the monies to be received as compensation for acquisition of 0.635 acres of land owned by Respondent No.1 to Respondent No.1.
(cc) Direct appointment of receiver to run, manage and supervise the affairs of Respondent No. 1, 10, 11 & 12 & frame a scheme to run the affairs of Respondent No. 1, 10, 11 & 12 by the Hon'ble Tribunal.
(dd) To pass order to grant investigation under Section 213 of the Companies Act, 2013 into the affairs of Respondent No. 1, 2, 10, 11 & 12 and their group Companies;
(ee) Direct the Respondents not to create a majority to give effect to its designs and declare all actions of respondents without specific approvals of the Petitioners as null and void; (ff) Direct appointment of M/s AKGVG & Associates or any other independent agency as External Coordinator of Respondent No. 1, 10, 11 & 12 with a scope to include (a) maintenance of books of accounts, (b) location of registered office, (c) maintenance of secretarial records & (d) provision of secretarial services, (e) liaison with statutory auditor;
(gg) Direct the Respondents to handover complete secretarial records, books and accounts and all information and data of Respondent No. 1, 10, 11 & 12 to Petitioner No 2 in accordance with Board resolutions dated 19.12.2008;
(hh) To pass ad interim order to restrain Respondent No. 2, 3, & 4 from representing Respondent No. 1, 10, 11 & 12 before any legal forum & dealing with legal matters of Respondent No. 1, 10, 11 & 12 and the said Respondents may be directed to appoint an independent & external legal person/firm within 45 days to render the required services.
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 26 of 57
(ii) To pass ad interim order to restrain Respondent No 2, 3 & 4 from representing Respondent No 1, 10, 11 & 12 before any licensing/ government authorities and that Respondent No. 1, 10, 11 & 12 may be directed to appoint any independent & external person/agency within 45 days to render the required services.
(ii) Direct the Respondents to handover all documents, agreements, registries, ownership records, maps, permissions, licenses, authorities/POA given or taken and communication with supporting relating to immovable, movable and intangible assets of Respondent No. 1, 10, 11 & 12 to External Coordinator or any independent agency as the Tribunal deems fit;
(kk) Direct the Respondents to handover all cheque books, all bank statements, details of cheque issued but not presented in Banks, standing instruction with banks, all banking and statutory login and password, complete details of legal cases or notices filed by or against Respondent No. 1, 10, 11 & 12 complete details of cases, returns, compliance, notice, demand, refund or proceeding with various statutory authorities, local bodies and private parties documents, etc. of Respondent No. 1, 10, 11 & 12 to External Coordinator or any independent agency as the Tribunal deems fit;
(II) Direct the Respondents to pay costs incurred by the Petitioners for the present Petition before the Hon'ble Tribunal; (mm) Pass an appropriate order against the Respondents for various non compliances under the Companies Act, 2013 as disclosed under this petition.
Pass such other and/or further orders be made affording complete reliefs to the Petitioner as the Hon'ble Company Law Tribunal may deem fit and proper.
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 27 of 57
25. The Petitioners in the CP have sought for as many as 15 interim reliefs however, the petitioners only prays for one interim relief i.e. reproduced herein "xvi. To pass an interim order w.r.t three board resolution dated 13.04.2019 authorising the Respondent No. 2, 3, 7 and 8 to deal with 7 acres of land purchased vide Sale Deed No. 3543 dated 12.05.2006 not to be exercised by Respondents in any manner till pendency of the petition."
26. The Tribunal vide order dated 09.08.2019 allow the prayer for interim relief which is as under:-
"In the circumstances, a status quo order as and from this date in relation to the immovable property covered under Sale Deed No. 3543 dated 12.05.2006 will be in order, till the decision of the Ld. Arbitral Tribunal being pronounced in relation to the dispute as between the parties pending before it or the decision of this Tribunal in relation to CA No. 422/C-III/ND/201 questioning the jurisdiction of this Tribunal in view of Section 8 of the Arbitration and conciliation Act, 1996 whichever is decided earlier and with a view to preserve the property reflected presently in the name of the 1st Respondent company till such time."
27. This interim order is challenged by the Petitioners i.e. Solitaire Capital India in CA (AT) No. 268 of 2019 on the ground that the interim order of status quo made conditional till decision of Ld. Arbitral Tribunal, who is supposed to pronounce decision in the pending dispute between the parties. The Tribunal cannot exercise its power by referring to the decision as may be pronounced in the Arbitral proceedings, therefore, the conditional interim order is illegal. Against the interim order of the Tribunal other CA (AT) No. CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 28 of 57289 of 2019 has been preferred by Karamchand Realtech Pvt. Ltd. on the ground that the Tribunal has no jurisdiction to pass such interim order of status quo in a Petition under Section 241 - 242 with regard to the assets of the Company and Application under Section 8 of the Arbitration Act has been filed by the contesting Respondent No. 1 to 4 raising the question of maintainability and before it is decided, the question of maintainability of the Application under Section 241 - 242 cannot be decided and the Tribunal has no jurisdiction to pass even conditional order of status quo.
28. This Appellate Tribunal vide order dated 02.12.2019 decided both the Appeals by common order and held that:-
"In the aforesaid background, the Tribunal rightly held that predominant focus in a CP under Section 241 -242 of the Companies Act, 2013 is to safeguard and interest of the Company. However, if a party raises the issue of maintainability of the petition under Section 241-242 by filing a petition under Section 8 of the Arbitration Act, the Tribunal rightly held that such issue is to be decided but after the pronouncement by the Arbitral Tribunal and in the meantime passed interim direction as it thought fit and proper in the interest of the company. If the Tribunal is required to pass further ad-interim relief order, it may wait till the decision of the Arbitral Tribunal and then decide the main issue of maintainability and then decide on the question of passing further interim order during the pendency of the petition, if it is held to be maintainable"
29. With the aforesaid, both the Appeals were dismissed by this Appellate Tribunal. Thereafter, the Solitaire Capital India and Another filed Civil Appeal No. 9400 of 2019 before the Hon'ble Supreme Court. The Hon'ble CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 29 of 57Supreme Court has disposed of the Appeal with the following directions which is as under:-
"2. The Appeal is outcome of an interim order passed by the NCLT which has been dealt with by the NCLAT in the impugned order. As the Application under Section 8 of the Arbitration and Conciliation Act, 1996 is pending before the NCLT, we request the NCLT to decide the same finally, as agreed to by the Ld. Counsel for the parties, within a period of ten days.
3. No further order is required to be passed at this stage. In case any order is passed, it is open to the parties to take steps in accordance with law for redressal of their grievance.
4. Interim order passed by this Court on 17.12.2019 shall continue to operate for a period of ten days from today.
5. The Appeal is, accordingly, disposed of."
30. Hon'ble Supreme Court has disposed of the aforesaid Appeal on 09.01.2020. Thereafter, the Petitioners (Respondent No. 1 and 2) filed an Application before the Tribunal CA No. 83 of 2020 the prayers sought in the Application are already mentioned in Para 2 of this Judgment. The substance of the relies is that decide the Application under Section 8 of the Arbitration Act expeditiously as per the order of the Hon'ble Supreme Court and grant injunction till disposal of the Application under Section 8 of the Arbitration Act. The Tribunal after hearing Ld. Counsel for the parties allowed the Application and directed that the Respondents are restrained from dealing with 7 acres of land registered in the name of first Respondent Company under Sale Deed No. 3543 dated 12.05.2006 in any manner whatsoever till the Application filed under Section 8 of the Arbitration Act is CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 30 of 57decided in event the said Application is dismissed till final disposal of the main CP No. 94 of 2019.
31. Being aggrieved with this order the Appellant Vipul Group has filed this Appeal CA (AT) No. 60 of 2020.
32. In the light of all the details noted above, the Tribunal proceed to examine the Application filed Section 8 of the Arbitration Act, by the Respondent No. 2.
The Respondent No.2 in the Application filed U/S 8 of the Arbitration Act, has contended as follows;
i) A Memorandum of Understanding dated 13.09.2018 was executed inter alia between the parties to the Company Petition. Differences in disputes arose between parties to the Memorandum of Understanding dated 13.09.2018 (relied upon and annexed by the Petitioners from pages 292 to 304 of the Company petition) which contained an arbitration clause.
ii) The Petitioners filed an application under Section 9 of the Arbitration Act, before the Hon'ble High Court of Delhi seeking certain interim measures, wherein, the Hon'ble High Court of Delhi vide order dated 03.12.2012 was pleased to pass status quo order, which was modified by order dated 10.03.2015 when the Hon'ble High Court of Delhi was pleased to dispose of the Section 9 petition by a reasoned and detailed common judgment in OMP No. 1123 of 2012, OMP No.551 of 2014 and OMP No. 624 of 2014,
iii) An Arbitral Tribunal was constituted and the arbitration proceedings commenced on 26.02.2015. The Arbitral Tribunal comprises Hon'ble Mr. Justice A.K. Sikri, (Former Judge or Supreme Court of India) (earlier presided by Hon'ble Mr. Justice S.B. Sinha, Former Judge of Supreme Court of India), Hon'ble Mr. Justice R.C. Chopra, former Judge of Delhi High Court) and CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 31 of 57Hon'ble Ms. Justice Reva Khetrapal, (Former Judge Delhi High Court).
iv) The Application filed by the Petitioners under Section 17 of the Arbitration Act on 04.05.2019, is pending adjudication before the Arbitral Tribunal. The Application under Section 17 of the Arbitration Act was taken up on 13.05.2019, detailed arguments were heard on 16.05.2019 as well as on 17.05.2019. It was only thereafter on 17.05.2019 that the Arbitral Tribunal was pleased not to grant any interim - protection. The Arbitral Tribunal passed Order on 17.05.2019 which was deliberately and mischievously concealed by the Petitioners.
v) That the Petitioners had a right of choosing a forum for agitating the claims, and the Petitioners in the case had chosen to approach the Arbitral Tribunal by filing Application under Section 17 of the Arbitration Act, seeking interim measures of protection.
vi) The Petitioners vide the Company Petition are attempting to re agitate the issues which have already been raised by them before the Arbitral Tribunal, and it is only after miserably failing to obtain any interim protection before the Arbitral Tribunal, that the Petitioners have moved the Company Petition before this Tribunal in a most mala fide manner.
vii) As the issues involved in the Company Petition are identical to the disputes already pending adjudication before the Arbitral Tribunal, and as disputes have risen from and in connection the terms and conditions as contained in the Memorandum of Understanding dated 13.09.2018, all such instances are covered by the arbitration clause requiring such dispute to be settled and decided by arbitration alone.
viii) The issues raised by the Petitioners in the Company Petition are already matter of adjudication before the Arbitral Tribunal. Further, it is an established proposition of law that once an Application under Section 8 of the arbitration Act has been filed and once the existence of a valid arbitration agreement between CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 32 of 57the pane has been brought to the notice of the judicial authority, the judicial authority ought refer the dispute to arbitration and the Application under Section 8 of the Arbitration Act has been filed (Respondent No.2] before filing of the reply to the Company Petition (First Statement) before this Tribunal. The Prayers made in the Application filed U/S. 8 of the Arbitration Act, are reproduced as follows; -
"A. Allow the present Application under Section 8 of arbitration and Conciliation Act, 1996 and refer the matter/parties for arbitration before the Hon'ble Arbitral Tribunal comprising Hon'ble Mr. Justice A.K. Sikri, Former Judge of Supreme Court of India, Hon'ble Mr. Justice R.C. Chopra, Former Judge Delhi High Court and Hon'ble Ms. Justice Reva Khetrapal, Former Judge of Delhi High Court; and/or B. Dismiss the Company Petition filed before this Tribunal; and/or C. Pass any such other and further order(s) as this Tribunal may deem fit and proper in the facts and circumstances of the case."
33. Reply filed by Respondent No.7 (Karamchand Realtech Pvt Ltd) in support of the Application filed U/S. 8 of the Arbitration Act:-
Reply filed by the Petitioners in the Application filed U/S 8 of the Arbitration Act:-
34. The Petitioners in their reply have submitted that the application filed under Section 8 of the Arbitration Act is frivolous and mala fide and with intent to delay the proceedings. Further, it is submitted that the acts of oppression and mismanagement committed by the Respondents are the subject matter covered under the provisions of the Companies Act, 2013 and CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 33 of 57only this Tribunal has the power to adjudicate upon the issue. The Respondents have failed to make out the basis on which the Application under Section 8 of the Arbitration Act is maintainable.
35. The Petitioners have stated that while conducting the affairs of the Respondent No. 1 Company, the Respondents have committed several acts of Oppression and Mismanagement detailed in Para 23 of this Judgment.
36. It is also stated that the cause of action and the subject matter leading to the initiation of legal proceedings in Company Petition and that under the Arbitration Petitions are separate and distinct. Further, the reliefs sought under the Company Petition and the Arbitration Petitions are unconnected and distinct from each other. In order to clarify the position, the comparative table of the prayer Clause is also submitted.
37. The Tribunal vide order dated 04.01.2021 decided the Application CA No. 422 of 2019 filed under Section 8 of the Arbitration Act and held that :-
"48. In the light of the detailed discussion made above, it becomes clear that the matter complained of relates to the instances of oppression and mismanagement of the affairs of first Respondent Company. The subject matter of the petition is not capable of being referred to Arbitral Tribunal. The petitioners have a right under law to seek statutory reliefs from the NCLT, which alone could be granted in view of the statutory scheme contained in the Companies Act, 2013 and the subject matter of the company petition is outside i.e. purview of the arbitration clause."
38. Against the aforesaid order, Vipul Group has filed CA (AT) No. 11 of 2021 and also Mr. Karamchand Real Tech Pvt. Ltd. has also filed CA (AT) CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 34 of 57No. 20 of 2021. In the Judgment, the parties are referred as their original status before the Tribunal.
Submissions on behalf of Vipul SEZ Developers Pvt. Ltd. and Vipul Ltd.
39. Ld. Sr. Counsel for the Respondents No. 1 and 2 (Appellants) submitted that the subject land of 7 acres under Sale Deed No. 3543 was purchased on 12.05.2006 in the name of the Respondent No. 1 (Appellant No. 1) Company. Thereafter, an exchange award was registered with the sub-registrar, Gurugram on 11.08.2006. Whereby the Respondent No. 1 (Appellant No. 1) exchanged the said 7 acres of land with M/s Ritwiz Builders and Developers Pvt. Ltd. for consideration of 7.806 acres under Sale Deed No. 2205 dated 17.01.2006. Ld. Tribunal failed to consider that transfer of immoveable property 7 acres was evident from registered exchange deed dated 11.08.2006. The same will take precedence over all previous documents. The Tribunal erred in not considering that in exchange of said 7 acres of land, the Respondent No. 1 (Appellant No. 1) became owner of 7.806 acres of land which also formed part of revise project land under MOU dated 13.09.2008. Thus, there was a valid consideration for exchange.
40. It is further submitted that the Petitioner No. 1 filed a Civil Suit before the Gurugram Civil Court seeking cancellation of said register exchange deed. In this suit, an Application under Section 8 of the Arbitration Act filed by the Appellants have been allowed vide order dated 12.07.2019 passed by the Court of ADJ Gurugram. The Petitioner's Civil Revision against the same was dismissed by the Punjab and Haryana High Court vide order dated 22.01.2020. The SLP filed by the Petitioner No. 1 against the said order was CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 35 of 57also dismissed by the Hon'ble Supreme Court vide order dated 08.02.2021. Thus, Tribunal by the impugned order granted stay on land owned by third party namely Ritwiz who was not impleaded by the Petitioners in the CP.
41. Ld. Sr. Counsel for the Respondent No. 1 and 2 (Appellants) also submitted that the Respondent No. 1 and 2 and Petitioners group initially agreed to develop 150 acres of land in terms of JDCA dated 29.08.2006, all the parties agreed to revise the extent of project land and accordingly, an MOU dated 13.09.2008 was signed and executed by the Respondent No. 1 and 2 and Petitioners, whereby parties reduced the project land from 150 acres to about 138.568 acres. The said 7 acres of land does not form part of Annexure-A to the MOU which specified the details of 138.568 acres. Instead, the land of 7.806 acres which came to the Respondent No. 1 (Appellant No. 1) under exchange deed was made part of revised project land. As per the MOU, it was agreed by the parties that Vipul Group and Karamchand shall have a right to deal with any land not forming part of the revised project land including transfer to any third parties. The validity of the binding nature of MOU has also been upheld by the Hon'ble Delhi High Court in OMP No. 1123 of 2012 on 10.03.2015. Accordingly, the Hon'ble High Court declined to grant any interim relief to the Petitioners (Respondent Nos. 1 and 2) on said 7 acres of land. This Judgment has not been challenged by the Petitioners (Respondent Nos. 1 and 2) and has attained finality.
42. On 27.07.2017 the Arbitral Tribunal adjudicating an Application under Section 17 filed by the Petitioners while denying relief in relation to the said 7 acres of land held that "we have noticed hereto before that prima CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 36 of 57facie the said MOU dated 13.09.2008 is binding on all parties". The Petitioners preferred an Appeal against the said Judgment dated 27.07.2017 before the Hon'ble High Court being Arb.A.Comm No. 27 of 2017 but facing dismissal, withdrew the same vide order dated 22.04.2019 with liberty to file another Section 17 application.
43. The second Application under Section 17 filed by the Petitioners, the Arbitral Tribunal denied interim relief in relation to the said 7 acres of land again and dismissed the Application. The Petitioners have challenged the Judgment of the Arbitral Tribunal before the Hon'ble High Court of Delhi by filing an Appeal under Section 37 of the Act and the same is pending without any interference.
44. Ld. Sr. Counsel for the Respondent No. 1 and 2 (Appellants) submitted that even in the suit filed by the Petitioner before Gurugram Civil Court challenging the exchange deed, and initial stay granted by the Civil Court was vacated by the Court of Ld. ADJ vide a detailed order dated 12.04.2019 and this order has also attained finality as the Petitioners never challenged this order. Thus, the Petitioners after having failed in their repeated attempt to get injunction on said 7 acres of land, finally approached the Tribunal in the month of June, 2019 by filing the completely dressed up and malafide petition under Sections 241-242 of the Companies Act, 2013 alleging oppression and mismanagement and again prays by the same interim relief i.e. stay on said 7 acres of land.
45. Ld. Sr. Counsel for the Respondent No. 1 and 2 (Appellants) submitted that without prejudice to the aforesaid the Petitioner admittedly has 18.2% stake in Respondent No. 1 (Appellant No. 1) Company, in terms of the MOU CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 37 of 57dated 13.09.2008 signed by all the parties including the Petitioners, the project land was revised to 138.56 acres and in terms of clause 9 of MOU, the Respondent No. 1 and 2 (Appellants) have agreed not to alienate the revised project land under MOU and terms of clause 7 of MOU parties executed an escrow agreement whereunder, the Respondent No. 1 and 2 (Appellants) have submitted original title deeds of about 50% of the revised project land with the escrow agent. The Respondent No. 1 and 2 (Appellants) have already given statement before the Hon'ble High Court of Delhi not to alienate the revised project land in terms of which the stay has been granted by the Hon'ble High Court on lands only to that extent. Thus, Petitioners are fully protected of their investment and even on equitable principles. Thus, the Ld. Tribunal grossly erred in passing the impugned order.
46. It is further submitted that there is no pleadings in support of grant of stay on said 7 acres of land despite the same, the Tribunal passed the impugned order granting stay. Assuming that the said 7 acres of land is owned by the Respondent No. 1 (Appellant No. 1), which is in the teeth of admission of the Petitioners that said land was transferred to Ritwiz and in fact the Petitioners had also filed the suit for cancellation of such transfer.
47. Ld. Sr. Counsel for the Respondent No. 1 and 2 (Appellants) also submitted that while passing the impugned order the Tribunal failed to even consider the Notification No. GSR464(E) dated 05.06.2015 issued by the Ministry of Corporate Affairs, Government of India, whereby Section 2 (76)
(viii) of Chapter 1 of Companies Act, 2013 shall not apply with respect to Section 188 to the private Company. Further 2nd proviso to sub-Section (1) of Section 188 shall also not apply to private company. Thus, objection of CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 38 of 57Petitioners regarding alleged violation of Section 188 was even prima facie not maintainable.
Submissions on behalf of the Kramchand Realtech Pvt. Ltd. (Appellant in CA (AT) No. 20 of 2021 and Respondent No. 7 & 8 in CA (AT) No. 11 of 2021.
48. Ld. Counsel for the Respondent No. 7 (Appellant) submitted that all the parties agreed to revise the extent of project land an MOU dated 13.09.008 was signed and executed reducing the project land from 150 acres to about 138.568 acres. The 7 acres of land under sale deed no. 35434 does not form part of Annexure A to the MOU which specify the details of 138.568 acres. Instead, the land of 7.806 acres which came to the Respondent No. 1 (Vipul SEZ Developers Pvt. Ltd.) under exchange deed was made part of revised project land. As per Para 4 of clause 1 of MOU it was agreed by the parties that Vipul Group and Kramchand Realtech Pvt. Ltd. shall have a right to deal with any land not forming part of revised project land including transfer to any third party. The validity and the binding nature of the MOU has been upheld by various forums.
49. Ld. Counsel for the Respondent No. 7 (Appellant) also submitted that the Tribunal in the impugned order erred in inter alia making the observations that Vipul Group in the Application filed under Section 8 of the Arbitration Act has not specifically pleaded that the Company Petition is a dressed up Petition. It is also erroneously observed by relying on typographical error in Para 10 of the short reply filed by the Respondent No. 7 (Appellant) to the Company Petition to come the conclusion that 7 acres of land under sale deed 3543 is owned and possessed by Vipul SEZ Developers CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 39 of 57Pvt. Ltd. It did not appreciate the reply in entirety wherein paragraph 7, 8, 11 and 12 of the Respondent No. 7 (Appellant) has clearly stated that in terms of MOU, all parties including the Petitioners that Vipul SEZ Developers Pvt. Ltd. and Respondent No. 7 (Appellant) shall have right to deal with other parcel of land approx 28 acres over and above the revised project land.
50. It is also submitted that parallel proceedings under Section 241 and 242 of the Companies Act not maintainable when rights of the Petitioners are yet to be determined in Civil Proceedings. For this purpose, cited the Judgment of Hon'ble Supreme Court in the case of Aruna Oswal Vs. Punkaj Oswal and Ors. (2020) 8 SCC 79. Hon'ble Supreme Court held that a petition under Sections 241 and 242 of the Companies Act was not maintainable as the rights, title and interest of the petitioners was yet to be determined in the civil proceedings which was initiated by the petitioners itself. Similarly, in the present case also, the right and interest on 28 acres of land which include 7 acres of land under sale deed no. 3543 is yet to be determined in the pending civil suit in the Arbitral Tribunal. There is not a single finding in the impugned order on the jurisdiction of the Tribunal in the light of the Ld. Arbitral Tribunal being ceased of the disputes between the parties including dispute in relation to sale deed dated 12.05.2006.
51. The Hon'ble Supreme Court in the case of Arjun Kumar Vs. Mahendra Kr.& Ors. (1964) 5 SCR 946 has observed that Interlocutory Orders are on various kinds, some like orders of stay, injunction or receiver or designed to preserve the status quo pending litigation and to ensure that the parties CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 40 of 57might not be pre-judiced by the normal delay which the proceedings before the Court, usually take time, such orders are certainly capable of being altered or very by subsequent applications for the said relief, though normally, only on proof of new facts or new situation which subsequently emerged.
52. Ld. Counsel for the Respondent No. 7 (Appellant) pointed out that the Petitioners have filed many applications for interim relief on 7 acres of land, however, all have been rejected in several proceedings between the same parties. Thus, the order passed by the Tribunal is liable to be set aside. Ld. Tribunal has erred in holding that the matter is not capable to refer the Arbitral Tribunal.
Submissions on behalf of Solitaire Capital India and Sanjiv Ahuja.
53. Ld. Sr. Counsel for the Petitioners (Respondent No. 1 and 2) submitted that the Tribunal passed a conditional interim order on 09.08.2019 holding that a status quo order as and from this date in relation to the said 7 acres of land will be in order, till the decision of the Ld. Arbitral Tribunal being pronounced in relation to the dispute as between the parties pending before it or the decision of this Tribunal on the Application under Section 8 of the Arbitration and conciliation Act, 1996 whichever is decided earlier and with a view to preserve the property reflected presently in the name of the 1st Respondent company (Appellant No. 1 herein) till such time. The Respondent No. 1 and 2 (Appellants) have not challenged the aforesaid order, however, the Petitioners had challenged the aforesaid conditional order before this Appellate Tribunal by filing an Appeal CA (AT) No. 268 of CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 41 of 572019, furthermore, the Respondent No. 7 had also challenged the said order in CA (AT) No. 289 of 2019. This Appellate Tribunal by its common Judgment dated 02.12.2019 was pleased to dismiss the aforesaid Appeals by observing that the Tribunal rightly held that predominant focus in a CP under Section 241 -242 of the Companies Act, 2013 is to safeguard the interest of the Company.
54. Thereafter, the Petitioners challenged the aforesaid order before the Hon'ble Supreme Court, the Hon'ble Supreme Court by orders dated 17.12.2019 and 09.01.2020 upheld the order of the Tribunal thereby further ordering that status quo on the above said 7 acres land shall continue to operate and requested the Tribunal to decide the Application under Section 8 of the Arbitration Act finally.
55. It is submitted that this Appellate Tribunal during the pendency of present Appeal vide order dated 13.03.2020 decided the Tribunal to comply the aforesaid order of the Hon'ble Supreme Court and decide the Application filed under Section 8 of the Arbitration Act. The subsequent orders passed by this Appellate Tribunal clearly shows that the present Company Appeal was only kept pending for compliance of the order dated 13.03.2020 since the Tribunal has finally dismissed the Application under Section 8 of the Arbitration Act vide order dated 04.01.2021 nothing more is left in the present Appeal and therefore the same requires a dismissal.
56. It is settled law that the main concerned of CP under Section 241-242 of the Companies Act, 2013 is to safeguard the interest of the Company. In any event, interest of the Respondent No. 1 (Vipul SEZ) in the said 7 acres of land was created on 12.05.2006 upon its purchased by the Respondent No. CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 42 of 571 (Vipul SEZ) JVC whereby the Respondent No. 1 (Vipul SEZ) utilised the monies invested by the Respondent No. 1 and others in Respondent No. 1 (Vipul SEZ) Company to make the said purchase. The Tribunal and this Appellate Tribunal in their orders rightly took into consideration that the predominant focus in a CP under Section 241 -242 of the Companies Act, 2013 is to safeguard the interest of the Company.
57. Ld. Sr. Counsel for the Petitioners (Respondent No. 1 and 2) further submitted that the exemption provided under Section 188 of the Companies Act, 2013 does not apply to the Company Petition under Section 241-242 of the Companies Act, 2013. It is settled principle of law that non- applicability/exemption under the Companies Act, 2013 including Section 188 of the Companies Act, 2013, it is not mean that the Directors have absolute freedom to manage the affairs of the Company. The Hon'ble Supreme Court while dealing in the matter of Dale & Carrington Invt. Pvt. Ltd. & Ors. Vs. P.K. Prathapan & Ors. (2005) 1 SCC 212 had observed that existence of right has been exercised bonafide and in the interest of the Company has to be considered in the facts of each case and if it is found that it is not so, such act is liable to be set aside.
58. It is submitted that the Respondent No. 1 (Vipul SEZ) is legally owner of subject 7 acres of land. The agenda in respect of said 7 acres of land was taken up in the category of any other items at the board meeting held on 13.04.2019. The Section 188 of the Companies Act, 2013, Rule 15 Foreign Exchange Management Act, (FEMA) and Secretarial Standards have all being grossly violated as detailed mentioned in the Company Petition.
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 43 of 57
59. It is submitted that the said issue is to be decided and adjudicated by the Tribunal, further the issue is on merits and not in issue of Section 8 Application or not an interim order in an interim stage. The provisions under Rule 15 of Companies (Meeting of board and its Powers Rules) 2014 have also to be read in conjunction with Section 188 of the Companies Act, 2013, these rules specify limits in respect of related party transactions that can be considered by the board beyond which any proposed transaction has to be referred to the shareholders. The Company has received Foreign Direct Investment (FDI) and as such the board resolution dated 13.04.2019 is violative of FDI policy/FEMA.
60. Ld. Sr. Counsel for the Petitioners (Respondent No. 1 and 2) further submitted that the reliefs claimed in the Petition are of oppression and mismanagement which fall within the jurisdiction of the Tribunal alone. It is as settled principle of law and has been upheld by the Arbitrator in the present case that the Arbitral Tribunal does not have jurisdiction to determine the issues between the parties with regard to oppression and mismanagement. The Tribunal having special jurisdiction in such matters, for this purpose, cited the Judgment of Hon'ble Supreme Court in the case of Booz Allen and Hamilton Inc. Vs. SBI Home Finance Ltd. & Ors. (2011) 5 SCC 532. The Relief claimed by the Petitioners in the Petition cannot be granted by Arbitrator or by Civil Court as Jurisdiction of Civil Court is barred under Section 430 of the Companies Act, 2013. Section 430 expressly states that no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 44 of 57power conferred by or under this act or any other law for time being in force, by the Tribunal or by the Appellate Tribunal.
61. It is submitted that all the parties to Arbitration or not parties to the Company Petition the Arbitration Proceedings emanate from the contractual disputes. As such the MOU dated 13.09.2008 does not have any relevance to the Tribunal proceedings which are in respect of minority oppression of the Petitioner No. 1 as shareholder of the Respondent No. 1 and mismanagement of the affairs of the Respondent No. 1 (Appellant No. 1). For this purpose, cited the Judgment of Hon'ble Bombay High Court in the case of Rakesh Malhotra Vs. Rajinder Kr. Malhotra (2015) 192 Com. Cas. 516 (Bombay). The MoU dated 13.09.2008 has been terminated by the Petitioner No. 1 and Solitaire Ventures Pvt. Ltd. as which was based upon fraud and misrepresentation and is thus void ab initio and such termination is pending for adjudication before the Ld. Arbitrators.
62. When an Application under Section 17 of Arbitration Act was filed before the Ld. Arbitrator by the Petitioners on 02.06.2017, the order dated 27.07.2017 disposing of the said Application by the Ld. Arbitrators records in Para 37 and 38 that the Counsels for the Respondents No. 1 and 2 (Appellants) specifically mentioned that mismanagement and oppression alleged in the Application under Section 17 does not fall within the jurisdiction of the Arbitration and it is the Tribunal under Sections 241-242 which has the exclusive jurisdiction with regard thereto which was upheld by the Arbitrators in Para 45 and 46 of the order. The relief claimed under the Arbitral claim statement and in Section 17 of Arbitration Act filed on 04.05.2019 and the relief claimed under the Companies Act, 2013 in respect CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 45 of 57of which the Company Petition was filed on 03.06.2019 are unconnected and distinct from each other. There is no prayer seeking cancellation of board resolution in the Arbitration proceedings even if allegations regarding the passing of the board resolutions were made in the Section 17 Application.
63. Ld. Sr. Counsel for the Petitioners (Respondent No. 1 and 2) submitted that without prejudice to the forgoing argument the alleged exchange award dated 11.082006 has not been given effect to till date and the legal titled to the said 7 acres of land is still in the name of Company and equally legal titled of the said 7.806 acres of land is still in the name of Ritwiz Builders and Developers Pvt. Ltd.
64. Lastly it is submitted that the Respondent No. 1 and 2 (Appellants) have merely alleged that the Petition is dressed up. However, nowhere in their pleadings they have elaborated what actually is a dressed up petition and why the petition is to be treated as dressed up petition. Therefore, allegations raised by the Respondent No. 1 and 2 (Appellants) are baseless and cannot be relied upon by this Appellate Tribunal. Therefore, it is submitted that no case of interference in the impugned ordersare made out and the present Appeals be dismissed with costs.
65. Ld. Counsel for the Respondent No. 7 and 8 adopts the argument advanced by the Ld. Sr. Counsel for the Respondents No. 1 and 2 (Appellants) and submitted that the impugned ordersare liable to be set aside.
66. Ld. Counsel for the Respondent No. 9 supports the argument advanced by the Ld. Sr. Counsel for the Petitioners and submitted that CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 46 of 57during the pendency of the Appeal this Tribunal passed an order dated 18.03.2020 which is indicative of the fact that this Appeal was kept pending to ensure effective and efficient compliance of the order dated 09.01.2020 passed by the Hon'ble Supreme Court, since the Application under Section 8 of the Arbitration Act stands dismissed by virtue of speaking order passed by the Tribunal and the aggrieved parties i.e. Appellants in the present Appeal have already preferred a separate Appeal i.e. CA (AT) No. 11 of 2021 and 20 of 2021. The Appeal CA (AT) No. 60 of 2020becomes infructuous.
67. It is further submitted that the preliminary questions for consideration of present Appeal in view of response filed by the Respondents that is power and authority of the Tribunal to pass an interim order during the pendency of this Application under Section 8 of the Arbitration Act. The present Appeal is premised on the submission of the Respondent No. 1 and 2 (Appellants) that the impugned order could not have been passed once the jurisdiction of the Tribunal was under challenged in Application under Section 8 of the Arbitration Act. The said plea is misconceived and sans any substance as Sections 241 - 242 of the Companies Act vests that the Tribunal with wide powers to affairs of the Company and the only statutory qualifications placed on the Tribunal to entertain a petition under Sections 241-242 of the Companies Act is under in Section 244. The Tribunal is vested with exclusive powers to deal acts of oppression and mismanagement in relation to affairs of the Company.
68. It is also submitted that the Arbitration Act in itself permits the court to pass interim orders even prior to commencement of Arbitration. Significantly, the Arbitration Act allows a challenged to the jurisdiction of CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 47 of 57the Tribunal under Section 16 of the Arbitration Act. However, the said provision is in no manner bars grants of interim reliefs under Section 9 or 17 of the Arbitration Act itself. In the first round of Appeals, several restrained orders were passed during the pendency of the Application under Section 8 of the Arbitration Act, therefore, even this Appellate Tribunal and Hon'ble Supreme Court has affirmed and reaffirmed that interim orders could be passed during the pendency of Section 8 Application. Therefore, it is prayed that the Appeals be dismissed.
69. After hearing Ld. Sr. Counsels for parties, we have gone through the record.
70. Following two issues arose for our consideration: -
(i) Whether the Tribunal erred in holding that the subject matter of the Company Petition is not capable of being referred to Arbitral Tribunal?
(ii) Whether the Tribunal erred in granting ad-interim injunction vide impugned order dated 14.02.2020?
Issue No. (i) Whether the Tribunal erred in holding that the subject matter of the Company Petition is not capable of being referred to Arbitral Tribunal?
71. Ld. Tribunal on the basis of material on record holds that 7 acres of land purchased under sale deed No. 3543 Dated 12.05.2006 is owned and possessed by Vipul SEZ Developers Pvt. Ltd. For this findings, Ld. Tribunal placed reliance on the board resolution dated 13.04.2019 and in the admission Para 10 of the Reply filed by the R.- 7 (before Tribunal). On the other hand, Ld. Counsels for R1 & R2 (Vipul Group) submitted that Vipul SEZ Developers exchanged the said 7 acres of land with Ritwiz Builders and CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 48 of 57Developers Pvt. Ltd.in consideration of 7.806 acres under sale deed no. 22051 vide the registered exchange deed 11.08.2006. This fact is admitted by the Petitioners in Para 7.35 of the Company Petition. It is also submitted that due to typographical error in Para 10 of the Reply filed by the Respondent No. 7 to the CP to come to a conclusion that 7 acres of land is owned and possessed by Respondent No. 1 Company is manifestly incorrect. The Respondent No. 7 in Para 10 stated that "The Petitioner has suppressed the fact that somewhere parcel of approximately 28 acres of separate commercial parcel, that are not part of the revised project land of 138.568 acres (to belong to the separate commercial parcel owned by the Respondent No. 1 and 7) where mistakenly registered in the name of Respondent No. 1"
72. The aforesaid typo error in Para 10 of the short reply of the Respondent No. 7 to Company Petition is manifestly evident from a bare perusal of Para 7, 8, 11 and 12 of the same reply, wherein the Respondent No. 7 has clearly stated in terms of MOU, all parties including the Petitioners admitted that the Respondent No. 1 and Respondent No. 7 shall have right to deal with other parcel of land of approx 28 acres over and above the revised project land.
73. According to the Respondents (Appellant herein) the Tribunal has erred interpreting the contents of the board resolution dated 13.04.2019 to hold that the said 7 acres of land was owned by the Respondent No. 1 i.e. Vipul SEZ Developers Pvt. Ltd. It is also pointed that a statement of board resolution cannot confer any title of any immovable property on any party and it was the registered exchange deed dated 11.08.2006 whereby title of said 7 acres of land was already transferred to Ritwitz Builders and CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 49 of 57Developers Pvt. Ltd. If it was not so, there was no reason for the Petitioners to file Civil Suit seeking cancellation of the said exchange deed.
74. On behalf of the Petitioners, it is submitted that the Respondents have relied upon illegal exchange award which is not part of the pleadings in Application under Section 8 Arbitration Act. This issue was raised by the Respondents only during the arguments of Section 8 Application. Therefore, new facts and evidence presented for the first time by the Respondents (Appellant herein), at the stage of argument and written submissions are not permissible and liable to be rejected without pre-judice to the forgoing argument. The alleged exchange award dated 11.08.2006 has not been given effect to till date and the legal title of the said 7 acres of land is still in the name of Company and equally legal title of the said 7.806 acres is still in the name of Ritwitz Builders and Developers Pvt. Ltd. By approaching the board of Company for approval on 13.04.2019, the Respondents (Appellants herein) have accepted that ownership of the said 7 acres of land lies with the Company and not with Ritwitz.
75. We have minutely gone through the submissions of rival parties. It is an admitted fact that the said 7 acres of land under sale deed No. 3543 dated 12.05.2006 is purchased in the name of Vipul SEZ Developers Pvt. Ltd. and in possession of the Company. As per the Respondents, they have transferred the land to Ritwitz vide registered exchange deed dated 11.08.2006. The Respondents are unable to explain us that if the title has already been passed to Ritwitz. Then why vide Board resolution dated 13.04.2019 Vipul Ltd. and Karamchand Realtech Pvt. Ltd. were authorized to deal with said land in any manner whether for sale, lease MOU, CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 50 of 57agreement to sale or grant lease, appear before registrar and execute any documents in any manner they so wish.
76. The another question arose that if the title has already been transferred and possession has been handed over to Ritwiz, so why the Respondents are opposing the interim relief of restraining them to deal with the said land. These questions are not answered by the Respondents and if Ritwiz became the owner of the said land, certainly Ritwiz should have contested the proceedings.
77. With the aforesaid, we are of the view that Ld. Tribunal has rightly held that Vipul SEZ Developers Pvt. Ltd. is the owner and in possession of the said land.
78. Now, we have considered whether this land is part of JDA dated 29.08.2006 or MOU dated 13.09.2008. Ld. Tribunal after analysing the evidence held that the said land is not part of MOU. Therefore, cannot be referred to Arbitration. Ld. Tribunal also held that "It reflects from serial no. 4 of annexure- B" to the JDA dated 29.08.2006 that a portion of land including 7 acres of land under the sale deed No. 3543 is owned and possessed by the Respondent No. 1 (formerly known as Indica Estate Ltd.) subsequently, 7 acres of land was excluded from the Annexure B to the JDA dated 29.08.2006, when a MOU was executed on 13.09.2008. As per the MOU dated 13.09.2008, the parties agreed that any piece of parcel of the land not forming part of revised project land owned by Vipul Group and Karamchand Realtech Pvt. Ltd. shall have a right to deal with the said land including but not limiting to transfer the same to any other entity their sale discretion." There is no rebuttal of this finding on behalf of the Respondents CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 51 of 57(Appellant herein). Therefore, we are in agreement with the findings of Ld. Tribunal that the said land is neither part of JDA dated 29.08.2006 nor MOU dated 13.09.2008. Therefore, any dispute in regard to said land which is owned by the Respondent No. 1 cannot be referred to arbitration.
79. According to the Respondents the dispute pending before the Arbitral Tribunal and the relief claimed in the Company Petition are the same. The main relief claimed in the Company Petition is as under:-
"to declare three board resolutions dated 13.04.2019 or such similar resolution (s) authorising Respondent No. 2, 3, 7 & 8 to deal with the 7 acres of land purchased through sale deed no. 3543 dated 12.05.2006 as illegal and unlawful and being a related party transaction as void ab initio & and in view of the settled law that any authority for any act which is impermissible in law is void and be set aside (y) To declare any action taken by respondent's w.r.t. three board resolutions dated 13.04.2019 or such similar resolution(s) authorizing Respondent No. 2, 3, 7 & 8 to deal with the 7 acres of land purchased through sale deed no. 3543 dated 12.05.2006 as illegal and unlawful and be set aside."
80. The aforesaid relief has not been claimed before the Arbitral Tribunal. The Tribunal alone can grant such relief in view of the statutory scheme contained in the Companies Act, 2013 and the subject matter of the Company Petition is outside the purview of the Arbitration clause. We are in agreement with the findings of Ld. Tribunal that the aforesaid relief could be granted by the Tribunal.
81. The Petitioners in the Company Petition prayed to declare the board resolution dated 13.04.2019 as illegal and unlawful and being a related CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 52 of 57party transaction as void ab initio in view of the settled law that any authority for any act which is impermissible in law is void and liable to be set aside, in this regard, it is useful to reproduced the board resolution dated 13.04.2019 passed in the board meeting of Vipul SEZ Developers Pvt. Ltd. which is as follows:-
"Summary of proceedings under item 14 (Any other time at the board meeting Vipul SEZ Developers Pvt. Ltd. held on 13.04.2019).
a. Mr. Rakesh Sharma Proposed an item on 7 acres of land in the ownership of Company claiming that beneficial ownership of which is with Vipul Ltd. &Kramchand Realtech and informed the board that he proposes to take joint authority in favour of Vipul Ltd and &Kramchand Realtech to deal with said land purchased under sale deed no 3543 dated 12.05.2006 in any manner whether for sale, lease, MOU, Agreement to sell or grant lease, appear before registrar and execute any documents and in any manner they so wish.
Mr. Sanjiv Ahuja stated that such an important agenda item cannot be taken up without prior information to the Board and should have been supported by a note. He further said that Mr. Punit Beriwala. Mr. Anil Arya and Mr. Rakesh Sharma are interested parties and thus they cannot vote on this matter and pass a resolution in their own favour. He said that this matter is sub-judice and suggested to take legal opinion on it. He further stated that the proposed resolution tantamount to theft of Company property and such a resolution, is given effect will result in Police Action which will complicate matters since there is already a subsisting compliant/FIR before the EOW Delhi. He further objected that not even a hard copy of the proposed CA (AT) No. 60 of 2020, 11 & 20 of 2021.Page 53 of 57
resolution is being circulated and the matter is only being verbally discussed and this is improper.
Mr. Rustogi said that the full payment for this land is made by the Company and not by Vipul Ltd. and Kramchand, the matter is sub-judice and no agenda has been circulated prior to the meeting. He further stated that items without prior circulation to the Board, such as the proposed agenda item cannot be taken up in the meeting. He further said that Mr. Punit Beriwala, Mr. Anil Arya and Mr. Rakesh are interested parties and cannot vole on this item. He stated that the Company is the owner of this land and objected to this board resolution. He also said that the proposed resolution tantamounts to theft of company property.
Mr. Rakesh Sharma stated that Tribunal has passed a judgement on this land that Vipul Lid. and Karamchand have become beneficial owners of the land by virtue of MOU dated 13.09.2008 which has been signed by all parties Mr. Sanjiv Ahuja objected and said that the Tribunal Order was an interim Order and not Judgement which is itself under appeal in Hon'ble High Court of Delhi.
Mr. Rakesh Sharma said the item was taken tip with permission of the Chairman to which Mr. Ahuja objected since the Chairman i.e., Mr. Anil Arya is himself an interested party.
Mr. Beriwala stated that you can approach the CLT/Company Law Board and any other authorities to raise this and whatever other issues.
Mr. Anil Arya suggested to vote on matter to which Mr. Sanjiv Ahuja and Mr. VK Rustogi objected that the resolution cannot be passed. Mr. Punit Beriwal, Anil Arya and Mr. Rakesh Sharma supported voted in favour of resolution and Mr. Sanjiv Ahuja and VK Rustogi voted against.
CA (AT) No. 60 of 2020, 11 & 20 of 2021.Page 54 of 57
b. Mr. Rakesh Sharma proposed another resolution that the said land is part of license and if any NOC/ Sanction is required from DTCP or any govt authority and any document is to be submitted and nay application to be made, Vipul Ltd and M/s. Kramchand Realtech are jointly authorised through their Directors/manager along with Mr. Purit Beriwala and /or Mr. Anil Arya to approach the concerned govt. authority in any manner they so wish. Mr. V. K Rustogi repeated his objections as per the previous item Mr. Ahuja also objected to this item. (emphasis Supplied) Mr. Punit Beriwala, Anil Arya and Mr. Rakesh Sharma supported voted in favour of resolution and Mr. Sanjiv Ahuja and VK Rustogi voted against.
No hard copies of the proposed resolution were circulated, and the matter was dealt with only verbally.
C. Mr. Rakesh Sharma further proposed to pass a third resolution that authority in favour of Vipul Lid and Karamchand and/or Punir Beriwala and/or Anil Ana to defend any case or fight any case in respect of this land in any manner they so wish. Mr. Punit Beriwala, Anil Arya and Mr. Rakesh Sharma supported voted in favour of resolution and Mr. Sanjiv Ahuja and VK Rustogi voted against.
No hard copies of the proposed resolution were circulated, and the matter was deal with only verbally."
82. The authorization to affirm or conduct to sale of said 7 acres of land was granted by the aforesaid resolution. As such the resolutions were allegedly passed in an illegal manner against established principles of Companies Act, 2013 as pleaded by the petitioners. These board resolutions are under challenged in the Company Petition filed under Section 241 r/w 242 of the Companies Act.
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 55 of 57
83. The Respondents have raised a plea that Company Petition is dressed up vexatious and malafide. Ld. Tribunal has elaborately dealt with this issue and gave a finding that Company Petition is demonstrably bonafide and raise genuine concerned as to affairs of the first Respondent Company. In fact the relief sought in the petition is exclusively within the jurisdiction of the Tribunal.
84. The Petitioners have also raised an objection in regard to non- compliance of Sections 184 and 188 of the Companies Act. As per the Respondents the notification dated 05.06.2015 of the Ministry of Corporate Affairs are grants certain exemption to private companies. In rebuttal the Petitioners have elicited that the submissions of the Respondent No. 2 are incorrect because a bare perusal of Sections 184 and 188 and the notification dated 05.06.2015 revealed that certain exemption were granted in favour of the private companies but there are certain pre-conditioned to be fulfilled, the scheme of entering into related party transaction under Sections 184 and 188 is applicable to the facts of the present case. As per the notification dated 05.06.2015 the exemption granted to private companies does not preclude the Respondents from the purview of Sections 184 and 188 of the Companies Act. Thus, we are of the firm view that Ld. Tribunal has rightly held that the subject matter of the Company Petition is not capable of being referred to Arbitral Tribunal. Issue No. (ii) Whether the Tribunal erred in granting ad-interim injunction vide impugned order dated 14.02.2020?
CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 56 of 57
85. As we have already held that the finding of the Tribunal that the subject matter of the Company Petition is not capable of being referred to Arbitral Tribunal, is correct. The first Respondent Company is the owner and in possession of the said 7 acres of land. By the Board resolution dated 13.04.2019 the Respondent No. 2 and Respondent No. 7 are authorized to deal the said land as they so wish. The Petitioners have filed the Company Petition in the month of June, 2019 and challenged the Board resolution. The Board resolution is under challenged and the transaction is pertaining to related party which prima facie is in violation of the provisions of Section 188 of the Companies Act, 2013 and in case 7 acres of land is sold by the Respondents during the pendency of the Petition. The Petitioners will become remediless.
86. It is also to be noted that the Tribunal for the first time passed a conditional interim order dated 09.08.2019 holding that a status quo in relation to the said 7 acres of land be maintained till the decision of the Ld. Arbitral Tribunal being pronounced in relation to the dispute between the parties pending before it or the decision of this Tribunal in relation to CA No. 422/C-III/ND/201 questioning the jurisdiction of this Tribunal in view of Section 8 of the Arbitration and conciliation Act, 1996 whichever is decided earlier and with a view to preserve the property reflected presently in the name of the 1st Respondent company i.e. Vipul SEZ Developers Pvt. Ltd. till such time. This order is not challenged by the Respondents, however, this conditional order is challenged by the Petitioners in CA (AT) No. 268 of 2019. This Appellate Tribunal has not interfered with the order and remove the condition. Thereafter, the Petitioners have filed an Appeal before the Hon'ble CA (AT) No. 60 of 2020, 11 & 20 of 2021.
Page 57 of 57Supreme Court. Hon'ble Supreme Court upheld the order of the Tribunal. (See Para 29 of this Judgment). Thus, the order passed in favour of the Petitioners dated 09.08.2019 is continued till date.
87. With the aforesaid discussions, we are of the view that there is no substance in these Appeals. Thus, these Appeals are dismissed. However, no order as to costs.
[Justice Jarat Kumar Jain] Member (Judicial) [Dr. Ashok Kumar Mishra] Member(Technical) New Delhi 20th January, 2022.
SC CA (AT) No. 60 of 2020, 11 & 20 of 2021.