Company Law Board
Shri Vijay Kumar Chopra And Ors. vs Smt. Sudershan Chopra And Ors. (Hind ... on 1 August, 2006
ORDER
S. Balasubramanian, Chairman
1. In this order I am considering CA 318 of 2005 filed by Group the petitioners, CA 341of 2005, CA 10/2006 and CA 134 of 2006, all filed by Group A the respondents. Since all these applications are inter connected, I am disposing of all these applications by this common order.
2. Before dealing with these applications, it is necessary to give a brief of the circumstances under which these applications happened to be filed. Group B hereinabove had filed a petition under Sections 397/398 of the Companies Act, 1956 (the Act) alleging oppression and mismanagement in the affairs of M/S Hind Samachar Limited (the company). The company is a family company comprising close relatives as shareholders. Petitioners' group styled Group and Respondents' group, styled as Group 'A', each hold shares in the company. There had been certain dispute before two groups consequent to which certain memorandum of family settlements providing for joint and equal participation in the management of the company were entered into, the terms of which were also incorporated into the Articles of the company. Yet, disputes did not end and this petition happened to be filed. Since the company is essentially a family company, this Board advised the parties to resolve the disputes amicably by dividing not only the company but also all other family businesses and assets equally so that there was a complete parting of ways between the two groups. It was agreed that Group B would prepare two equal lots and Group A would have the first option of choosing one lot. Accordingly, in the hearing held on 14.2.2000, Group B gave a proposal of dividing-the assets and businesses of the family including the company into two lots-Lot 1 containing the Jalandhar and Ambala Units and the Lot 2 containing Delhi and Jaipur Units. Thereafter, Group B gave a modified proposal on 7l March, 2000 again dividing the assets and businesses of the company into Lot 1 and Lot 2 with the option to Group A to choose one of them. However, instead of exercising the option to choose one lot, Group A filed an application under Section 8 of Arbitration & Conciliation Act which was dismissed by this Board. Appeal proceedings initiated were dismissed and finally the present petition was disposed of by this Board by an order dated 17th May, 2004 with the following directions: "Accordingly I direct that there shall be a division of the company with Group B taking over the complete control of Jalandhar and Ambala units and Group A taking over Delhi and Jaipur units. This will be along with the respective assets and liabilities identifiable with each unit. All common assets and liabilities will be apportioned equally either in specie if possible or compensated by cash. The company will be with Group B as they will be controlling the Jalandhar unit and Group A may incorporate a separate company with a different name. Since both Group s hold equal shares in the company, there has to be equality not only in terms of monetary value but also in all other respects like areas of distribution etc. I find that besides the company, both Group s have equal interest in four other partnership firms, another private limited company and a Trust all of which have dealings with the company. In the lots prepared originally by Group B, all these entities were also included in the division. Since I am directing division of the company with a view to put an end to the state of stalemate and to ensure parting of ways, it is advisable that both Group s agree for complete division of all their interests not only in these entities but also all other assets and properties of the family. I find from the lots prepared by Group B that each and every asset/liability of not of the company but also other entities and the family has been covered including territorial division of areas of distribution of different publications. While the first lot includes Jalandhar and Ambala Units, the second lot includes Delhi and Jaipur Units. Since the first choice of choosing a lot was with Group A, it is but natural that Group B, while preparing the lots would have ensured equality. This being the case, if Group A are agreeable to take the 2nd lot which includes Delhi and Jaipur units, the disputes would come to an end. Otherwise, to ensure equal division, I have to appoint an independent person, preferably, a retired High Court or Supreme Court Judge to supervise and complete this exercise. Accordingly, the matter is fixed for further consideration on 14th July, 2004 at 2.30 p.m. at which time Group A should indicate as to whether they are willing to take the 2nd lot as given by Group B on 7th March 2000, or they would like to have the division done equally by an independent person (with Jalandhar and Ambala with Group B and Delhi and Jaipur with Group A), In the later case, both the sides should also indicate whether they are willing for including all the firms as well as other family interests in the division so that there would be a complete parting of ways between the two groups. They will also indicate the name of a retired Judge mutually acceptable to both Group s failing which I shall appoint one and give further directions.
3. This order was taken on an appeal before Punjab & Haryana High Court wherein the parties had agreed to settle the disputes amicably. Accordingly, the court passed the following order on 19.10.2005:
The appellants, as well as, Group A have decided to settle the matter amicably. It has been agreed, that the appellants will be entitled to Lot-2, in terms of the enclosures accompanying the letter dated 7.3.2000 constituting proposals formulated by Group A(herein) and available on the record of the Company Law Board. It goes without saying, that Lot-1, as determined by the enclosures to the aforesaid letter dated 7.3.2000, shall be retained by Group A. The afore stated arrangement shall entail that the assets and the liabilities of the company and the firms under Lot-2 located in the territories of Delhi and Jaipur shall fall to the share of the appellants; and the assets and the liabilities of the company and the firms under Lot-1 in the territories of Jalandhar and Ambala shall fall to the share of Group A. Additionally, the appellants have exercised their option to accept Rs. 2.4 crores under paragraph (xx)(I) of the modified proposal. This amount has been agreed to be deposited by Group A with the Company Law Board, by way of Bank draft, for onward transmission to the appellants, within six weeks from today.
In order to implement the settlement agreed to by the parties described in the foregoing paragraph, we consider it just and appropriate to relegate the parties to the Company Law Board, which will enforce the implementation of the aforesaid settlement. The Company Law Board is expected to complete the exercise, as expeditiously as possible, but certainly within a period of three months from today. Parties in person or through their representatives, to appear before the Company Law Board on 27.10.2005 during its afternoon session.
Parties shall maintain status quo in respect of the lot which falls to the share of the rival parties, till final implementation at the hands of the Company Law Board.
Respondent No. I has also agreed to execute declarations under the Press and Registration of Books Act, 1867, as and when requested to do so by the appellants. Such declarations shall be furnished by respondent No. 1 within two weeks of the said request. Needless to mention, that the aforesaid request shall pertain to territories exclusively assigned to the appellants. Likewise, respondent No. 1 shall be entitled to execute such declarations on behalf of Group A, without reference to the appellants within the territories assigned to Group A. The instant settlement has been recorded at the instance of the learned Counsel for the revival parties, who have obtained the consent of their clients. -" In view of the above, the impugned order passed by the Company Law Board is set aside and stands modified as above.
Disposed of accordingly.
Order dasti on payment of usual charges.
4. Consequent to the order of the High Court, Group B filed CA318of 2005 stating that the amount of Rs. 24 crores as directed by the High Court would be deposited before this Bench at the time of hearing and that till such time the settlement was worked out, the amount should be kept in an interest bearing deposit. It was further stated in the application that several clauses to the modified proposals given on 7.3.2000 had become either redundant or unworkable owing to lapse of time and therefore appropriate directions were required to be given in this regard. It was further sought in the application that Group B should be permitted to avail banking facility of Rs. 12.5 crore sanctioned by Vijaya Bank to meet the company's working capital need and that appropriate directions should be given to the Estate Officer, Chandigarh Administration to permit Group B to acquire and take possession of 4 plots allotted to the company without imposition of any penalty. This application was mentioned on 1.12.2005 when Group B lodged a demand draft for Rs. 18.87 crores and also a letter addressed to UBI, Jalandhar to draw a DD in favour of CLB for Rs. 5.13 crores. I directed that the amount of Rs 18.87 crores should be deposited in State Bank of Patiala in an FD for 45 days in the name of CLB. Directions were given to Group A to file their replies. In their reply, Group A contended that by not paying the*full amount of Rs. 24 crores and also by asking the CLB to keep the amount of Rs. 18.87 crores in a fixed deposit, Group B had acted in breach of-the High Court directions. Further, Group B cannot be allowed to borrow money in the name of the company, as in terms of Clause (xx)(iii) of the proposal dated 7.3.2000, the company has to be wound up after discharging all the liabilities. In their reply, they had also referred to their letter dated 11.11.2005 addressed to Group B, pointing out that the proposal dated 3.2.2000 and modified by letter dated 7.3.2000 provide that Group which chooses lot-2 would exercise option in respect of various other assets. Accordingly, they had conveyed their exercise of options. They had also objected to other prayers in the application. The application was heard on and I had reserved the order.
5. In the meanwhile, Group A filed CA 341 of 2005. In that application, they had sought for restraining Group B group in any manner from utilizing or dealing with the cash and bank balances reflected in the balance sheets as at 31.3.2004 and 31.3.2005 till final terms were recorded by this Board and also for restraining Group B from utilizing any refunds that might be received by them. In that application, they have pointed out that the balance sheet of the company as on 31st March, 2004 discloses a sum of Rs. 32.05 crores being available with the company and in the balance sheet as on 31st March, 2005, cash and bank balances available with the company was more than Rs. 45 crores. Considering the income generated after 1.4.2005 and the advance tax paid, the company was likely to have about Rs. 55 crores as cash and bank balances. Therefore, the assertion of Group B in CA 318 of 2005 that the company had only Rs.5.13 crores in its bank account was false. Further from this averments it is clear that Group B had siphoned of large amounts from the company. In terms of the proposal dated 7.3.2000, all amounts as are available with the company and to be received are to be equally divided between the two groups. In their reply to this application, Group B has stated that the amount as shown in the balance sheet as on 31st March, 2004 and 31st March, 2005 were not available with the company as on date. Further, the figures in the balance sheets cannot be relied on by Group A as the balance sheet has not been approved in any board meeting or general meeting and even the assessment has not been completed. As a matter of fact, a revised balance sheet has already been filed with the Income Tax authorities. Further, Delhi Unit under the control of Group A owes large sums of money to Jalandhar Unit under the control of Group B. Further, the figures shown in the balance sheet as on 31.3.2005 comprised of about Rs. 10.5 crores in Mumbai bank account and about Rs. 12.67 crores in the bank accounts of Delhi unit. Further, Group A cannot claim and are not entitled to any money belonging to Lot-1 which has been allotted to Group B. Group A is not entitled for equal share of assets as of date in view of the fact that de-facto division had been effected as early as in the year 2000. The Punjab & Haryana High Court has very clearly recorded " The assets and liabilities of the company and the firms under Lot-1 in the territories of Jalandhar and Ambala shall fall to the share of Group B herein and shall be retained by them". As a matter of fact it is Group A which has been indulging in large scale siphoning of funds from Delhi Unit without making any contribution to the business carried out by Group A in Jalandhar. Therefore, the question of Group B sharing any liabilities/assets of Delhi Unit or Group A sharing any liabilities/assets of Jalandhar does not arise.
6. Thereafter, Group A again filed an application CA 10 of 2006 on 10.1.2006 complaining that when the decision of this Board on CA 318 of 2005 wherein Group B had sought for permission to avail credit facilities was pending, they had already availed the facility and as such they should be restrained from utilizing the facility and Vijaya Bank should be directed to cancel the facility and Vijaya Bank should also be directed to file before the Bench, all applications, documents, declarations etc. in relation to the sanction of the credit facility. They have further stated that taking of such facility is against the provisions of the proposal dated 3.2.2000 and modified on 7.3.2000. In the reply, Group B once again reiterated that having opted for one option of accepting Rs. 24 crores before the High Court, no other options are available to Group A. That is the reason why the High Court has recorded that a settlement had been arrived of between the parties and accordingly relegated the parties to this Board for the purpose of enforcement/implementation of the aforesaid settlement. Subsequently, Group B has also deposited the balance amount of Rs. 5.13 crores in the name of the Board on 11.1.2006 and thus the entire amount of Rs. 24 crores has been deposited with the CLB. Further, for availing the credit facility sanctioned by Vijaya Bank, it is Group B group which has given personal guarantees and only the assets falling within Lot-1 allotted to that Group have been furnished as security. The order of the High Court dated 19.10.2005 clearly contemplates that either party can raise funds against assets falling to its share and the only restraint was that they cannot encumber assets falling to the share of the other side. As a matter of fact, Group B did not need permission from this Board but in view of the Vijaya Bank putting the said condition, Group B applied to this Board for permission. Later on, Vijaya Bank itself had waived the ' afore said condition and sanctioned the credit facility which Group B has availed. Before sanctioning the credit limit, the Vijay Bank was convinced that assets of only Lot-1 which have been vested with Group B group in terms of the High Court order had been given as security. Since Group B had already parted with Rs. 24 crores, they were in need of funds for upgradation of the printing facility at Dharamsala, Jammu, Jalandhar and Ludhiana. Such upgradation was necessary to ward of competition from "Jagran".
7. Thereafter, Group A filed CA 134 of 2006 in terms of Section 634A of the Act seeking for implementation of the order dated 19.10.2005 of Punjab and Haryana High Court and to award lot-2 to Group A and for a direction for dissolution of Hind Samachar Limited.
8. These applications were heard on a number of days. The learned Counsel appearing for Group B submitted: In terms of Clause (xx)(1), the amount of Rs. 24 crores is payable out of the funds of the company and if the company does not have sufficient funds, the shortfall has to be met by Group B. Admittedly, only a sum of Rs. 5.13 crores was in the current account of the company in Union Bank of India, Nariman Point Branch, Miunbai. Therefore, the short fall of Rs 18.87 crores had to be met by Group B itself and accordingly a draft for this amount was drawn. Group B could not draw the amount of Rs 5.13 crores available in the company's bank account as it required the signatures of Group A as they are joint signatories to that account. The company is to get refund from income tax, PF and ESI authorities and as and whenever the refunds are received, the same should be reimbursed against Rs. 18.87 crores paid by Group B. 9 The learned Counsel further submitted: Group B cannot exercise any option in regard to the other assets of the company as conveyed by when in their letter dated 11.11.2005. The options are to be exercise at the time of choosing the Lot and when they chose Lot 2 before the High Court, they chose the only option of receiving Rs. 24 crores and did not exercise other options available under Lot 2 and as such no further right to exercise option under lot-2 is available to them now. Since as per the High Court order, all assets and liabilities of the companies and firms under Lot-1 located in the territory of Jalandar and Ambala shall fall to the share of Group B and similarly that all assets and liabilities of the company and firms under Lot-2 located in the territories of Delhi and Jaipur shall fall to the share of Group A, the latter cannot claim any amount lying in the bank account of the company or received by the company from its debtors, further the High order has used the word "retain" to indicate that whatever was within a particular Group on that day it could retain the same and there is no question of sharing the same with the other group. Oven otherwise, since both Group s have been independently managing their own units right from the time the disputes started, one group cannot have any claim on the other group of any benefits accrued to their respective units during this period. In so far as availing the bank facilities from Vijaya Bank is concerned, Group B had provided security to the bank of the assets which are within Lot-1. Even the High Court order dated 19.10.2005 only provides that one group should not deal with the assets of the other group till the settlement is worked out and there is no bar in one group dealing with assets falling within its own lot. However, the bank has already sanctioned the limit and the company has already availed the credit facilities. In so far as land at Chandigarh is concerned, that land automatically falls within Lot-1 and only to avoid payment of penalty, Group B has sought for directions to the Estate Officer, Chandigarh to handover possession without levying any penalty as the delay in taking possession is on account of Group A not cooperating with Group A earlier as is evident from the earlier proceeding before this Board.
10. Shri Tikku appearing for Group A submitted: It is wrong on the part of Group B to contend that only a sum of Rs. 5.13 crores is lying in the credit of the company's bank account. They have not disclosed the balance available in the company's account as per the balance sheets. As per the balance sheet filed by them as on 31st March, 2004 with the Income Tax Department, there was a cash and bank balance of Rs. 32.50 crores. If the income for the year ending 31st March, 2005 is taken into account, the cash and bank balance will be more than Rs. 45 crores. In addition the balance sheet also shows a sum of Rs. 24.57 crores under "Loans and Advances" which is interest free loan given by Group B to their own family concerns. Further, by seking for keeping the part payment of Rs. 18.87 crores in the name of the CLB, Group B has flouted the orders of the High Court. This amount of Rs. 24 crores was provided as compensation in Clause (xx)(1) of the modified proposal for Ambala Unit which was to be with Group B. Choosing of this option does not restrict the right of Group A to exercise other options in terms of the other clauses as available in Lot 2. The assertion of Group B that many clauses to the enclosure to the letter dated 7.3.2000 have become redundant or unworkable is nothing but a lame excuse to avoid discharge of obligations envisaged in the lots. Further they have also not indicated which clauses have become so. If it were their impression, they should have disclosed the same before the High Court. Further in terms of Clause (xxv)(o), once the option is exercised, parties will have to enter into a formal agreement and file terms of settlement before the CLB and only when the CLB takes the same on record, that date becomes the effective date and the assets and liabilities of the company as on that date have to be divided as per the terms of the proposal. Their prayer for permission to avoid credit facility in the name of the company from Vijay Bank cannot be permitted as in terms of the proposal, the company is to be. wound up after clearing all its liabilities. Therefore, the question of mortgaging the property of the company is not permissible. In the proposal it has been specifically provided that each group will have to give an undertaking to other group that no encumbrance would be created in respect of any assets of the company. Further, it has also now beep disclosed that notwithstanding the pendency of the application, Group] B has already availed the facility, it is nothing but an act of contempt of the High Court and the Board. As far as directions to the Estate Officer, Chandigarh is concerned, such directions could be given only when parties enter into a formal agreement in terms of Clause (xxv)(o). This Board should direct Group B to hand over Lot 2 immediately and comply with all other requirements as per the modified proposal dated 7.3.2000.
11. I have considered the pleadings and arguments of the counsel on all the applications. It is unfortunate that alter having agreed to resolve the disputes amicably before the High Court, instead of working out the ways and means of amicable parting of ways, both the sides have made fresh allegations against each other. From these applications, I find that unless and until the issues raised in these applications are decided, it is not possible to implement the order of the High Court dated 19.10.2005. That is the reason why I also directed that the drafts for the amount of Rs 24 crores tendered by Group B be deposited in the name of this Board till the issues were determined. As far the issues raised in these application are concerned, I am giving below my findings on each of them.
12. Is Group B entitled to raise credit facilities in the name of the company: Group B has contended that in view of the order of this Board dated 17.5.20Q4, the company is to be with Group B and therefore, they had availed the credit facility in the name of the company. It is to be noted that in the order dated 17.5.2004, I had proposed two alternatives for putting to an end the acts complained of One was to divide the company into two, with Jalandar and Ambala with Group B and Delhi and Jaipur with Group A. In that event, Group B were to retain the company and Group A were to incorporate a new company. The second was that Group A could choose Lot 2 as per the proposal of Group A vide its letter dated 7.3.2000 so that there would be a comprehensive settlement relating to all assets and businesses of the family. Since the parties had decided to settle the disputes amicably before the High Court, the order of this Board dated 17.5.2004 has been set aside by the High Court. Therefore, no reliance can be placed on the order of this Board dated 17.5.2005 and the entire settlement will have to be in terms of the proposal contained in the letter of Group B dated 7.3.2000. Group B has contended that many of the terms of the proposal have either become redundant or unworkable. Such a contention cannot be accepted at this implementation stage, especially when Group B had not taken that stand before the High Court. Further, Group B has also not indicated those terms which have become redundant or unworkable. The enclosures to the letter dated 7.3.2000 consist of two parts-one is the original proposal of dividing not only the company but also all other group entities including personal assets of both Groups into two lots as proposed on 3.2.2000. Thereafter, certain modifications were made to the earlier proposal and conveyed on 7.3.2000. The recital in the said letter "The proposal sent by our client under cover of their letter of 3.2.2000 and the above mentioned modification constitute a composite proposal and the same is not severable in any manner" would indicate that the proposal was a composite one. In terms of Clause (xxiii) of the enclosure to letter dated 7.3.2000, it has been specifically provided that Hind Samachar Limited and four other firms shall not form part of any Lot and that after discharging all liabilities including payment to creditors and also liabilities to the group choosing Lot 2, shall be divided equally between the two groups and thereupon the company would be wound up and firms dissolved. This being the case, after the High Courts has recorded the settlement between the two groups, Group B could not have borrowed money in the name of the company notwithstanding the fact that assets falling with that group only have been given as security. Further, when their application seeking for permission to avail the facility was pending, they could not have availed the facility. Anyway, since Group B has already availed the credit facility, it will, in accordance with Clause (xxiii), register a new company and the facility now availed should be transferred that company. This should be done at the earliest. Hind Samachar Ltd shall be wound up in accordance with the terms of the proposal dated 7.3.2000.
13. Whether Group A is entitled to exercise other options provided in Lot 2: It is the contention of Group B that since Group A had exercised the only option of accepting Rs. 24 crores before the High Court as per the option available to them in terms of Clause (xx) of the modified proposal, they are not entitled to exercise other options provided in Lot-2. I do not find any justification in this contention of Group B. It is recorded in the High Court order "It has been agreed that appellant will be entitled to Lot-2 in terms of the enclosures accompanying the letter dated 7.3,2000 constituting proposal formulated by Group A.... Additionally, the appellants have exercised option to accept Rs. 24 crores under paragraph (xx)(i). of the modified proposal". When it is specifically stated that Group A would be entitled to Lot-2, it goes without saying that whatever is provided for and-in Lot-2, Group A are entitled for the same. If there are options exercisable under Lot-2, they are entitled to exercise the said options. I do not find that while exercising the option of accepting Rs. 24 crores, which was one of the options provided in Lot-2, Group A had waived then right, of exercising options in respect of other clauses. Therefore, Group A had rightly exercised their option by their letter dated 11.11.2005 which Group B is bound to honour.
14. Group B has sought for a direction to the Estate Officer, Chandigarh to hand over the plots of land allotted to the company without charging any penalty as the delay in making payment was on account of iion cooperation by Group A. Granting of such a prayer against a third party at this stage is not within the powers of this Board when the mandate of the High Court to this Board is only to implement the settlement between the parties. All earlier orders passed in regard to the plots of land stand vacated and the Estate Officer is at liberty to proceed with the matter in accordance with law.
15. Is Group A entitled to share the bank balance of the company as shown by Group B in the balance sheets filed with the Income tax department: A crucial issue that would have bearing on this is the effective date to determine the assets and liabilities of the company. While according to Group B, the effective date would be the date on which each group started independent operations, according to the respondents, the effective date should be in accordance with the proposal dated 7.3.2000 in which a schedule for implementation of the composite proposal had been proposed. In that proposal, in Clause XXV(o), it is specified that once an option is exercised in terms of the proposal, the parties will have to enter into a formal agreement and file the terms of settlement before the CLB. Only when the CLB takes the same on record, it becomes the effective date. Therefore the effective date has to be prospective and the cash and bank balance and liabilities as of that date have to be shared between the two groups. I have considered this issue carefully. This Board happened to decide a case of more or less similar in facts as that of the present case in Prakash Nath v. Achal Nath 111 CC 711 CLB. The facts of that case were that the company was incorporated in Lahore in 1939 and the registered office was transferred to Delhi in 1967. The parties to the proceedings were family members of two brothers. The first petitioner Shri Prakash Nath, was one of the brothers and the first respondent was the son of the other brother, Shri Ashok Nath. The company was being managed by both the brothers jointly till about 1990. On April 8, 1990, a family settlement was arrived at between the brothers in the presence of five Panchas. Pursuant to this family settlement, further discussions were held between the parties with the assistance of the Panchas and finally, the company was divided into A and B Divisions with effect from November 30, 1992, pursuant to a memorandum dated August 29, 1992, by which Division A was taken over by Shri Ashok Nath while Division B was taken over by the first petitioner and these divisions were being independently managed by these two groups right from November 30, 1992. Both the groups held 50% share in the company. Group B filed a petition alleging oppression and mismanagement by Group A. The said petition was disposed of in the following terms. "Since the company had already been divided and that the two groups are managing the affairs of the divisions independently for nearly ten years, it would be more appropriate to formalize the division of the company especially when we find that both the divisions are independently maintaining separate accounts which are consolidated for the purpose of preparation of the annual accounts of the company: Therefore, in exercise of our powers under Section 402 of the Act, we direct as follows : The petitioners will incorporate a new company in respect of Division B within a period of three months. All assets and liabilities of Division B as on date shall be taken over by the new company. The existing company will consist of Division A along with its assets and liabilities. All the assets acquired and liabilities incurred by or attributable to Division B with effect from November 30, 1992, shall be with the new company and the assets acquired and liabilities incurred by or attributable to Division A shall be with the company. As far as the apportionment of the un apportioned liabilities as on November 30, 1992, between the two divisions is concerned, since this issue is pending for long in spite of intervention of third parties viz. Shri Sud and Mrs. Shankar Iyer and Co. we direct, even if it is to cause some prejudice to one of the groups, that these, liabilities on that day should be divided equally between the two divisions as the shareholding of each group is equal. Likewise, the undivided assets also will be divided equally. -If either of the divisions had incurred any expenditure on behalf of the other Division or cleared any liability of the other division after November 30, 1992, adjustments should be made. "In the present case, it is on record in the proceedings before this Board, that both the sides" had started independent operations after the disputes had started as is evident from the fact that each group started filing applications against the other in conducting the affairs of the units under their control, solely on the ground that the other group was not consulted. I also happened to deal with complaints that Group A was not signing cheques even for payment of bonus to worker etc. In other words, de-facto division had already taken place as for as the affairs of the units under the two groups are concerned. During the past-few years, of their independent management of the their respective units, they would have created further assets and incurred further liabilities and it would be inequitable to direct sharing of the same between the two groups. Further, there also does not appear to be any inter group transactions after the disputes had started. Even though the counsel for Group A contended that there were inter group transactions, in spite of my repeated reminders to him to give a list of such transactions, he did not do so. Therefore, I am of the view that as in the above case, and also as contended by Group B, the effective date to determine the shareable assets and liabilities should be the date on which both the groups started managing the affairs of the units under their control independently. However, it would be impossible to determine/pin point the said date and therefore it has to be decided on a rational basis. Since the proposal was given on 7.3.2000. I consider it appropriate that the effective date, in so far as sharable assets and liabilities in terms of the proposal should be 31st March 2000. Thus, any asset created or liability incurred after this date by either of the parties the affairs of the company pertaining to the units under their control shall be with that group only. In view of this, Group A can claim a share in the bank/cash balance as available in the company's bank account only as on 31.3.2000.
16. Group B has contended that even though it is the company which has to pay Rs 24 crores to Group A and Group B has only to meet the short fall, to comply with the directions of the High Court, it has paid the entire amount by itself and as such it has sought for reimbursement out of the cash that may become available after receipt of various dues like income tax, PF refund etc. Clause (xx) dealing with cash compensation payable to Group A reads "The above compensation referred to in the three alternatives outlined herein above shall be paid by Hind Samachar Ltd to the Group allotted Lot-2 after prepayment of deposits received from the public and from cash available with the company in its bank accounts and its debtors. In the event of any short fall in the amount available with Hind Samachar Ltd to make such payment of compensation, the balance amount shall be paid by the Group allotted Lot-1". Since I have already given a finding that the date for determining the cash available with the company shall be 31.3.2000, for application of the above clause, the relevant date shall also be 31.3.2000.
17. Implementation of the proposal dated 7.3.2000: The said proposal contains a time schedule for general implementation of the division between the two Groups and also time frame within which certain acts are to be completed. The time schedule for all purposed under the said proposal shall commence with effect from 1st August 2006, being the date of this Order. Since in terms of the proposal dated 7.3.2000, the accounts of the company and the firms are to be audited by the statutory auditors of the company/firms, they shall complete the audit of these entities up to 31st March, 2000, latest by 30th November, 2006. For the purpose of determining the surplus/deficit in the account of the company as on that date, all subsequent transactions like receipts and payments pertaining to transactions prior to 31.3.2000 shall be taken into account by the auditors to determine the surplus/deficit as on that date.
18. Claim for release of Rs 24 crores to Group A: I had directed deposit of this amount in the name of this Board only in view of the issues raised by both the groups. Since I have given my findings on the issues, there is no impediment in releasing this amount to Group A. Accordingly, I direct the State Bank of Patiala, in which this amount has been kept as deposit, to release the same together with accrued interest on of after 16th August, 2006 to Group A under the authority of this order. Group A will produce a copy of this order to the Bark indicating the bank account to which this amount is to be transferred and the bank will act accordingly.
19. If the parties desire that to oversee the timely implementation of the proposal dated 7.3.2000, an independent person should be appointed, I shall do so on filing of an application to that effect. Such a person shall be, preferably, a retired High Court Judge.
20. All the applications are disposed of in the above terms.