Company Law Board
G.L. Dalmia And Ors. vs Bateli Tea Company Limited, Belgachi ... on 22 August, 2006
Equivalent citations: (2007)1COMPLJ450(CLB), [2007]73SCL84(CLB)
ORDER
S. Balasubramanian, Chairman
1. In this order, I am considering three petitions CP Nos.97, 98 and 99 of 2005 together, as in all the three respondent companies, same set of family members hold shares and the reliefs sought for by the petitioners will have to be considered taking all these three companies together. All these three companies are engaged in cultivation and sale of tea, each owning a single tea garden. Bateli tea garden having an area of about 397 hectares is located in Assam, Belgachi tea garden of about 448 hectares is located in West Bengal and New Terai garden having an area about 440 hectares is located in New Terai, WB.
2. In 1949, one M.L. Dalmia, the grandfather of GG Dalmia and father of B.L Dalmia 2nd respondent in CP 97, and one Mathura Prasad' Saraff, who were related through marriage, jointly acquired the controlling shareholding interests in Belgachi Tea Company Limited from the erstwhile promoters. In 1956, Belgachi acquired around 52% shares of Bateli and thus the latter became a subsidiary of the former. After some years, New Terai also became a subsidiary of Belgachi. Presently, neither Bateli nor New Terai is a subsidiary of Belgachi. M.L Dalmia expired in 1962.
3. Presently, there are 2 families, which hold majority shares in these companies Dalmia family and Saraff family. Outsiders hold, less than 10% shares in these companies. There are two branches within the Dalmia family, viz. C.K. Dalmia branch which is the petitioner in all these three petitions and B.L. Dalmia branch. In Saraff family, there are 4 branches M.L. Sharaff, N.L. Saraff, B.K. Sharff and R.G. Saraff
4. The common case of the petitioners is: Sometime in 1970, an agreement and/or understanding and/or arrangement was arrived at between the Dalmias and Saraffs under which the two branches of Dalmia family were to control the management and day to day management of Bateli and Belgachi and Saraffs were control the day to day management of New Terai. Accordingly, the registered offices of these companies were shifted, Belgachi and Betali to the premises in which other Dalmia companies were functioning and New Terai to the premises in which other Saraff companies are housed. In 1973, when Bateli ceased to be a subsidiary of Belgachi, shares held by Belgachi in Bateli were transferred to both the groups equally, the shares coming to Dalmia group further divided equally between the petitioners' group and B.L. Dalmia group. However, the management of Bateli continued to be with the petitioners' group. Likewise, when New Terai ceased to be subsidiary of Belgachi in 1981, the shares held by Belgachi in New Terai were transferred in the same manner as the shares held by Belgachi in Bateli and New Terrai continued to be under the control and management of Saraffs. In Bateli, Dalmia family holds approx. 49% shares and Saraff family holds 49% shares and the balance with outsiders. Within Dalmia family, petitioners' branch held 24% and the B.L Dalmia branch 25% shares.
5. In so far as Bateli is concerned, the case of the petitioners is: In April 2004, an understanding was reached between the two branches of Dalmia family by which it was agreed that in view of the petitioners' group being in management of Bateli and B.L. Dalmia group being in control of Belgachi, there should be inter-se transfer of shares so that petitioners' group holds more shares in Bateli and 2nd respondent group in Balgachi. Accordingly, 2nd respondent group transferred 5% shares to the petitioners' group in Bateli by which the petitioners' group now holds the largest percentage of shares of 29% in Bateli. Likewise, the petitioner's group also handed over their 5% shares in Belgachi to B.L Dalmia group, so that that group holds the largest percentage of shares in Belgachi. For a long time, the Boards of all the 3 companies consisted of 4 directors from Dalmia group and 4 directors from Saraff group. Because, of the understanding that each branch will control one company, the petitioners have ceased to have any director in New Terai from 2002 and in Belgachi from Feb. 2005. The allegation of the petitioner is that not withstanding the arrangement that Bateli is to be under the control and management of the petitioners, Saraffs are interfering with the management of the company to the detriment of the petitioners and the company and as such they have sought for a declaration that Bateli belongs to the petitioners and that the other two groups should be directed to sell their shares to the petitioners.
6. The submissions of respondents 1 to 6 in the common reply are: It is the petitioners who have acted oppressively against the respondents by changing the bank operations by all the directors, a practice which had been in vogue for decades, by excluding them from bank operations by opening a new account and designating only the 1st and 2nd petitioners as authorized signatories. After opening the new account, they have siphoned of Rs. 1 crore sanctioned as loans by UCO Bank to their own company, namely, Manish Co. Private Ltd. Around August, 2005, they had stolen the share certificates and blank instrument forms relating to 11293 shares held by B.L Dalmia group. The B.L Dalmia group never transferred the shares as claimed by the petitioners. The petitioners have not shown any proof of payment of consideration nor have disclosed any board meeting in which the transfer was approved. Their claim that they had handed over 5% shares in Belgachi to B.L. Dalmia group is also false. The petitioners are also engaged in competing business by setting up a bought leaf tea manufacturing facility near Siliguri in the name of M/S Dalmia Tea Plantation & Industries Ltd. and are using the infrastructure, resources and manpower of Bateli. They are also guilty of secreting all the statutory records and accounts books of the company from the registered office to their own premises. The so called understanding that each group will own and control a particular company is without any foundation. The petitioners had obtained ex-parte interim order superstitiously without any proper notice to the respondents.
7. In so far as Belgachi is concerned, the allegations of the petitioners are: Dalmia group holds 50% shares in the company while Saraf group holds 49%. Within Dalmia group, B.L. Dalmia branch holds 29% shares while the petitioners' branch holds 21% shares. Within Saraff group, each of the 4 branches of Saraff group holds 12.25% shares. In other words, B.L. Dalmia branch is the largest single shareholder. Even though, this company had 4 directors representing each of Dalmia and Saraff groups, in Feb. 2005, the 1st and 2nd petitioners resigned from the Board and presently they have no representation on the Board, (the company accepted their resignations only on 3.11.1005). This company has always been controlled and managed by B.L. Dalmia branch right from 1980. Neither of the petitioner directors was actively involved in the affeirs of the company other than making available funds to the company as Balgachi has not been doing well for the past many years. Between the period 2000-20p5, the petitioners, through Bateli, have lent a sum of about Rs. 40 lacs to Belgachi. In 2004, further Rs. 25 lacs had been withdrawn by B.L. Dalmia from the accounts of Bateli without the knowledge and consent of the petitioners. Belgachi has run up provident fund dues in excess of Rs. 60 lacs. Since criminal complaints have been filed against the company and also against all its directors including the 1st and 2nd petitioners, at the behest of the 1st petitioner, part payment to the extent of Rs. 19.78 lacs was made in January, 2006. The attempts of B.L. Dalmia branch to make payment of the balance dues in installments has failed, where after Belgachi filed a writ petition before Calcutta High Court and got an order for making the payment in installments which also according to the petitioners Belgachi has failed to comply with. Salaries/wages have not been paid on due dates. There are arrears of excise duty, the production and sale of tea is coming down and the company has been consistently incurring losses. Therefore, an investigation into the affairs of the company should be ordered and the respondent directors should be directed to clear all the provident fund and other statutory dues.
8. In the common reply filed by respondents 1, 2, 3, 4, 6 and 7, the respondents have submitted: The 1st and 2nd petitioners have been directors of the company for a long time and have been taking active part in the day to day functioning of the company. They have not resigned as directors in February 2005, as claimed by them, as is evident from the fact that they have written to the bankers of the company for a cheques book. For the year 2004-2005, the company has earned profits and as such the claim of the petitioners that the company is riot being managed properly is not correct. They submitted their resignation only on 14.2.2005 which was accepted by the Board on 3.11.2005. Even though, they have ceased to be directors from that date, yet, the 1st petitioner is still using the company cars. The tea garden of the company is located in Naxalite area of West Bengal. All the tea gardens in that area are running in loss due to poor quality of the tea and poor yield compared to tea gardens in Assam. That is the reason why the company has not been able to discharge its liabilities including statutory liabilities. The petitioners were fully aware of this fact. Therefore, to allege that the poor performance is due to the mismanagement of the respondents is not correct. No ground has been made out for grant of any relief sought for by the petitioners in this petition.
9. As far as New Terai is concerned, the allegations of the petitioners are; In this company, Dalmia family and Saraff family hold 46% shares each. Within Dalmia family, petitioners' branch holds 23% shares and the other Dalmia branch holds 23% shares. Within Saraff family, ML Saraff branch and RG Saraff branch each holds 23% shares. This company has been under the control and management of M.L. Saraff and his son the 6th respondent. Petitioners were never involved in the affairs of the company even though they were directors of the company from which position also they had resigned in 2002. The company has been incurring losses consistently over the last few years indicating clearly, mismanagement in the affairs of the company by Saraff group. After the disputes started in relation to Bateli in November, 2005, on enquiries, the petitioners came to know that on 20th September, 2004, the company had issued 42000 shares to respondents 2, 8 to 17. The allotment of the shares cannot be sustained for various reasons; no general meeting was held to get the approval under Section 81(1)A of the Act to allot shares to outsiders as these shares have been issued to M.L. Saraff and persons/entities closely associated with him. The purpose and motive for allotment were only to grab majority shareholding in the company and also to reduce the petitioners to an insignificant minority. Further, this allotment is also is contrary to the provisions of SEBI Regulations and Guidelines. By this issue, the Saraff group has acted in a manner grossly oppressive to the petitioners. Further, the affairs of the company are also being mismanaged. Due to improper maintenance of machinery, the factory of the company is virtually closed and the company has run up huge liabilities including provident fund dues. Since the petitioners were shown to be directors, they had to pay a sum of Rs. 5 lacs to the provident fund authorities as per the directions of the High Court on a writ petition filed by the petitioners. In addition, salary and wages to workers and executives remained unpaid for over a period of 3 months. Accordingly, reliefs have been sought inter alia for a declaration that the allotment made in September, 2004 is illegal, null and void, investigation into the affairs of the company, directions to the Saraff group to clear all the PF dues at the earliest etc.
10. In the common reply filed by the respondents 1 to 7, they have submitted: The 1st and 2nd petitioners have been directors of the company for a long time and they have been actively involved in day to day affairs of the company. It is evident from the fact that they have signed the balance sheets even after the year 2002. The poor performance of the company is due to the same factors as explained in case of Belgachi. Even though the petitioners claim that they have resigned as directors in 2002, till date, the company has not received their letters of resignation. They have signed the balance sheet on 3.9.2003 and also the loan documents of Allahabad Bank on 2.4.2004 as directors of the company. The only allegation in the petition relates to allotment of 42000 shares of Rs. 10/- each at a premium of Rs. 90/- per share. The issue of shares was necessitated for "discharging the various liabilities of the company and also due to one of the conditions imposed by the bankers that the paid up capital should be increased. la relation to the issue of shares, all statutory formalities were complied with. The petitioners were fully aware of this issue and were not interested due to the poor financial position of the company. However, if they are willing to invest now at the same rate, they could buy the shares from respondents 2,8 to 17.
11. Shri Mookherjee, Senior Advocate appearing for the petitioners submitted: The shareholding pattern of all the three companies would indicate that both Dalmia Group and Saraff Group each holds equal percentage of shares in all the three companies. For a long time, the management and control of New Terai has been with Saraff while Bateli and Belgachi has been with Dalmia's group. Within Dalmia's group, Bateli has been in control of the petitioners and Belgachi with B.L. Dalmia branch. To reflect the control of these companies, the shareholding within Dalmia's group has been adjusted by which in Bateli, petitioners now hold 29% shares while B.L. Dalmia branch holds 20% shares. In Belgachi, petitioners 'hold 21% and B.L Dalmia branch 29% shares. The day to day management of Bateli has been with the petitioners' group for a long time. The 1st petitioner became a director of Bateli in 1983 and has been functioning as one of the MDs from 1997. The fact that the 1st petitioner has been in active management would be evident from various documents annexed with the petition. From these documents, it could be seen that Income Tax Returns have been filed by either of the petitioners, all correspondence with Income Tax have been dealt with by the 1st petitioner, dealings with insurance companies on behalf of employees have been dealt with by the 1st petitioner, claims towards subsidiary have been made by the 1st petitioner. All the bank dealings are looked after by the 1st petitioner. Even the factory license is in the name of the 1st petitioner. Further, it is the 1st and 2nd petitioners who have given personal guarantee for the loan taken from the bank, The contention of the respondents in the reply that in addition to the petitioners, the respondents have also been signing various documents to indicate that they are in joint management with the petitioners is not borne out by facts. The only cheqes signed by them related to payment of bills of their own vehicles. No doubt 3rd responded was also another MD but his role was limited to issuing notices for general meetings, signing of dividend warrants etc. The very fact that in para 16(xviii), the respondents have admitted that the registered office of the company is in the same premises as that of other Dalmia companies would indicate that Belgachi and Bateli are Dalmia companies. New Tarai which is under the control of Saraff, its registered office is in the premises in which other Saraff companies are housed. In view of the good management of the petitioners, Bateli has been doing well as is evident from the fact that its turnover has gone up from Rs. 413 lacs in 1994-95 to Rs. 813 lacs in 2004-2005 and it has been consistently paying dividends ranging from 20% to 150%, Various other proactive decisions taken by the petitioners in improving the working of the company is elaborated in pages 26 to 36 of the petition. This fact has been admitted by the respondents also in their reply wherein they admitted that presently the tea garden of Bateli faring well even when other tea gardens are not doing well. Because of the efforts of the petitioners, there has been no default in repayment of loans and as a matter of fact there is no subsisting liability. There has been constant increase in production and the company has been able to get best price for its tea. Even the Medical Inspector of Plantation has certified that the medical facility available in the garden of the company is one of the best among the tea gardens (Annexure P-7). Even though, area wise tea garden of Bateli is small compared to that of Belgachi and New Terai the quantum of cultivation of tea is more or less equal, but, in financial terms, Bateli is stronger compared to the other two. This is because of the efforts of the petitions in managing the company well. Bateli has given a loan of Rs. 40 lacs to Belgachi and about Rs. 40 lacs to New Terai. As against this, Belgachi owes about Rs. 50 lacs as provident fund dues and New Terai as Rs. 1 crore as provident fund dues. Likewise, Belgachi has bank dues of about Rs. 1 crore while New Terai of above Rs. 2 crores. Because of this, Bateli did not want to give more loans to these two companies. However, in the 1st week of November, 2003, the 6th respondent without the knowledge of the petitioners had issued a cheque for Rs. 10 lacs in favour of Belgachi on 29.10.2003 and again Rs. 5 lacs on 7.11.2003 and Rs. 10 lacs on 22.3,2004. This was done by the 6th respondent by obtaining a new cheque book from the bank. On objection of the bank of such withdrawal, the petitioners had to assure the bank that the amount would be recovered from Belgachi and deposited in the bank. In page 37 of the reply, the respondents have taken a stand that all the 3 companies being 3 children of the same family, there is nothing wrong in providing inter-corporate loan or temporary accommodation. Such a contention is fallacious because the management of the each company is with separate group and therefore the respondents cannot assert that financial accommodation should be made especially when their own companies are not doing well. Even in family companies, the legal rights are subject to equitable consideration and standard of probity is higher. Without the knowledge and concurrence of the petitioners who have been in control of Bateli, the respondents should not have diverted the funds of the company. Since the 6th respondent misused his power of operation of bank account, the petitioners were forced to close the account of the company and open a new account in September, 2004 to be operated by either of the petitioners only. They alone furnished bank guarantee in respect of the credit facilities under the new sanction of Rs. 404.72 lacs. However, the respondents allegedly passed a Board resolution on 14th December, 2004 authorizing all the respondents also to operate the same new bank account opened by the petitioners. The very fact that the respondents had proposed to operate the same new account opened by the petitioners would indicate that they had ratified the act of the petitioner directors opening the new account. By adding the respondents as signatories, they have curtailed the powers of the petitioners to operate the bank account exclusively and with a view to siphon of the funds of the company. When the bank sought the concurrence of the petitioners in this regard, the Saraff group decided to remove the 1st petitioner as MD of the company. Accordingly, they issued a special notice under Section 284(2) of the Act and in the Explanatory Statement, it has been alleged that the 1st petitioner has been mismanaging the affairs of the company. Even in the Explanatory Statement to the notice dated 27th December, 2004, the Saraff group has stated "It appears that his capability to manage and conduct the affairs of the company in an efficient and proper manner has certainly been tarnished and adversely affected". In the same notice it is further stated that "He has taken important decisions and implemented the same". These statements themselves would indicate that the other two groups have recognized that Bateli has been under the management and control of the petitioners" group. When the notice was received by the directors of other Dalmia group, they wrote to the company stating that they were not in favour of passing the resolution and as such asked Saraff to withdraw the same. This being the case, how the other Dalmia branch is supporting the Saraff now is not understood. Further, while the Saraff, in their reply, have questioned the factum of transfer of 5% shares to the petitioners by the BL Dalmia branch, this branch has not filed any affidavit denying this fact. Actually, in April 2005, both Dalmia branches swapped 5% shares on payment of agreed consideration to BL Dalmia branch and the 5% shares transferred by them have been demated also. Even though, with a view to end the disputes, the petitioners entered into an agreement on 8.1.2005 for joint management of all the three companies, yet, this agreement has not been acted upon by all the parties as is evident from the fact that the petitioners resigned from Bateli in Feb. 2005 (Even though form No. 32 was filed in November, 2005). The fact that the relationship between the parties has soured further is evident from the letter of the 5th respondent to the bank on 27.10.2005 by which he has advised that Bank all the bank operations would be by joint signatures of two directors, even though for about a year the same was operated singly by either of the petitioners. In view of the conflicting instructions, now the bank has frozen the bank account, due to which the petitioners are clearing the dues of the company from their personal accounts. The allegation that the petitioners are carrying on competing business by running a bought leaf factory is baseless as it does not have any tea garden of its own and it merely processes tea plucked from the tea gardens around Siliguri in WB which is far away from bateli garden in Assam.
12. Shri Sarkar, Senior Advocate, appearing for the petitioners submitted: In view of the averment of the 7th respondent in more than once in his reply that Bateli is under the control of Dalmia group, Saraff will have to go out of the company. Even though, according to the 7th respondent, Bateli is under the control Dalmia group, yet, B.L Dalmia is not a managing director and therefore it is evident that the 1st petitioner being one of the managing directors, the control of the should remain with him. Further, at page 37 of the reply of Saraff that, all the three companies are in the nature of partnership between Dalmia and "Saraff" family, equitable consideration should be taken into account and if it Is done so, since Bateli has been under the control of Dalmia group and since the other Dalmia has no interest in the company, this company should remain with the petitioners. It is also clear from the averments of the 7th respondent that he has no shares in New Terai and since the petitioners also have resigned from New Terai and since Saraff have been managing that company by themselves, New Terai should be with Saraff group. Further, in his reply, the 7th respondent has not denied the transfer of his group 5% shares to the petitioners in Bateli. In terms of Section 402(b), this Board has the power to direct purchase of the shares of one group by the other and not necessarily that majority should buy out the minority. Even though, on paper the companies are to be managed jointly, yet in reality, each company is being managed by single group. Even otherwise, in Bateli, taken the group as a whole, Dalmia group holds majority shares of 49% as against Saraff group holding of 45%. The only reason why the Saraffs and other Dalmia group are objecting to the petitioners' taking over Bateli is that it has been doing extremely well, while the other two companies are not financially sound. Since the admitted fact is that there are 3 companies in which all the 3 groups hold shares and that disputes have arisen among the shareholders, the only way by which permanent solution can be found is by way of partition. Since the petitioners have been control of Bateli for a long time, that company should go to the petitioners. In Arati Dutta Gupta v. Unit Construction Co. Ltd. 124 CC 584, this Board has held that if one group has been in control of a company, their status should not be disturbed. In Praful M Patel v. Wonderweld Elecrodes Pvt Ltd 2002 6 CLA 423, this Board has held that if the minority shareholder has been in control and management of the company, then, he should have the right to purchase the shares of the majority shareholders. Likewise, in Vijay Krishna Jaidka v. Jaidka Motor Co. Ltd. 1997 1 CLJ 268, this Board has divided the business of the company between the petitioners and respondents therein on equitable grounds. It is to be noted that the petitioners have voluntarily resigned both from New Terai and Belgachi and as such they have absolutely no stake in these two companies except the shareholding and the personal guarantees given for the bank loans.
13. Shri U.K. Choudhary appearing for the respondents submitted: Even the maintainability of the petition is questionable. There are 7 petitioners in CP 97 of 2005 while the affidavit has been affirmed and verified only by the 2nd petitioner. He has not been authorized by other petitioners of which three are companies which the 2nd petitioner cannot represent without Board resolution of these companies. The 1st petitioner has also not filed any affidavit. The 2nd petitioner by himself holds only 4% shares and therefore in terms of Section 399, the petition is not maintainable. Even this affidavit does not appear to be in accordance with Regulation 14 of the CLB Regulations. Even though, 5th, 6th and 7th petitioners have purportedly given powers of attorney in favour of the 2nd petitioner, yet, they are not in proper format, not delay stamped and do not bear the common seal of the respective companies nor any Board resolution passed by the company has been disclosed. Mere signing of Vakalatnama by all the petitioners would not make the petition maintainable in terms of Section 399 of the Act.
14. He further submitted: The stand of the petitioners that they have been in exclusive management of the company is false. The petitioners' group controls only 20% shares in the company and they have only two directors on the Board compared to the respondents holding 80% shares and having 6 directors on the Board. The company being a public company, in terms of Section 287, the provisions of which have been incorporated in Article 105 of the Articles of Association of the company, the quorum for Board meeting is 1/3rd of the total strength or the two directors whichever is higher. In the present case, there are 8 directors in the company and therefore 1/3rd would be 3 directors. Therefore, the two petitioner directors could not have passed a resolution regarding opening of a new account and as such their action of opening a new account is abinitio void. By this clandestine act and with the oblique motive of taking complete control of the company, the petitioners have excluded the other respondent directors from the management of the company. When all the directors had been authorized to operate the bank account, there was nothing wrong in any of them obtaining a new cheque book. It is not the first time that sister companies are being assisted by financial accommodation. Even the petitioners have given financial assistance to their own group companies. There is not even a whisper as to when and how opening of new bank account was approved by the Board. Therefore they must have opened a account by a fabricated resolution. Having clandestinely opened the account, the petitioners cannot claim that they have given personal guarantees. If the respondents had been asked to do so, they would have also done so as has been the practice. When the respondents came to know of the opening of the bank account, instead of asking the bank to close the account as having been opened unauthorizedly, the respondents only passed a resolution of including them also as signatories without excluding the petitioners. This would show the bonafides of the respondents. When the notice for removal of the 1st petitioner as MD was issued, the petitioners' group wanted the matter to be resolved amicably. Accordingly, a meeting was held on 8.1.2005 wherein it was agreed that all the 3 tea gardens and the offices would be jointly managed by both Saraff and Dalmia groups. It was also decided that both the groups would hold equal shares in all the companies and that steps would be taken to equalize the holding. In view of this agreement, the resolution to remove the 1st petitioner as MD was dropped. Having agreed in January, 2005 for joint management and equal shareholding, the petitioners could not have filed this petition seeking for exclusive management of Bateli in December, 2005. Further, the manner and mode in which the petitioners obtained interim order exhibits the malafide of the petitioners. This petition was mentioned on 1.12.2005 at Delhi while the petitioners issued the notice only on 30.11.2005 knowing fully well that it would not reach the respondents at Calcutta before the hearing. By this, the petitioners obtained an ex-parte order in the nature and to the extent of ousting all the respondents from the management and affairs of the company. The interim reliefs obtained by them are practically in the nature of final reliefs. Further it is the petitioners who have committed act of oppression against the respondents by opening a new bank account and excluding the respondents from being the authorized signatories, a practice which has been in vogue for a very long time. In page 7 of the petition, the petitioners have averred that respondents 2 to 7 have not attended any Board meeting of the company nor have taken any interest in the business of the company. If these directors had not attended any Board meeting, they would have automatically ceased to be directors in terms of Section 283(1)(g) of the Act but the petitioners have not claimed so. This itself would indicate that the averment of the petitioners is wrong. The foundation on which the petition has been filed is that there was an understanding that each company would be managed by one batfish exclusively. No evidence has been produced to substantiate the same either by way of a family settlement or by way of an MOU. The claim of the petitioners that B.L. Dalmia branch had transferred 5% shares in Bateli with an understanding that further shares would be transferred is absolutely false. There is nothing on record as to when and how much consideration was paid for the shares and in which Board meeting, the transfer was approved. Therefore, even within Dalmia family, there is nothing on record to show that Bateli would be under the control of the petitioners' group and Belgachi under the control of B.L Dalmia branch. Therefore, the basic premises under which this petition has been filed that the petitioners will have to be in exclusive control of the company is wrong and unsubstantiated.
15. Learned Counsel further submitted: It is highly inequitable for the petitioners to seek control and management of a profit making companies with least shareholding and leave the loss making companies to majority shareholders. The profitability of Bateli is not due to the alleged good management by the petitioners but because of other factors, like, location, quality and flavour of tea cultivated etc. It is to the knowledge of everyone that tea gardens in Assam are doing much better because of these reasons than those located in West Bengal. Even the cost of conversion is much cheaper in Assam compared to West Bengal. Earlier, Belgachi was doing so well that it could acquire Bateli and New Terai. The petitioners were in control of Bateli garden only in their capacity as garden managers and as such they cannot claim ownership on the ground that they were managing the gardens. In every tea garden, it rs the manager who manages the tea garden and directors do not directly involve themselves in the day to day affairs. Just like the 1st petitioner, 3rd respondent is also another MD, in fact the chairman of Bateli, and the balance sheet is signed by all the directors. There is no provision in the Article giving exclusive management and control to the petitioners. Respondents have not abandoned Bateli as is evident from the fact that they have all given personal guarantees. The petitioners have not established that there are grounds for winding up of any of these companies on just and equitable grounds. In the absence of satisfaction of this condition, which is precedent for grant of any relief under Sections 397/398 of the Act, the petition should be dismissed as held in Bagree Cereals case 105 CC 493 SC. Further, series of acts of oppression and mismanagement have been alleged. As far as Bateli is concerned, the only grievance of the petitioners relates to the alleged diversion of funds of Rs. 25 lacs to Belgachi. When the petitioners themselves admit that all the 3 companies are family companies, there was nothing wrong in giving financial assistance to another family company. Further, the money has not been used by anyone for their personal benefit. None of the case cited by Shri Sarkar has relevance to the present case as facts are entirely different. In Track part case, there was a family settlement and the division was agreed to before the CLB. In Unit Construction case, the allegation was that majority had been converted into minority and in Wonderweled case, the majority shareholders has abandoned the company. In regard to New Terai, it is about non payment of PF dues and in case of Belgachi, the allegations are about issue of further shares and non payment of PF dues.
16. As far as Bateli is concerned, it is the petitioners who have excluded the majority shareholders from the management by changing the bank operations and thus had acted oppressively against the majority shareholders. Further, they had also removed all the records of the company from the first floor wherein the registered office is located to the 3rd floor. In addition, the petitioners have also started a competitive business in the same location where Belgachi and New Terai gardens are located. When the petitioners paid Rs. 5 lacs for clearing PF dues of Belgachi, it was actually out of the funds of Bateli. If so, there was nothing wrong in withdrawal of Rs. 25 lacs from Bateli for the benefit of Belgachi. When there are two MDs, how can the 1st petitioner claim that he is in sole control of the company. As a matter of fact, the other MD is the Chairman of the Board and general meetings. Even the 1st petitioner sought for a cheques book on 24.3.2004 even though according to him, he has no interest in that company. If there was an agreement between the two Dalmia branches regarding of control of the companies, the same is not binding on the Saraffs. Even otherwise, there is nothing on record to show that petitioners had transferred their shares in Belgachi to the other Dalmia group to claim that they had agreed for exclusive management of Bateli and Belgachi respectively by the petitioners and the other Dalmia group. In Belgachi, the petitioners resigned as directors not because of transfer of shares but because of pre-occupation. As far as New Terai is concerned, they have not resigned but have cooked up a story as if they had ceased to be directors prior to December, 2002. Such a letter was sent to the ROC only on 9.9.2005. The company has not received any resignation letter from them so far. As late as 13.4.2004, the petitioners had given personal guarantees in respect of New Terai. New shares were allotted in New Terai as the company needed funds and by this allotment, the petitioners' minority status had not been affected at all. Summing up his arguments, the learned Counsel submitted that the prayer of the petitioners that each group should control the ownership and management of one company cannot be granted. However, with the view to put an end to the disputes, his clients are willing to purchase the shares held by the petitioners in all the three companies on a fair value.
17. In rejoinder, Shri Mukherjee submitted: As far as the objections relating to maintainability of the petition is concerned, letter of authority from every petitioner authorizing the 2nd petitioner to file the petition is on record. The 1st and 2nd petitioners collectively hold more than 10% and even if the authority given by the 5th to 7th petitioners which are companies, are held to be invalid, yet, the 1st and 2nd petitioner holding more than 10% are entitled to file this petition as the 1st petitioner has authorized the 2nd petitioner to file the petition on his behalf. In J.P Srivatsava v Gwalior Sugar case 2005 1 SCC 172, the Supreme Court has held that even subsequent affidavits could be considered for examining the maintainability of the petition. In the present case, all the shareholders have given affidavits affirming that they had authorized the 2nd petitioner to file the petition on their behalf. Further, the 1st petitioner was present in a number of hearings. In that case, the Supreme Court has also taken cognizance of group concept. Here the admitted fact is that the 2nd petitioner is a member of GP Dalmia group and he has filed this petition for and benefit of that group. Therefore, maintainability under Section 399 cannot be questioned. In so far as establishment of ground for just and equitable ground is concerned, it is evident from Section 397(2)(a) of the Act that once act of oppression is established, the consequence is that the company has to be wound of on just and equitable grounds and that such winding up would unfairly prejudice the members. In Pearson Education Inc. v. Prentice Hall India Pvt. Ltd. Co. Appeal SB No.20 and 21 of 2004 Delhi High Court, it has been held that once oppression is established, the court may with a view to bring to an end the matters complained of make an order as it thinks fit. Therefore what the petitioners have to establish is that there have been acts of oppression. In Kilpest case, it was a composite petition under Sections 397/398 and also Section 433(f). That is why, on facts of that case, the Supreme Court held that there were no grounds for winding up of the company under just and equitable clause. In Sangramsinh P. Gaekwad v. Shanta Devi P. Gaekwad AIR 2005 SC 809, the Supreme Court has held in para 207 of its judgment that even if no case of oppression had been made out, the court may grant such relief so as to do substantial justice between the parties.
18. The learned Counsel further submitted: 7th respondent belongs to one of the branches of Saraff. In his affidavit in reply to the petition, in various places, he has admitted that Bateli is under the control and management of the petitioners and even in respect of Belgachi, he has averred that the same is under the control and management of Dalmias. It is to be noted that BL Dalmia branch has not filed any affidavit independently, especially when the petitioners have claimed that they had entered into an understanding with that group for swapping their respective shares in Bateli and Belgachi. Saraffs' cannot make any submissions on the same as they were not involved in the understanding. Holding the position of directors is irrelevant as the issue is who is in control and management of the companies. From the facts of the cases, it is abundantly clear that the petitioners are in control and management of Betali, BL Dalmia group of Belchachi and Sharrfs of New Terrrai and the prayer of the petitioners is that the same should be legally formalized by exchange of shares at a value to be determined by an independent valuer and since, Betali's financial position is sound the respondents would get a good price for their shares. Since the petitioners have been in management and control of the company for long they have the legitimate expectation of continuing with the management, and this principle has been applied by this Board in Gurmit Singh v. Polymer Papers Ltd. 123 CC 486. Further, when two companies in which shareholders are common and disputes had arisen among themselves in regard to the affairs of the companies, this Board had directed that each group will control the ownership and management of one company exclusively. Micro particle Engineers Pvt. Ltd. v. Munuswamy 105 CC 526 and this decisions has been upheld by the Madras High Court. Similarly in the present cases, there are three companies and three distinct groups of shareholders and since disputes have arisen among them, each group should be in exclusive ownership and control of the one company. In Yashovaradhan Saboo v. Groz Beckert Ltd. 1993 1 CLJ 20, this Board directed the majority to buy out the minority as the majority was in control of the company. However, in Praful M Patel v. Wonderweld Electrode Pvt. Ltd. 2003 115 CC this Board had directed the minority to buy out the majority as the minority were in control of the company. The very fact that the respondents had not taken any action to remove the petitioners from the management of Bateli after the agreement in December 2004, would indicate that there was subsequent agreement for exclusive management of the company by the petitioners. The allegations against the petitioners that they had diverted funds to their own concerns is only an after thought as the respondents fully knew that there was no diversion but only repayment of the loans taken for installation of new plant and machinery. That is why, they had signed the Balance Sheet for the year ended 31.3.2005 which reflected the repayment of the loans and also additions to the plant and machinery.
19. The learned Counsel, therefore, prayed for the following reliefs: The petitioners should be given the right to purchase the shares held by the other two groups in Bateli so that Bateli is owned and controlled by the petitioners. Likewise, the petitioners should be directed to sell their shares in Belgachi to B.L. Dalmia group so that it becomes the largest shareholder in that company. Similarly, the petitioners should be directed to sell their shares in New Terai to M.L. Saraff branch so that it becomes the largest shareholder in that company. The valuation of shares should be done by reputed persons, like J. Thomos & Co. or Carritt Moran & Co. who are experienced tea brokers and the payment for the shares should be made within a time frame. Directions should also be given for all the dues payable to Bateli and other companies of the petitioners by Belgachi and New Terai as per the books of accounts. The sale proceeds of Belgachi and Terai should be directed to be first utilized for discharge of statutory liabilities more particularly the PF dues. Petitioners should be discharged from guarantees given in favour of Belgachi and New Terai and a declaration should be made that the petitioners are not in charge of or responsible for the conduct of business of Belgachi and New Terai.
20. I have considered the pleadings and arguments of the counsel. At the outset, I make it clear that even though both the sides had filed written submissions, I have not considered the same as the respondents have complained that the petitioners have submitted more than what was argued. The maintainability of the petitions has been questioned on the ground that the requirements of Section 399 have not been fulfilled. Even though the number of petitioners differs, there are 4 common petitioners in all these petitions. The 1st petitioner is the head of GG Dlamia branch. His shareholding in Bateli is 10.48% shares, Belgachi 3.24% shares and New Terai 0.64%%. The 2nd petitioner is the son of petitioner holding 4.06% in Bateli, 2.56% in Belchaci and 12.86% in New Terrai. The 3rd petitioner is the mother of the 1st petitioner holding 5.97% shares in Bateli, 6.45% shares in Belgachi and 0.58% shares in New Terrai. The 4th petitioner is the wife of 1st petitioner holding 0.40% shares in Bateli, 4.38% shares in Belcgachi and 4.11% shares in New Terai. The 5th, 6th and 7th respondents are companies controlled by the 1st petitioner group which also hold shares in the three companies. Even though these petitions have been filed in the name of all these petitioners, affidavits have been filed and verified by the 2nd petitioner in his personal capacity as well as in the capacity of authorized signatory for the other petitioners. In the petition letters of authorities given by the 1st 3rd and 4th petitioners and powers of attorney given by the 5th 6th and 7th respondents have been annexed. Shri Charudhary, citing certain authorities pointed out the powers of attorney are not valid and that the letters "of authority also do not meet with the requirement of consent in terms" of Section 399. The main object of Section 399 providing for certain numerical or shareholding strength is to prevent disgruntled shareholders with insignificant shares from invoking the beneficial provisions of Section 397/398 claiming to act in a representative capacity and not with a view to prevent voicing against genuine grievances of oppression and mismanagement. Therefore technicalities relating to proper format of powers of attorney or the authority letter etc., are not relevant as long as the shareholders exhibited their intension that a petition under Section 397/398 has to be filed and to that extent they have authorized a shareholder to act on their behalf. In all the letters of authority, it is specifically mentioned that the signatories were petitioners in all the three petitions and that for the purpose of expediency, they have authorized the 2nd petitioner to sign all pleadings and affidavits on their behalf. Further, when the objection relating to the authority letters had been raised, all of them have subsequently filed affidavits affirming that they had given authority letters in favour of the 2nd petitioner to sign the pleadings and affidavits on their behalf. Further the 1st petitioner was personally present in a number of hearing. On a similar objection as in the present case, in Gwalior Sugar case, the Supreme Court has held that when the authority given is subsequently confirmed by an affidavit, then the authority should be deemed to be valid for the purposes of Section 399. In view of this, I hold that the petitions are maintainable in terms of Section 399.
21. In so far as the merits are concerned, the main allegations of the petitioners in relation to Belgachi and New Terai are that these companies have not been doing well due to mismanagement and that huge liabilities including PF dues are subsisting. Incurring losses and/or existence of huge liabilities need not necessarily mean mismanagement. It may, at the most, reflect inefficient management. The petitioners have repeatedly compared the performance of Bateli with the performance of the other two companies to allege mismanagement in these two companies. The respondents have adequately explained the reasons for the unsatisfactory performance of these two companies with which I am convinced. In so far as issue and allotment of shares in New Terai is concerned, it is not the case of the petitioners that the company was not in need for funds. It is their own allegation that the company has not been discharging its liabilities including statutory dues, obviously for want of funds. Again, when on the one hand when the petitioners assert that New Terai is the under the control and management of Saraff group, on the other hand the petitioners cannot complain that by this allotment Saraffs have acquired majority in that company. Any way, this allotment cannot be set aside for two reasons: that the company was in need of funds and that Saraff group has agreed that the petitioners can have the liberty of acquiring shares in proportion to their shareholding from 2nd and 8th to 17th respondents at the issue price
22. Therefore, only the allegations relating to Bateli and consequent reliefs require consideration. While the petitioners allege that the other two groups are interfering with petitioners in the conduct of affairs of Bateli, it is the grievance of the respondents that by changing the bank operation, the petitioners have excluded the other two groups from the affairs of Bateli. From the various documents filed with the petition and as elaborated by the learned Counsel for the petitioners, I am fully convinced that the petitioners were/are in active management of Bateli. I do not accept the contention of the respondents that the 1st petitioner was acting only in the capacity of the manager of the estates. It is on record that there is a different person designated as manager. As a matter of fact, in the hearing held on 21.7.2006, the petitioners filed an application bringing to my notice that Saraff group has in fact appointed a CEO in Bateli when order on the petitions had been reserved and I have restrained the said appointee not to discharge any function till the petitions are disposed of. This appointment of a CEO all of a sudden itself would vindicate the stand of the petitioners that the 1st petitioner had been in complete management of the company.
23. The entire disputes relating to Bateli revolves around opening of a new bank account by the petitioners, exclusively to be operated only by the petitioners. The justification given by the petitioners is that the same was necessitated to protect the funds of the company as the 6th respondent had, without the knowledge and consent of the petitioners, issued cheques for Rs. 25 lakhs in favour of Belgachi by obtaining a new cheque book. The respondents have challenged this opening of the bank account not only on the ground that there was no board resolution authorizing the petitioners to open such an account, but also on the ground that the respondent directors who were authorized signatories for a long period, have been excluded. While regarding the former they claim that is illegal and regarding the later they allege oppression. They have also advanced the arguments that since all the three companies are sister companies, there was nothing wrong in extending financial help by one company to another company. All the arguments of the respondents would be valid if the concurrence of the petitioners, who are in management of Bateli had been taken before issuing cheques in favour of Belgachi. It is on record that Bateli had earlier extended financial support to Belgachi, which was with the knowledge and consent of the petitioners. No director on his own, even if he is an authorized signatory, can divert the funds of one company to another company even in the same group, without the knowledge and consent of other directors, more particularly, those who are in the management of the company who are answerable for proper management of funds of the company: Therefore, if the petitioners had taken an action to prevent such diversion of funds, even if the same is against the provisions of the Act, can not be held to be either mismanagement or oppression. Further, even the respondents in the board meetings held on 14.12.2004 and 17.1.2005 did not question the authority of the petitioners to open the new batik account but had only resolved that the respondents would also be authorized signatories to operate the said bank account. By this the respondents have actually condoned any illegality in opening the new bank account by the petitioners.
24. Having come to the conclusion that the petitioners have not established any act of oppression and mismanagement in the affairs of Belgachi and that even the alleged oppression relating to issue of further shares in New Terai having become in fructuous in view of the liberty given by the respondents to the petitioners to acquire proportionate shares by transfer from 2nd, 6th to 17th respondents and also having given a finding that in so far as Bateli is concerned,' the act of exclusion of the respondents from bank operations was in the interest of the company, the nature of relief to be given requires consideration.
25. As far as Betali is concerned, by passing a resolution that the respondents would also be authorized signatories, presently, the bank operation has come to a stand still. The action of the respondents in appointing a CEO when the matter relating to the management of Bateli is pending before this Bench is not only highly oppressive as the same would amount to stripping the powers of the petitioners, it would also amount to over reach this Bench. In Unit Construction Ltd and Polymer Paper Co. Ltd. cases, this Board has held that shareholders in management of a company for a long time cannot be removed. In the present case, the attempt to stripping the petitioners of their powers enjoyed by them for a long period is definitely an act of oppression. It was forcefully argued by the learned Counsel for the respondents, that in view of the decision of the Supreme Court in Bagree Cereals case that unless the petitioners establish that the company is liable to be wound up on just and equitable grounds and that such winding up would be prejudicial to them and also the company, no relief can be granted in these petitions as the petitioners have not so established. In this connection, it has become necessary to examine the provisions of Section 397(2). It reads "If on any application under Sub section (1), the Company Law Board is of the opinion(a) that the company's affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member of members: and (b) that to wind up the company would unfairly prejudice such member or members, but otherwise, the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up", A careful analysis of the above would indicate, that it is for this Board to form an opinion that the affairs of the company are being conducted in an oppressive manner and once it forms such an opinion, the just and equitable grounds for winding, up of the company becomes established and this Board has to grant relief in terms of Section 402, if it again forms an opinion that such winding up would prejudicially affect the interest of the members/company. In other words, once this Board gives a finding that acts of oppression have been established, winding up of the company on just and equitable grounds becomes automatic. Shri Sarkar relevantly referred to the unreported judgment of Delhi Court in Prentice Hall case, wherein, the Court has held that once oppression is established, reliefs under Section 402 could be granted. In so far as Betali is concerned, I have already held that acts of oppression have been established. Even otherwise, the issue whether relief could be granted in a petition under Sections 397/398, even if no oppression has been established, has been examined the Supreme Court time and again. While in Needles case, a three Judges Bench decided that even if no oppression is established, relief could be granted on just and equitable grounds, in Bagree Cereals case, Division Bench of the Supreme Court held otherwise. However, in the later case, a Division Bench of the same court has held in Geakwad's case, that in a given case, despite holding that no act of oppression has been made out, the Court may grant such relief so as to do substantial justice between the parties.(par 207 of the Judgment). Therefore, in so far as Betali is concerned, as acts of oppression has been established, relief could be granted and in so far as New Terai and Belgachi are concerned, relief could be granted to do substantial justice between the parties in view of the strained relationship among the parties.
26. The foundation of all the 3 petitions is that there are two distinct groups of shareholders, namely, Dalmias and Saraffs. It has also been claimed in all these petitions that within Dalmia group there are two branches and within Saraffs groups, there are 4 branches. Respondents have not disputed these averments. The respondents have also admitted that all the three companies are family companies and all the branches, are holding substantial shares in these companies. The only dispute relates to the assertion of the petitioners that there has been an arrangement of each group managing one company while according to the respondents, all the three companies are in joint management. I have already held that Bateli has been in the control and management of the petitioners notwithstanding the fact that the other Dalmia group and Sartaff Group hold majority shares and are also having majority in the board. Mere having representation on the board, even if in majority, could not amount to joint management as claimed by the respondents. Even though, the understanding of branch wise management of these three companies has not been supported by any document, yet, from the facts of the case, it is apparently clear that Bateli is under the control of the petitioners, Belgachi is under the control of B.L. Dalmia branch and New Terrai is under the management of Saraff. This is evident from the fact that the petitioners have furnished enough documents to show that they are in active management of Bateli. There was no need for the 6th respondent to transfer Rs. 25 lakhs to Belgachi if the other Dalmia group is/was not in management of Belgachi. Likewise, the very fact that Sharaff issued and allotted shares to their own entities in New Terrai would indicate that this group is in management of New Terai. Further, these groups need not have given justification' for the unsatisfactory performance of these two companies if they were not in management of these companies. Thus, it is crystal clear that in spite of commonality of directors representing both Dalmia group and Sharaf group, there has, in fact, been exclusive management by one group/branch of one company.
27. The respondents have relied on the meeting held on 8.12.05, wherein the parties had agreed that all the three companies would be managed jointly and that both the groups would hold equal shares in all the three companies and action would be taken to equalize the shareholdings. It is on record that after the new account was opened for Bateli, the respondents passed a resolution for operation of the said bank account by all the directors on 14.12.04 and notice for removal of the petitioners was issued on 27.12.04 (which was not acted upon as the other Dalmia group was not in favor of the same) and the parties had agreed to jointly manage all the three companies on 8.1.05 and this petition was filed in December, 2005. There is nothing on record to show that the said agreement was implemented either in part or in to in the intervening period. As a matter of fact, admittedly the petitioners resigned from Belgachi on 14.2.05 i.e. within two months of the agreement on 8.1.05. Thus, it is evident that the agreement for joint management of all the three companies by both the groups/branches, has failed.
28. Under the circumstances, the issue for consideration is whether the prayer of the petitioner for parting of ways should be granted. From the proceedings before me, it is evident that the relationship between the parties have soured so much that the respondents now are even trying to completely oust the petitioners from the management of Bateli by appointing a CEO. In addition, there was an allegation of alleged diversion of funds by the petitioners from Bateli to their own sister concern knowing fully well that there was no diversion of funds but only repayment of the loan taken from the said company. Thus, the petitioners have made out a case for a direction for parting of ways which, according to them, could be effected by directing B.L. Dalmia group and Sharaf group to sell their shares in Bateli to the petitioners. On the other hand, the respondents have contended that since they are the majority shareholders, the petitioners should be directed to sell their shares to the respondents. In terms of Section 402(a) of the Act, there is no stipulation that it is the minority, which should be directed to sell their shares to the majority. Whether the minority should sell or purchases depends on the facts of each case, Normally, it is the majority shareholders who would be in control of the company and therefore, directions are normally given to the minority to sell their shares to the majority. In the present case, admittedly there are three companies and I have already given my finding that each company is found to be under the control and management of one group and that the attempt to manage all the companies jointly and equalization of shares has failed. It is very rare that the shareholders in control of the company whether they are in minority or majority are directed to sell their shares. Shri Sarkar relevantly cited the case of Wonderweld wherein, this Board directed the majority to sell their shares to minority as the latter was in control of the company for a long time. However, where both the sides are in management and the company has more than one separate and identifiable divisions/businesses, this Board had divided the company by allocating one or more divisions/businesses to one group and the remaining to other groups (Achal Nath/Hind Samachar/Trackparts/Jaidka Motors), Likewise, when there were two companies controlled and managed by common shareholders, this Board had directed one group to take one company and the other group the other company (Micro particles). In the present case, admittedly there are three groups of shareholders and there are three identifiable independent companies carrying on similar businesses with the three groups as shareholders. Therefore, as rightly pointed out by the Learned Counsel for the petitioners, the most equitable way of putting to an end of the disputes would be to direct the group in control of a company to purchase the shares held by the others in that company on a fair value to be determined by an independent valuer. It was vehemently argued by the counsel for the respondents that it would be highly inequitable to direct the respondents holding majority shares in a profitable company (Bateli) to sell their shares as against their controlling of loss making companies. Since, the worth of the companies will be taken into account in the determination of the fair value, no prejudice would be caused to any of the shareholders.
29. Accordingly, I direct as follows:
1. The B.L Dalmia Group and Saraff group are directed to sell their shares held in Bateli to the to the petitioners group.
2. With effect from the date of this order, the respondent directors shall not interfere in the affairs of Bateli and shall not take any decision in regard to the affairs of Bateli, even though they would continue as directors till full consideration is paid for the shares held by them in Bateli. The petitioners are at liberty to decide about the appointment of the CEO made by the respondents.
3. BL Dalima group is at liberty to purchase the shares of the petitioners in Belgachi and Saraff group is at liberty to purchase the shares of the petitioners in New Terai, both by giving a 15 days notice to the petitioners, which shall be binding on the petitioners. In Belgachi, the petitioners., are no longer directors and the fact has been admitted by the respondents. In so far as New Terai is concerne'd, there are no details of their ceasing to be directors, but by this order, they will be deemed to have ceased to be directors with immediate effect. They will not interfere in the affairs of both these companies with immediate effect.
4. I am not giving any finding on whether the petitioners have acquired 5% shares in Bateli from B.L. Dalmia group or not for the reasons that there are not adequate materials to decide this issue and also that no relief in respect of the same has been sought in the petition.
5. All the financial claims like loans etc of Bateli and other companies of the petitioners against New Terai and Belgachi may be settled in terms of the respective commercial terms as in this proceeding, I am concerned only with the shareholders rights and not with inter-se corporate claims.
6. The petitioners shall indemnify the respondents against any claim in respect of Bateli and likewise, the respondents shall indemnify the petitioners in respect of any claims in respect of the other two companies.
7. Within 2 months from the date of receipt of full consideration for the shares held by them in Bateli, the Saraff group shall release the petitioners from the guarantees given in respect of New Terai and like wise, B.L. Dalmia group shall release the petitioners from the guarantees given by them in respect of Belgachi.
8. The fair value of the shares of Bateli shall be determined by M/s Carritt Moran & Co. In case, the Saraf and BL Dalmia groups exercise the option of purchasing the shares held by the petitioners in other two companies as per the option given in par 29.3, the fair value of the shares of the other two companies will also be determined by the same valuer.
9. The valuation exercise should be completed within a period of 3 moths from the date of assignment. The fees payable will be negotiated by the concerned companies and paid by them.
10.All the parties are at liberty to make written as well as oral submissions before the valuer which shall be taken into consideration by the valuer in determining fair value of the shares.
11.The parties are at liberty to decide whether they would purchase the shares by themselves or the respective companies would do so In case the company/ies purchase the shares, consequent reduction in the share capital is authorized by this order.
12.Once the valuation is completed, the consideration should be paid within a period of 2 months in one or more installments.
13.Liberty given to the parties to apply in case of any difficulty in working out this order.
30. All the three petitions are disposed of in the above terms without any order as to cost.