Company Law Board
Shri Raj Kumar Gupta And Ors. vs Banaras Beads Limited And Ors. on 4 July, 2007
ORDER
S. Balasubramanian, Chairman
1. The first respondent company viz., Banaras Beads Limited (the company) was originally incorporated as a family private company with the 1st and 2nd petitioners, the 2nd respondent who are all real brothers along with their father as 1st directors. The company became a deemed public company in terms of Section 43(A)(1) of the Act and was converted into a public company in October, 1994. The company is engaged in the business of manufacture of handicrafts mostly of glass beeds. In February, 1995, the company went to public and issued 22,16,000 equity shares of Rs. 10/- each at a premium of Rs. 75/- per share. The company has units in Banaras and Delhi. While the 2nd respondent being the CMD of the company has been looking after the affairs of Banaras Units, the 1st petitioner, being the whole time director has been looking after the affairs of Delhi Units. The 2nd petitioner disassociated himself from the company sometimes in 1998. The public shareholding in the company is roughly about 17.15%%. Disputes and differences had arisen between the 1st petitioner and the 2nd respondent which resulted in the disputes being referred to a sole arbitrator in the year 1998. The sole arbitrator Justice A.N. Gupta gave an award dated 1st November, 1998. In terms of the award, the company was to be divided in to two by which the Units at Delhi, Noida, Kolkatta and Ernakulam were to go to the 1st petitioner who was to incorporate a separate company while Banaras Beeds along with Banaras Unit and Tandia unit was to vest in the 2nd respondent. In terms of this award, the parties were to approach the High Court under Sections 391/394 which in fact the company did. However, the 1st petitioner challenged the award before the civil court. During the pendency of the proceedings, it came to light that the High Court dismissed the petition filed under Sections 391/394 of the Act on the ground that the general meeting which approved the de-merger has not been properly conducted. In the reply to CA 55/2005, the 2nd respondent has averred that the suit against the arbitration award has been dismissed and the award has been confirmed by the civil court and that the 1st petitioner has filed an appeal before the High Court.
2. The petitioners collectively claiming to hold 41.6% shares in the company filed this petition in 1999 alleging oppression and mismanagement in the affairs of the company. The 1st petitioner group comprises of the 1st, 3rd, 4th, 5th and 6th petitioners and they have claimed to hold 32, 58, 392 shares. The main grievances, as in the petition, are that the 2nd respondent, in spite of having resigned as the CMD, continues to function so, that minutes books are not properly maintained, that the annual accounts for the year 1997-98 had not been placed before the general body, that the 2nd respondent had transferred 6.31% shares of the 1st petitioner by forging the signatures to a charitable trust, that there have been financial mismanagement in the company, that the 2nd respondent is starving the Delhi Unit without transferring sufficient credit limits through banks to the company, that by a filing false complaint, the 2nd respondent prevented the petitioners from attending the AGM on 24.9.1998, that the 2nd respondent had opened various bank accounts in the names of individuals including the petitioners by forging their signatures and has been operating them on his own etc. On the basis of these allegations, the petitioners sought for various reliefs including order of restraint against the 2nd respondent from dealing with the fixed assets of the company, to restrain the respondents from having any dealings with the sister companies, for a direction to the 2nd respondent to restore back to the company about Rs. 18.5 crores fraudulently diverted by him to various parties and also for a declaration that the 2nd respondent had vacated the office of the CMD.
3. When the petition was taken up for hearing on 29.4.1999, taking into consideration that even though the company was a public company, since the petitioners and the respondents held major shareholdings in the company and that they had been attempting to settle the disputes by way of arbitration, this Board advised the parties to attempt at a amicable settlement. Accordingly, an order was passed on 29.4.1999 asking the 1st petitioner and the 2nd respondent to independently propose the terms of settlement for the consideration of this Board on 3.8.1999. On 3.8.1999, the following order was passed "The counsel and the parties present in person have agreed, in our presence, for separation of Delhi units and Banaras units--Delhi units going to the petitioners and Banaras units going to the respondents. The petitioner will provide to the respondents, his proposal for division of the assets and liabilities latest by 31.8.1999 and respondents to react on the same by 15.9.1999". The matter was posted to 20.9.1999. On this day, the counsel for the 1st petitioner submitted that due to various problems, his client was not willing for division of the company and prayed for hearing the matter on merits. On 25.1.2000 when the matter was taken up, it was noticed that the 2nd respondent had sent a letter that he was having discussions with the petitioners for resolving the disputes and sought for adjournment. The 1st petitioner who was present in person confirmed the same and accordingly the matter was adjourned. Thereafter, a number of applications were filed by the 1st petitioner on various issues. In the hearing held on 28.12.2001, both the 1st petitioner and the 2nd respondent were present when they reached at an agreement that the entire company would be taken over by the 1st petitioner and that he would purchase all the shares held by the 2nd respondents group. The same was recorded in the order dated 28.11.2001 with the directions for the parties to exchange various documents indicated in that order. Accordingly, the documents were exchanged. However, nothing fruitful emerged and further applications were filed by both the sides. In the hearing held on 13.11.2003, the following order was passed: "The 1st petitioner and the 2nd respondent have given their consent for division of the company by which the Delhi Unit including NOIDA would go the 1st petitioner and the Banarasi Unit including Tadia to the 2nd respondent and that the division will be based on valuation to be made by an independent valuer. As far as the 2nd petitioner who is also a family member, I have suggested to his advocate that his client can go out of the company on receipt of the consideration for his shares on the same valuation made by the valuer. He requires time to consult his client". The parties were directed to furnish the names of Chartered Accountants to value the shares. Since they could not agree on the name a of valuer, by an order dated 3rd December, 2003, this Board appointed M/S R.S. Ahuja & Co, Chartered Accountants, to prepare a report on the division of the company and also to determine the fair value the shares based on the balance sheet as on 31.3.1999. Thereafter, by an order dated 13.1.2004, the date of valuation was changed to 31.3.1997 and the valuers were also asked to take into consideration all legitimate adjustments made in subsequent years while valuing the shares. The valuers submitted their valuation report in April, 2004 giving a proposal for division of the company and also valuing the shares at Rs. 34.81 per share. The valuers, however, left certain contentious issues for determination by this Board. Both the sides filed applications raising various objections on the valuation report. Since the objections raised by the parties were substantial in nature which could not be gone into and decided by this Board, in the hearing held on 4.10.2004, both the parties agreed that an independent person could be appointed to go through all these objections and determine the fair value of the shares and that the value so determined would be binding on the parties. Accordingly, by an order dated 13.10.2004, this Board appointed Shri A.R. Ramanathan, former Member of this Board to determine the fair value of the shares and also to determine the issues that had been left by Shri R.S. Ahuja & Co. for determination of this Board. Shri Ramanathan submitted is report in January, 2005. In his report, Shri Ramanathan observed that with various contentious issues between the parties, attempting a valuation without a finality on these issues, was bound to be an imperfect exercise and might be unfair. Accordingly, he advised the parties to agree on a lumpsum of Rs. 15 crores which was to be paid by the 2nd respondents group to the 1st petitioner group as on 31st March, 1997. From this amount, the value of all the properties going to the petitioners' group, on determination by a joint team of approved property valuers could be deducted and adjustments relating to all commercial transactions between Delhi Units and Baranasi Units from 1st April, 1997 could be adjusted. Once the final amount is determined, the amount would carry a simple interest at 10% from 31.3.1997. He had also observed that in case no fair solution could be found out, this Board could consider recommending winding up of the company as a last resort.
4. When the report was received, both the 1st petitioner and the 2nd respondent were very keen that no recommendation for winding up should be made, but on the basis of these two valuation reports, I should pass an order of division of the company taking into consideration various points raised by both the sides. The matter of amicable settlement was discussed in my Chamber on a number of occasions with the 1st petitioner and the 2nd respondent. The 2nd petitioner also joined the discussions on a few occasions. He has his own independent grievances that the company had declined to register the transfer of certain shares in favour of his group, and his group has independently filed 3 petitions under Sections 111 of the Act. Since in his report, Shri Ramanathan had referred to disputes on the shareholdings, in the discussions on 22.2.2005, I directed both the sides to furnish the details of source of funds for acquisition of shares held by them as on 18.3.1999. The same was reiterated in the hearing on 7.3.2005 and on 22.3.2005. In the hearing on 5.5.2005, since the 2nd respondent had filed the details as per the earlier order, to substantiate the same, I directed him to file certified copies of the annual returns for the years 1989-90 to 1997-98 and also the returns filed in respect of the Trust. The 1st petitioner was directed to bring all cash scripts in original along with a chart indicating the original shares and the bonus shares. The details were furnished by both the sides.
5. During the discussion on 1.8.2005, both the sides agreed that on the basis of the earlier valuation, their objections, documents filed by them and also their further discussion, I might pass an order. However, since the issues raised were not clear, I held further discussions with them on 14.11.2005, 16.12.2005, 17.1.2006 and on 6.3.2006. On that date, I passed the following order: "Compromise talks between R-2 and P-l held. I have advised both of them that R-2 can keep the business of Vanarasi Unit along with assets and liabilities and Petitioner No. 1 to keep Delhi and Noida units along with all assets and liabilities. In other words, whatever companies/units under their respective control as of date will continue to be with them and there shall be no claims against each other as is shown in the books of accounts which will be written of by respective groups. R-2 is agreeable to this suggestion while P-l desires some time to consider after the disputes between P-2 and R-2 relating to P-2 shares are settled. In regard to P-2 shares, it has been agreed that the company will register the shares in the name of P-2 company of those standing in the name of son of P-2 if the some is agree able. In so far as shares purchased by P-2 from the market, the same will also be registered in P-2's name on withdrawal of cases filed by him in this regard. It has also been agreed that the shares in respect of which a criminal case has been filed will be withdrawn and the shares transferred-in the name of P-2. Order regarding shares will be passed in the hearing fixed on 26.3.2006 after Hearing the son of F-2. The matter was further discussed and finally on 19.2.2007 when the 1st and 2nd petitioner and the 2nd respondent were present, the following order was passed: "Compromise talks held 2nd petitioner desires to continue as a shareholder in the company. Regarding parting of ways between the 1st petitioner and the company in terms of the earlier orders, final order will issue dividing the company with the Delhi Unit with the Is petitioner and Varanasi Unit with the 2nd respondent". Hence the present order.
6. The sequence of events would indicate that even at the initial stages, after the petition was part heard, the parties desired parting of ways and valuers were appointed to work out the same. Unfortunately, while both the parties raised objections on the valuation of R.S., Ahuja & Co., Shri Ramanathan has expressed his inability to determine the valuation of shares. Since the 1st petitioner and the 2nd respondent had agreed that I should pass an order on division of the company by taking into considerations the issues raised by the parties, I have to deal with the same. There are three main issues required to be determined for the division of the company. First is the number of shares held by the 1st petitioner's group and the second is inter office transactions to determine who should pay to whom and how much. Regarding the 1st petitioner's claim that his group which held 50% shares in the company should continue to hold the same percentage now also, I explained to him that after the public issue when the general public came to hold more than 17%, it would unconceivable that his group would continue to hold 50% shares in the company. In the petition, it is indicated that the 1st petitioner's group holds 3258392 shares constituting about 32%. In addition, he had alleged that 6.31% shares held by his group had been illegally transferred to the Trust. There is no allegation in the petition that the shares earlier held by the 1st petitioner's group had been illegally transferred by the 2nd respondent. According to the 2nd respondent, the 1st petitioner group holds, as per the register of members and also as per the share certificates held by them, only 31,13,946 shares out of which 12,37,340 shares were acquired out of company funds to the tune of Rs 5.2 crores which is yet to be repaid to the company. Complete details have been furnished in his reply to CA 93/2005 indicating the holdings of the 1st petitioner's group at different times. He further submitted that when in the reply to the petition, the 2nd respondent had indicated that the 1st petitioner's group holds only 3113946, in the rejoinder, the same has not been rebutted. However, in CA 93/2005 filed by the 1st petitioner, he has given a chart: indicating that his group holding of 34,22,672 shares comprises of only the original shares together with bonus shares declared on 4 occasions on those shares and that his group had not acquired any further shares and therefore, the question of his using the company money of Rs 5.2 crores did not arise. When the 2nd respondent pointed out that most of the shares held by the 1st petitioners group are those acquired by that group as is evident from the share certificates, in CA 161/2005, the 1st petitioner has alleged that all the original share certificates of his group were with the 2nd respondent and he had manipulated the shares and handed over certificates only in relation to 31,12,946 shares and these shares comprise of those fraudulently transferred from the binami shareholders of the 2nd respondent. By this fraudulent means, the 2nd respondent has created a fictitious liability on Delhi office of a sum of Rs 5.2 crores. According to the 2nd respondent, the 1st petitioner had donated 3500 shares to a Trust in 1990 and he and his wife had transferred 13425 shares in 1992, which was approved in a Board meeting on 12.10.1992, which was attended by the 1st petitioner. A copy the minutes has been annexed in the reply to CA 93/2005. He has also enclosed copies of the IT Assessment orders to show that the 1st petitioner and his wife had disclosed the capital gains on the sale of these shares. The 1st petitioner's contention is that all the IT matters of the 1st petitioner's group were being dealt with in Banaras by the 2nd respondent and he had forged the signatures of the 1st petitioner and his wife and therefore no credence should be placed on these documents. When the 2nd respondent relied on the certified copies of the Annual Returns signed by the 1st petitioner to rely on the shareholding of his group, the 1st petitioner alleged, again, forgery. In regard to the gift/transfer of 3500 shares to the Trust, which was approved in a Board meeting on 30.3.1991 presided over by the father, the 1st petitioner alleges that the 2nd respondent had forged the father's signature. He further alleges forgery in respect of his signature in the Annual Report of 90-91, which indicates the transfer of 3500 shares to the Trust along with transfer of 3500 shares by the 2nd respondent to the Trust. In view of this, the 1st petitioner claims 50% of the shares held by the Trust. According to the 1st petitioner, since the 2nd respondent has the habit of forging signatures, none of the documents produced by him should be taken on the face value. The 2nd respondent pointed out that even as late as in 1997 and 1998, the 1st petitioner's group has been paid dividend only on 31,13,946 shares, which had been accepted without protest and the allegation of forgery is an after thought. The first petitioner alleges that on his own admission, the 2nd respondent has purchased shares for himself out of the company funds and therefore, he should repay the amount so misappropriated. I have narrated the stand of the parties in regard to the shareholdings.
7. The Second issue is regarding debits raised by Vanarasi office against Delhi office and vice versa. In so far as inter unit transactions as on 31.3.1997 are concerned, as on 31.3.1997, being the date of valuation, there was no dispute except a small difference of Rs. 945/-. As on that date, as per the Delhi office books, Delhi office owed a sum of Rs. 11.08 crores to Varanasi. The disputes now raised relate to further debits made against each other. Vanarasi Unit has raised a debit of Rs. 5.2 crores against Delhi relating to the shares acquired by the petitioner's group while Delhi office has raised various debits towards 50% of the share premium, 50% of the profit of the company from 1983-84 to 1996-97 and also export commission on FOB value. The 1st petitioner resists the debit of Rs. 5.2 crore on the ground that he never acquired any shares out of the company's funds and that by manipulation, the 2nd respondent got a number of shares transferred in the name of the 1st petitioner's group and as such he Delhi office is not liable for the same. In so far as the debits raised by Delhi office against Vanarasi Unit is concerned, the 2nd respondent contends that a branch office of the company cannot seek for share of share premium or reserves and surplus as they have to be in the accounts of the company only. This is the narration of the stand of the parties in regard to inter-office transactions.
8. The third issue relates to valuation of shares. In the valuation of Shri R.S. Ahuja who has determined the fair value of the share at Rs. 34.81 per share, after all the adjustments as on 31.3.1997, the petitioner's group would have to pay to the company a sum of Rs. 13.88 crores at the time of division if their shareholding is taken at 31,13,946 and Rs. 12.22 crores if their shareholding is taken at 3851866 that is after giving credit for 50%o of the parental shareholding to the 1st petitioner's group. In his report, Shri Ramanathan has opined that in view of the diverse stand taken by the parties in regard to the shareholding of the 1st petitioner's group, it would be difficult to determine the same and has accordingly suggested a lump sum of Rs 15 crores as the value of the shareholdings of the petitioner's group subject to other adjustments as per the report. Both the sides are agreeable to this sum except that the 1st petitioner desires the same without any adjustments while according to the 2nd respondent, this amount is subject to deductions of the dues from Delhi office as on 31.3.1997 and to the extent of commercial transactions between Delhi and Varanasi. He has computed the that even if a lump sum of Rs. 15 crores is taken as the entitlement towards their shares, after the adjustments as suggested by Shri Ramanathan, the dues from the Delhi Office to Varanasi Unit comes to Rs. 17.11 crores (Reply to CA 162 of 2005). In turn the 1st petitioner has contended that after payment of Rs 15 crores without any adjustment, the 2 respondent should be directed to pay back to the company the alleged diverted amount of Rs. 16.79 crores together with interest at the rate of 24%), the total being Rs. 54.06 crores. In addition, he has also sought for clearing the dues of Delhi office to the extent of over Rs. 22 crores (CA 117 of 2006). Since both the sides have raised debits against each other which are all challenged, in my order dated 6.3.2006, I had suggested that there should be no claim by each other which was agreed to by the 2nd respondent. During the further discussions which I have not recorded, the 1st petitioner was willing to accept a sum of Rs. 10 crores at the time of division while the 2nd respondent Remanded a sum of Rs. 5 crores from the 1st petitioner at the time of division. I would like to place on record that most of the issues raised by the parties are not in the petition or in the reply to the petition or in the rejoinder. These issues were raised only when the valuation process was started. From the narration of the stand of the parties in regard to these issues would reveal that even if the matters are heard and examined in detail, it would be very difficult to resolve. Since both the parties have agreed for division and the determination as to who should pay to whom and what amount at the time of division is very difficult to be determined, I am of the view that the claims and counter claims both in regard to the adjustments sought by the parties and the shareholding should be ignored and since on record both the 1st petitioner and the 2nd respondent hold more or less equal percentage of shares of about 32% each, the parting of ways should be without any cash payment by either of them. In the hind sight, this may appear to be unfavourable to the 1st petitioner, but considering the fact, that the valuation was based on the balance Sheet as on 31st Mar 1997 and that on that day, the Delhi Office under the control of the 1st petitioner owed a sum of over Rs 11 crores, which need not be paid now, the petitioner cannot have any grievance for division without any cash payment by the 2nd respondent. The 2nd respondent cannot have any grievance that Delhi office has been let off without payment of its dues, as he himself had agreed for division without any adjustment as recorded in my order dated 6.3.2006. However, since the company, its name and the logo will be retained with the 2nd respondent, I consider it fit to direct the 2nd respondent/company to pay a sum of Rs 2 (two) crores to the 1st petitioner who shall not use the name or logo of the company after the division. There is a dispute regarding a property at B-2, G.K. Enclave-II, which according to the 1st petitioner is a property of the Delhi Unit while according to the 2 respondent it is not. Since the said property is located at Delhi and is valued at Rs. 1 crore, if the 1st petitioner desires this property, the 2nd respondent will hand over vacant possession of the same to the petitioner's group. In that case, the cash amount of Rs. 2 crores will be reduced to Rs. 1 (one) crore. In addition, the company will also transfer, free of cost, all the shares that it holds in the companies belonging to the 1st petitioner group. The NAV of such shares is roughly Rs 33 lakhs. This is the best solution that I could think of in the present case.
9. In so far as the 2nd petitioner is concerned, he did not seem to have any reservation on amicable settlement of the disputes as is evident from the fact that he was present in person on 29.4.1999, when the 1st petitioner and the 2nd respondent were asked to submit proposals for settlement. Thereafter neither he nor his advocate was present in some of the subsequent hearings. In the hearing on 13.11.2003, when the 1st petitioner and the 2nd respondent agreed for division of the company and also for appointment of a valuer, the counsel for the 2nd petitioner was present, and he sought for some time to ascertain from his client whether he would be willing to go out of the company on receipt of fair consideration for his shares. So the 2nd petitioner was aware of the attempts of amicable settlement. After the receipt of the report of Shri Ramanathan, when certain directions, were given on 22..3.2005, the counsel for the 2nd petitioner was present, and the 2nd petitioner himself joined in person during discussions on the valuation on 22.2.2005. During further discussions on 22.3.2005, 19.4.2005, 5.5.2005, and 1.8.2005, his counsel was present. On 16.12.2005, 17.1.2006 and on 6.3.2006, the 2nd petitioner was present in person when the 2nd respondent agreed to register the shares in favour of the 2nd petitioner's group. The order passed on 6.3.2006 has already been reproduced in paragraph 5 ante. In terms of that order, the son of the 2nd petitioner Shri Prasant appeared before me and submitted that he had no objection to the registration of transfer of the shares held in his name in favour of M/S Prashant Glass Works Private Ltd. Therefore, the said shares numbering 4,29,900 shares shall be registered in the name of M/S Prashant Glass Works Pvt. Ltd. without any further act or deed by either the 2nd petitioner or by Shri Prashant. Once the 2nd petitioner withdraws the cases filed by him in regard to the shares acquired by him from the market and also the criminal case, all the shares involved in this proceeding shall also be transferred and registered in the name of the concerned transferee. This direction will dispose of the petitions filed by the 2nd petitioner's group viz. CP Nos.14/111 of 1999, 15/111 of 1999 and 1/111 of 2001.
10. Before parting with this order, it is necessary to note that during the process of settlement, a number of applications were filed by the 1st petitioner and the 2nd petitioner as also by the 2nd respondent. Since the matter of compromise was being discussed, even though pleadings had been completed in some of the applications, they were never pressed. The 2nd petitioner filed CA 23 of 2006 seeking for an investigation into the affairs of the company and CA 56 of 2006 seeking for convening an EOGM. After the order dated 6th March, 2006 was passed when the 2nd respondent had consented to register the shares relating to the 2nd petitioner, he filed CA 118 on 7.4.2006 seeking for a direction to the 2nd respondent to produce certain documents and also for disposing of CA 23 and 56 of 2006 before any order on the settlement. Thereafter he filed CA 156 of 2006 on 12.5.2006 for recording that he was withdrawing from compromise talks and that the petition should be heard on merits and an order of investigation should be passed. Thereafter, he filed CA 60 of 2007 on 10.1.2007 seeking various directions regarding the annual general meetings. However, when further discussions between the parties took place on 19.2.2007 when the 2nd petitioner was also present, he did not press for hearing of any of the applications and instead expressed his desire to continue as a shareholder of the company. Accordingly, the following order was passed which was signed by the 1st and 2nd petitioner and the 2nd respondent: "Compromise talks held 2nd petitioner desires to continue as a shareholder in the company. Regarding parting of ways between the 1st petitioner and the company, in terms of the earlier order, final order will be issued dividing the company with the Delhi Unit with the 1st petitioner and Varanasi Unit with the 2nd respondent". This statement that he would like to continue as a shareholder is because of the reason, that on an earlier occasion, he demanded Rs. 200 per share to go out of the company. Having not pressed any of the applications and having consented for the division of the company with his desire to continue as a shareholder, the 2nd petitioner appears to have filed a writ petition before the Allahabad High Court, a copy of which has been sent to this Board by the Standing Government Counsel (received on 29.6.2007). In the writ petition, he has sought for a direction to this Board to dispose of CA 118 of 2006 and CA 60 of 2007, however, without disclosing the orders of this Board dated 6.3.2006 and 19.2.2007. With the consent order dated 19.2.2007, the petition had reached a finality and only a formal of order in terms of the order dated 19.2.2007 remained to be issued, and which is the present order. Therefore, the question of hearing any pending application did not arise after 19.2.2007.
11. I dispose of the petition and also the 3 petitions filed under Section 111 by the 2nd petitioner's group with the following directions. Within 60 days from the date of this order:
(1) The company should transfer all the assets belonging to Delhi Units to the 1st petitioner or any of his company at the choice of the petitioner and shall also pay a sum of Rs. 2 crores. In case the 1st petitioner desires to have the property at GK Enclave, then the same should be handed over to him and the cash payment shall be reduced to Rs 1 crore. Likewise all the shares held by the company in the 1st petitioner's companies shall also be transferred free of cost. All the expenses connected with the transfer of assets/shares shall be borne by the 1st petitioner's group as also all (2) The 1st petitioner shall hand over all the books of accounts and other documents connected with the company maintained in Delhi Office to the 2nd respondent within the same period as also all stocks and other inventory available as on date to the company. He shall not create any new liability in the name of the company on any account. All outside liabilities of Delhi office, except relating to the properties transferred to the 1st petitioner group shall be taken over by the company. Likewise all dues to Delhi office shall be collected by the company. The 1st petitioner shall assist the auditors to carry out the up to date audit of Delhi units.
(3) After this period, the 1st petitioner shall not use the name of or the logo of the company.
(4) Even after parting of ways, both the sides will cooperate with each other in case of any necessity on matters relating to Delhi office or Varanasi office or the company relating to the past periods. Dealing with all pending proceedings relating to the affairs of Delhi unit, shall be the responsibility of the 1st petitioner and the company, wherever necessary assist him in dealing with the cases.
(5) All the shares which are registered in the name of the petitioners' group in the register of members shall be cancelled and the company is authorized to reduce its paid up capital to the extent of the face value of shares so cancelled. The book value of the assets of the company transferred to the 1st petitioner's group and together with the sum of Rs. 2 crores or Rs 1.5 and the face value of the shares held by the company and directed to be transferred to the 1st petitioner, shall be deemed to be the consideration paid by the company for the shares. The 1st petitioner's group shall surrender all the share scripts to the company. Effective from today, till the surrender of the shares, the 1st petitioner shall not transfer any of the shares held by it nor acquire further shares of the company.
(6) Neither of the groups shall have any claim against the other or the company and all the claims and counter claims made in the petition/applications shall be cancelled/withdrawn/written off in the books of accounts of the company at the time of consolidation of the accounts.
(7) Within 30 days from the date of this order, all the shares involved in CPs.14/111, 15/111 of 1999 and 1/111 of 2001 shall be registered in the name of the petitioners therein without any further act or deed.
(8) The 1st petitioner shall cease to be a director of the company effective from 60 days of this order.
(9) Even though it is reported that the loans payable to the SBI have already been cleared by the company, yet, if the 1st petitioner's personal guarantee still subsists, the company should take immediate action to relieve the 1st petitioner of his personal guarantee.
(10) All the litigations initiated by both the parties against each other including criminal complaints shall be withdrawn immediately.
(11) All the employees of Delhi Units of the company shall be deemed to be the employees of the 1st petitioner with continuity of service and benefits and all the accrued benefits in respect of the such employees shall be transferred along with them.
(12) All the pending applications are disposed of without any orders in view of the above directions.
12. Liberty to the parties to apply in case of any difficulty in working out this order including for seeking clarifications, if any.