Bombay High Court
M/S. Star Grain And Shipping Pvt. Ltd. ... vs Chetan Dalal And 10 Others on 2 April, 2026
Author: Manish Pitale
Bench: Manish Pitale
2026:BHC-OS:7885
COAPP20_16.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY APPEAL NO.20 OF 2016
M/s. Star Grain and Shipping Pvt. Ltd. and another ... Appellants
Vs.
Chetan Dalal and others ... Respondents
WITH
INTERIM APPLICATION (L) NO.25984 OF 2022
WITH
INTERIM APPLICATION NO.3224 OF 2025
WITH
INTERIM APPLICATION NO.3225 OF 2025
IN
COMPANY APPEAL NO.20 OF 2016
---
Mr. Kevic Setalvad, Senior Advocate a/w. Ms. Malcolm Siganporia and
Mrs.Manisha Mane Bhangale, Ms. Bijal Vora and Mr. Ashutosh Agarwal i/b.
Parinam Law Associates for Appellants in Company Appeal No.20 of 2016.
Mr. Haresh Jagtiani, Senior Advocate a/w. Mr. Yashpal Jain, Ms. Jahnavi Vora,
Mr. Pranay Kamdar and Mr. Siddhesh Jadhav for Respondent No.1A in Company
Appeal No.20 of 2016.
CORAM : MANISH PITALE, J.
RESERVED ON : 14th JANUARY, 2026
PRONOUNCED ON: 02nd APRIL, 2026
JUDGEMENT :
. The appellants have filed this appeal under Section 10F of the Companies Act, 1956, challenging judgment and order dated 29.04.2015 passed by the Company Law Board, Mumbai (for short 'CLB'). By the said judgement and order, the CLB accepted the contentions of the original respondent No.1 - Girdharlal Nathubhai Dalal (hereinafter referred to as 'Girdharlal Dalal'), who was the petitioner before the CLB, and issued directions with which the appellants are aggrieved.
MINAL Digitally signed by
MINAL SANDIP PARAB
During the pendency of the appeal, the original appellant No.2 - Bharat SANDIP Date: 2026.04.02 PARAB 18:23:59 +0530 1/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc Kantilal Dalal (hereinafter referred to as 'Bharat Dalal') expired and in his place, his son Darshan Dalal, representing his estate, came on record. Original respondent No.1 - Girdharlal Dalal also expired and his interest is represented by Chetan Dalal before this Court. The said Girdharlal Dalal was the uncle of the said Bharat Dalal. In other words, both, the uncle and the nephew have expired and their successors are pursuing the proceedings.
2. The said original respondent No.1 - Girdharlal Dalal filed Company Petition No.120 of 2013 before the CLB invoking Sections 397, 398 read with 402 and 403 of the Companies Act, alleging oppression and mismanagement in the affairs of the appellant No.1 company - M/s. Star Grain & Shipping Private Limited. The said Girdharlal Dalal approached the CLB stating that he and his brother Kantilal Dalal were carrying on business since 1951 through a partnership firm called 'Kantilal & Company'. The business increased due to which partnership firms and private limited companies were formed. But, the said Kantilal & Company continued to be the flagship entity. Around 1969-1971, the two sons of Kantilal Dalal i.e. one Surendra Dalal and the original appellant No.2 - Bharat Dalal were added as partners in Kantilal & Company. In February 1976, the appellant No.1 company was incorporated and the said Bharat Dalal also incorporated a partnership firm in the same name. Subsequently, the said Kantilal Dalal and Surendra Dalal retired from the business in India and Girdharlal Dalal along with Bharat Dalal continued as partners and joint holders in the said partnership firm and private limited companies. As a consequence of reconstitution, Girdharlal Dalal claimed to have 30% shareholding in the appellant No.1 company and he was appointed as the director of the company with effect from 01.10.1997.
3. Around 1997-1998, Bharat Dalal informed Girdharlal Dalal about 2/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc the Deutsche Group from Singapore looking for a partner in India for a joint venture company to enter the securities market of India. It was stated that the joint venture required an initial investment of about Rs.15 crores in lieu of which 25% shareholding would be allotted in the joint venture company. The aforesaid investment of Rs.15 crores was made wherein Girdharlal Dalal claimed to have given Rs.4.50 crores in proportion of his shareholding of 30%. It was further claimed that Bharat Dalal withdrew the balance amount from Kantilal & Company and invested in the joint venture company and that there was no external borrowing. On 01.04.1999, the joint venture company Deutsche Securities India Private Limited (DSIPL) was incorporated, wherein the appellant No.1 company became 25% shareholder.
4. According to Girdharlal Dalal, till 2004-2005, he continued to preside over the said company as Chairman in its official meetings and all the decisions were routed through him. According to him, even DSIPL recognized him as the Chairman of the appellant No.1 company. According to Girdharlal Dalal, around 2005-2007, relations between him and Bharat Dalal became strained due to the approach and behaviour of Bharat Dalal. In this backdrop, when the relations took a turn for the worse, in April 2007, Girdharlal Dalal called upon Bharat Dalal to give full details of all his dues in Kantilal & Company, affiliated companies as also the appellant No.1 company. He also called upon Bharat Dalal to furnish all relevant documents. But, Bharat Dalal refused to do so and in this backdrop, some time in June 2007, Bharat Dalal allegedly behaved in an abusive manner with Girdharlal Dalal and threw him out of the office of the company and even the residence.
5. According to Girdharlal Dalal, although he was shocked and aggrieved by the behaviour of Bharat Dalal, he did not take any precipitate action with the hope that his brother Kantilal Dalal would 3/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc intervene. It is claimed that several attempts were made by relatives and common friends to resolve the issues and to refrain from any legal action. When Girdharlal Dalal wrote to DSIPL on 09.08.2011 seeking certain information regarding investment of appellant No.1 company, income generated etc., the DSIPL claimed that it recognized only Bharat Dalal as the person representing the appellant No.1 company and on that ground, no response was given to the enquiries made by Girdharlal Dalal. It is further claimed that Girdharlal Dalal came to know about an arbitral award dated 10.07.2010, only in July 2011, pertaining to an arbitration proceeding between Bharat Dalal and his father Kantilal Dalal, who was the brother of Girdharlal Dalal. It came to light that although the award pertained to some settlement between Bharat Dalal and his father Kantilal Dalal regarding offshore investments, the rights of the petitioners concerning immovable properties and his interests in joint business entities were also adversely affected. However, Girdharlal Dalal was never put to notice about such a proceeding.
6. On 08.03.2013, Kantilal Dalal expired. Pursuant thereto, Bharat Dalal wrote to Girdharlal Dalal, claiming to be the executor of the Will of Kantilal Dalal, and called upon Girdharlal Dalal to satisfy the claim of Bharat Dalal under the said award, seeking transfer of immovable properties and other interests. In this backdrop, the said Girdharlal Dalal filed a suit before this Court. It was claimed that he made enquiries and searched the records of the appellant No.1 company available with the Registrar of Companies (RoC) and found a series of misdemeanors committed by Bharat Dalal by abusing his position in the appellant No.1 company. Hence, on 11.09.2013, Girdharlal Dalal sent a notice to the appellant No.1 company, Bharat Dalal and the respondents in this appeal, highlighting the acts of oppression and mismanagement, calling upon them to take remedial steps.
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7. On 25.09.2013, Girdharlal Dalal received a letter from the advocates representing the said opposite parties, seeking time to send a reply to the notice. The said Girdharlal Dlaal apprehended that the appellants and the other respondents were merely seeking time in order to fabricate the records of the company and hence, he filed the aforesaid Company Petition No.120 of 2013 before the CLB. A number of reliefs were claimed in the said company petition, including a declaration that allotment of certain shares of the appellant No.1 company in favour of Bharat Dalal, with the intention of reducing the shareholding of Girdharlal Dalal, was illegal, bad in law, null and void; an order for setting aside the resolutions on the basis of transfer of shares and rectifying Register of members of the appellant No.1 company; a declaration that Girdharlal Dalal continued to hold 30% of the paid up equity share capital of the appellant No.1 company; an order for rectifying the Register in order to delete the names of Bharat Dalal and respondent No.2 and their shareholding; a direction to the statutory auditor of the company to furnish all information regarding the appellant No.1 company and other directions to restrain Bharat Dalal and others from mismanaging the affairs of the appellant No.1 company.
8. The said Bharat Dalal appeared before the CLB and raised a preliminary point about delay and laches on the part of Girdharlal Dalal in approaching the CLB. All the allegations about misbehaviour on the part of Bharat Dalal were denied and it was stated that Girdharlal Dalal was all along aware about the change in the shareholding. It was emphasized that Girdharlal Dalal held 30% of the shareholding as a trustee and for the benefit of Darshan Dalal and Mangal Dalal, both being the sons of Bharat Dalal. It was claimed that Girdharlal Dalal acquired 30% shareholding from the wife of Bharat Dalal i.e. Jyoti Bharat Dalal without payment of any consideration, which further demonstrated that he held the shares only in trust for the benefit of the 5/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc sons of Bharat Dalal. It was submitted that the entire management of the appellant No.1 company was always with Bharat Dalal and that Girdharlal Dalal never actively participated in the business. It was with a mala fide motive that a story was created by the said Girdharlal Dalal while approaching the CLB and that too, admittedly after several years of the alleged cause of action accruing to the said Girdharlal Dalal. It was submitted that the records of the company clearly demonstrated that all the actions were validly undertaken and that, Girdharlal Dalal was all along aware about the affairs of the company. On this basis, it was submitted that the petition deserved to be dismissed.
9. The CLB considered the rival submissions and by the impugned judgement and order dated 29.04.2015, accepted the case of Girdharlal Dalal to a substantial extent. The objection of delay and laches was rejected and the CLB found that Girdharlal Dalal indeed held 30% shareholding and that the transfer of shares in favour of respondent No.2
- Mangal Dalal was illegal, thereby declaring the same as null and void. It was declared that Girdharlal Dalal continued to hold 30% of the total paid up capital of the appellant No.1 company, thereby reinstating Girdharlal Dalal as a director of the said company. Apart from this, the CLB appointed M/s. Haribhakti & Co. as a special auditor to conduct special audit of the appellant No.1 company for the period between 01.04.2007 and 31.03.2015, further directing that if it was found that Bharat Dalal had siphoned off funds of the company, he would have to reimburse the same.
10. Aggrieved by the said judgement and order of the CLB, the appellants filed the instant appeal. While taking up the appeal for preliminary hearing, this Court continued the stay granted by the CLB on its own order. The contesting respondent Girdharlal Dalal entered appearance. On 13.08.2015, this Court admitted the appeal and granted 6/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc stay to the impugned order of the CLB, except clause (j), which pertained to the appointment of the aforesaid special auditor and the directions issued in that context.
11. During the pendency of the appeal, the original appellant No.2 - Bharat Dalal expired and Darshan Dalal, representing his estate, came on record. Similarly, upon expiry of the original respondent No.1 - Girdharlal Dalal, Chetan Dalal is representing his interest. In the year 2025, the appellants filed Interim Application No.3224 of 2025 for taking on record agreements dated 01.10.1997 and 08.02.1999. It was claimed that as per agreement dated 01.10.1997 executed between the said Girdharlal Dalal (original respondent No.1), the appellant No.1 company and the respondent No.5 i.e. Jyoti Bharat Dalal, it was agreed that 30% shares of the company held by the said respondent No.5 would be transferred to Girdharlal Dalal wherein the consideration was left blank. It was further claimed that as per agreement dated 08.02.1999, Girdharlal Dalal was holding shares in the appellant No.1 company jointly with the said Bharat Dalal and that, Girdharlal Dalal was not to sell, gift or otherwise transfer his share / shareholding to any person other than Bharat Dalal and / or his wife or sons. It was further claimed in the application that the said agreements came to light when the papers of the company were being shifted by Darshan Dalal in the year 2018. It was further claimed that since the said documents are crucial in the context of the appeal and they are necessary for assisting this Court in disposing of the appeal, the application filed under Order XLI, Rule 27 of the Code of Civil Procedure, 1908 (for short 'CPC') may be allowed. The said application was vehemently opposed on behalf of the contesting respondent Girdharlal Dalal whose interest is now represented by Chetan Dalal, hereinafter referred to as the contesting respondent. It was stated that the said application does not satisfy the requirements of Order XLI, Rule 27 of the CPC and hence, the 7/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc application deserves to be dismissed. In this context, additional affidavits were filed on behalf of the rival parties in support of their respective stands. The appeal along with the said application were taken up for hearing.
12. Mr. Kevic Setalvad, learned senior counsel appearing for the appellants submitted that the CLB failed to appreciate that the petition filed by Girdharlal Dalal was hopelessly barred by delay and laches, even accepting the claims made in the company petition itself. It was emphasized that as per Girdharlal Dalal himself, as far back as in the year 2007, he was allegedly thrown out of the appellant No.1 company as well as the residence by Bharat Dalal and that, despite attempts being made by relatives and common friends, his grievance was not resolved. Girdharlal Dalal also claimed that in July 2011, he became aware about the arbitral award wherein his rights were adversely affected. According to him, he carried out search of the records of the appellant No.1 company with the office of the RoC and became aware about the misdemeanors allegedly committed by Bharat Dalal. Yet, he chose to file the petition before the CLB in October 2013. This was after a long period of more than six years having been elapsed from the accrual of cause of action to Girdharlal Dalal. It was submitted that, not a semblance of explanation was given and reliance was simply placed on the notice dated 11.09.2013 issued by Girdharlal Dalal. Delay and laches could not be explained by simply issuing notice much after alleged accrual of cause of action, without any explanation as to what prevented Girdharlal Dalal from approaching the CLB, prior in point of time. In this context, reliance was placed on judgement of the Delhi High Court in the case of Surinder Singh Bindra and others Vs. M/s. Hindustan Fasteners (P) Limited and others, 1989 SCC OnLine Del 197 and judgement of the Calcutta High Court in the case of Hungerford Investment Trust Ltd. v. Turner Morrison & Co. Ltd., (1972) ILR 1 Cal 8/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc
286.
13. It was also submitted that this could not even be a case of continuing wrong as the alleged wrongful acts of oppression may have caused injury, which was already complete. It could not be said to be a continuing wrong even though it may be claimed that the damage resulting from the act continued. It was emphatically submitted that even as per Girdharlal Dalal, none of the alleged oppressive acts were continuous in nature and therefore, the petition filed before the CLB suffered from gross delay and laches. In this context, reliance was placed on the judgements of the Supreme Court in the case of Balkrishna Savalram Pujari and others vs Shree Dnyaneshwar Maharajsansthan and others, 1959 SCC OnLine SC 68 and Samruddhi Co-operative Housing Society Limited Vs. Mumbai Mahalaxmi Construction Private Limited, (2022) 4 SCC 103 as also judgement of Bombay High Court in the case of Sulochana Neelkanth Kalyani Vs. Takle Investments Company and others, 2016 SCC OnLine Bom. 3543.
14 It was further submitted that the CLB erred in granting relief to Girdharlal Dalal, when he had made allegations of fraud and forgery while pursuing the reliefs in the company petition. Since the jurisdiction exercised by the CLB is necessarily summary in nature, such complicated questions of fraud and fabrication, involving disputed questions of facts could not have been decided by the CLB and hence, the impugned order was rendered without jurisdiction. The CLB proceeded to hold that the share certificates appeared to be fabricated and that there were forged entries as also overwriting on folio numbers, all of which pertained to forgery and fabrication; these being aspects on which the CLB had no jurisdiction to render findings, and as a consequence, the findings rendered by the CLB were mere conjectures. It was further submitted that the allegation of fraud, even if made in civil 9/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc proceeding, is required to be established beyond reasonable doubt, which the CLB could not have found in the light of the summary jurisdiction exercised by it under the provisions of the Companies Act. In any case, it was submitted that the alleged overwriting on share certificates could not have been termed as 'forgery', thereby demonstrating the error committed by the CLB. In this context, reference was made to judgements and orders passed by the CLB itself in the cases of Ansar Khan and another Vs. Finecore Cables P. Ltd. and others, 2006 SCC OnLine CLB 26, Jiwan Mehta Vs. Emmbross Forging P. Limited and others, (2009) 148 Comp Cas 789 (CLB). Reference was also placed on judgement of the Supreme Court in the case of Indian Bank Vs. Satyam Fibres, (1996) 5 SCC 550.
15. It was further submitted that the CLB erred in rendering findings against the appellants under the Benami Transactions (Prohibition) Act, 1988 (hereinafter referred to as the 'Benami Act'). It was submitted that findings on the issue of certain transactions being benami could not have been rendered in the summary proceedings before the CLB. In any case, it was submitted that crucial documents were ignored by the CLB while rendering findings under the provisions of the Benami Act on a specific contention raised in that regard by the original respondent No.1 i.e. Girdharlal Dalal. It was further submitted that even as per Girdharlal Dalal, no consideration has been paid in respect of the shares that were shown in his name, and therefore, the aforesaid aspect of the matter ought to have inured to the benefit of the appellants. Reliance was placed on judgements of the Supreme Court in the cases of Jaydayal Poddar through LRs and another Vs. Mst. Bibi Hazra and others, (1974) 1 SCC 3; Nagindas Ramdas Vs. Dalpatram Ichharam and others, (1974) 1 SCC 242 and judgement of this Court in the case of Sabita Rajesh Narang Vs. Sandeep Gopal Raheja and others, AIROnline 2023 BOM 699 and judgement of Allahabad High Court in the case of 10/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc Ajodhya Pd. Bhargava Vs. Bhawani Shankar Bhargava and another, 1956 SCC OnLine All 131.
16. It was submitted that the findings rendered by the CLB with regard to the consideration for transfer / allotment of 30% shares in favour of Girdharlal Dalal and other such aspects suffered from patent illegality, as such findings were rendered in the face of documents that demonstrated the facts to be otherwise. It was also submitted that the CLB could not have held that joint shareholding was not permitted when Article 9 of the Articles of Association provided otherwise and hence, the error on the face of the record and perversity of the said findings was writ large. The said findings were clearly contrary to the record and hence, the impugned order deserved to be set aside. Reliance was placed on the judgement of the Supreme Court in the case of Commissioner of Customs, Pune Vs. Ballarpur Industries Limited, (2021) 10 SCC 736.
17. It was then emphatically submitted that the direction issued in clause (j) of the impugned order of the CLB is wholly unsustainable, simply for the reason that such a relief was not even prayed for by Girdharlal Dalal in his petition. The effect of the said direction is that the special auditor has been delegated with adjudicatory role, which is clearly impermissible in law. In any case, it was submitted that the report of the special auditor, at the highest, could be an expert evidence and not conclusive proof. The appellants, particularly Bharat Dalal, had no opportunity to rebut the contents of the report of the special auditor and therefore, the error in the impugned order is self-evident. In this context, reliance was placed on judgement of the Supreme Court in the case of Kantha Vibhag Yuva Koli Samaj Parivartan Trust and others Vs. State of Gujarat, (2023) 13 SCC 525.
18. Apart from making the aforesaid submissions, the learned senior counsel appearing for the appellants vehemently put forth submissions in 11/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc support of the application filed under Order XLI, Rule 27 of the CPC, seeking permission to place on record certain documents, particularly the aforesaid agreements dated 01.10.1997 and 08.02.1999. It was submitted that the said application was not limited to bringing the documents on record, but it was also for amendment of the appeal in the light of the contents of the said documents. It was further submitted that the said documents satisfy the requirements of Order XLI Rule 27 of the CPC, inasmuch they are necessary for determining the real question in controversy between the parties and that, sufficient explanation is placed on record as to why the documents could not be filed before the CLB and how they came to the knowledge and custody of Darshan Dalal, representing the estate of Bharat Dalal in the year 2018 during shifting of the office of the appellant No.1 company. It was submitted that this Court while deciding the appeal ought to take into consideration all the material that would assist it in reaching the truth of the matter and hence, the application ought to be allowed, so that documents crucial for deciding the questions arising in the appeal, are duly taken into consideration.
19. As regards the additional affidavit filed on behalf of the contesting respondent Chetan Dalal (representing the interest of the said Girdharlal Dalal), placing reliance on contents of Suit No.807 of 2018 and Testamentary Petition No.871 of 2018 filed before this Court, it was submitted that the reference to the minority shareholding in the appellant No.1 company of Girdharlal Dalal was merely stated by way of abundant caution in the light of the last Will of Girdharlal Dalal. It was submitted that this clearly would not absolve the obligation of Girdharlal Dalal and his legal representative Chetan Dalal in proving lawful title in respect of the said shares and establishing that consideration was indeed paid for allotment / transfer of the said shares. It was submitted that the contents of the said suit and the testamentary petition were being 12/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc misread by the contesting respondent to deliberately mislead this Court. It was submitted that nothing would turn on the contents of the said suit and the testamentary petition, as the onus was entirely upon Girdharlal Dalal and his successor to first show that the shares were transferred in his favour for consideration and that, they were not held in trust. On this basis, it was submitted that the impugned order ought to be set aside.
20. On the other hand, Mr. Haresh Jagtiani, learned senior counsel appearing for Chetan Dalal, representing the interest of Girdharlal Dalal i.e. the petitioner before the CLB, submitted that the findings rendered by the CLB were based on proper understanding of the issues and upon cogent reasoning. It was submitted that the appellants have failed to demonstrate that any question of law arises in the appeal for this Court to exercise the jurisdiction under Section 10F of the Companies Act. It was emphasized that the CLB is the final authority on facts and that unless the findings rendered by the CLB are shown to be perverse, based on no evidence or are otherwise arbitrary, this Court, while exercising jurisdiction under Section 10F of the Companies Act, cannot exercise jurisdiction to interfere with the order. In this context, reliance was placed on judgement of this Court in the case of Abdul Wahid Abdul Gaffor Khatri v. Safe Heights Developers (P) Ltd., 2018 SCC OnLine Bom 693.
21. The learned senior counsel appearing for the contesting respondent Chetan Dalal submitted that the impugned order of the CLB considered each and every aspect of the matter in detail and rendered cogent findings, based on a proper analysis of the material on record. It was submitted that the question of limitation would not apply to the CLB and this is evident from judgement of this Court in the case of Sulochana Neelkanth Kalyani Vs. Takle Investments Company and others (supra). It was held therein that CLB is not a Court for the 13/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc purposes of Article 137 read with Sections 3, 4 and 5 of the Limitation Act, 1963 and hence, there is no particular limitation period provided. It was submitted that in terms of the judgement relied upon by the appellants themselves in the case of Surinder Singh Bindra and others Vs. M/s. Hindustan Fasteners (P) Limited and others (supra), events prior to the period of three years from the date of filing of the petition can certainly be looked into when they form part of the continuous process of oppression and mismanagement continuing upto the date of filing of the petition. In the present case, the allegations made by Girdharlal Dalal clearly satisfy the said requirement and therefore, the argument of delay and laches made on behalf of the appellants deserves to be rejected.
22. It was submitted that the fact that Girdharlal Dalal held 30% shareholding in the appellant No.1 company was admitted by the appellants themselves. Since they asserted that the aforesaid 30% shares were held by Girdharlal Dalal merely as a custodian or as a trustee for the benefit of Darshan Dalal and Mangal Dalal (sons of Bharat Dalal), the burden was on them to prove such an assertion. This was all the more necessary when the annual returns and balance sheets of the appellant No.1 company for various years, including the year 2007-08, endorsed the fact that Girdharlal Dalal held 30% shares in the appellant No.1 company and particularly when, such documents were signed by Bharat Dalal himself. The documents on record stated that 30% shares were received by Girdharlal Dalal from Jyoti Dalal at par with issue price. This further demonstrated that the assertions made by the appellants were without any substance. The documents on record also recorded that Girdharlal Dalal had introduced capital in the company. On this basis, it was submitted that no fault could be found in the findings rendered by the CLB on the aforesaid aspect of the matter and also in the context of the provisions of the Benami Act.
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23. On the aspect of lack of jurisdiction in the CLB to decide questions of fraud and forgery, it was submitted that the CLB had correctly inferred from the documents and material on record that fraud and forgery had occurred. Such documents were admitted by the original appellant No.2 Bharat Dalal himself and when the CLB had arrived at conclusions based on such documents, it could not be said that disputed questions of facts pertaining to fraud and forgery had been wrongly decided by the CLB. It was asserted that this was an open and shut case of fraud played on Girdharlal Dalal, and therefore, the CLB was well within its jurisdiction to hold that it was a good ground to render findings about oppression and mismanagement against the appellants. In this context, the CLB took into consideration the obvious forgeries in share certificates, the documents pertaining to board meetings where Girdharlal Dalal was purportedly removed as a director as being unbelievable on the face of the documents and the illegal manner in which the shareholding was increased, only with the intention of reducing the percentage of shareholding of Girdharlal Dalal from 30% to 0.03%. Reliance was placed on judgements of the Supreme Court in the cases of Indian Bank Vs. Satyam Fibres (supra); Chalasani Udaya Shankar and others Vs. Lexus Technologies Private Limited and others, (2024) 10 SCC 303 and Adesh Kaur Vs. Eicher Motors Limited and others, (2018) 7 SCC 709.
24. As regards the application filed under Order XLI, Rule 27 of the CPC for placing copies of the aforesaid agreements dated 01.10.1997 and 08.02.1999 on record, it was submitted that the said application was another desperate attempt on the part of the appellants to somehow secure relief. It was submitted that the said agreements were discovered after 27 and 29 years respectively of their alleged execution and after the death of Girdharlal Dalal on 19.01.2017. This fact, in itself, is enough to reject the said application. The story put forth on behalf of the appellants 15/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc as to why these agreements could not be produced at an earlier point of time is absolutely dubious and ought not to be accepted by this Court. It is to be noted that Girdharlal Dalal had called upon Bharat Dalal, as far back as on 02.08.2008, to produce documents in his possession to support his claim that Girdharlal Dalal was a mere trustee or custodian of 30% shares held in the appellant No.1 company. No such documents were produced and they were not even placed before the CLB when the company petition was decided. It was submitted that the appellants have lied on oath about the timing of discovery of these documents, for the reason that Bharat Dalal, before he passed away, had produced these very documents during the course of an arbitration proceeding in September 2017 and this was to the knowledge of Darshan Dalal, who was himself a party to the arbitration proceedings. Yet, a false statement has been made in the interim application that Darshan Dalal discovered these agreements only in February / March 2018. It was submitted that on this ground alone, the application ought to be dismissed.
25. It was further submitted that in any case and without prejudice to the aforesaid submissions, the contents of the said agreements do not support the claims made by the appellants. The agreements proceeded on the basis of ownership of 30% shares of Girdharlal Dalal and only stipulated that Bharat Dalal would have right of first refusal, in the event Girdharlal Dalal desired to dispose of the shares at market value. Nothing in these agreements indicate that Girdharlal Dalal held the aforesaid shares in trust. This was also contrary to the assertion made before the CLB that the aforesaid understanding about Girdharlal Dalal being merely a trustee or a custodian, was a verbal agreement.
26. By placing reliance on additional affidavit filed in the said application on behalf of the contesting respondent, it was submitted that the original appellant No.2 i.e. Bharat Dalal had himself made 16/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc statements in Suit No.807 of 2018 and Testamentary Petition No.871 of 2018 filed before this Court, to the effect that the aforesaid 30% shareholding of Girdharlal Dalal was indeed part of his estate. The said statements made on oath by Bharat Dalal, clearly admitted that Girdharlal Dalal was rightful owner of 30% shares in the appellant No.1 company, contrary to the assertions made before the CLB and even before this Court. It was submitted that on this ground also, the said application filed under Order XLI, Rule 27 of the CPC deserves to be dismissed.
27. It was submitted that the appellants cannot find fault with the direction given in clause (j) of the operative portion of the impugned order, for the reason that the CLB was satisfied that the original appellant No.2 Bharat Dalal had siphoned off funds of appellant No.1 company for personal gain and therefore, the appointment of special auditor was necessitated. The CLB was not expected to ascertain the quantum of the siphoning and only for the said purpose the special auditor was appointed. It was submitted that the appellants could not claim that the special auditor, in any manner, had denied them or respondent Mangal Dalal any opportunity to interact. After a number of years, affidavit was placed on record commenting upon the report of the special auditor. It was submitted that this Court can certainly take into consideration the contents of the report of the special auditor, which indicate the correctness of the order of the CLB. It was further submitted that report of Deloitte, another auditor appointed by the appellants, was nothing but a self-serving document tailored to meet the needs of the appellants, and therefore, this Court may not consider the same while disposing of the present appeal. It was submitted that documents, that were not made available to the CLB and this Court, were produced before Deloitte in order to obtain a convenient report, which ought to be ignored by this Court. In these circumstances, it was submitted that the 17/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc appeal deserves to be dismissed.
28. Having heard the learned counsel for the parties, considering the fact that this is an appeal filed under Section 10F of the Companies Act, it has to be considered and decided on questions of law. It is a settled position of law that such an appeal would lie only on a question of law and that the CLB is the final authority on facts. Only if the Court considering the appeal concludes that the findings of fact rendered by the CLB, are perverse or based on no evidence or are found to be otherwise arbitrary, any interference would be warranted. This position of law has been recognized and reiterated by this Court in the case of Abdul Wahid Abdul Gaffor Khatri Director and others Vs. Safe Heights Developers Pvt. Ltd. and others (supra). In the said judgment, this Court referred to and relied upon judgments of the Supreme Court in the cases of V. S. Krishnan Vs. Westfort Hi-Tech Hospital Limited, (2008) 3 SCC 363 and Purnima Manthena Vs. Renuka Datla, (2016) 1 SCC 237. Thus, the scope of jurisdiction under Section 10F of the Companies Act is limited. This Court has considered the rival submissions in the backdrop of the said position of law and it is found that the following questions of law arise for consideration:
(a) Whether the petition filed by the original respondent No.1 -
Girdharlal Dalal before the CLB was hit by delay and laches?
(b) Whether the CLB exceeded its jurisdiction by considering and rendering findings on issues of fraud and forgery?
(c) Whether the findings rendered by the CLB on various issues, including the nature of shares held by the said Girdharlal Dalal as also on the aspect of oppression and mismanagement, could be said to be perverse, based on no evidence or are otherwise arbitrary?
(d) Whether the application filed under Order XLI, Rule 27 of the CPC in this appeal, deserves to be allowed?
(e) Whether the direction of the CLB of appointing a special 18/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc auditor in clause (j) of the operative portion, renders the order liable to be set aside?
29. As regards the first question pertaining to delay and laches, at a point in time, it was even argued on behalf of the appellants that the petition filed by Girdharlal Dalal before the CLB, was hit by limitation. The question of limitation would not arise in the light of the position of law clarified by this Court in the case of Sulochana Neelkanth Kalyani Vs. Takle Investments Company and others (supra). In the said judgment, after referring to various precedents, it was held that the CLB is not a 'Court' for the purposes of Article 137 read with Sections 3, 4 and 5 of the Limitation Act, 1963 and there is no particular limitation period for filing application or petition under the Companies Act. Thus, the submissions made on behalf of the appellants with regard to limitation, are without any basis.
30. Nonetheless, in the very same judgment, this Court did hold that since the reliefs that can be granted under the said Act are discretionary, inordinate and unexplained delay and laches could certainly be a factor to be taken into consideration by the CLB.
31. The appellants have contended that even as per the case of the said Girdharlal Dalal, he was thrown out of the business of the appellant No.1 company and even from the residence, way back in the year 2007. According to him, in the year 2011 itself, he had become aware about the claims made by Bharat Dalal (original appellant No.2) in respect of arbitral award dated 10.07.2010. He also pleaded that upon approaching the RoC, he allegedly came to know about the misdemeanors of Bharat Dalal and yet, he waited till October 2013 to file the petition before the CLB. It was submitted that merely issuing notice on 11.09.2013 would not push forward the cause of action to maintain the petition before the CLB and that therefore, the petition was hit by delay and laches, which the CLB failed to 19/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc appreciate. In this context, it would have to be examined as to what was the grievance of Girdharlal Dalal when he approached the CLB. On a proper appreciation of the statements made in the petition filed before the CLB and the nature of grievance raised by Girdharlal Dalal, this Court finds that the allegations pertained to a continuous course of actions of the said Bharat Dalal, resulting in oppression and demonstrating mismanagement of the affairs of the appellant No.1 company. It is only when a wrongful or oppressive act is an isolated event and can be said to be stale, that a petition filed after considerable period of time, could be said to be hit by delay and laches.
32. This would also entail an aspect of acquiescence and estoppel, on the basis that the aggrieved person knowing fully well about such an isolated event, failed to take any precipitate action in the matter. This is the position of law, even taking into account the judgments relied upon by the appellants, in the cases of Surinder Singh Bindra and others Vs. M/s. Hindustan Fasteners (P.) Ltd. and others (supra) and Hungerford Investment Trust Ltd., Re. Vs. Turner Morrison and Co. Ltd. (supra).
33. In the present case, the grievance of Girdharlal Dalal was that Bharat Dalal, being his nephew, had started behaving in a rude and unacceptable manner. This attitude continued, despite intervention of relatives and common friends. Since Girdharlal Dalal held 30% shareholding in appellant No.1 company, which was not denied even by Bharat Dalal, Girdharlal Dalal continued under the impression that he indeed was holding his proportionate shares. It was his specific case that after he made necessary enquiries, he came to know that Bharat Dalal, along with his wife and sons, in a clandestine and illegal manner, had adversely affected the proportion of his shareholding. It was also his case that upon becoming aware of their illegal acts, he was prompted to file the petition before the CLB. In such a situation, there is no acquiescence or estoppel coming in his way and consequently, the petition filed before the CLB could not be said 20/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc to be hit by delay and laches.
34. The appellants have urged that Girdharlal Dalal could not have been permitted by the CLB to raise grievance after a long period of six years when the acts attributed to them, even if presumed to be injurious to him, were committed long before Girdharlal Dalal chose to approach the CLB. Reliance was placed on the judgements of the Supreme Court in the cases of Balkrishna Savalram Pujari and others vs Shree Dnyaneshwar Maharajsansthan and others (supra) and Samruddhi Co-operative Housing Society Limited Vs. Mumbai Mahalaxmi Construction Private Limited (supra) to contend that the alleged wrongful acts, causing injury to Girdharlal Dalal, were complete and at worst, the damage resulting therefrom could be continuous. But, in any case, no continuing wrong was demonstrated. This Court is unable to agree with the said contention raised on behalf of the appellants. A perusal of the position of law clarified in the aforesaid judgements of the Supreme Court, would show that in the present case, the appellants, particularly Bharat Dalal along with other respondents herein continued to act in a manner so as to isolate Girdharlal Dalal and also continued to breach their obligations qua Girdharlal Dalal, who according to Bharat Dalal himself was holding 30% shares in the appellant No.1 company. The said Bharat Dalal could not have been permitted to escape the liability of such continuous acts of wrongdoing by hiding behind the shield of delay and laches, and therefore, the approach adopted by the CLB in this regard cannot be faulted with. The acts of oppression and mismanagement were found to be of continuous nature and therefore, the petition filed before the CLB could not be said to be hit by delay and laches. Thus, the first question is answered against the appellants and in favour of the contesting respondent.
35. The second question pertains to the jurisdiction exercised by CLB in rendering findings on the aspects of fraud and forgery. It is the specific case 21/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc the appellants that the nature of allegations made by Girdharlal Dalal necessarily required detailed oral and documentary evidence on the aspects of fraud and forgery and that the said issues could not have been decided in the summary jurisdiction exercised by the CLB. In this regard, a distinction will have to be made between cases where the issues of fraud and forgery on the one hand, require detailed oral and documentary evidence and on the other hand, cases where fraud and forgery can be said to be made out on the face of the record and in the light of the admitted position. In the case of Adesh Kaur Vs. Eicher Motors Limited and others (supra), the Supreme Court held that the National Company Law Tribunal (NCLT) was absolutely right in not relegating the appellant therein to any further proceeding, as it was found to be an open and shut case of fraud perpetrated by the respondent therein. Subsequently, in the case of Chalasani Udaya Shankar and others Vs. Lexus Technologies Private Limited and others (supra), it was held that the tribunal was entitled to exercise its power to examine the allegations of fraud and forgery on the principle of preponderance of probabilities and if a case was clearly made out on the basis of the material available on record, the parties need not be relegated to other proceedings.
36. In the light of the said position of law, the CLB was well within its jurisdiction to examine the documents on record, to verify the claims made by Girdharlal Dalal in the context of oppression and mismanagement. If the documents on record demonstrated mala fide and a deliberate design to oust the petitioner i.e. Girdharlal Dalal, the CLB could be said to be acting within its jurisdiction to render findings in that regard. If held otherwise, it would lead to a situation of abdication of jurisdiction by the CLB, the moment an allegation of mala fide is made and in that context, allegations are made about fraud and forgery inflicted upon the petitioner. It would be a travesty if in such situations, the petitioner is relegated to the Civil Court. Such allegations are always part of the petitions that allege oppression and mismanagement, as was the case before the CLB in the present matter.
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37. A perusal of the impugned order shows that the case of oppression and mismanagement was considered by the CLB, in the context of the allegations of Girdharlal Dalal that he was sidelined and sought to be ousted, despite the fact that he held 30% shares of the appellant No.1 company. It was Bharat Dalal, who refuted the said allegation by claiming that Girdharlal Dalal had been removed as a director of the appellant No.1 company, that his shares and shareholding had been drastically reduced from 30% to 0.03%, that he held the shares in the first place only in trust and as a custodian for the sons of Bharat Dalal and that the change in percentage of shareholding and removal of Girdharlal Dalal as director, was based on steps taken in accordance with law, upon meetings being conducted after due notice to Girdharlal Dalal.
38. It is while examining the said assertions of Bharat Dalal upon whom the burden was to prove the same, that the CLB considered the documents on record. Even while exercising summary jurisdiction, the CLB found that glaring facts emerged, indicating substance in the allegations levelled by Girdharlal Dalal. As a matter of fact, when CLB called upon Bharat Dalal to produce the original share certificates, they were never produced. The CLB found that the documents on record demonstrated that Bharat Dalal himself had addressed correspondence to Girdharlal Dalal, admitting him to be a director.
39. The CLB also found that the meetings allegedly held by the Board of Directors of appellant No.1 company, wherein Girdharlal Dalal was removed as a director, were based on notices that were never served upon Girdharlal Dalal. Such notice was neither found to be issued on the letterhead of the Company nor bearing any stamp. It was also found that in the notice issued on 02.05.2008, the registered address of the company was mentioned as Khushnuma Apartment, when it was an admitted position that till 01.09.2009, the registered office of the Company was at Janmabhoomi Bhavan. It was also found that the son of Bharat Dalal was shown as 23/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc having participated in the meetings, when admittedly he became a director much later and it was also found that Bharat Dalal himself participated in the meetings as representing the interest of Girdharlal Dalal.
40. The CLB also found that while the material on record demonstrated that Bharat Dalal was aware about the fact that at the relevant time, Girdharlal Dalal was residing at Aurobindo Ashram at Pondicherry, notices were not sent to him at the said address, which showed the clandestine manner in which the meetings were held. It is in the face of such position emanating from the documents and material on record, that the CLB rendered findings on the aspects of fraud and forgery.
41. This Court is of the opinion that in the facts and circumstances of the present case, it cannot be said that the CLB exceeded its jurisdiction and that it should have relegated the parties to the Civil Court. This was not a case where detailed oral and documentary evidence was required to reach conclusions, as the material on record was sufficient to reach cogent and logical conclusions on the said aspect of the matter. This Court also finds that the findings rendered by the CLB in the impugned order are borne out from the material placed before it and therefore, it cannot be said that the CLB exceeded its jurisdiction, while passing the impugned order.
42. In this regard, reliance placed on behalf of the appellants on the judgements of CLB in the cases of Ansar Khan and another Vs. Finecore Cables P. Ltd. and others (supra) and Jiwan Mehta Vs. Emmbross Forging P. Limited and others (supra) cannot take their case any further. A proper reading of the said judgements shows that even the CLB has not held that whenever an allegation of fraud and / or forgery is made, the parties are necessarily to be relegated to a civil suit. It is only when complicated and serious disputes regarding facts arise in a matter, that recourse to oral testimony tested by cross-examination of witnesses, is necessitated. As noted hereinabove, the documents 24/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc available on record themselves were enough for the CLB to reach conclusions regarding fraud and forgery on the part of Bharat Dalal and the other respondents. Such detailed analysis is found in various portions of the impugned order of the CLB, including paragraph 87. The CLB was clearly justified in reaching such conclusions on a bare reading of the documents and at relevant places, the CLB drew adverse inferences as the appellants failed to produce documents in their custody. As regards reliance placed on judgement of the Supreme Court in the case of Indian Bank Vs. Satyam Fibres (supra), it is found that the appellants as well as the contesting respondent are relying on the said judgement in order to support their respective stands. The position of law has to be applied to the facts and circumstances of the individual cases. A reading of the impugned order of the CLB shows that the issue of fraud and forgery has been approached in a correct manner as the documents and material on record, on the face of it, demonstrated the mala fide actions of Bharat Dalal and this was an open and shut case of fraud and forgery committed by him in connivance with the other respondents. Therefore, no fault can be found with the findings rendered by the CLB in that regard and it cannot be said that the CLB erred in exercising its summary jurisdiction. Hence, the said question is also answered against the appellants and in favour of the contesting respondent.
43. On the third question concerning perversity of findings, the appellants have attacked the impugned order of the CLB on various aspects. The contention of the appellants about Girdharlal Dalal holding 30% share in trust and as a custodian of the sons of Bharat Dalal was based on the assertion that Girdharlal Dalal never paid consideration for his 30% share. In this context, the CLB took into consideration the documents and material on record. The same demonstrated that the minutes of meetings of the years 2005-2006 recorded that Girdharlal Dalal had acquired 30% shareholding from Jyoti Dalal at par with issue price. The annual returns 25/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc and balance sheets of the Company for the relevant years, including for the year 2007-2008 recorded Girdharlal Dalal as 30% shareholder. The said documents were signed by Bharat Dalal himself. Show cause notice issued by Bharat Dalal to Girdharlal Dalal itself recognized him as a shareholder and director and the communications on record, including a letter dated 19.05.2007 show that Bharat Dalal acknowledged Girdharlal Dalal as having infused capital in the appellant No.1 company. Girdharlal Dalal stoutly denied the aforesaid claim of 30% shares being held in trust and as a custodian of the sons of Bharat Dalal.
44. In the face of such material, the burden was entirely on Bharat Dalal to demonstrate, on the basis of documents and material on record, as to how it could be said that Girdharlal Dalal had held the shares in trust or as custodian of Bharat Dalal's sons. The CLB found that Bharat Dalal failed to make good the aforesaid assertion. There was no material placed on record and as a matter of fact, the documents on record pointed towards the contrary. In such a situation, it could certainly not be said that the findings rendered on the said aspect of the matter, are perverse.
45. On the aspects of fraud and forgery, this Court has already discussed hereinabove as to how the findings rendered by the CLB cannot be said to be perverse or beyond jurisdiction. As regards the aspect of reduction of percentage of shares of Girdharlal Dalal from 30% to 0.03%, the CLB found that such crucial decisions were taken in meetings, which were clearly held behind the back of Girdharlal Dalal. It was also found that the minutes of meeting and documents produced in that context, indicated that they were prepared with the design of illegally ousting Girdharlal Dalal and in any case, reducing him to a non-entity, behind his back. The CLB found that the aforesaid step of drastically reducing the percentage of shares held by Girdharlal Dalal was with a design to deprive him of any locus of raising objection in future, with regard to oppression by Bharat Dalal and others. The aforesaid findings are again found to be based on appreciation 26/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc of documents and material on record, the contents of which were not even denied by Bharat Dalal. Therefore, it cannot be said that the findings rendered by the CLB were based on no evidence or that they could be said to be arbitrary. Hence, the findings cannot be termed as perverse.
46. This Court has perused the impugned order and it is found that on the said aspects of the matter as well as the alleged relinquishment of shareholding by Girdharlal Dalal, the CLB found that the documents on record demonstrated that he had only offered to relinquish his share in the profits and losses and that the said offer was subject to compliance of requisite formalities, which never happened. The CLB found that repeated actions were undertaken by Bharat Dalal and such actions were not bona fide and on the contrary, they were undertaken with the oblique motive to gain control over the Company and to somehow oust Girdharlal Dalal. The said findings are based upon reference to relevant documents and material on record. Hence, the findings cannot be said to be perverse in any manner. Once it is found that the findings on facts rendered by the CLB, are sustainable, this Court exercising jurisdiction under Section 10F of the Companies Act, cannot interfere with the impugned order. In the light of these findings, this Court does not find any substance in reliance placed on behalf of the appellants on judgements in the cases of Jaydayal Poddar through LRs and another Vs. Mst. Bibi Hazra and others (supra), Nagindas Ramdas Vs. Dalpatram Ichharam and others (supra), Sabita Rajesh Narang Vs. Sandeep Gopal Raheja and others (supra), Ajodhya Pd. Bhargava Vs. Bhawani Shankar Bhargava and another (supra); and Commissioner of Customs, Pune Vs. Ballarpur Industries Limited (supra). Hence, the said question is also answered against the appellants and in favour of the contesting respondent.
47. Much emphasis was placed on behalf of the appellants on the application filed under Order XLI Rule 27 of the CPC, whereby the purported agreements dated 01.10.1997 and 08.02.1999 were sought to be 27/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc placed on record. It was claimed that these two agreements completely clinched the case in favour of the appellants and that they demonstrated the falsity of the stand taken by Girdharlal Dalal before the CLB and also before this Court in this appeal. The contesting respondent has vehemently opposed the said application. In order to consider the rival submissions, it would be appropriate to refer to Order XLI Rule 27 of the CPC. The same reads as follows:
'ORDER XLI APPEALS FROM ORIGINAL DECREES
27. Production of additional evidence in Appellate Court.--
(1) The parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the Appellate Court. But if--
(a) the Court from whose decree the appeal is preferred has refused to admit evidence which ought to have been admitted, or (aa) the party seeking to produce additional evidence, establishes that notwithstanding the exercise of due diligence, such evidence was not within his knowledge or could not, after the exercise of due diligence, be produced by him at the time when the decree appealed against was passed, or]
(b) the Appellate Court requires any document to be produced or any witness to be examined to enable it to pronounce judgment, or for any other substantial cause, the Appellate Court may allow such evidence or document to be produced, or witness to be examined. (2) Wherever additional evidence is allowed to be produced by an Appellate Court, the Court shall record the reason for its admission.'
48. A perusal of the above-quoted provision clearly shows that the appellate Court can permit the parties to produce additional evidence only in circumstances enumerated in sub-clauses (a), (aa) and (b) of the Clause 1 of Order XLI Rule 27. A party seeking to produce additional evidence is required to demonstrate that the existence of such evidence was not within its knowledge, despite exercise of due diligence or it could not have been 28/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc within its knowledge. The appellate Court can even otherwise permit such evidence and documents to be produced, if it is of the opinion that such documents would enable it to pronounce judgment or for any other substantial cause. Thus, the appellate Court would not allow such an application as a matter of course and the applicant would have to make out its case, in terms of the aforesaid requirements of the provision.
49. In the present case, it is not possible to believe that Bharat Dalal was unaware about the existence of the said agreements, although they were purportedly executed between his wife Jyoti Dalal, appellant No.1 company, of which he was a director, and Girdharlal Dalal. It cannot be accepted that he did not have knowledge about the existence of the said purported agreements, despite exercising due diligence. As a matter of fact, when Girdharlal Dalal approached the CLB, making serious allegations of oppression and mismanagement, and the defence raised by Bharat Dalal was to the effect that Girdharlal Dalal was merely a custodian and he was holding 30% shares of the Company in trust for the sons of Bharat Dalal, in the first instance, he would have relied upon the said two purported agreements. This was particularly in the backdrop of the fact that according to the appellants, the contents of the said agreements fortified the claim that Girdharlal Dalal was merely holding the shares in trust for the sons of Bharat Dalal.
50. Even during the pendency of this appeal, till the year 2023, no effort was made to rely upon the said purported agreements or even to claim about their existence. For the first time, after 27 and 29 years of alleged execution of the said purported agreements and after about 6 years of the death of Girdharlal Dalal, they are sought to be brought on record before this Court. The story put forth by the appellants that Darshan Dalal representing the estate of the deceased Bharat Dalal, came across the said agreements for the first time in 2018, when the office of the Company was being shifted, on the face of it, is not believable. This becomes all the more 29/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc serious in the backdrop of the fact that before Bharat Dalal passed away, he had produced these agreements before the arbitrator in the year 2017 and this was to the knowledge of Darshan Dalal, as he was also a party to the arbitration proceedings. Yet, it is stated that Darshan Dalal discovered the said purported agreements for the first time in February/March 2018. In this backdrop, it has been vehemently submitted on behalf of the contesting respondents that since false statements were made on oath before this Court, appropriate action regarding perjury should be initiated.
51. This Court finds that the explanation sought to be given, as regards the reason for not being able to produce the said agreements at any time earlier, is wholly unacceptable and it does indicate that the appellants, while filing this application, have not approached this Court with clean hands. The Supreme Court, in a number of judgments, has held that in such a situation, the party misrepresenting or suppressing facts in Court proceedings, pollutes the stream of justice and it is not entitled to any relief, interim or final. This is specifically held by the Supreme Court in its judgment in the case of Kishore Samrite Vs. State of Uttar Pradesh and others, (2013) 2 SCC 398. On this ground alone, the application deserves to be rejected.
52. Even if the prayer made in the application is to be considered on the touchstone of Order XLI Rule 27(1)(b) of the CPC, the same cannot be granted. This Court does not find that the said document will, in any manner, enable this Court to pronounce judgment or that any substantial cause is made out by the appellants. It is to be noted that the case of Bharat Dalal before the CLB was that there was an oral agreement to the effect that Girdharlal Dalal would hold 30% shares in appellant No.1 company in trust for the sons of Bharat Dalal. It was never claimed that there was a written agreement, much less any reference to the said purported agreements dated 01.10.1997 and 08.02.1999. Even if their contents are perused, this Court finds that they do not, in any manner, take forward the 30/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc case of the appellants about Girdharlal Dalal having held the aforesaid shares in trust for the sons of Bharat Dalal. The clauses in the agreements nowhere mention any such fact. Even if it is to be considered that the amount for the said shares was left blank in the said agreements, it cannot inure to the benefit of the appellants in any manner. The purported agreement dated 01.10.1997 stipulated that the shares were 'purchased' by Girdharlal Dalal and that upon payment of consideration, the shares were to be transferred to him. The purported agreement dated 08.02.1999 provides that Bharat Dalal would have the right of first refusal, in the event Girdharlal Dalal desired to dispose of his shares in the Company to a third party at market value. The said contents of the purported agreements do not, in any manner, indicate that either they would enable this Court in pronouncing judgment in the appeal or that any substantial cause is made out by the appellants for taking the said documents on record.
53. In any case, as noted hereinabove, it is wholly unbelievable that both Bharat Dalal and his wife Jyoti Dalal, who were in the thick of the dispute with Girdharlal Dalal, completely forgot about execution and existence of the purported agreements dated 01.10.1997 and 08.02.1999. Even if the parameters laid down by the Supreme Court in the judgments, upon which the appellants have placed reliance i.e. North Eastern Railway Administration, Gorakhpur Vs. Bhagwan Das (Dead) by LRs, (2008) 8 SCC 511, Satish Chand Surana Vs. Raj Kumar Meshram, 2021 SCC OnLine SC 3446, A. Andisamy Chettiar Vs. A. Subburaj Chettiar, (2015) 17 SCC 713 and Gajanan Jaikishan Joshi Vs. Prabhakar Mohanlal Kalwar, (1990) 1 SCC 166, are to be applied to the application filed by the appellants under Order XLI Rule 27 of the CPC, it is clear that no case is made out for allowing the same. In fact, it is clearly a desperate attempt on the part of the appellants to find fault with the cogent findings rendered by the CLB in the impugned order.
54. In this regard, the contents of the additional affidavit filed on behalf 31/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc of the contesting respondent cannot be ignored. It is pointed out therein that the said Bharat Dalal had filed a suit seeking administration of estate of Girdharlal Dalal on 15.12.2017 bearing Suit No.807 of 2018 before this Court. Bharat Dalal sought a declaration that shares held by Girdharlal Dalal in the appellant No.1 company be declared to be forming part of the estate of Girdharlal Dalal. In Testamentary Petition No.871 of 2018, again filed by the said Bharat Dalal, he stated on oath that the estate of the deceased Girdharlal Dalal comprised of a minority shareholding of the appellant No.1 company. The said petition was also filed before this Court. Thus, Bharat Dalal, during his lifetime, asserted on oath before this Court in the aforementioned two proceedings that the 30% minority shareholding of Girdharlal Dalal in the appellant No.1 company formed part of his estate. This is diametrically opposite to the claim of Bharat Dalal that the said shareholding was held by Girdharlal in trust and as a custodian for the two sons of Bharat Dalal. These are irreconcilable stands. In response to the said additional affidavit filed on behalf of the contesting respondent, all that the appellants could state was that, such a stand was taken merely by way of abundant caution and that, in any case, the said proceedings were sub judice before this Court. The said stand taken on behalf of the appellants does not dilute the fact of such diametrically opposite and irreconcilable stands taken by Bharat Dalal in proceedings before this Court, which also reflect upon the falsity of the stand taken before the CLB. It also demonstrates that no perversity could be attributed to the findings rendered by the CLB and further that, the appellants were trying to salvage their case by now relying upon the aforementioned two agreements annexed to the application filed under Order XLI, Rule 27 of the CPC. This further demonstrates that no case is made out by the appellants for considering the aforesaid application. Hence, the said question is also answered against the appellants and their application under Order XLI, Rule 27 of the CPC deserves to be dismissed.
55. This Court also finds that the direction issued by the CLB in clause 32/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 ::: COAPP20_16.doc
(j) of the operative portion of the impugned order for appointing special auditor, cannot be a ground for setting aside of the impugned order. In the impugned order, the CLB had already rendered specific findings against the appellants, as to the manner in which they had sought to oust Girdharlal Dalal from the Company in a mala fide manner. It was found that Girdharlal Dalal had clearly made out his case of oppression and mismanagement. After having granted consequential reliefs to Girdharlal Dalal, the CLB also found that an enquiry was required to be conducted on the question of Bharat Dalal having siphoned off the funds of the Company. It is in this backdrop that the special auditor was appointed and it was not as if the findings on oppression and mismanagement were contingent upon the report that would be submitted by the special auditor.
56. The report of the special auditor is not the basis for justifying the order of the CLB, for the reason that the said order examined and analyzed the documents and material on record, in the light of the rival submissions, reaching cogent findings in respect of the acts of oppression and mismanagement committed by Bharat Dalal. Therefore, it cannot be said that the CLB exceeded its jurisdiction while directing appointment of special auditor.
57. In view of the conclusions rendered hereinabove, this Court finds that the aforementioned questions are answered against the appellants and in favour of the contesting respondent. No case is made out for interfering with the impugned order of the CLB.
58. Accordingly, the instant appeal and Interim Application No.3224 of 2025 filed under Order XLI Rule 27 of the CPC, are dismissed with costs. Interim order also stands vacated.
59. All other pending applications in this appeal are also disposed of.
(MANISH PITALE, J.) Priya / Minal 33/33 ::: Uploaded on - 02/04/2026 ::: Downloaded on - 02/04/2026 21:46:40 :::