Company Law Board
Ajay Kapoor vs Hitkari Industries Limited And Ors. on 2 August, 2006
ORDER
S. Balasubramanian, Chairman
1. In this order, I am considering CA 140 of 2005 filed by the petitioner and CA 153 of 2005 filed by the respondents.
2. The facts of the case are that the petitioner Shri Ajai Kapoor had filed a petition under Sections 397/398 of the Companies Act, 1956 (the Act) alleging acts of oppression and mismanagement in the affairs of M/S Hitkari Industries Ltd (HIL) by the respondents -Ved Kapur Group. Simultaneously, Ved Kapoor Group filed a similar petition in respect of another group company, Hitkari China Limited (HIL) alleging that the Ajay Kapoor Group was mismanaging the affairs of the company. Since the disputes relating to these companies were within the family, on my persuasion and after a number of personal discussions and interim orders, the parties decided to amicably settle the disputes by which one group would go out of all the three companies including Hitkari Potteries Limited (HPL). It was decided that there would be a bidding for the shares and the higher bidder would acquire HIL, and option to choose to acquire HCL and HPL without payment of any consideration was given to Ajay Kapdor group. Ajay Kapoor Group became the higher bidder at Rs. 50 per share in HIL and accordingly the total consideration for all the shares held by Ved Kapoor Group was worked out at Rs. 7,48,56,850 which was to be paid in installments. As per the option given, Ajay Kapoor Group opted to take over HPL and HCL also. An order was passed on 1.2.2005 incorporating various terms agreed to by the parties for implementing the parting of ways amiably, however reserving two issues on which the parties could not agree, to be decided by me. These two issues related to payment of dues from HIL and its subsidiary TFPL to Ved Kapoor Group and companies and firm controlled by that group and similar dues from HIL and HPL to Ved Kapoor group. Ajay Kapoor Group paid the full consideration as per installments stipulated and took over the control and management of HIL and other two companies.
3. Application CA 140 of 2005, was filed by Ajay Kapoor, when the full consideration for the shares acquired by him from Ved Kapoor remained unpaid. Ajay Kapoor has alleged that when he bid for the shares of HIL, he went by the financial state of HIL as projected by Ved Kapoor Group. However, after taking over control of the company, he found that Ved Kapoor Group had over valued the stock on hand both quantitatively and qualitatively and had filed inflated stock statements with State Bank of Bikaner and Jaipur in order to avail the entire sanctioned working capital limits granted by the bank. The total value of the stock declared by Ved Kapoor Group in the statement furnished to the bank as on 30th September, 2004 was Rs. 687 lacs. In terms of the bank sanction the basis of valuation of inventory has to be "invoice price/market price/contract price/ cost of production whichever lower". Therefore the company is bound to adopt this in valuation of inventory but Ved Kapoor group adopted different method of valuation. A copy of this statement was given to Ajay Kapoor before the bidding process started and on the basis that the company had a stock worth Rs. 687 lacs, Ajay Kapoor bid for the shares of HIL. On this basis, Ajay Kapoor also replaced the guarantees provided by the Ved Kapoor Group to the bank with his own guarantees. However, in June, 2005, the bank conducted an independent audit of the stock statement furnished by HIL in the last 12 months in order to ascertain that the limits provided were adequately protected by the stock. In their initial stock statements, the auditors appointed by the bank, indicated that the value of stock as on 15th June, 2005 was only Rs. 411 lacs and the method of earlier valuation was not in accordance with the bank guidelines. As per the stock audit report dated 18.10.2005, the bank auditor has computed the value of stock as on 30th September, 2004 as Rs. 477 lakhs and not Rs. 687 lacs as wrongly submitted to the bank by Ved Kapoor Group. Thus, there was a short fall of about Rs. 210 lakhs' as on 30th September, 2004. Further, on the basis of the method prescribed by the bank for valuing the inventory, Ajay Kapoor Group computed the value of inventory as on 20th January, 2005, the date on which inventory of stock was done and list prepared by the Bench Officer of this Board and found the value of the stock as Rs. 461 lacs including cylinders (both chemical and electronics and Flexo Plates). In the stock statement furnished to the bank, the number of cylinder available in the company shown as 4193, while the stock was only 3015 as other cylinders shown as stock had already been sold but undelivered. The value of such cylinders is Rs 62.5. lakhs. Further even though there are 3 different types of cylinders with different costs, Ved Kapoor had adopted a single arbitrary price,of Rs 6,450. Because of excess stock and over valuation, the valufe of cylinders had been inflated by Rs 137 lakhs. If all these adjustments are made, then, the actual value of stock handed over to Ajay Kapoor Group on 20th January, 2005 was only Rs. 399 lacs as against Rs. 687 lacs as per the statement furnished to the bank and given to Ajay Kapoor Group. In view of the above, Ved Kapoor Group should be directed to pay a sum of Rs. 288 lacs being the shortfall in the value of stock, to Ajay Kapoor Group.
4. In their reply, Ved Kapoor Group has submitted: The entire bidding process was on the understanding "as is where is basis". The change of management was effected only after Ajay Kapoor Group carried out full inspection of the books of accounts and records of the company. Even though, the stocks were taken over by Ajay Kapoor Group on 17.1.2005, this application was filed more than six months later during which period Ajay Kapoor Group itself had continued to file stock return as per earlier valuation. Ajay Kapoor, being a director of the company, knew the method of valuation and as
5. In so far as CA 153 of 2000 is concerned, Ved Kapoor group has sought for a direction to Ajay Kapoor group to release various dues from HIL, HPL, HCL and other group companies to Ved Kapoor Group as per the order of this Board dated 1.2.2005. In the reply JAjay Kapoor group has, while denying that any amount is payable to Ved Kapoor group, has raised certain counter claims on Ved Kapoor group.
6. Shri Sarkar, Senior Advocate, appearing for Ajay Kapoor dealing with CA 140 of 2005 submitted: Before the bidding took place, by an order dated 24.10.2004, this Board permitted Ajay Kapoor to undertake inspection of the books of accounts and other records along with other two professionals. Since there was no cooperation from Ved Kapoor Group to give a meaningful inspection, by an order dated 3.4.2004, this Board directed Ved Kapoor Group to lodge photo copies of the documents duly authenticated with the Bench Officer, with liberty to the petitioner to inspect and take notes. One of the documents filed with the he was a monthly stock statement as on 30.9.2004 furnished by the company to the bank and Ajay Kapoor obtained a certified copy of the same and relied on the information furnished in the stock statement believing it to be true at the time when he bid for the shares. Further, since many of the other documents were incomplete, Ajay Kapjor filed CA 6 of 2005 seeking for certain warranties/indemnities as set out in paragraph 10 of the said application to be given by Ved Kapoor Group in case Ajay Kapoor became the successful bidder. In the order dated 1st Feb, 2005, in paragraph 5, this Board had also recorded that main assets and stock in hand shall be as reflected in the documents filed before the Bench. Now that, as explained in the application, the value of stock shown in that stock statement of Rs. 687 lacs has been found to be inflated on account of both wrong valuation and addition of cylinders which are not properties of the company, the Ved Kaput group is bound to reimburse the difference. Even the bank auditor has found the figures shown in the stock statement as inflated. Therefore, as per the computation shown in the applications, the respondents are liable to pay Rs. 288 lacs to Ajay Kapoor Group. However, if for any reason, this Board feels it necessary, it can appoint an independent valuer to compute the value of stock as on 20.1.2005.
7. Shri Choudhary, appearing for Ved Kapoor Group submitted: The claim of Ajay Kapoor of Rs. 288 lacs is nothing but a bogus claim. It is not the case of Ajay Kapoor Group that physical stock on hand was not in accordance with the stock statement furnished to the bank. They are only questioning the method of valuation. The method of valuation of stock has been going on for a long time without any objection by the bank, As a matter of fact, even Ajay Kapoor Group followed the same method of valuation when they availed of additional Rs. 100 lacs bank facility. It is wrong on the part of Ajay Kapoor Group to contend that their bidding of Rs. 50/- per share was based on the stock statement, The entire bidding process was on the basis "as is where is basis" and no specific item can be said to determine the value of the share. If the contention of Aja Kapoor is that he relied on a particular value, then, in that eventuality Ved Kapoor Grup had declared the value of land at Rs. 30 lacs while its market value as of now is more than Rs. 200 lacs. In that case, Ved Kapoor Group could justifiably ask Ajay Kapoor Group to reimburse Rs. 170 lacs. The stock and raw material handed to Ajay Kapoor. Group were as per excise records of the company and Ajay Kapoor Group has confirmed that there was no shortage in the physical stock ' handed over. All the borrowings by the bank against the stock including cylinders have been used by the company to finance its working capital requirements. This application was filed when further/installments towards consideration for the shares for the Ved Kapoor Group was pending and just to avoid the payment, Ajay Kapoor Group had filed this application. As far as cylinders are concerned even Ajay Kapoor Group is showing these as stock, items furnished t6Vt the bank after take over. In fact, they had increased the stock by 388 cylinders during Jan./March, 2005 for getting increased loan from the bank. Only in June, 2005, Ajay Kapoor Group reduced the stock of cylinders by 1397 just for the purpose of substantiating their claims , against Ved Kapoor Group.
8. In regard to CA 153 filed by Ved Kapoor group is concerned, Shri Choudhary argued: After having taken over the ownership and control management of HIL, Ajay Kapur group is trying to wriggle out the terms of the consent order, according to which various dues payable to Ved Kapur group and associated companies should have been paid by now. In so far as the dues from HIL to Packit is concerned, an amount of Rs. 51,86,92 is due. The only reason on which Ajay Kapoor group is contesting this claim is that the transactions between Packit and HIL were unauthorized and the transactions were entered into for the purpose of siphoning of funds of the company. Ajay Kapur group has also taken the stand that since Packit has made a profit of Rs. 45 lacs in the transactions with HIL, this amount should be deducted. Even though, this allegation has been made in the petition, once compromise has been arrived at, this issue cannot be raised thereafter and whatever amount is shown as due to the Packit in the books of accounts of HIL, the same should be paid. Further, by utilizing Packit, the company has saved nearly Rs. 16 lacs during the period of its transactions with Packit. HIL owes 6,40,646 to Hibar and Terrafilms owes Rs. 16 lacs to Hibar. In terms of the consent order, these amounts should have been paid by 10th July, 2005. Even though, Ajay Kapur group confirms that these amounts are due, yet, they are denying the payment on the ground that other companies of Ved Kapoor owe money to HIL. HIL also owes Rs. 2,66,888 to Ved Kapoor (HUF). Even though, in October, 1999, the company had issued cheques towards payment of this amount, yet, these cheques were not encashed and the amount is still outstanding in the books of HIL. It is to be noted that all the above dues have been informed to the Ajay Kapoor group even before the bidding took place and as such that group was fully aware of these dues and that is why even in the order of this Bench it was stipulated that all these dues should be paid by 10th July, 2005. The company owes about Rs. 5 lacs to Jaiwant Bery towards his gratuity but the company is not paying, Likewise, Jaiwant Bery has submitted a claim for Rs. 36000/-towards expenses incurred for sales promotion of the company. Instead of admitting this claim, the company has shown willingness to pay only Rs. 9000/-.
9. The learned Counsel further submitted: HPL and HCL which have been taken over by Ved Kapoor group owe various amounts to Ved Kapoor group. These dues were discussed in the hearing on 17.1.2005, and this Bench recorded in its order datedl.2.2005 "The dues by HCL and HPL to Ved Kapoor group shall be in accordance with the BIFR scheme except amounts due to them on their personal accounts like loans etc. about which I shall decide after the full, consideration for the shares is paid. As far as amount paid by HIL to Hybar packaging Private Ltd., Packit and Shri Ved Kapoor (HUF) and also amount payable by TFPL to Hybar Packaging Pvt. Ltd. are concerned, the same shall be in accordance with the terms of the contract and in case the amounts are overdue, then, the same shall be paid on or before 10.7.2005". Now that, full consideration has been received by Ved Kapoor group, directions should be given to Ved Kapoor group to pay the following amounts.
(1) HIL to Packit Rs. 51,86,092
(2) HIL to Hybar Rs. 6,40,746
(3) TFPL to Hybar Rs. 16,00,000
(4) HIL to Ved Kapoor (HUF) Rs. 2,63,888
(5) HIL to Jaiwant Bery-Gratuity Rs. 5,00,000
(6) HIL to Jaiwant Bery-Claim
towards expenses. Rs. 36,000
Dues from HPL & HCL
(1) Personal Loans by Ved Kapoor Rs. 1,96,18,772
(2) HPL to Raj & Samp Rs. 23,85,905
(3) HPL to Ved Kapoor Group Rs. 14,54,850
for sharing Himachal Ceramics
land presently occupied by HIL
(4) HPL to Ved Kapoor for direct Rs. 4,72,688
payment made by him to Jagson
Pal Finance on behalf of HPL.
(5) Gratuity dues of Ved Kapoor from
HPL and HCL.
(6) HPL to Reena Singh against
deposit. Rs. 9,00,000
(7) Ajay Kapoor to Ved Kapoor
for personal loan. Rs. 23,53,921
10. Shri Sarkar appearing for the Ajay Kapoor group submitted: In so far as dues to Packit is concerned, it is true that as per the books of accounts of the company, a sum of Rs. 51,86,092 is shown as payable to Packit. However, Ajay Kapoor group has already challengeds he transactions between the company and Packit in the petition. Packit is a partnership concern between the 3rd respondent and his wife. The only business of the firm is to buy and sell materials for packaging products which is identical to the business of the company. There was no need to have transactions through Packit and company itself could have independently carried on the transactions so that it would have retained profits which have now gone to Packit, which is of the order of about Rs 45 lakhs. By diversion of this business, the respondents had acted in breach of their fiduciary duties. All the transactions with Packits were approved in board meetings with the participation of the 3rd respondent and without his participation there would have no quorum. Thus, these transactions with Packit are completely in breach of Sections 299 and 300 of the Act. Therefore, since the transactions with Packit were patently illegal, this Board should not take cognizance of these transactions and direct HIL to pay the amount as per the account. Further, in terms of the order of this Board, if there have been transactions as per contract, the same was payable. However, no contract with Packit is available with HIL.
11. The learned Counsel further submitted: In so far as amount of Rs. 2,63,888 claimed to be payable to Ved Kapoor (HUF) is concerned, the books of HIL do not reflect any amount payable to HUF. Even prior to bidding, this amount was not declared as payable to the HUF. As far as the amount of Rs. 6,40,746 payable to Hybar and Rs. 16,00,000 by Terrafilms to Flybar are concerned, these amounts are shown as payable in the books of accounts of HIL. Since HIL has to receive payment from other companies of Ved Kapoor group, these amounts cannot be paid. As far as Rs. 5 lacs payable to Jaiwant Bery towards his gratuity is concerned, gratuity is not payable by HIL and the same is payable only by LIC. The company has already written to LIC and as and when the same is received from LIC, it will be paid to Jaiwant Bery. Actually, the amount of gratuity payable works out to Rs. 2,30,769 and not Rs. 5 lacs as claimed by Jaiwant Bery. In so far as Rs. 36,000 claimed by Jaiwant Bery towards expenses incurred for sales promotion is concerned, this claim does not flow from any order of this Board and as such cannot be adjudicated by this Board especially when his appointment as MD was illegal. Notwithstanding this, his entitlement for expenses is limited only to Rs. 9476/- and since his drivers had taken an advance of Rs. 14144/-, Jaiwant Bery owes Rs. 5000 to the company.
12. The learned Counsel further submitted: As against the claim made by Ved Kapoor group against the company, it is Ved Kapoor group which has to pay a large amount to FIIL. Since this Board has held that the appointment of Mr. Bery as MD as invalid vide its order dated 24.9.2003, he has to refund to the company of about Rs. 49.9 lacs paid as remuneration to him. In addition, even beyond his entitlement as MD, he has overdrawn Rs. 8,76,175 which should also be refunded to the company. In addition, he is also to refund Rs. 39,500 and Rs. 16,800/- pertaining to an air conditioner and microwave purchased for his personal use but charged to the company.
13. The learned Counsel further submitted: In so far as the amounts claimed against HPL and HCL are concerned, Ajay Kapoor by himself is not personally liable to make payment against any of these claims and it is the liabilities of these companies to pay this amount. In so liar as dues from HPL is concerned, the admitted fact is that a scheme of revival of the company is pending before AAIFR. Therefore, any payment by the company to creditors including Ved Kapoor group will have to be in accordance with the scheme. Therefore, till such time the scheme is approved, no money can be paid to Ved Kapoor group from HPL. Further, even the claim of Rs. 1,60,90,992 by Ved Kapoor group from HPL is wrong. As per the audited balance sheet as on 31st March, 2004, only a sum of Rs. 21.61 lacs is payable to Ved Kapoor group. Actually, the amount claimed by Ved Kapoor group were not loans given to HPL but were illegitimate transfer entries from M/S Hitkari Brothers and HCL. Therefore, as and when revival scheme is approved, the amount of Rs. 19.5 lacs as per the audited balance sheet as on 31st March, 2005 will be paid to Ved Kapoor group, In so far as claim of Rs. 23,85,908 by M/S Raj & Sarup is concerned, they do not constitute part of Ved Kapoor group and no shares from them have been purchased by Ajay Kapoor group pursuant to the bidding. Further, as per the books of accounts, only a sum of Rs. 2,61,786 is due to M/S Raj & Sarup which will be paid in terms of the scheme. Similarly, the claim of Ms. Reena Singh cannot be considered by this Board since no shares from her have been purchased consequent to the bidding. The claim of Rs. 14,54,850 being 50% of the debt owed by HPL to HCPIL cannot be paid at this stage and Ved Kapoor group has to wait till the scheme is approved by BIFR/AAIFR. Regarding the claim of Ved Kapoor from Ajay Kapoor of Rs. 20 lacs, this claim does not arise out of the ordeHiated 1.2.2005 and since many outstanding issues are pending between Ved Kapoor and Ajay Kapoor, this Board cannot decide this matter. As a matter of fact, Himachal Folien Private Limited which is under the control of Ved Kapoor group and in which Ved Kapoor group holds 50% shares, owes a sum of Rs. 55,57,514 to HIL. This amount with accrued interest works out to Rs. 82,60,406. Since Ajay Kapoor group holds 50% shares in Himachal Folien, it should be directed to pay HIL, 50% of the outs'tandings amounting to Rs. 41,3 0,203 to HIL.
14. I have considered the arguments of the counsel. In so far as CA 140 is concerned the entire claim of Ajay Kapoor Group is based on the alleged wrong valuation adopted by Ved Kapoor in valuing the stock and also taking the value of cylinders as part of the stock. The main contention of Ajay Kapoor Group is that they had relied on the stock statement furnished to the bank as on 30.9.2004 at the time of bidding for the shares and in terms of the warranties as sought for in his application CA 6 of 2005, Ved Kapoor Group is bound to reimburse this amount.... The claim of Rs. 288 lacs comprises of difference in the value of Rs 104 lakhs in raw material, Rs 76 lakhs in semi finished goods and Rs 123 lakhs in cylinders minus some surplus in other items. To my specific query in the hearing whether there was any discrepancy in the physical stock, the counsel for the Ajay Kapoor Group answered in the negative. However, from the application and the documents annexed with the rejoinder, I find that the main difference in the value of raw material, semi finished goods and cylinder has arisen on account of a different unit price that the Bank auditor has adopted in respect of each of them. Therefore, the only issue is whether on the basis of the alleged wrong method of valuing the stock, Ajay Kapoor Group could claim reimbursement of the difference. It is an admitted fact that whatever method of valuation was adopted for valuing the stock, it was being adopted for a number of years, I could have found justification in questioning the method of valuation if the method adopted was applied just before the date of bidding. It is also on record that the bank, which conducted periodical stock verifications, never questioned the method of valuation nor the statutory auditors of the company. As rightly pointed out by Shri Choudhary, the bid was not based on any particular item of asset but taking into consideration the totality of the assets and liabilities of the company and its business prospects. As a matter of fact, the bidding was a competitive process, the petitioner himself having started, if I remember correctly at Rs. 30/- per share, going up to Rs. 50/- only when Ved Kapoor Group bid, Rs. 49/- per share. Therefore, to allege that Ajay Kapoor Group bid for Rs. 50/- per share on the basis of the stock statement cannot be accepted. It is not in dispute that even Ajay Kapoor Group followed the same method of valuation after taking over the control of the company. The reliance on the warranties is also misplaced as I do not find any warranty relating to the method of valuation which was going on for a number of years prior to the date of bidding and it had been accepted by the bank all through. The warranty relied on by the Ajay Kapoor Group reads "The Ved Kapoor Group hereby indemnifies the Ajay Kapoor Group in respect of all current assets of the company comprising inventory, work in progress, raw and process material, finished goods and merchandise whether in hand or in transit both in terms of quantities and values as reflected in the stock registers and/or the stock statements furnished to the company's bankers from time to time and any shortfall therein shall be to the account of the Ved Kapoor Group." The admitted fact is that the stock and value as reflected in the stock registers is reflected in the stock statement furnished to the bankers and Ved Kapoor Group has not indemnified about the method of valuation. Further, in terms of para 5 of the order of this Board dated 1.2.2005, the only stipulation was that the main fixed assets and stock in hand shall be as reflected in the documents filed before this Bench and this stipulation is not with reference to the method of valuation. Therefore, the claim of the petitioner for the difference of Rs. 226 lacs (as on 20.1.2005) on account of difference in value due to wrong method of valuation cannot be accepted and as such this claim is not admissible. As Tar as cylinders are concerned, the allegation, as in the petition, is that instead of the same being shown as fixed assets, with the view to avail enhanced credit limit, Ved Kapoor group has included the same as stock. As long as the physical units are available as per the stock statement, wrong classification, whatever may be the motive, cannot give raise to any objection from Ajay Kapoor group. However, Ajay Kapoor group claims that 800 cylinders which had already been sold but in the physical possession of the company have been included in the stock statement and therefore a sum of Rs 62.7 lakhs, being the cost of the same should be reimbursed by Ved Kapoor group. Dealing with this issue, in the reply to the application, Ved Kapoor group has explained "It is submitted that 800 printing cylinders out of the stock of 4317 are not the property of the customers as HIL is invoicing the customers for design and development charges" and not for the printing cylinders as is evident from the invoice. These designs and development charges also attract excise duty as is evident from other similar manufacturers balance sheet which also confirms charge of excise duty on design and development charges. Previously, the industry was raising debit notes for design and development charges which are required to provide the printing as per the customers specific design. This change was due to the change in the policy of the excise department. There was an objection by excise department which felt that the designing charges were infact a part of the cost of the produce and that therefore design and development charges recovered from the customers should also attract excise duty. Thereafter, the industry including HIL discontinued the practice of raising debit notes and starting raising invoice for the same charges including charges of excise duty as per guidelines of excise department". Again in paragraph 19(iii), Ved Kapoor group has submitted "The printing cylinder has not been sold to the customers. The cost of design and development charges have been invoiced/recovered from the customer. The design and development charges are excisable as it is classified as a sale of service. This is evident, as the customer's, are also treating these expenses as revenue expense and have not reflected that cylinders as an Asset in their balance sheets. If the cylinder was an asset of the customer, as claimed by the petitioner, the customer would not allow HIL to etch their name on the cylinder, as by doing so, HIL has ensured that any other manufacturer cannot use the same cylinder for doing printing for the customer who supposedly owns the cylinders. After the cylinder wears off re-etching has to be done, cost of which is borne by HIL. If the cylinder was the property of the customer, as claimed by Ajay Kapoor group, then it would not be logical for HIL to bear the cost of re-etching/rectification, of the customer's asset. It is denied that the value of such cylinder ought to be written off cylinders accounts and thus actual value of cylinder in stock would be far less than reflected in the accounts". In the rejoinder, denying the detailed submissions of Ved Kapoor group as above, Ajay Kapoor group has only stated that it has been the practice of the company to show the sale of cylinders as design and development charges. In the application at Annexure -M, Ved Kapoor group has enclosed a statement of "chemical cylinder with sale" giving details of numbers and ' dates of invoices, From this statement, I find even those cylinders which were reportedly sold as early as in the year 2000, are found to be in physical possession of the company. If a customer had paid for the cylinder, he would not have left the same in the physical possession of the same with the company for over 5 years. Since, the issue is purely a question of verifiable fact, I direct the parties to submit a certificate from the excise department within 15 days of this order to substantiate their claims. Thereafter, I shall decide this issue. Thus, as far as CA 140 of 2005 is concerned, Ajay Kapoor group cannot have any claim on account of variation in the rates adopted for valuation of the stock by Ved Kapoor group and the claim can be only in relation to 800 cylinders in case the excise authorities confirm his, stand.
15. As far as CA 153 is concerned, Ved Kapoor group has made various claims. In so far as the dues to Packit is concerned, Ajay Kapoor group is bound to pay the amount due as per books of accounts. No allegation that it was a diversion of business or that the transactions between HIL and Packit were approved in the board meetings in violation of Section 299/300 etc. can not be entertained at this stage as all these allegations were already a part of the petition and as a matter of settlement of the dispute, the bidding process was initiated and Ajay Kapoor group was successful. If the matters have to be decided on merit, the question of bidding process would have never been initiated. The same is the position in regard to the appointment of Shri Bery as the MD. Therefore', the question of recovering the remuneration paid to him does not arise. It is very unfortunate that Ajay Kapoor group having agreed to settle the disputes by the process of bidding, are once again racking up the same allegations as contained in the petition now when in terms of the order of this Bench dated 1.2.2005, dues are payable by Ajay Kapoor group. Therefore, Ajay Kapoor group has to make payments of Rs. 51,86,092 from HIL to Packit and Rs. 6,40,746 from HIL to Hybar and Rs. 16 lacs from Terrafilms to Hybar. These amounts would either become payable or adjustable once I give a finding on the Cylinders after receipt of certificate from excise authorities. As and when the gratuity payable to Jaiwant Bery is received from LIC, the same should be paid to him without delay. Likewise, HIL will also reimburse Rs. 20,000;being expenses incurred by Shri Bery for sales promotion of the company as against his claim of Rs 39,000. As far as dues from HPL is concerned, I agree with Ajay Kapoor group that for the dues of HPL whether is personal loans to HPL or otherwise, Ved Kapoor Group cannot be held to be personally liable. Since approval of revival scheme is awaited from BIFR/AAIFR, till such time the revival scheme is approved, no directions can be given to HPL by this Board to repay the loans and other dues to Ved Kapoor group and the repayment shall also be in accordance with the scheme. In the personal loans, Ved Kapoor groups has combined the personal loans given to HPL and HCL. If any amount out of this combined amounts is due from LICL, the same will be paid by Ajay Kapoor group within month as HCL is not before BIFR. Ajay Kapoor group have made certain claims on the dues by Himachal Folien to HIL on the ground that Himachal Folien is under the management of Shri Bery. Since Himachal Folien was not part of the consent order dated 1.2.2005, the said Tclaim cannot be considered in this order. Similarly, personal dues between Shri Ajay Kapoor and Shri Bery, not being a part of the consent ore' cannot be considered in this order. 16.Both the applications are disposed of in the above terms.