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By an order dated 19th August, 1999, the Company Law Board recorded the history of the disputes between the parties and the proceedings taken by each against the other and ultimately the resolution of the differences of the parties. The Company Law Board recorded that the Board had in the course of hearing suggested various terms of settlement to resolve the matters amicably between parties having regard to their close relationship. It had expressed its opinion that in order to achieve a fair and equitable settlement, out of the nine tea estates owned by respondent No.1, five tea estates together with certain other assets should be vested in the MMS Group. The suggestion was accepted by the parties in the settlement arrived at between them. They identified the tea estates and other assets to be given to the MMS Group and also quantified the share of the liability of the respondent No.1 which had to be paid by the MMS Group which came to Rs. 7,24,67,708.90 (Rupees seven crores twenty four lacs sixty seven thousand seven hundred and eight and paise ninety only). The order records that the Memorandum of Family Arrangement and Transfer Document executed between the parties would form an integral part of the order. As far as the figure of Rs. 7,24,67,708.90 was concerned, the Company Law Board stated that it would be subject to all deductions and adjustments as set out in the Transfer Document. One Mr. M.C. Joseph, Chartered Accountant was appointed as an independent auditor for the purpose of clause 4.1.1.12 of the Transfer Document, who would verify and certify the figures stated therein. It was also recorded that on completion of the settlement, the five estates and certain other assets would vest in the MMS Group. In order to perfect their title thereto, the Company Law Board directed the parties to execute the transfer deeds to affect the transfer of the relevant assets. Accordingly, the Board pursuant to powers vested in it under Section 402 of the Companies Act 1956, directed that:-

In paragraph 12 of the order the Company Law Board recorded that the order had been read out to the parties and the parties had confirmed their consent to the terms of the order.

In terms of the Memorandum of Family Arrangement (referred to hereafter as the 'MOFA'), the CBS Group was required to give a completion notice to the MMS Group signifying that the five estates were free from all encumbrances and ready to be transferred by the Respondent No.1 to the MMS group. According to the CBS Group, such notice was given on 17th January, 2000. The notice was objected to by the MMS Group by letters dated 18th January, 2000 and 20th January, 2000 on the ground that it was not in terms of Clauses 7.2 and 7.3 of the Transfer Document. On 7th February, 2000 the MMS Group filed an application under Section 634A of the Companies Act 1956 praying for a decision as to whether the notice dated 17th January, 2000 was valid and if so, to direct the CBS Group to proceed with the completion as per the Transfer Document and the MOFA. Alternatively it was prayed that if the notice was held to be invalid the CBS Group should be directed to handover the entire Management of the Respondent No.1 to the MMS Group and the MMS Group should complete the agreement. In the further alternative it was prayed that a Special Officer should be appointed to take over the responsibilities of the CBS Group in the Management of the Company and should be directed to complete the agreement between the parties.

The Company Law Board by its order dated 18th August, 2000 noted that the MMS Group had submitted that they were not liable to make any payments towards the outstanding Bank dues, and that according to the MMS Group nothing would become payable by the MMS Group to the CBS Group in terms of the agreement after giving effect to all the clauses. In fact according to the MMS Group, the CBS Group had to pay an amount to the MMS Group after the adjustment of the account. The Board noted that the only question was whether the accrued gratuity liabilities in respect of the employees of the 5 estates had been taken into account by the parties when they entered into the agreements and what the parties had intended in including clauses 4.1.1.11 in the MOFA. The Board found that there was substance in the contention of the CBS Group that the liabilities on account of gratuity was never contemplated by the parties when they entered into agreement fixing the MMS Group's share of liabilities. Thus although they found that the MMS Group was "legally right in claiming the amount", the CBS Group was justified in its stand that this was not in contemplation of the parties. It was, therefore, found that there was no meeting of minds and there was bona fide dispute between the parties with regard to the interpretation of the clause relating to the accrued gratuity liability. In these circumstances, the Board found that it could not pass any order on the application under Section 634A filed by the MMS Group. As far as the CBS Group's application was concerned, their prayer for recalling the orders passed by the Board was rejected. Both the applications were accordingly dismissed but it was observed that:-

Learned counsel appearing on behalf of the appellant has submitted that the Court could not refuse to implement the consent order dated 19th August, 1999. It was stated that the Company Law Board while dealing with an application under Section 634A sits as an executing Court and in such a situation its powers are curtailed to the extent that it is bound to take the judgment as it stands. The Executing Court can interpret the decree and proceed with its execution as interpreted but could not refuse to execute it. It was argued that the legal effect of the consent order is that it is binding on the parties and could not be set aside except on very limited grounds, none of which was present. It was submitted that even if there was an ambiguity in the consent order that could have been interpreted. There was in fact no mistake of fact that had arisen either with respect to the agreement or the consent order. As far as the issue of the liability of the MMS Group under clause 4.1.1.11 of the Transfer Document to pay the gratuity which had accrued to the employees of the estate transferred to the MMS Group was concerned, it was submitted that the MMS Group without prejudice to its rights and contentions had agreed before the Company Law Board and were still willing to take over that liability. In any event, it was submitted that the disputed clause could be severed and the remaining clauses of the agreement could be implemented. Learned counsel appearing on behalf of the CBS Group submitted that the order of the Company Law Board recording the MOFA and Transfer Document was not a final order. It was submitted that the parties never understood the order of the Board dated 9th August, 1999 to have finally disposed of the disputes. In fact after the order of the High Court, the appellants themselves had gone back to the Company Law Board and filed an application praying for enforcement of the agreement after severing clause 4.1.1.11. That application was pending. Secondly it was submitted that in terms of the agreement, the payment of amounts in terms of the agreement by the MMS Group to the CBS Group was to be simultaneous with the completion. The MMS Group defaulted in carrying out its obligation and in fact the parties therefore had the right in terms of the MOFA to rescind the agreement. As far as the Transfer Document was concerned, it was stated that the CBS Group had acted strictly in terms thereof. It was stated that had the MMS Group carried out their obligations under the agreement, the Bank's dues would have been discharged. As matters now stood the Bank dues had increased from approximately Rs. 8 crores to a demand of about 18 crores. It was stated that in an adjustment of the equities, the MMS Group would have to bear its share of the Bank dues as at present obtaining. Finally it was submitted that the appeal of the MMS Group should not be entertained under Article 136 having regard to their conduct. Our attention was drawn to an investigation initiated by the Government against the 5 tea estates under the Management of the MMS Group.