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4. Respondents Nos. 2 and 4 have filed their counters to the petition. The reply of the second respondent, in a nutshell, is as follows : the first petitioner is the managing director and another a joint managing director and as such they have no locus standi to file this petition alleging oppression and mismanagement in the affairs of the company. This petition has been filed with an oblique motive of retaining the control of the company even though the petitioners are in minority. Since the entire petition is founded on the family agreement which itself provides for arbitration in case of disputes, the petitioners cannot file this petition for execution of the family agreement especially when the company is a listed company. Further, the petitioners have already filed two civil suits on the same issues that have been raised in this petition. The respondent is the son of the founder of the company, namely, H. N. Bhargava, elder brother of the petitioner. After the death of H. N. Bhargava, the petitioner, being the eldest in the family was appointed as the managing director. The respondent is a chartered accountant and joined the company in 1973 as Executive (Finance) and later became the Director (Finance) and remained as such till 1983. After his appointment as managing director, the petitioner started promoting his own sons and forced the respondent and his brother to leave the company in 1983. He did not allow any of the family members of his brother who was the promoter of the company to become a director. No doubt, in the year 1991, a family agreement was entered into, yet, the petitioner was promoting' his sons and the son of the second petitioner, completely neglecting the family of M. N. Bhargava (respondents Nos. 3 and 4), which was originally on the side of the petitioner. All the divisions were under the control of the petitioners even though as per the family agreement, all the family members would have equal participation in the management. Thus, it is the petitioners' group which has oppressed the majority shareholders. As far as the plastic division is concerned, this project was appraised by the ICICI at a cost of Rs. 20.81 crores and that of expansion of the Kanpur unit at Rs. 5.5 crores totalling to Rs. 26.31 crores. The financing of the project included public issue of Rs. 9.5 crores. Since the capital market conditions showed signs of weakness, the company could not resort to public issue and accordingly, the board decided to finance the project by resorting to intercorporate deposits. The entire project was executed and supervised by the fourth petitioner and not by the respondent as alleged in the petition. Only in January, 1996, the respondent sought for a role in the company and since the petitioner did not want him to be associated with the Kanpur unit, he made the respondent in charge of the ailing plastic division, which was being looked after by the fourth petitioner till then. Only in October, 1996, after a lot of persuasion, the petitioners made the respondent a whole time director. Even though the Kanpur divisions were supporting the plastic division till the fourth petitioner was in charge of the plastic division, after the respondent took control of the plastic division, no financial support was forthcoming from the Kanpur unit. The petitioners did not take any interest in the affairs of the plastic division. In view of the liquidity problem, the financial institutions urged the company to go for a rights issue of Rs. 8 crores and at the initiative of the respondent, VSL Finance Limited agreed to sponsor the rights issue. However, the petitioner was not interested in the rights issue being made and as such this rights issue did not materialise even though the respondent and his family members had contributed Rs. 1.5 crores towards the rights issue. Even though the plastic division was not doing well, yet, the petitioner wanted remittances from this division to Kanpur. Instead of assisting the plastic division, the petitioner, with a view to oust the respondent from the company, suggested closing of this division, sale of the division or in the alternative advised forming of a separate entity for this division, even though the petitioner was fully aware that the financial institutions would not support this move. In spite of the financial difficulties experienced by the plastic division, the petitioner issued instructions to the bank to transfer the sale proceeds of the plastic division to Kanpur resulting in non-payment of salary to the workers consequent to which the workers went on a flash strike in May, 1998, and the electric connection was also disconnected due to non-payment of electricity bills. In spite of these matters having been brought to the notice of the petitioner, no remedial action was taken by him. In the meanwhile, with a view to consolidate his position, the petitioner allegedly held a board meeting on August 25, 1998, which was attended only by three out of the ten directors, in which one P.N. Bhalla was appointed as a director and far reaching decisions were taken. It was done without the knowledge of the directors belonging to the DB group. The proceedings of this meeting have been stayed by a civil court. The respondent gave a notice for convening a board meeting on June 13, 1998, at which eight of the ten directors were present. When the issue relating to appointment of Shri Bhalla in the earlier meeting was raised, the petitioner along with the second petitioner left the meeting. The meeting continued with the respondent as the chairman and four additional directors were appointed and change of operation of bank accounts was also approved. These resolutions have now been stayed by a civil court. Later, some of the shareholders requisitioned a general body meeting for removing two directors and appointing two other directors and this requisition was considered through a circular resolution by the majority of the directors and these directors decided to convene the extraordinary general meeting. In the meanwhile, the board allegedly passed a resolution in a board meeting convened by the petitioner rejecting the requisition. However, the requisitionists themselves convened the said meeting and passed the resolutions as proposed. Thus, it is the petitioner with minority backing who has oppressed the majority shareholders.

5. After the petition was filed, a number of applications were filed, both by the petitioners as well as by the respondents making allegations against each other in the conduct of the affairs of the company subsequent to the filing of the petition. The petitioners also filed an amendment application C. A. No. 198 of 1998, seeking to bring on record the board meeting held on July 8, 1998, three more directors were inducted and that one director had resigned. The main allegations of the petitioners were that, through a circular resolution, the respondents claim that the petitioner was removed as the managing director and the second petitioner as the joint managing director with effect from December 30, 1998 ; that the respondent had forcibly taken over the Kanpur division of the company, on December 28, 1998 ; that the petitioners were not allowed entry into the factory premises. The allegations of the respondents were that without notice to his group of shareholders, the petitioner allegedly held the annual general meeting for 1997-98 on December 28, 1998, whereat far reaching decisions were taken ; that the registered office of the company was shifted to the residence of the petitioner ; that all the records of the company had been removed from the registered office ; that clandestinely; and without the approval of a duly constituted share transfer committee, a number of shares held by the respondents which were in pledge with VLS Finance Limited had been transferred to VLS Finance resulting in the respondent being reduced to a minority.

6. In the hearing held on July 22, 1998, C. A. No. 133 of 1998 was moved wherein the petitioners had sought for restraining the requisitionists from convening the extraordinary general meeting as per the requisition dated June 15, 1998. On that day, without passing any order on the application, in view of the close relationship between the parties, counsel were advised to impress upon their clients to settle the dispute amicably. In the next few hearings, the matter of amicable settlement was, considered. In the meanwhile, certain disputes arose between the parties regarding an annual general meeting allegedly held on December 28, 1998, and also on the passing, of a circular resolution removing the petitioner as the managing director and the second petitioner as the joint managing director. In the hearing held on January 8, 1999, we directed that none of the resolutions both in the annual general meeting and in the board meeting shall be given effect to. In the hearing held on February 10, 1999, with a view to explore the possibility of amicable settlement between the parties, as an interim measure, the fifth petitioner representing the petitioners and the second respondent representing the respondents agreed to have a working arrangement and in terms of the consent given by them, we passed an order on February 10, 1999, a gist of which is as follows : The board to be reconstituted with two directors from each side with Justice R. M. Sahai, former judge of the Supreme Court as the chairman; the petitioner group to manage the day-to-day affairs of the forge division and the respondents the other two divisions in Kanpur ; the board to decide the fate of the plastic division ; bank accounts were to be operated jointly with one member from each group ; no transfer of shares during the pendency of the proceedings ; none of the parties to pursue any pending proceedings, etc.