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2013 Supreme(Del) 268
High Court of Delhi
S. MURALIDHAR, J.
Nagesh Kumar & Another
Versus
Nagesh Hosiery Exports Ltd. & Others
CO.A. (SB) No. 18 of 2008
Decided on : 05-03-2013
For the Appellants:Krishna Kumar with Kaustubh Shukla, Advocates.
For the Respondents:R2, Ms. Sangita Bhayana, R3, Sanjay Maria, Advocates.
The main legal point established in the judgment is that a finding of fact can be set aside in appeal if it is perverse and based on no evidence, even if the appeal is permissible only on a question of law.
Headnote:
Companies Act - Appeal under Section 10F - Summary of Acts and Sections: Companies Act, 1956, Sections 397, 398, 10F - The judgment discusses the background facts of the case, the impugned order of the CLB, and the proceedings in the present appeal.
Fact of the Case:
The case involves a dispute between family members over the ownership and management of a company, Nagesh Hosiery Exports Limited (NHEL). The appellants alleged oppression and mismanagement by the respondents and sought relief under Sections 397 and 398 of the Companies Act, 1956.
Finding of the Court:
The Court found that the impugned order of the CLB was not legally tenable and set it aside to the extent that it directed the appellants to be paid a specific sum per equity share and to restore possession of the company's premises, plant, and machinery. The matter was remanded back to the CLB with specific directions.
Issues: The issues involved oppression and mismanagement by the respondents, valuation of shares, and possession of company assets.
Ratio Decidendi: The Court held that the CLB's order was not legally tenable and remanded the matter back to the CLB for further examination of possession of company properties and valuation of shares by an accredited valuer.
Final Decision: The appeal was disposed of with specific directions to the CLB and costs awarded to the appellants.
S. Muralidhar, J.
1. This appeal under Section 10F of the Companies Act, 1956 (‘Act’) is directed against a judgment dated 11th June 2008 passed by the Company Law Board (‘CLB’), Principal Bench in Company Petition No. 97 of 2006 filed by Appellant 1, Mr. Nagesh Kumar and his wife Appellant 2, Mrs. Renu Mehra.
Background Facts
2. The background to the present appeal is that Respondent 2 Mr. Vidya Prakash Mehra, is the father of Appellant 1 Nagesh Kumar, Respondent 3 Mr. Ravinder Kumar and Respondent 4 Mr. Rakesh Kumar. Respondent 2, along with his brother Mr. Dharam Pal was running a partnership firm in the name of M/s. Nagesh Hosiery Mills (‘NHM’). As a result of disputes between the partners, a deed of dissolution was executed by them on 30th July 1983. Under the dissolution deed, inter alia, the immovable property being building No. B-1-1214 near Kailash Cinema Chowk in Civil Lines, Ludhiana was divided into two parts. One part was allotted to the parties of the 4th, 5th and 6th parts i.e. Mr. Ashok Kumar, Mr. Rajan Kumar and Mr. Mukesh Kumar sons of Mr. Dharam Pal. The other portion was given to the parties of the 1st, 2nd and 3rd parts i.e. Mr. Ravinder Kumar, Mr. Nagesh Kumar and Mr. Rakesh Kumar. Likewise, another immovable property being a building at GT Road, village Bhaura, Ludhiana was divided into two parts and distributed to the two sets of parties. The relevant clause in this regard reads as under:
“d) That immovable property being Building No. B-XXXII-933 at G.T. Road, Village Bhaura, Ludhiana has been divided into two parts as indicated in the plan attached herewith marked annexure 4. The portion shown by the slightly irregular rectangle ABCDEFGHIJ shaded green (Area of land 15,310. 7/9 Sq. Yards) in the plan has been allotted and given to the parties of the 4th, 5th and 6th parts hereto collectively, while as the slightly irregular rectangle BCEDEFGHIJKL shaded red (Area of land 15,310. 7/9 sq. yards) in the plan has been allotted and given to the parties of the 1st, 2nd and 3rd parts hereto collectively.”
3. The Respondent 1 company Nagesh Hosiery Exports Limited (‘NHEL’) was incorporated in 1980 with its registered office in Greater Kailash, New Delhi. Appellants 1 and 2 Nagesh Kumar and his wife Renu Mehra, held 40,940 equity shares in NHEL. This represented 20.47% of the 1,99,500 paid up equity shares of Rs.10 each of NHEL. 25,950 shares were held by Mrs. Suhag Rani, the mother of the Appellant 1 and Respondents 3 and 4. 22,600 shares were held by Respondent 2 Mr. Vidya Prakash Mehra as Karta of the Hindu Undivided Family (‘HUF’) comprising of himself and his sons. The other shareholders included Mr. Nagesh Kumar who holds 27,750 shares, Mrs. Renu Mehra who holds 13,190 shares, Mr. Ravinder Kumar who holds 25,750 shares, Mr. Rakesh Kumar who holds 30,100 shares, Mrs. Charu Mehra, Respondent 5 and wife of Mr. Ravinder Kumar, who holds 15,189 shares and Mrs. Sudha Mehra, Respondent 6 and wife of Mr. Rakesh Kumar, who holds 10,840 shares. In terms of the annual return filed by NHEL with the Registrar of Companies (‘ROC’), Mrs. Shammi Sobti holds 17,290 shares and Mr. Om Prakash Khanna holds 50 shares.
4. It is stated that on account of differences between the parties, a Memorandum of Understanding (‘MoU’) was entered into on 10th April 1993 between Mr. Vidya Prakash Mehra Respondent 2 (referred to in the MoU as party of the First part), Mr. Ravinder Kumar Respondent 3 (referred to in the MoU as party of the Second part), Appellant 1 Mr. Nagesh Kumar, (referred to in the MoU as party of the Third part) and Mr. Rakesh Kumar Respondent 4 (referred to in the MoU as party of the Fourth part). It was inter alia agreed that no new order would be taken in the name of NHEL or the firm M/s. Nagesh Hosiery Exports (‘NHE’). It was agreed that “all the four parties may do their independent business of any kind in any name but would not use the name of Nagesh Hosiery Exports Limited or Nagesh Hosiery Exports till
