The Court ruled that the application under the Companies Act was maintainable despite previous findings, emphasizing proper compliance with ownership criteria for governance disputes.

1. Leave granted.

2. A common Judgment of High Court of Madhya Pradesh at Gwalior in Miscellaneous Company Appeals filed by the Respondents herein is in challenge before us. These Appeals were filed by the Respondents against the order of the Company Law Board (CLB) arising out of the applications filed by the appellants herein under S.397 and 398 of the Companies Act (hereinafter referred to as 'the Act') alleging mismanagement of the company by the Respondents. Both the parties have already completed one round of litigation upto this Court and have come up before us in the second round. The factual matrix leading to the filing of the present appeals before us dates back to July, 1995 when the appellants herein filed the petitions under S.397, 398 of the Act. The facts are as under:
This is a family dispute amongst two brothers, namely, J. K. Srivastava and H. K. Srivastava, both of whom have expired. Their Legal Representatives are before us. J. K. Srivastava Group (appellants herein) filed Company Petition No. 27 of 1995 dated 1.7.1995 before the Company Law Board under S.397 and 398 of the Act alleging that M/s. Gwalior Sugar Company Ltd., which is a family concern, was being mismanaged by H. K. Srivastava Group.

3. The Company Law Board, on the basis of the aforementioned petition and the replies thereto by the respondents, was initially of the opinion that this being a family concern, the disputes should be resolved amicably and passed an order dated 22.1.1996 calling upon the parties to make efforts for compromise. The relevant extracts of the order are as under:
"In view of the close relationship between the parties, we suggested to the counsel for both the sides that they should try to work out an amicable settlement between the parties. The counsel have undertaken to do so. The result of their efforts will be intimated to us on 20th February 1996 at 2.30 p.m."
Thereafter, three hearings took place and ultimately on 7.5.1996, the CLB passed the following order:
"It was agreed by the parties that the petitioners will sell their shares to the respondents for a value per share to be determined by a valuer appointed by us and the value will be binding on all the parties. The parties will approach jointly reputed valuers and suggest an acceptable name for our approval on 30.5.1996 at 4.15 p.m."

4. On 10.6.1996, with the consent of the parties, the CLB appointed M/s. Thakur Vaidyanathan Iyer & company Chartered Accountants, New Delhi to value the shares of the Company. On 22.11.1996, the Chartered Accountants valued the shares. As the respondents had reservations about the value, the matter was reheard by the valuer and ultimately the value of equity shares was decided at Rs. 6340/- per share. The valuation for a preference share of Rs. 100/- was fixed at par. The respondents herein objected to this valuation also vide their C.A. No. 302 of 1997. They also filed C.A. No. 264 of 1997 for recalling the order dated 10.6.1996. Their contention was that the other disputes relating to the family properties in possession of the petitioners should also be settled. The matter was fixed for hearing on 6.11.1998.

5. However, before that, respondent no. 8 Mrs. Radhika Srivastava filed an application C.A. No. 262 of 1998, challenging the order dated 10.6.1996 and praying for its recall. It was alleged in the application that respondent no. 8 had no knowledge of the compromise and that she was kept in dark about the settlement arrived at. She also further contended that the petition under S.397 & 398 of the Act was not maintainable since as per S.399 of the Act, the petitioner had to have 10% of the total issued share capital which would include preference shar