K K MODI Vs. K N MODI

JUDGEMENT

(1.) Leave granted in Special Leave Petition Nos. 14905 and 18711 of 1997.

(2.) The present litigation has arisen on account of disputes between Seth Gujjar Mal Modi's five sons - K. K. Modi, V. K. Modi, S. K. Modi, B. K. Modi and U. K. Modi on the one hand (hereinafter referred to as 'Group B') and Kedar Nath Modi, the younger brother of Seth Gujjar Mal Modi and his three sons - M.K. Modi, Y.K. Modi and D. K. Modi (hereinafter referred to as 'Group A') on the other hand. The Modi family owns or has a controlling interest in a number of public limited companies. They also own various assets. Differences and disputes have arisen between Kedar Nath Modi and his sons constituting Group A and the sons of late Gujjar Mal Modi constituting Group B on the other hand. To resolve these differences, negotiations took place with the help of the financial institutions which had lent money to these companies, and through whom substantial public funds had been invested in the companies owned and/or controlled by these two groups. Representatives of several Banks, Reserve Bank of India and financial institutions were also invited to participate. Ultimately, on 24th of January, 1989, a Memorandum of understanding was arrived at between Group A and Group B. Under the Memorandum of Understanding so arrived at, it is agreed between the parties that Group A will manage and/or control the various companies enumerated in Clause 1. One of the companies so included is Modipon Ltd. minus Indofil (Chemical Division) and selling agency. Under Clause 2, Group B is entitled to manage, own and/or control the companies enumerated in that clause. One of the companies so included in Modipon Ltd. minus Modipon Fibre Division. The agreement also provides for division of assets which are to be valued and divided in the ratio of 40 : 60 - Group A getting 40% of the assets and Group B getting 60% of the assets. The shares of the companies are required to be transferred to the respective groups after their valuation. Under Clause 3, valuation has to be done by M/s. S. B. Billimoria and Company, Bombay. Clause 5 provides for companies which are to be split between the two groups as per the Memorandum of Understanding. The division has to be done under Clause 5 by a scheme of arrangement to be formulated by M/s. Bansi S. Mehta and Company, Bombay after taking into consideration the valuation done by M/s. S. B. Billimoria and Company, Bombay. Units of a company to be given to each group are to be given along with assets and liabilities. Clause 6 provides for interim arrangements which are to be made in respect of the three companies which are being split - these being Modi Industries Ltd., Modipon Ltd. and Modi Spinning and Weaving Mills Company Ltd. We are not concerned with the other clauses, except to note that the date for carrying out valuation, the date of transfer, the appointment of independent Chairmen of these companies which are to be split and certain other matters specified in the Memorandum of Understand-ing shall be done in consultation with the Chairman, Industrial Finance Corporation of India (IFCI).

(3.) Clause 9 provides as follows :-