GURPARTAP SINGH Vs. VISTA HOSPITALITY PVT LTD

JUDGEMENT

(1.) This is an appeal filed by one Shri Gurpartap Singh and Smt. Geeta Partap Singh under section 10F of the Companies Act, 1956 ("Act", for short) impugning the order passed by the Company Law Board in C.P. No.7(ND)/2013 and CA No.41/2013 on 13.03.2013.

(2.) It is necessary to give a brief background of the facts leading to the filing of the present appeal. The respondent-company, Vista Hospitality Private Ltd. was incorporated on 10.01.2003, with the appellants as the original promoters and directors. Pursuant to a joint venture agreement, hereinafter referred to as JVA, entered into between the appellants and the respondents herein on 21.12.2007 there was a restructuring of the shareholding as well as the board of directors under which the appellants, the Gurpartap group, came to hold 65% and the respondents, the Jhankar group, came to hold 35% of the shares in the company. The board of directors consisted of 5 directors nominated by the Gurpartap group and 3 directors nominated by the Jhankar group. Upto the year 2010, the affairs of the company were running smoothly. Sometime early in the year 2011, it appears that disputes over the functioning of the company and the conduct of its business arose between the two groups. There were allegations and rebuttals that the respondents were trying to entice away the clientele of the company to their concern, Jhankar Banquets, which was operating opposite to the company and thereby causing loss. It was also alleged by Gurpartap group that the Jhankar group was acting to the detriment of the company's business.

(3.) In the above situation, the Gurpartap group, the appellants herein, filed a petition before the Company Law Board (CLB) in C.P. No. 101(ND)/2012 under sections 397-398 of the Act alleging oppression and mismanagement and sought reliefs by way of permanent injunction against the Jhankar group (i) from diverting the business of the company to their own business and (ii) from acting contrary to the understanding arrived at in the JVA and (iii) to pass orders directing the parties to make offers for buying out the other party's shares even before the expiry of the lock-in period of five years which was to expire on 20.12.2012 and (iv) to direct that respondent No.3 was not capable of being appointed a director of the company.