CAPARO INDIA LTD Vs. CAPARO MARUTI LIMITED

JUDGEMENT

(1.) The company involved in the imbroglio is Caparo Maruti Ltd. (hereinafter referred to as ' the company') . It was set up as a joint venture of three parties, namely, M/s Maruti Udyog Limited (MUL), Caparo India Limited (U.K.) (hereinafter referred to as ' Caparo group') and Mr.M.D.Jindal (Jindal group). The entire shareholding is with these three groups. The authorized share capital of the company is Rs.20 crores comprising 2,00,00,000 equity shares of Rs.10/- each. However, entire authorized share capital is not subscribed. The issued, subscribed and paid up capital of the company is Rs.12.50 crores divided into 1,25,00,000 equity shares of Rs.10/- each. The disputes have erupted between the Caparo group and Jindal group and the MUL is a silent spectator. Caprao group is having its registered office in London and holds 75 lacs equity shares of Rs.10/- each thus, constituting 60% of total paid lip equity share capital. Jindal group has investment in this company through two companies, namely, Machino Plastics Limited (Machino group) and Machino Finance Private Limited. Machino group is a joint venture of Maruti Udyog Limited (MUL), Sujuki Motor Corporation and Jindal group. M/s Machino Finance Private Limited is also controlled by Jindal group. These two companies together are holding 20% of paid up share capital of the company. Remaining 20% is held by MUL. Thus Caparo group is the holding company of Caparo Maruti Limited with 60% share capital and Jindal groups are having 20% equity stakes. It may also be noted at this stage that Caparo group is controlled and managed by Lord Swaraj Paul and family members of Jindal group. Mr.M.DJindal is the head of Jindal group. Mr.Jindal is the husband of Lord Swaraj Paul's sister. These two groups are closely related to each other. It is a different matter that today, unfortunately, the two groups are at loggerheads and there are number of litigations between the parties.

(2.) Coming to the present litigation, Jindal group through Machino group and Machino Finance Private Limited (shareholders of the company) filed, as joint petitioners, CP N0.17/2003 before the Company Law Board (for short 'the Board'), Principal Bench, New Delhi under Sections 397, 398 and 399 read with Sections 402 and 403 of the Companies Act, 1956 (hereinafter called as 'the Act') alleging oppression and mismanagement on the part of the Caparo group. The company was arrayed as the respondent No.1 and Caparo group as the respondent No.2 and the Directors as the respondents No. 3 to 6. Various acts of oppression and mismanagement were attributed to the Caparo group.

(3.) The matter culminated in the impugned judgment dated 19th August, 2004. The Board rejected most of the contentions/ allegations of the Jindal group and thus did not find it to be a case of mismanagement and oppression. However, even while dismissing the petition, the Board still observed that Mr.M.D.Jindal who was founder, promoter and chairman for number of years, feels oppressed and thus gave the direction that in case he is willing to part with his shares, then the company/respondent should purchases the shares on valuation to be made by an independent valuer. Jindal group is dissatisfied with those findings of the Board whereby it is held that there is no oppression and mismanagement. The Caparo group also feels agitated so far as the direction of the Board to it to purchase shares of Jindal group is concerned. Obvious move of both the parties, therefore, was to challenge the impugned judgment dated 19th August, 2004 and consequently both have filed appeals. Co.A(B) No.24/2004 is filed by Caparo group challenging the directions contained in last para i.e. para 24 of the impugned judgment. Co.A(SB) No.25/2004 is filed by Jindal group challenging the findings of the Board on merits of their petition. Since these cross-appeals are against the same judgment, I propose to dispose of both the appeals by this common judgment.