BIPIN VADILAL MEHTA Vs. RAMESH B DESAI

JUDGEMENT

(1.) The applicants, Shri Bipin Mehta and Shri Priyam Mehta, have presented the Company Application No. 113 of 1995 and have taken out the Judge's Summons.

(2.) The prayers in the Judge's Summons can be reproduced thus :

(3.) The Company Petition No. 35 of 1988 has been presented by Shri R. B. Desai and others. The respondent No. 1 happens to be the Secretary of the Company, namely, M/s. Sayaji Industries Ltd. The respondents No. 2 and 3 are, Shri Bipin Mehta and Shri Priyam Mehta, who have taken out the Company Application. The case of the petitioners in the Company Petition is that, they are the Shareholders of the Company, namely, M/s. Sayaji Industries Ltd. and of M/s. Maize Products, one of the units of the said Company and, therefore, they are interested in the proper functioning and the management of the said Company. They feel, more concerned, in particular, for the proper utilisation and application of the funds and assets of the Company. They are also interested in seeing that the funds of the Company are not utilised for private, personal, or collateral purposes. According to them, the respondent No. 1 Company is a Public Limited Company, having their registered office at Kathwada, Ahmedabad. The respondents No. 2 to 11 are the Directors of the said Company. The respondent No. 2 Shri Bipin Mehta, was inducted as an Additional Director of M/s. Sayaji Industries Ltd. on 18/02/1982 and was appointed as a Managing Director on the same day. According to the petitioners, the respondent No. 3 Shri Priyam Mehta was inducted in the management of the Company, right from January 1982. This was so because, the respondent No. 2 Shri Bipin Mehta had acquired large number of shares of the Company from the previous management, under a Memorandum of Understanding (MOU), dated 30/01/1982 (Annexure A) and Memorandum of Modification dated 13/11/1982 (Annexure B). Under the first MOU dated 30/01/1982, there was an arrangement between Shri Bipin Mehta, Smt. Nirmayi Mehta and Shri Priyam Mehta on one hand, and Shri Suhas Mehta and Smt. Chhaya S. Mehta, on behalf of themselves and their minor son Saurabh, on the other hand. The object of this agreement of MOU was to entrust the control and management of M/s. Sayaji Industries Ltd. and M/s. C. V. Mehta Pvt. Ltd. in the hands of respondent No. 2- Shri Bipin Mehta and his son, Shri Priyam Mehta, the respondent No. 3. It was provided under clause 10 of the MOU that, Shri Bipin Mehta, the respondent No. 2 should deposit an amount of about Rs. 40 lakhs with M/s. C. V. Mehta Pvt. Ltd., in order that M/s. C. V. Mehta Pvt. Ltd. would pay back the debts towards Shri Suhas Mehta and other family members. According to the petitioners, this amount of Rs. 40 lakhs was clearly by way a consideration for getting the controlling interest and management of M/s. Sayaji Industries Ltd. and M/s. C. V. Mehta Pvt. Ltd. The said sum of Rs. 40 lakhs was required to be deposited by Shri Bipin Mehta with M/s. C. V. Mehta Pvt. Ltd. as per the understanding. Unless this was done, the acquisition and/or control over the Shares of M/s. Sayaji Industries Ltd. and M/s. C. V. Mehta Pvt. Ltd. could not have been obtained by Shri Bipin Mehta, as per the first MOU. This amount of Rs. 40 lakhs was payable immediately, by Shri Bipin Mehta to Shri Suhas Mehta through M/s. C. V. Mehta Pvt. Ltd. But, according to the petitioners, Shri Bipin Mehta could not, for the reasons best known to him, arrange for the said funds. The obvious result was that, Shri Bipin Mehta could not obtain the control and management of the said two Companies. This had resulted in a request, by Shri Bipin Mehta to Shri Suhas Mehta, seeking the modification of the Terms of Agreement of the MOU. Shri Bipin Mehta had said that, he would pay the said sum in two instalments; one in the sum of Rs. 20 lakhs, pursuant to which, the control and management of M/s. Sayaji Industries Ltd. were to be transferred to Shri Bipin Mehta and his family members. It appears that, this amount was paid and, approximately, 13,000 shares of the Company came to be transferred in the name of Shri Bipin Mehta and his family. The remaining amount of Rs. 19 lakhs (approximately) was required to be deposited by Shri Bipin Mehta with M/s. C. V. Mehta Pvt. Ltd. This was necessary because, M/s. C. V. Mehta Pvt. Ltd. held 9,000 equity shares of M/s. Sayaji Industries Ltd. It was, therefore, absolutely, necessary for Shri Bipin Mehta to pay or deposit the abovesaid amount of Rs. 19 lakhs to or with M/s. C. V. Mehta Pvt. Ltd. within a period of 24 months from the date of the second MOU. It was made clear that, if the above said amount of Rs. 19 lakhs were to be paid, during the second period, Shri Bipin Mehta would get into the management. This would happen immediately on the payment of the said sum.