KAMANI METALLIC OXIDES LIMITED Vs. KAMANI TUBES LIMITED

JUDGEMENT

(1.) This notice of motion is taken out by the respondent- company, Kamani Tubes ltd., the winding up application against which is rejected, under s. 536(2) of the companies Act, for permission, to dispose of the assets of the company or, in the alternative, to disposed of 95,117 equity shares of the Kamani Engineering Corporation ltd. held by the respondents. Obviously there was no urgency so far of the first prayer was concerned, but so far as the alternative prayer was concerned, there was such urgency, because the Kamani Engineering Corporation Ltd. Has issued convertible debentures and the last date for splitting of the right was may 26, 1982, while the last date for applying for the debenture is June 26, 1982. It was contended that the prospective buyer or buyers of the shares may apply for the right debentures in their name or names or may apply in favour or their nominees. It was rightly contended that if the right of splitting is lost, the prospective buyer or buyers would be reluctant to purchase the shares and as respondent no. 1 company cannot itself apply for the debentures for want for funds, the company would be put to loss inasmuch, as after June 26, 1982, the shares would be quoted on ex- right basis, obviously, at proportionately lesser price. We found substance in the contention and hence we heard the matter urgently but as the hearing continued beyond court hours on May 25, 1982, and as some order was necessary before 26th, we passed the operative order reserving the reasons to be given later.

(2.) Before we consider the merits of the objections raised by the appellants, we would like to state a few relevant facts. The appellant-company, Kamani Metallic Oxides Ltd. and the respondent- company belong to what is known as Kamani Group of Companies. The members of the Kamani family own about 80% of the up capital of the appellant-company and 92% of the respondent-company. Since disputes between the members of Kamani Family are referred by virtue of several references, to the arbitration of Shri Viren J. Shah. By an interim award dated April 7, 1981, the arbitrator has directed that all the 3,08,354 shares of the Kamani Engineering Corporation Ltd. held by all the parties to te agreement of reference dated June 29, 1979, should be sold by the committee appointed by the aributrator for that purpose. These shares include the 95,117 shares held by the respondents-company. We were told that there is a firm offer to purchase the entire lot at Rs. 75 per share, on cum-right basis, as against the market price of Rs. 63 per share.

(3.) This appeal arises out of the order by the which the application filed by the appellant-company for the winding up of the respondent-company was dismissed. The application for winding up was filed on the allegation that the respondent-company failed and neglected to repay a long of Rs. 27,84,242.35,as well as interest thereon , aggregating to Rs. 37,29,653.96, despite a statutory notice. before filing the application for winding up the appellant-company filed summary suit no. 349 of 1979, for decree against that respondent-company for Rs. 41,20,999.24 and interest. By consent terms dated November 14, 1980, all the disputes in the suit were referred to the sole arbitration of Shri viren J. Shah. by an interim award no. XII, dated April 9, 1981, the arbitrator has directed the respondent-company to pay sum of Rs. 23,87,000, being the principal amount of the loan to the committee named in the award, certain installments. no doubt some directions in in the award including to one about constituting the committee, to whom the amount is directed to be paid, are under challenge in Arbitration Petition no. 109 of 1981, filed by the appellant-company and its chairman. But the appellants have failed to get a partial decree passed in its favour in Summary Suit No. 344 of 1977, in respect of the amount directed to be paid under the terms of the above-referred award.