GIRDHAR GOPAL DALMIA Vs. BELGACHI TEA CO LTD

JUDGEMENT

(1.) THE present two appeals arise out of two company petitions filed before the Company Law Board (which I shall refer to as the "board" in this judgment) under the provisions of sections 397 and 398 of the companies Act, 1956, by a group of shareholders in two companies, the Belgachi tea Company Ltd. and the New Terai Association Ltd. alleging mismanagement of the affairs of the company as well as commission of acts which are harsh, oppressive and burdensome. The two petitions, along with a third petition involving Bateli Tea Company Ltd. , in which the main parties to the present two appeals are the main shareholders, was disposed of by the Board by a common order passed on 22nd August, 2006. There are two cross-objections in respect of these two appeals, and the appellants in A. P. O. No. 44 (concerning the New Terai Tea Association Ltd.) has taken out an application being TA/ 301/07 bringing on record certain facts arising subsequent to the order passed by the Board. I propose to dispose of both these appeals along with the cross-objections as also the application, being TA/301/07 by a common judgment, as they arise out of one order only, and there are overlapping factual and legal issues involved in both these appeals. There are three major shareholding groups in these companies, two of them originally belonging to one Dalmia family, whom I shall describe as G. G. Dalmia group and B. L. Dalmia group respectively, and the other one being the Saraff group. The G. G. Dalmia group are the appellants in those two appeals. There appears to be four branches within the saraff group, but before the Board no conflicting stand was taken by any of these Saraff branches, who have been impleaded as respondents in both these petitions, and they were treated collectively by the Board. Main contest in these proceedings appear to be between G. G. Dalmia group and the Saraff group, the b. L. Dalmia group aligning with the latter.

(2.) BY this order, the Board granted liberty to the B. L. Dalmia branch to purchase the shares in Belgachi Tea Company Limited whereas similar liberty was given to the Saraff group in the New Terai Tea Association Ltd. (These companies shall be referred to in the later part of this judgment as Belgachi and New Terai respectively ). In the case of New Terai, direction was given that the representatives of the appellants in their Board of Directors shall be deemed to have ceased to be Directors with immediate effect, and such Directors were restrained from interfering with the affairs of both the companies. The financial claims of the appellants against New Terai and Belgachi were left to be settled in commercial terms, and the Board opined that in these proceedings the Board was concerned with shareholders' claim and not inter sc corporate claims. The appellants were directed to indemnify the respondents against any claim in respect of Bateli Tea Co. Ltd. and the respondents in turn were directed to indemnify the appellants in respect of any claims concerning Belgachi and New terai.

(3.) AS regards complaint of the appellants over Bateli Tea Co. Ltd. ("bateli" in short), B. L. Dalmia group as also the Saraff Group has been directed to sell their shares to the G. G, Dalmia branch. The Saraff Group was directed to release the G. G. Dalmia branch from the guarantees given in respect of New Terai within two months from the date of receipt of full consideration for the shares held by them in Bateli. The B. L. Dalmia group was likewise directed to release the appellants from the guarantees given by them in respect of Belgachi. In addition, certain consequential directions were issued as regards valuation of shares in Bateli, and also the two companies which form the subject-matter of the present proceeding in the event the B. L. Dalmia group and Saraff group exercised their option. An appeal against the order passed in the company petition involving Bateli has been preferred in this Court, being APOT No. 491 of 2006 and an Hon'ble Single Judge of this Court has been pleased to set aside the order of the Board so far as the same related to Bateli. His Lordship, however, had been pleased to stay the operation of the judgment which was delivered on 16th April, 2007 for a period of four weeks. The appellants herein has filed a petition for Special Leave to appeal against this judgment before the Hon'ble supreme Court of India. On 14th May, 2007, the Hon'ble Supreme Court has been pleased to pass the following order in this Special Leave Petition.