Holding

The Supreme Court held that the High Court Single Judge erred in remitting the entire dispute to the Company Law Board and must decide the three appeals on the CLB’s findings, except for the maintainability issue already settled.

Summary

The case arose from a family dispute between two brothers who were shareholders of a family concern. The petitioners filed a company petition under Sections 397 and 398 of the Companies Act alleging mis‑management and sought to compel the respondents to buy their shares at a price fixed by a valuer appointed by the Company Law Board (CLB). The CLB ordered the sale, appointed chartered accountants to value the shares, and later fixed a price of Rs.6,000 per equity share. Respondents challenged the valuation and the maintainability of the petition, arguing that the petitioners did not hold the requisite 10% shareholding under Section 399(3) and lacked authority to file. The CLB dismissed the petition on maintainability grounds. The Supreme Court, in a 2004 judgment, held that the petition was maintainable because the trust held more than 10% of the shares and the petitioner had authority as trustee. The matter was remanded to the High Court, which erroneously sent it back to the CLB for a fresh hearing, ignoring the CLB’s other findings. The Supreme Court now held that the High Court must decide the three appeals on the CLB’s findings (except the maintainability issue already settled) and may consider the binding nature of the compromise, directing disposal within six months.

Issues considered

The correctness of the High Court Single Judge’s remand of the matter to the Company Law Board after the Supreme Court had decided the maintainability of the petition.
Whether the findings of the CLB on valuation, consent and compromise are binding and should be adjudicated by the High Court.
Whether the parties are bound by the terms of the compromise recorded by the CLB.
Whether the High Court may entertain further contentions relating to subsequent developments.

Legislation cited

Companies Act, 1956s. 397, s. 398, s. 399

Subjects

family disputemismanagementcompany petitionshare valuationSection 399Company Law Boardcompromisemaintainabilityappellate jurisdiction

Judgment

[2008) 12 S.C.R. 1236

l
A J.P. SRIVASTAVA & SONS (RAMPUR) PVT. LTD. & ORS. ,__
)'
V.
H.K. SRIVASTAVA (DEAD) THROUGH L.RS. & ORS.
(Civil Appeal Nos. 54 71-72 of 2008)
SEPTEMBER 3, 2008
B
[ALTAMAS KABIR AND V.S. SIRPURKAR, JJ.] f.. r
.--
Companies Act; Ss. 397, 398 and 399:
Company Petition - Family concern - Mis-management
f
~
c of - Filing of petition ulss 397 and 398 of the Act - Company
Law Board directing petitioners to sell their shares to
respondents after valuati.on of shares - Appointment of
Chartered Accountants to value shares of the company - L
Challenged by respondents - Dismissed by CLB holding
D that the petitioner neither having the authority on behalf of the
II
trust to file petition nor having necessary share holding to be ·j

eligible to file petition - Dismissed by the Single Judge -
Letters Patent Appeal dismissed by the Division Bench of the r-
High Court - Supreme Court remanded the matter to Single l
E Judge holding that appellant had necessary share holding
and authority to file appeal on behalf of the trust - Single
Judge remanded the matter to CLB - Correctness of - Held:
Supreme Court, in its earlier directions directed Single Judge
to decide all the issues in the appeals and to decide upon the
~
F correctness of order passed by CLB excepting the issue of A
maintainability- However, Single Judge remanded the matter ~I
to CLB to decide on all issues afresh - Hence, matter
remanded back to Single Judge of the High Court to decide
the appeals pending before it as directed earlier.
G There was a family dispute amongst two brothers.
~
One of the brothers, appellant filed a company petition in
the year 1995 before the Company Law Board under Ss.
397 and 398 of the Companies Act alleging mis-
management in a family concern by his brother, the
H 1236
J.P SRIVASTAVA & SONS (R. PUR) PVT. LTD. & ORS. 1237
v. H.K. SRIVASTAVA (DEAD) THROUGH L.RS.
~
respondent. The CLB passed a consent order to the effect A
~ that petitioners would sell their shares to the respondents
' for a value per share to be determined by a Valuer
~
appointed by the Board and the value would be binding
on the parties. On June 10, 1996, the CLB appointed a
. firm of Chartered Accountants to value the shares and B
...
f
--\ the firm has determined the value of shares. Challenging
the valuation of shares by the firm, respondents filed
_.. application before CLB. In the meantime, respondent No.8,
legal representative of respondent No.1 filed a petition
before CLB challenging the order dated June 10, 1996.
CLB took the view that the objections raised by
c
respondent No.8 pertaining to the maintainability of the
petition was valid, however, the application was dismissed
by CLB on the ground that the petitioner did not have the
authority of the Trust to file the petition nor did they have
D
shareholding exceeding 10% of the total shareholding to
i ·- be eligible to file the petition. Three appeals came to be
filed against this order of the CLB. One of the appeals
was by the present appellants against the finding of
maintainability, while the other two appeals were filed by
E,
the respondents for recalling order dated 10.6.1996
passed by CLB. All the three appeals were dismissed by
the single Judge of the High Court. Aggrieved, the
appellants filed Letters Patent Appeal, which was
dismissed by the Division Bench of the High Court.
~ Appellants challenged the judgments of the Single Judge F
_.J

as well as Division Bench of the High Court before this
Court. The appeals were allowed by this Court vide its
judgment dated October 26, 2004 holding that appellant
No.3 had the necessary authority to file the petition on
behalf of the Family Trust of respondents and she as well G
_,J_
as the Trust had more than 10% of the share capital of
the Company in control, and as such, there was no bar
under Section 399(3) of the Act and also under the
Regulation 18 of the Regulations for filing the petition
under Sections 397 and 398 of the Act. Accordingly, the H
1238( SUPREME COURT REPORTS [2008] 12 S.C.R.

A matter was remanded back to the Single Judge of the
High· Court. The Single Judge instead of deciding the
appeal, remitted the matter to CLB for decision afresh.
Hence the present appeals.
Appellants contended that Single Judge of the High
B Court has completely ignored the findings given by the
CLB on the questions other than the maintainability of
the petition; that the CLB had categorically found that
the respondents had given consent for settling the matters
amicably and accepting such consent, the CLB had
C passed the final order; that the petition filed by respondent
No.8 was fully dealt with and the objections raised by her
regarding her not even having consented to the
agreement was rejected and her contention for recall of
. i
the order dated 10.6.1996 was also rejected by the CLB. I
D It was only her objection regarding the maintainability
was entertained by the CLB holding that the petition under
Sections 397 and 398 of the Act was not maintainable.
However, since this Court has held the petition· to be
maintainable, the other findings were also very much alive
E in that order; and that appeals were filed before the single
Judge in the first"round of litigation, precisely against
those findings; and that the single Judge of the High
Court was in error in ignoring all these findings and
remitted the matter to CLB for decision afresh in violation
F of directions of this Court.Disposing of the appeals, the
Court
HELD: 1.1This Court upset only the tater part of the
order passed by the Company Law Board, particularly
pertaining to the maintainability of the petition under
G Sections 397 and 398 of the Companies Act on account
of the provision of Section 399 (3) of the Act. It specifically
held in its earlier judgment dated 26.10.2004 that the CLB
had incorrectly held the said petition to be not
maintainable. This Court found specifically that the
H objection regarding the applicability of Section 399(3) of
•
J.P. S~IVASTAVA & SONS (R. PUR) PVT LTD..& ORS. 1239
v. H.K. SRIVASTAVA (DEAD) THROUGH L.RS.

the- Act could not hold water, and it was categorically A
declared that appellant No.3 had the necessary authority
to file the appeaf on behalf of the Trust and she as well as
the Trust had more than 10% of the share capital alongwith
-,I
-;
the appellant. Thus, it is clear that the order of the CLB
only on the question of maintainability was held to be' B
--'. erroneous. No other aspect and the finding in that order
~
were even touched by this Court. .Since this Court
remanded the whole matter to the single Judge of the
High Court before which the appeals against the order of
the CLB were filed, on this background, when the
judgment is considered, it is found that the single Judge
c
has miserably failed to decide ariy questions whatsoever..
(Para - 22) [1251,C-G]
1.2 The single Judge of the High Court has taken a
very· strange view of the matter and has proceeded to D
~-
hold that the CLB had not decided the matter on merits,
and, therefore, the whole matter was liable to be re-
decided by the CLB. The CLB had given the findings on
C.A. No. 264of1997, C.A. No. 302of1997, C.A. Nd. 262 of
1998 as also the objections raised thereto by the E
appellants. It is forthis reason that the order passed by
the ·cLB has been dealt with in great details in the earlier
part of the judgment. (Para - 23) [1252,C-E]
1.3 It cannot be said that the CLB had not decided all
the other matters, since,· it found the original petition to .F
"" be untenable .., This Court, however, desist from dealing
with any other findings of the CLB to which reference .
has already been made: This Court had expected· ttie
single Judge of the High Court to decide all those matters
covered by the appeals filed by both the parties and to G

- ~
decide upon the correctness of the order passed-by the
CLB on ·all the other· issues excepting the issue ol
maintainability, which issue was already finally dealt with
by .this Court in· its _earlier judgment. This Court is,
therefore, of the clear opinion that the matter 'should be H
~

•l
1240 SUPREME COURT REPORTS [2008] 12 S.C.R.

A referred back to the single Judge for de~iding all the three
appeals filed by the respective parties with the time frame.
(Para - 23) [1252,E-G]
1'.4 The earlier order of remand to the single Judge
passed by this Court is reiterated and it is directed that the
8 single Judge of the High Court will now take up all the -
three appeals filed by the parties against the order of the
CLB and dispose of the same in the light of the
observations made in this judgment; that all. the other
contentions would be allowed to be raised and considered
c except the question of tenability of the petition under
Sections 397 and 398 of the Act, which has been finally
decided by this Court in -th-e earlier round of litigation; and
ttiat the parties are also permitted to raise the questions ·
regarding the subsequent developments directly in
D accordance with law and only if they are germane to the
·matter in question. (Para - 25) [1253,E-H; 1254,A]
2. It is clarified that it would be open for the High
~6urt ·to go into the ·question as to whe!her the parties
hereto were bound by the terms of compromise, which
E have been affirmed by the CLB. The High Court would
also be bound to consider the tenability of the appeals
filed by respondents. Group. (Para - 24) [1253,C-D] ·
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
F 5471-5472 of 2008
From the final Judgment and Order dated 27.7.2005 of
the. High Court of Judicature of Madhya Pradesh, Bench at
Gwalior in Misc. Company Appeal Nos. 1 of 2005 (Old No. ~
Company Case No. 5 of 1999) and 3 of 2005 (Old No. Company ~ ·
G Case No .. 7 of 1999) -- ·
Tasneem Ahmadi, Sudhir Kumar Gupta and Mithir Kumar --
Chaudhary for the Appellants. ,,~--- .

Ramesh Singh, An~ur,' Saisgal, gaurav Singh, Rashmi
H- Rekha, Bina Gupta and Ga~ima Prashad for the Respondents.
J.P. SRIVASTAVA & SONS (R. PUR) PVT. LTD. & ORS. 1241
v. H.K. SRIVASTAVA (DEAD) THROUGH L.RS.
1'
The Judgment of the Court was delivered by A
V.S. SIRPURKAR, J 1. Leave granted.
2. A common Judgment of High Court of Madhya Pradesh
at Gwalior in Miscellaneous Company Appeals filed by the
.Respondents herein is in challenge before us. These Appeals B
~ were filed by the Respondents against the order of the Company
Law Board (CLB) arising out of the applications filed by the
appellants herein under Section 397 and 398 of the Companies
Act (hereinafter referred to as 'the Act') alleging niismanagement
of the company by the Respondents. Both the parties have c
already completed one round of litigation upto this Court and
have come up before us in the second round. The factual matrix
leading to the filing of the present appeals before us dates
back to July, 1995 when the appellants herein filed the petitions
under Section 397, 398 of the Act. The fac;ts are as· under.
D
3. This is a family dispute amongst two brothers; namely,
J.K. Srivastava and H.K. Srivastava, both of whom have expired.
Their Legal Representatives are before us. J.K. Srivastava
Group (appellants herein) filed Company Petition No.27 of 1995
dated 1. 7 .1995 before the Company Law Board under Sections E
397 and 398 of the Act alleging that M/s. Gwalior Sugar
Company ltd., which is a family concern, was being
mismanaged by H.K. Srivastava Group.

- -It
4. The Company Law Board, on the basis of the
aforementioned petition and the replies thereto by the
respondents, was initially of the opinion that this being a family
concern, the disputes should be resolved amicably and passed
F

an., order dated 22.1.1996 calling upon the parties t0;:-~rn_ake
efforts for compromise. The relevant extracts of the order are
, as under: G
"In view of the close relationship between the parties, we
suggested to the counsel for both the sides that they should
try to work out an amicable settlement betWeen the parties.
The counsel have undertaken to>dO so.. The result of their
H
1242 SUPREME COURT REPORTS [2008) 12 S~C.R
-;

efforts will be intimated to us on 20 1h February 1996 at
·f
A
2.30 p.m" r•
Thereafter, three hearings took place and ultimately on
7.5.1996, the CLB passed the following order:
. I .

B "It was agreed by the parties that the petiti_oners will sell
their shares to the respondents for a value per share to be · f
·determined by a valuer appointed by us and the value will.
be binding on all the parties. The parties "will approach ·
jointly reputed vaJuers and suggest an acceptable name
c for our 'approval on 30.5.1996 at 4.15 p.m."
5. On 10.6.1996, with the consent of the parties, the CLB
appointed M/s._Thakur Vaidyanathari Iyer &company Chartered
Accountants; New Delhi to value the shares of the Company.
On 22.11.1996, the Chartered Accountants valued the shares.
D As the respondents had reservations about the value, the matter
was re-heard by the valuer and ultimately the value of equity
.,
shares was decided at Rs.6340/- per share. The valuation for
a preference share of Rs.100/- was fixed at par. The respondents
herein objectetj to this valuation also vide their C."/ii. No ..302 of
E 1997._ They also filed C.A. No. 264.of 1997 fer recalling the
order dated ·10.6.1996. Their contention was that the other __ i.....,.---

disputes relating to the family properties in possession of the
petitioners should also be s:ettled. The matter was fixed for
hearing on 6.11.1998.

- ~-- 6. However, before that, respondent no. 8 Mrs. Radhika ~ ,.
Srivastava filed an application C.A. No. 262of1998, challenging-
the. order dated 10.6.1996 and praying for its recall. It was
~arteged in the application that respondent rio. 8 had. no
knowledge of the compromise and thc;it she was kept in dark
-G aboufthe settlement arrived at. She also further contended that I -~

the. petitioh under Section 397 & 398 of the Act was not
maintainable since as per Section 399 of the Act, the petitioner
had. to have 10%~of the total issued share capital which would
include preference sharef~.According to respondent no. 8, the
H, petitroner did not have the shareholding of 10%. Hence the

)~
J.P. SRIVASTAVA & SONS (R. PUR) PVT. LTD. & ORS. 1243
v. H.K. SRIVASTAVA (DEAD) THROUGH L.RS. [VS. SIRPURKAR, J]
_,.."_...,.~
',.
'· petition under. Sections 397 and 398 of the Act before the CLB A
itself was not maintainable.
7. This appli~ation was replied to by the present
appeilants, more particularly, the appellant no. 3 Mrs. Nini
Srivastava, wherein, it was stated that the petition filed before
the CLB under the provisions of Sections 397 and 398 of the B
...
Act was on behalf of the appellant no. 3 herself and also as the
trustee of J.K. Srivastaya Family Trust (ref~rred to as the 'Trust'
~
hereinafter) and since the Trust. had 1029 preferen~e shares
and. since she had an· authority to represent the Tr~st and file
c
petition on.its behalf, the petition was perfectly legal. It was also
contended that the respondent. no. 8 Mrs. Radhika Srivastava
was fully aware of this situation s'ince she had participated in
the proceedings in which there had been 25 hearings over
three and a half years till then. By an order dated 6.11.1998, the
CLB directed the appellants to file the consent/authority; if any D
,. given by the Trust to Mrs. Nini Srivastava for filing the petition
under Section·· 397 and 398 of the Act. On 9.11.1998, the
appellants brought on record an affidavit dated 9.6.1995 and
one affidavit of Mr. V.K. Srivastava dated 12.6.1995 was also
brought on the record. A detailed reply was also .filed to the E
application filed by Mrs. Radhika Srivastava that Mrs. Nini
Srivastava, the 3rd appellant herein, was appointed as a trustee
of the Trust on 24.8.1994 and she enjoyed the authority/consent
to file the petition vide communication dated 9.2.1995 and she

- ..I(
also had the consent of the co-trustee Mr. V.K. Srivastaya as F
per the affidavit dated 12.6.1995.
8. The Company also filed its reply and naturally supported
the respondents contending that since the petitioner was holding
the shares less than 1/1 oth of the issued share capital of the
company, the petition was not maintainable. G
;I.
9. All the three applications (C.A.No. 262 of 1998, C.A.
No. 264of1997 and C.A. No. 302of1997) and the objections
'thereto were heard by and decided by·the CL.Bon 18.1.1999 ..
The CLB took the view that the application C.A. No. 264 of
H
1244 SUPREME COURT REPORTS [2008) 12 S.C.R.

A 1997 was ·liable to be dismissed and C.A. No. 302 of 1997 V· ·
was also liable to be dismissed, however, it arrived at a
conclusion that the proper valuation of the shares would be
Rs.6000/-,per equity share. As far as the third application C.A.
No: 262 of 1998 is concerned, the CLB took the view that
B-· though the other objection~ were without any merits, the
objection pertaining to the maintainability of the petition was
valid,· as the petitioner did not have the authority of the Trust and
the petitioner did not have shareholding exceeding 10% of the
total snareholding. On this ground alone, the CLB dismissed ,._
c the petition filed under Sections 397 and 398 of the Act.
'·. 10. Three appeals came to be filed against this order of
the CLB. One of the appeals was by the present appellants
against the finding of maintainability, while the other two appeals
were by the respondents (herein), whereby their prayer for reca_ll
D. of order dated 10.6.1996 and the finding on the consent was
rejected by the CLB. All the three appeals were dismissed by
the learned $ir:igle Jud~e of the High Court by its order dated
30.6.2000. The learned single Judge upheld the findings of the
CLB. on the maintainability ·01 th~ petition and dl.smissed the
E appeal filed by the appellants. The learned Judge, however,
observed that since the original petition itself was had to be not
maintainable,· nothing survived in the appeal filed by the
respondents he~ein, challenging the other findings of the CLB.
11.. The appellants filedletters Patent Appeal against the
F· order of the learned single Judge. The Division Bench, however,
dismissed the appeal filed by the appellants vide its order dated
10.8.2001 and observed that ~ince the· appellants had filed a
fresh application before the CLB, the CLB should decide the
subsequent application on its merits ignoring the observations
G made by the CLB aswell as the learned single Judge about the
number of. shares held by JhE? Trust, and should f.urther decide
the case on merits.
12. All these appellate judgments of the learned single
H Judge as well as the Division Bench were challenged by the
J.P. SRIVASTAVA & SONS (R. PUR) PVT LTD. & ORS. 1245
v. H.K. SRIVASTAVA (DEAD) THROUGH L.RS. [V.S. SIRPURKAR, J]
~
appellants before this Court and this Court allowed these A
appeals vide its judgment dated 26.10.2004. The Court
-.
specifically held that the third appellant Mrs. Nini Srivastava
had the necessary authority to file the appeal on behalf of the
Trust and she as well as the Trust had more than 10% of the
share capital of the Company in control, and as such, there was B
no bar under Section 399(3) of the Act and also the Regulation
18 for the petition under Sections 397 and 398 of the Act.
13. Accordingly, the matter was remanded back to the
learned single Judge. The learned single Judge, however, came
to the conclusion that the CLB had not decided any other matter c
on merits, since it had taken the view that the original petition ..:--- -
under Sections 397 and 398 uf the Act for mismanagement 6fr
the company were not main.tainable. The learned single Judge,
therefore, without expressing anything, sent back the whole
matter to the CLB by his order dated 27.7.2005. It was observed D
<--
by the learned single Jbldge in his order:
"After hearing both the parties, I find that the Company
Law Board had dismissed the petition on the ground that
it is not maintainable and the said view was upheld upto
E.
the Division Bench. However, now the Apex Court has
taken a different view and held that the petition is
maintainable. From perusal of impugned order, I find that
the Court below has not given any findings on the merits
-t-' .
of the case, i.e., findings about the mismanagement. In
>(
such circumstances, this Court has no option but to remand F
,. -
the matter to the CLB for deciding the matter afresh. At
the time of deciding the matter afresh, the Company Law
Board shall consider the entire record available. At the
time of arguments, it was also pointed out by both the
parties that some subsequent events have taken place G
I j
during the last six years and a fresh petition against the
~ company is also filed which is pending. Under regulation
24, the Company Law Board has to take into consideration
all the events till the date of passing the order."
H
1246 SUPREME COURT REPORTS [2008] 12 S.C.R.

.A Thus, the matter stood remanded further to the CLB. It is
~-against this order of the learned single Judge that the appellants
have filed the. present appeals.
14. Ms. Ahmadi, the learneq counsel for the appellants
strenuously took us through all the orders and firstly contended
B · that the learned single Judge has completely ignored the findings
, given by the CLB on the questions other than the maintainability
of the petition. She pointed ·out that the CLB had very
categorically found that ~he respondents had given consent for
settling the matters amicably and accepting such consent, the.
C CLB had passed the final order. She also pointed out that the
CLB had also fixed the valuation of the shares at Rs.6000/- per
equity share, though the Chartered Accountants appointed by
the CLB had initially fixed the price at Rs,6340/- per equity
share. She also pointed out further that the petition filed by Mrs.
D Radhika Sriv.astava (C.A. No. 262 of 1998) was fully dealt with
an.d the objections raised· by Mrs. Radhika· regarding her not
even having consented to the agreement, was rejected. Her
further contention for recall of the order dated 10.6.1996 was
also rejected by the CLB. It was only her objection regarding
E ·the ma·intainabi1ity, which ~as entertained by the CLB holding.
that the petition under Sections 397 and 398 of the Act was not
maintainable. But, however, since this Court has held the petition
to be maintainable, it is obvious that the other findings were
also very much alive in that order. She further pointed out that
F appeals were filed before the learned single Judge in the first
, roundz precisely against those findings. She, therefore, urges
that the learned single Judge was in error in ignoring all these
findings and refusing to decide the appeals which were against
those findings. The learned counsel carries the arguments
G further and suggests that this Court now should put an end to
the controversy by upholding the order of the CLB regarding
the consent agreement on the part of the respondents. She has
also relied on a number of decisions, which pertain to the effect
of the party even having consent for the compromise.
H 15. As against this, the respondents, however had
'
J.P. SRIVASTAVA & SONS (R PUR) PVT. LTD. & ORS. 1247
v. H.K. SRIVASTAVA (DEAD) THROUGH L.RS. [VS. SIRPURKAR, JJ
-< supported the order of the learned single Judge, saying that all A
the questions were open before the CLB and the learned single
Judge is right in remanding the matter further for re-hearing
and re-decision on all the other questions.
16. On this background, we would have to see as to
whether the learned single Judge was right in making a B
-t
wholesale remand. It would be proper for us to first consider the
order passed by the CLB in details, as it will have. to be
examined as tO whether the CLB has actually not decided upon
any other point excepting the maintainability of the petition as
h~ld by the single Judge in impugned judgment. c
17. In the first two paragraphs, the CLB referred to the
fads of the petition and subsequent settlement arrived at
regarding the sale of shares by the petitioner at a value to be
determined by a valuer appointed by the CLB. lt also referred
D
to the appointment of M/s. Thakur Vaidyanathan Iyer & Company,
Chartered Accountants, New Delhi to value the shares of the
company. In third paragraph, the CLB referred to the presence
of Mr. Vikram Srivastava, Joint Managing Director, respondent
no. 3 as also the per share value arrived at by the Chartered
Accountants as per their valuer report, which was arrived at E
Rs.7031/-·per equity share. The CLB then makes a reference
to the date 5.3.1997, when the counsel for the petitioners
?Ccepted the value determined by the valuer, whereas, the
respondents' counsel had sought some time as also to the

- ~ order dated 18.3.1997, wherein, it was held that the valuers F
should give hearing to the petitioners as also to the respondents
within three weeks. In the fourth paragraph, the CLB then refers
to the written submissions before the valuer as also the revised
report of 8.10.1997 and the ultimate value computed by the
valuer per equity share of Rs.100 each being Rs.6340/-. It also G
j-
made a reference to C.A. No. 264 of 1997 seeking for recalling
the order of the Bench of valuation of the shares and for
abandoning the valuation process and to proceed with the
petition in accordance yvith law. It then made a reference to the
hearing which took place on 15:12.1997, wherein, the request H·
1248 SUPREME COURT REPORTS [2008] 12 S.C.R.

ly.-
A was made by the respondents to file objections to the valuation
report as also to the further developments dated 20.12.1997
etc. and ultimately to the instructions by the CLB; wherein, the
CLB had advised the parties to send notes to the Bench stating
specifically the points on which they had rese,rvations on the
B reports of the valuer, so that the Bench itself could take up the
matter with the valuer. After referring to ttie fact of the parties, f
sending the details of their petitions, the CLB ultimately referred
in this paragraph the possibility of settling the prices between
the parties.
c 18. In paragraph 5, the CLB referred to the contentions of
the respondents about the valuation made by the valuer through
Mr. Vijay Gupta, counsel for the respondents, mainly to the ,-
effect that the valuation was vitiated, as the person who had
done the valuation on behalf of the valuers was earlier a director
D of the Board of a company in which one petition·er was a directo.r.
In paragraph 6, the arguments of the advocate for the petitioner
were dealt with to the effect that the cons·ent terms recorded
was an independent Ol')e without having any connection· with
the disputes between the parties and, therefore, they should be
E independently implemented. The CLB also referred to the
readiness on the part of the petitioners to settle aJI the disputes,
as also to settle the other disputes through arbitration. Th~
CLB also referred to the further arguments that, ·however, the
payment for the shares held by the petitioner should be
F independent of the arbitration. In paragraph 7, the reply on the
)<
part bf the advocate for the respondents was referred to, while ....
in paragraph 8, the CLB referred to the application by
respondent no. 8 being C.A. No. 262of1998 dated 3.11.1998.
It also referred to the fact that replies were permitted to be filed
to the aforementfoned C.A. No. 262 of 1998, and it is ultimately
G
in paragraphs 9 and 10 that the CLB initially dealt with the
applications C.A. No. 264 of 1997 and 302 of 1997. After
considering the arguments in detail, and after referring to the
happenings at the earlier stage of the proceedings as also
after considering a decisi9nof the CLB in Mrs. Michelle Jawad-
H I

I---
>
JP SRIVASTAVA & SONS (R. PUR) PVf. LTD. & ORS. 1249
v. H.K. SRIVASTAVA (DEAD) THROUGH L.RS. [VS. SIRPURKAR, J]
A 1-A 1-Fahoum Vs. Inda Saudi Travels P Ltd. (1988-30 CLA A
42), the CLB observed in the present case also that:
"there is absolutely no reference to the private
understandings between the parties in the order dated
10.6.1996 and the petitioners are not agreeable for any
modification in the said consent order. Once the parties 8
consent to certain terms of settlement and the same is
recorded by a judicial forum, then the parties are bound
. by the said settlement terms. Therefore, there is no scope·
for recalling the order dated 10.6.1996 on this ground."
c
Thereafter, the CLB also rejected the contention raised
on behalf of the respondents that even if the consent terms
were to be implemented by which the respondents would
purchase the shares of the petitioners, then it could be only
after the other disputes between the parties are settled and till
0
such time, no payment need be made for the shares. The CLB
-I t
observed that:
"this argument also deserves to be rejected as no such
-~--- 'reference is found in the order dated 10.6.1996. Further,
after this order, a few hearings took place and at no point E
of time this issue was raised by the respondents".
It further went on to hold:
"Thus it is clear that even if there has been an agreement
to settle the other disputes, it was to be after the shares F
of the petitioners are bought out by the respondents".
The CLB then referred to the proposal. by the counsel of
the petitioners to refer all other disputes to the arbitrator to be
appointed by the CLB and observed:
G
"We think that it is a very fair proposal as the same would
put an end to all the disputes between the parties and a
time frame of 9 months for completion of the arbitration
proceedings should be sufficient and that on expiry of 9
months, the respondents should pay the consideration for H
1250 SUPREME COURT REPORTS (2008] 12 S.C.R.

the shares irrespective of the fact whether the arbitratLon I;...
A
proceedings are concluded or not."
In paragraph 10, the CLB referred to the valuation arrived
at by the Chartered Accountants. The CLB ultimately recorded
a finding:
B
"Thus on the basis ofthe valuation report, we consider ~
that a sum of Rs.6000/- per equity"share would be an
appropriate value for these shares and-Rs.100/~ each for
the preference shares.
c 19. It is then that the CLB considered the objections and
prayers raised by respondent no. 8. i,n C.A. No: 262 of 19.98
including the contention that the· petition under Section 397 arid
398 of the Act was not maintainable as the petitioner did not
hold 10% of the share capital. The CLB firstly held that the
D prayer of the 8th respondent for recall of the order dated
10.6. 1996 on the ground that she was not a party to consent
agreement,
..
had to be rejected .
?O. The CLB took into consideration the various facts that
the respondent no. 8 had kept quiet on large number of hearings,
E
though, her counsel was present all through. It also made a
reference that no explanation was given as to why respondent
no. 8 had waited for nearly an year to presei:it this application
(C.A. No. 262 of 1998), challenging the consent terms.·

F 21. On the second and the main aspect, concerning the
Section 399 of the Act, it was referred'tnat th_~. petitioners holding
· less than 10% of the share capital could not move application
under Section 397 and 39e of the Act. The CLB in paragraph
25 held as follows:
G "Thus, this petition suffers from either one or more of the
following: Consent in writing was not filed along with the -\

petition; The Trust did not, on the day of filing the petition
.control all .the. 1029 preference shares; all the trustees
have not been made parties to the petition and the trustees
H cannot, in law give consent to a co-trustee to file the
J.P. SRIVASTAVA & SONS (R. PUR) PVT. LTD. & ORS. 1251'
v. H.K. SRIVASTAVA
-~· - .
~
(DEAD)
.
THROUGH L.RS. [V.S. SIRPURKAR, J)

petition. If it is so, then the shares held by the Trust cannot A
be taken into account for the purposes of the provisions
of Section 399 and as such without passing any directions
in pursuance to our conclusions at paragraphs 9 and 10,
we dismiss this petition. However, since we ourselves
feel that the correctness of our decision needs to be tested B
on appeal, we also stipulate that all subsisting interim
orders will continue up to 31st March, 1999 so as to provide
for some time to the parties to initiate appeal proceedings.
Petition is dismissed. No order on cost".
22. We have carefully seen and noted that this Court upset C
only the later part of the order, pal'ticularly pertaining to. the
maintainability of the petition under Section 397 and 398 of the
Act on account of the provision of Section 399 (3) of the Act. it
specifically held in its judgment dated 26.10.2004 that the CLB
had incorrectly held the said petition to be not maintainable. D
This Court found specifically that the objection reg·arding the .
applicability of Section 399(3) of the Act could not hold water,
and it was categorically declared that the 3rd appellant (herein)
· .· had the necessary authority to file the appeal on behalf of ttie
Trust and she as well as the Trust had more than 10°io of the E
share capital alongwith the appellant Mrs. Nini Srivastava. Thus,
it is clear that· the order of the CLB only on the question of
maintainability was held to be erroneous. It is to be noted that
no other aspect and the finding in that order were even touched
by this Court. Since this Court remanded the whole matter to F
the learned single ·Judge before which the appeals against the
order of-the CLB were filed, on this background, when we -
~ consider the judgment now passed after remand, by the learned
single Judge, it is seen -that the learned single Judge has
miserably failed to decide any questions whatsoever. The G
parties were at issues on ali the aspects of the order passed
by the CLB besides the finding of the CLB on the maintainability
of the petition. This Court specifically ~eld that the objection
regarding the maintainability, JllOre particularly, raised by the
respondent no. 8 was not te~aole and the petition under the
H
'1252 ' SUPREME COURT REPORTS [2008] 12 S.C.R.

. ~-

A Company Act was perfectly maintainable. This Court had
deliberately not expressed on any other aspect of the matter. A
careful scanning of the order passed by this Court shows that
this Court had decided the matter only on the question of
applfcability of Section 399 (3) of the Act and had come to a
s clear conclusion that the petition under Section 397 and 398.of
the Act was perfectly maintainable: In short, this ·court had left
it to the learned single Judge to decide every other question
dealt with by the CLB in its order, since the appeals against
those questions were pending before the learned single Judge
c: and since those appeals were not decided at the first instance
by either the single Judge or the Division Bench.
· 23. On this background, we find that the single Judge has""-'-
taken a very strange view of the matter and has proceeded to
hold that the CLB had not decided the matter on merits, and,
D therefore, the whole matter was liable to be re-9.ecided by the
CLB. In this behalf, we must point out that the CLB had given
the findings on C.A. No. 264 of 1997, C.A. No. 302 of 1997,
C:A. No. 262 of 1998 as also the objections raised thereto ·by
the appellants. It is for this reason that we have dealt with ttie
E order passed by the CLB in great details in the earlier part of
·the judgment. According to us, ifcannotbe said that the CLB
had not decided all the other matters, since, it had found the
original petition to be untenable. We, however, desist 'from
dealing with any other findings of the CLB to which we have
F already made reference. We refuse. to express anything, since
this Court had expected the learned single Judge to decide all
those matters covered by the appeals filed by both the parties
and to decide upon the correctness of the order passed by the
CLB on all the other issues excepting the issue· of
G ··. maintainability, which issue was already finally dealt with by'this
. Court. in the judgment dated 26.10.2004. We are, therefore, of
' the cfear opinion that the matter should be referred back to the
learned single Judge for deciding all the three appeals filed by
the respective-parties with the time frame.
H 24. As regards the contentions raised by Ms. Ahmadi,
..
'
JP SRIVASTAVA & SONS (R. PUR) PVT. LTD. & ORS. 1253
v. H.K. SRIVASTAVA (DEAD) THROUGH L.RS. [VS. SIRPURKAR, J]
'(,
learned counsel for the appeilants as also the contentions raised A
by the opponents, we have already held that it would not be
feasible for us to consider the merits of the appeals filed by the
f
~
parties against the order of the CL.B. We have pointed out that
in its order, the CLB had considered number of questions raised
by the parties vide their objections and independent B
_. applications filed from time to time. Barring the question of
tenability - which is finally decided upon - this Court had not
considered any other questions covered in those appeals and
had left the same to be decided by the single Judge. We,
..... therefore, would not go beyond the directions of remand, earlier
issued by this Court. That would be neither a proper nor an
c
appropriate course to follow. However, we must clarify that it
would be open for the High Court to go into the question as to
whether the parties hereto were bound by the terms of
compromise, which have been affirmed by the CLB. In that, the
D
High Court would also be bound to consider the tenability of the
"f
appeals filed by H.K. Srivastava Group. We have clarified this
position, as so far there has been no debate on the tenability
of the appeals against the orders effected through compromise.
25. We, therefore, would reiterate the earlier order of E
remand to the single Judge passed by this Court. In that view,
we direct:

(1) That the single Judge will now take up all the three
appeals filed by the parties against the order of the
CLB and dispose of the same in the light of the F
observations made by us·.

(2) This shall be done within six (6) months from the
date of this order reaches the High Court.
(3) All the other contentions would be allowed to be G
,
raised and considered except the question of
tenability of the petition under Section 397 and 398,
which has been finally decide(j by this Court in the
earlier round of litigation.
H
IJ

. ""
1254 SUPREME COURT REPORTS [2008) 12 S.C.R.

'I-
A (4) The parties are also permitted to raise the questions
regarding the subseciuent developments directly in
accordance with law and-only if they are germane to
the matter in question.
The appeals are·disposed of in above terms. There shall
B be no orders as to costs.
R.P. Appeals disposed of.

·~·---·