Navneet Gupta v. M/s. Bharat Tractors Pvt. Ltd.

PRONOUNCED ON : 07.05.2019 t. The above petition is filed under Sections 247, 242 read with Section 59 of the companies Act, 2013 (the Act) by a sole petitioner having a shareholding strength individually of 500 equity shares of Rs.10/- each fully paid up in the total paid up equity share capital of 2,39,790 equity shares of Rs.10/- each in the 1't respondent company thereby constituting a percentage of O.2tYo, however, it is averred in the petition that he is duly backed by consents in writing of 2O.23o/o of equity shareholding of the 1't respondent company, the consents given being as to that of one Mr. Shiv Kumar Gupta holding 4.17%,lndu Gupta holding 4.38%, shiv Kumar Gupta (HUF) hotdin g 5.84%and Veer Karan Gupta (HUF) holdin95.84% thereby in all aggregating, including as to that of the petitioner to20.44% of the paid up equity share capital of the 1't respondent company and hence satisfying the condition prescribed under Sectio n244 of the Act for maintaining a petition under the relevant provisions.

2. ln relation to the 1't respondent company, namely Bharat Tractors Private Limited (BTpL) it is averred that it was incorporated on 16.12.1999 under the provisions of the Companies Act, 1956 as a private limited company with the Registrar of Companies, Rajasthan having registration no. U292L1R!1999PTCO16054 and that the registered office of the L't respondent company is situated at Gangashahar Road, Bikaner, Rajasthan 334001. The said company it is averred was promoted and incorporated by one Mr Rajendra Kumar Gupta, Mr Mahesh Kumar Gupta and Mr Ashok Kumar Gupta with the main objects as reflected in the Memorandum of Association of the company to the following effect:-

i) To carry on the business of manufacture, traders, agency, marketing in all kinds of tractors, vehicles, motor cars, lorries, trolla, auto rickshaws, agriculture implements and irrigation sYStems. ii) To deal in all kinds of tyres, tubes, fuels, lubricants and allother allied items required and necessary for any vehicles. iii) To carry on the business of repairs, cleaners, stores, warehouse and to run garage , service station, workshop for servicing all kinds of two wheelers , cars, trucks, buses, tractors, jeeps ,tempos, light commercial vehicles, lorries, trolla and auto rickshaws and other vehicles and conveyances and all parts thereof or any of the accessories thereto. iv) To carry on the business in lndia or elsewhere to own, lease, manage, run , establish, install and build, tyre retreding units, painting units, battery service stations, fuel stations, upholstery units, body building units etc and to convert, cure, finish, handle, fabricate, hire, alter, improve, clean, service, repair, shape paint turn, to account, weld, renovate, import, export, buy, sell and equip all description, specification, varieties, size, shapes, dimensions, capacities, a applications and uses of spare parts, components, accessories, fittings, consumables and incidental goods.

3. ln relation to individual respondents who have been arrayed in the petition as respondents no.2 to 9, the following details emerge upon a perusal of the petition including that of their respective shareholding percentages in the 1't respondent company given for easy reference by way of a tabulation: Arrayed as Respondent No ln the petition Name of the Respondent Shareholding percentage Respondent No.10 is a company, Company by the resPondents for Ashok Kumar GuPta Mahesh Kumar Gupta Mahesh Kumar Gupta (HUF) Rajendra Kumar GuPta Rajendra Kumar Gupta (HUF) Anita Gupta Chanda Gupta Ashok Kumar Gupta (HUF) t8.Ls% 2031% 0s.84% t9.21-% 05.84% 04.t7% oo.2L% 05.84% it is alleged, has been incorporated as Private the purpose of giving effect to their unlawful activities and hence impleaded as one and that Respondent No.11 it is contended is a proper and necessary party to the petition as the business of "Hyundai Dealership' in relation to the vehicles of Respondent 11 has been unlawfully diverted to Respondent No.10 comPa nY.

4. The 1't respondent company it is claimed by the petitioner was incorporated on the principles of quasi partnership and that it is a closely held company conducting its affairs as such keeping more and less equal shareholdings among the respective groups and giving proportional representations to all on the board and that the same has been the backbone for the functioning of the company. To this effect it is averred in the petition that subsequent to incorporation of the 1't respondent company in the year 1999, a lease deed dated 11.01.2000 was executed by respondents 2, 3 and 5 in favour of the 1't respondent company for leasing out entire piece of land for the purpose of carrying out the business of the said company with a view to start a dealership with Bajaj Auto Ltd which commenced on 19.04.2000. Subsequently, a dealership it is stated was also commenced in relation to 'Hyundai Car' and the dealership was named as 'Bharat Hyundai', the above said two dealership constituting the entire business of the L't respondent company'

5. However, the Urban lmprovement Trust (U.l.T) in relation to the user of land made available by the individuals raised certain objections vide its letter dated 24.tL.2005 regarding the user for commercial activities of the aforesaid property, leased out to the 1't respondent company, being non-commercial in nature and taking into consideration the said objections and with a view to comply with law, the concerned respondents consolidated the land holdings under lease in order to make it fit for commercial use. While so, on 18.12.20!3, the 10th respondent company came to be incorporated by the respondents in collusion with each other and the said company was defunct till May 2016, and in relation to the L0th respondent company, the directors, it is stated happened to be the 5th and 7th respondents. Further, previously a partnership firm in the name of 'Bharat Tractors' also came to be formed in the year 2001 and that the affairs of the firm was managed jointly by the petitioner along with one Mrs Shaila Gupta and Mrs lndu Gupta till the year 2012, however, subsequent to 2012 the respondents have indulged themselves in mismanagement and harassment of the petitioner.

6. Things being so, contrary to the understanding as between the parties in relation to Bajaj dealership and Hyundai dealership, being carried out since the year 2003, the 2nd and 5th respondents have entered into a Memorandum of Undertaking(Mou) whereby the Hyundai car business of the 1't respondent company was sought to be transferred to the L0th respondent company which seems to be the principal allegation against the respondents, however other allegations in relation to acts of oppression and mismanagement it is avrrrerd is also levelled against the respondents and for sake of brevity the same are being stated concisely under the respective heads under which the allegations have been made against the respondents by the petitioner in the petition, the same being as follows:

i) Diversion of business from 1't respondent to 10th respondent by way of MOU dated 31.05.2015 Hyundai dealership business which was rapidly growing and flourishing and being managed by petitioner herein and the 5th respondent, it is alleged that the 5th respondent with an oblique motive to usurp the said business and also since it came to the knowledge of the petitioner in relation to embezzlement and siphoning of funds by the respondents, ousted the petitioner from Hyundai dealership business of the L't respondent company and instead made him in charge of Bharat Bajaj business being the other dealership handled by the 1't respondent company, which even though was objected to bythe petitioner and other family members, however, to maintain harmony the petitioner continued to look after the said business. Both the dealership, it is averred by the petitioner, had a combined turnover of Rs.60 crores of which Hyundai business was fetching Rs.42 crores and the Bajaj business fetching Rs.1-8 crores in the year 2016. While so, as Hyundai business was flourishing and earning more profit as compared to aajaj business of low profitability, the respondents with a view to oust the petitioner from handling the said business completely took charge of Hyundai business and decided to transfer the said business to the shell company, being the 10th respondent company without the knowledge and consent of the petitioner and as well as other shareholders of the 1't respondent company and the family members. Thus with a view to monopolize the Hyundai business, a Memorandum of Undertaking (MoU) dated 3L't May 2016 had been entered into as between the L't respondent company represented by 2no respondent and the 10th respondent company represented by 5th respondent, whereby the business relating to Hyundai dealership of the L't respondent company is sought to be taken over by the 10th respondent company and that the petitioner did not have any knrowledge of the aforesaid MoU as well as the transfer of business as corntemplated in the assailed MOU as well as the Letter of lntent (LOl) issued by 11th respondent all of which it is contended as illegal. The Extra ondinary General Meeting (EoGM) purported to have been held on 31.05 2016 and two resolutions passed thereat in relation to transfer of Hyundai business and authorizing the 2nd respondent to transfer the dealership of Hyundai are also assailed on the premise that no EOGM was conducted on 31.05.20L6 and even if held, without following due procedure of law. No Board Meeting, it is also alleged have also taken place on the said date. Further, it is also contended that collaterals which had been offered for both the dealership when it was with the 1't respondent company, seems to have been offered as a collateral to State Bank of Bikaner ancl Jaipur even after the alleged transfer of Hyundai business to the 10th respondent to the detriment of the petitioner and other family members which are illegal. Since the transfer of Hyundai business being a transfer of an undertaking, necessarily the procedure under Section 180 of the Companies Act, 2013 should have been followed and a special resolution should have been passed in relation to the same and that the Board of Directors could not have passed such a resolution of which, in any case no notice was given to the petitioner. Further it is alleged that there has been no witness who had attested the MOU. Taking all the above into consideration, the MoU as entered into between the 1't respondent company and the loth respondent it is prayed is to be declared as unlawful and is required to be set aside as sought for in the petition. The efforts of the petitioner it is averred to stop the transfer of business contemplated by the MOU with the Ll-th respondent despite apprising it vide letter dated 28th August 2016 had not been successful as no steps have been taken by the said respondent. The unjustified and unlawful diversion as perpetrated by the other respondents it is contended by the petitioner is detrimental to the interest of the 1't respondent company as well as its financials and that of its shareholders and in the circumstances allthe actions being unlawful on the part of the respondents should be declared as null and void. Misappropriation & Siphoning of funds by the Respondents ln relation to the allegation of misappropriation and siphoning it is stated by the petitioner that even though the petitioner reposed confidence in the respondents as they were holding a fiduciary relationship and contrary to the same, after witnessing suspicious and unlawful activities, verified the financial documents and that the petitioner was shocked and petrified in the manner in which the respondent Broup had been siphoning away the funds of the company. ln this connection, the petitioner alleges that the partnership firm M/s. Bharth Tractors, under the control of Mr. Mahesh Gupta (R3) and Mrs Chanda Gupta (R8) being its partners, had transferred incomes arising out of car insurance incomes in their personal names and infra charges and all such other commissions received by the 1't respondent company into Bharat Tractors, even though the firm is not involved in any activity and had remained dormant since 2001. A similar allegation is also levelled against the 5th and 7th respondents as well as their son, namely one Mr Rajat Gupta and that benefits arising out of car insurance and other bank finance incentives are being taken away to their personal accounts instead of the benefits and incentives accruing to the 1st respondent company as was the case previously, and thus the actions are detriment to the company and its shareholders and all being done without the knowledge and consent of the petitioner thereby showing lack of transparency in the dealings on the part of the respondents in relation to the 1't respondent company and that their malafide intention and unlawful conduct is visible by the above act. Unlawful transfer of shares ln relation to the allegation of unlawfultransfer of shares levelled against the respondents, the petitioner alleges to the effect that 13,500 equity shares which stood in the name of one Smt. Sudarshana Devi, subsequent to her death and she having left behind five sons including 3'd and 5th respondents, instead of her shareholding being equally divided as per Hindu Law ,,amongst her five sons, without the knowledge and consent of the petitioner had chosen to transfer exclusively to the 3'd respondent under the signature of 5th respondent without any due compliance of law and thereby perpetrating unlawful transfer.

7. ln addition to the above allegations the petitioner also alleges that the respondents, being in control of all statutory records and documents of the 1't respondent company, despite efforts of the petitioner to have the same inspected, are not il1, allowing the petitioner to do so thereby leading to an apprehension on the part of the petitioner that the respondents are involved in large scale manipulation and fabrication. Further no notices of AGM/EOGM's are also being issued and also that of Board Meetings, all against the canons of the Companies Act, 2013' Since the 1't respondent company is sought to be treated as their own fiefdom by the respondents and their actions being lacking in probity and there being no efficacious remedy being available to have their grievances being redressed against the acts of oppression and mismanagement complained off and even though it will be just and equitable to wind up the company, however the same being prejudicial to the interest of the company and the petitioner and also other respondents this petition has been filed seeking for the following reliefs:

a) Pass an appropriate orders, relief's directions under section 241 and 242 of the Companies Act, 2013 to bring to an end the aforesaid acts of mismanagement perpetrated by the respondents and for necessary orders and reliefs in respect thereto, including as prayed;

b) Declare the MOU dated 31.05.2016 as being illegal, null and void and thereby directing the business of the Bharat Hyundai business of Bharat Tractors Pvt' Ltd. to be restored back to the respondent no' l- company; Direct the Respondent no. L0 company and other respondents to compensate the respondent No. L Company and/or Petitioner group to the loss caused by way of illegal transfer of business to R-10 company. Direct the Respondent no. 10 company and other respondents to bring back all the income derived and loss caused to respondent company and its shareholders by way of illegal transfer of business to R-10 company. Declare the transfer of 13500 shares to the Respondent No. 4 as being illegal, unlawful, null and void and thereby direct for equitable sharing as per law and thereby pass orders for Rectification of Registrar of Members u/s 59 of the Companies Act, 201.3. Scheme be regulated to run the affairs of the respondent No. 1 company by the Hon'ble Tribunal. To investigate the various acts of mismanagement by respondents in the respondent no. L company and direct the respondents to account and bring back the funds so diverted from the respondent No' 1' company in their personal accounts or otherwise Direct respondent No. 1 company to disburse equal remuneration to all the directors of the company and also allow petitioners to claim any outstanding remuneration or difference in remuneration since 2003. Direct the Respondents to borne the legal expenses for present litigation themselves and not to be reimbursed from the Respondent company. Pass such other and/or further orders be made affording complete reliefs to the petitioner as the Hon'ble National Company Law Tribunal may deem fit and proper.

8. (i) ffre reply of Respondent Nos.5 to 7 & 10 has been filed jointly by these respondents. Perusal of the averments contained in the said reply shows that in relation to both the dealerships, namely that of Bajaj Auto obtained in the year 1999 as well as subsequently of Hyundai Dealership obtained in the year 2003, a claim is made by these respondents that both these dealerships were obtained through the individual efforts of Respondent No.5. lt is further contended that since there were some disputes as between the directors of the 1't respondent company after a couple of years after obtaining Bajaj dealership, Respondent No.5 felt the need for obtaining another dealership and in the circumstances applied and got the dealership of Hyundai dealership and the same was carried under the name of 'Bharat Hyundai' and exclusively managed by Respondent No.5 and the bank accounts were also operated exclusively by Respondent No.5, whereas the Bajaj division was managed by the other respondents. The petitioner being a law graduate and not having much success in the profession and being the nephew of Respondent No.s and son of Mr

V.K.Gupta joined the respondent no.1 company with a share capital of O.27o/o and was also given directorship in respondent no.1 from which however, he had resigned in the year 2007. ln the year 2010 he was again re-inducted into the respondent no.1 company as a director, not with a view to participate in the business of respondent no.1. company but only to enable him to obtain dealerships in some other products for which a directorship in a company was a pre-requisite. Thus, in relation to the role of the petitioner concerning the business of Respondent No.1 company it is contended by these respondents that effectively he did not play any role.

(ii) ln the year 2013, it is averred that in view of the business of Hyundai division doing exceedingly well as compared to the Bajaj division, huge conflict arose between Respondent 5 and his brothers and dispute also arose in relation to the immoveable property on which the two divisions were functioning in view of the excess frontage occupied by Hyundai business of 24fts in excess of the share of respondent 5, jointly owned along with respondents 2 and 3. ln view of the disputes it was decided, as contended by these respondents that Respondent 5 decided to open a new company to handle the dealership of the said business which was also communicated to respondents 2 and 3 and the petitioner and on their consent Respondent No.10 company came to be incorporated on 18.12.20L3. However, the split of the divisions was not carried upon the request of the father of the petitioner and the business was continued as a family with Respondents 2, 3 and petitioner agreeing to respondent no.5 carrying the Hyundai business in the premises where R1 company also happens to be situated. Petitioner upon his desire for getting actively involved in Hyundai business, was allowed with remuneration. Based on a family meeting held, of R2, R3, R5 and the petitioner, it was decided to resolve disputes relating to land and sum of Rs.2.77 crores was decided to be paid by R5 for

24 fts occupied in excess. On 13.05.2016 it was decided by all the directors it is averred for holding a meeting on 29.05.2016 and on the said date, , it is further averred settlement was arrived at between the parties on several key issues including the transfer of entire Hyundai division to R5 which was also agreed to by the petitioner as the settlement bears the signature of the petitioner. Pursuant to the same, a Memorandum of Undertaking (MOU)was signed between R1 company and R10 company represented by its directors which was required to be done for the transfer of business of which the petitioner was aware, to give a formal shape. Based on above MOU and on communication being addressed to R1L by R1 company represented by its director, R11- had transferred the dealership in the name of R10 company. Thus, it is contended by respondents 5 to 7 & 10 that in filing this petition, the petitioner has deliberately suppressed facts, Further there is no illegality involved in relation to Hyundai business being transferred in whole to R10'

(iii) ln relation to allegation of misappropriation and siphoning of funds by these respondents in the petition,, it is contended by the said respondents that the allegations made are unsubstantiated and without any basis and are false and fabricated. No instances have been specifically alleged. These respondents also deny that car insurance benefit and bank finance incentive received by the R1 company was ever used by the said respondents. lt is also contended that unfounded allegations of embezzlement are being made against these respondents as the petitioner is not in a position to make out any case of any oppression and mismanagement against these respondents'

(iv) Finally in relation to transfer of shares of Smt. Sudarshana Devi Gupta alleged to be unlawful, it is contended that the transfer of shares took place with the consent of late Smt. Sudarshana Devi Gupta while she was alive, and in relation to allegations made against R3, these respondents it is represented are unable to answer the same in view of want of knowledge of the same. However, it is also contended that no documentary proof had been adduced to establish that the transfer of share bears the signature of R5. tt is also stated in the reply of these respondents that instead of giving effect to the Family Settlement as arrived at, the petitioner has chosen to file this petition on frivolous basis and this petition is hence required to be dismissed with exemPlarY costs.

9. (i) ln relation to Respondents 2 and 9, a reply has been filed in common by the said respondents perusal of which in a nutshell shows that R1 company was incorporated by R2, R3 and R5 who also happened to be the first directors of R1 company and the joint owners of the land in which the business of R1 is being carried. That the business of R1 company was managed in common by these respondents along with the petitioner since 2000 and out of common funds of the family members which is also evidenced by the accounts of R1 company and not out of the personal funds of a particular family member and that none had particular control over the business of R1 company. Both the dealerships namely Bajaj and Hyundai, were, however obtained through common efforts of all the parties and not out of the sole effort as sought to be portrayed by R5. Disputes as between the parties has been festering since long, particularly between R5 and others, namely petitioner, R2 and R3 in relation to Hyundai dealership. Even though peace was brokered in 2013, however, again disputes arose in view of R5 engaging in grave embezzlement and siphoning of money. ln order to purchase peace amongst the family members it was decided that Hyundai dealership will be looked after by R3 and R5 and Bajaj dealership will be looked after by petitioner and R2. Persistent efforts were taken in the year 2016 to resolve the dispute which did not bear fruit in view of the adamant attitude of R5, arising out of greed and selfish needs however, on 29th May 2016 when a similar meeting was arranged as between the parties, R5 agreed to the terms of settlement of other family members which were laid down during the meeting whereby R5 was required to pay certain amounts to R2, R3 and the petitioner, subject to which it was decided that Hyundai dealership could be managed by R5 made conditional upon the payments agreed by R5. A rough draft of the settlement containing the terms and conditions was signed, to be followed by a formalone on 31't May 2016 and an EoGM and compliances to formalize the division.

(ii) tt is further contended by these respondents, namely R2 and R9 that on 30th May 2016, it came to the knowledge of the petitioner and R2 that siphoning of funds had been perpetrated by R5 involving several crores which was also evident in view of R7 and R10 financials showing to be in affirmative, though not functioning, and hence in view of the same the other family members were not inclined to backthe settlement. However, R5 managed to persuade R2 on false promises and induced R2 being a gullible person to sign the MOU, Lease Deed and the EOGM papers and which R2 did in good faith. Thus on good faith, and in the interest of the family R2 signed, however, the same it is also contended could not have been signed on behalf of the Rl companywithout proper board resolution. ln the reply of R2 & R9, while denying allegations made against R2 by the petitioner in the petition, allegations in relation to R5 and his family members and R10 as made in the petition seemed to be affirmed in the said reply as well as those relating to diversion of business claiming it to be detrimental to the interest of Rl' company and misappropriation and siphoning off funds by R5. However, in relation to the allegations made by the petitioner under the caption 'unlawful transfer of shares' the reply of these respondents denies the same as false and that too vehemently and also avers that in relation to certain facts pertaining to the transfer as stated in the petition, the respondents 2 and 9 pleads that they do not have personal knowledge.

10. (i) A reply in common has been filed by Respondent Nos.3, 4 & 8 wherein it is seen that they are in concord with the reply to that of R2 and R9 and for sake of brevity the same is not repeated, save those contentions which are unique and found in the reply of these respondents. Paragraph 11 of the said reply,details the bank accounts held by R1 company. ln relation to the settlement it is contended by R3 and the other two respondents, namely R4 and R8 that there was no formal settlement, arrived as between the parties, even though an attempt was made on 29.05.2016 to resolve the disputes as between the parties, however, due to dishonest intention of R5 as manifest from the lncome Tax Returns of R7, his wife and their son one Mr Rajat Gupta, it did not take place. Despite there being no settlement, R2 and R5 connived and had the business of Hyundai dealership transferred from R1 company by virtue of a Memorandum of Undertaking to R10 and that no notice was given of EOGM to these respondents and where from it is also seen that in addition to Hyundai dealership, land was also leased out to R1-0 for a period of 11 months, all without the knowledge of the respondents R3, R4 and R8. lt is also contended that the said Memorandum of Undertaking also has been signed on a deficit stamp paper taking into consideration the provisions of Rajasthan Stamp Act as amended as and from 01.04'2016 and in the circumstances the same it is contended as null and void. The EOGM held on 3L.05.2016 is also sought to be challenged for procedural non-compliance in view of the provisions of Companies Act, 2013' ln the absence of a Managing Director in relation to R1 company, it is further contended that all the decisions have been taken by the Board till then, and hence R2 not being authorized, could not have signed the Memorandum of Undertaking independently and in the circumstances there has been a breach of fiduciary duties on the part of R2 and R5. ln relation to the partnership M/s. Bharat Tractors, it is averred that since the year 2001 it has been a non-trading firm managed by the petitioner, Mrs Shaila Gupta and tndu Gupta till 2012. tn relation to siphoning of funds on the part of R3 along with his family by way of insurance incomes in personal names and infra charges and all such other commissions received by R1 company to M/s.Bharat Tractors, the same is denied. ln relation to the allegations of unlawful transfer of shares it is stated that it took place only with the consent of the said Smt.Sudarshana Devi, the mother of Mahesh Kumar Gupta and Rajendra Kumar Gupta. Respondents No'3, 4 & S on their part while concluding the reply to the petition have curiously put forward some prayers on their part seeking the same to be granted.

11. The rival submissions were heard at length and the pleadings as well as oral and written submissions of the respective parties have been considered. ln relation to the competency of the petitioner to file the petition, taking into consideration the miniscule shareholding strength of the petitioner, however backed by consents of other shareholders and as to whether any of the respondents disputes the maintainability on the ground of lack of competency, none of the respondents put forth any objections on the said count and hence we are not delving in relation to the same, namely in relation to the competency with respect to shareholding as prescribed, in order to maintain a petition under Section

244 of the ComPanies Act, 2013 . lZ. The 1,t respondent company from the averments contained in the pleadings of the respective parties seem to be a family company, of which fact there is an unanimity of view what with the parties to the lis, being related to each other as evident from the family chart produced by the parties and which for easier understanding is reproduced below: FAMILY TREE LATE SH. RAM KUMAR JI GUPTA (13.0e.1s98) GUPTA (21.03.2015)& LATE SMT. SUDARSHANA DEVI . Respondent Nos.4, 6 and 9 in the petition happens to be the respective HUFs of R3, R5 & R2 in relation to which each of the said individual respondent happens to be the Karta

13. lt is also not in dispute that R2, R3 and R5 along with the Petitioner happened to be the directors of R1 company till the family settlement. lt is also not in dispute that the land over which the two dealerships, namely Bajaj Dealership and Hyundai Dealership are being run, belongs to only R2' R3 and R5. However, even though a claim is being made by R5 that the Hyundai dealership, the same being the Veer karan GuPta I rattrer Petitioner GrouP S.K. Gupta Petitioner Group A.K. Gupta Respondent No.2 M.K. Gupta Respondent No.3 R.K. Gupta Respondent No.5 Navneet GuPta (Son) Petitioner lndu Gupta (wife) Petitioner Group Nakul Gupta (Son) Chanda Gupta (wife) Respondent No.8 Anita Gupta (wife) Respondent No. 7

3 Sisters all married and settled -Disha (Daughter) -Sanket (Son) Mukul Gupta (Son) Karikaya Gupta (Son) Vinayak Gupta (Son) Rajat Gupta (Son) Ridhi Gupta (Daughter) primary bone of contention herein as between the parties, was exclusively started by R5 and that too out of his own finance, the said contention is not being supported either by R2 or by R3 as evident from the respective replies filed by them and in this respect they seem to support the averments of the petitioner in as much as contending to the effect that both the dealerships were jointly financed out of family funds and managed jointly by all the parties. However, in the year 2013 in view of certain disputes having arisen amongst the parties it is seen from the pleadings that the parties had decided that Bajaj Division will be managed by two of the directors of R1 company, while the Hyundai Division will be managed by the other two directors. ln the year 2016, the parties seems to have arrived at a consensus both in relation to the affairs of the L,, respondent company, as well as in relation to the property on which the business' namely' both the divisions of the 1,t respondent company are being conducted. While it is the contention of the Respondent No.5 that the parties have arrived at a settlement in relation to Hyundai division in as much as both under the Memorandum of Family settlement as signed by the directors of the 1't respondent company and as well as by all the five brothers of the family dated 29'05.2016, wherein it is has been unequivocally agreed that in relation to Hyundai dealership business,, is to be transferred to Respondent No.5 and pursuance of which, with a view to formalize, a Memorandum of Undertaking was entered into dated 31.05.2016 under which the Hyundai dealership business was transferred from R1 company to R10 company, represented by R2 and R5 respectively, however, it is the allegation of the Petitioner' though not in the petition, that Memorandum of Family Settlement as signed by the parties on 29'05'2016 is not a formal one and that the parties have reached only a broad consensus which he was forced to sign for family peace and harmony as brought out in the additional affidavit filed to the reply of the respondents, and that a formal Memorandum of Family Settlement was required to be entered into by the parties and that the division is also required to be approved by the shareholders of the 1't respondent company, which contention it ls seen is also supported by other respondents, save R5 and of his group who have filed a common reply along with him as already seen. ln this connection it is pointed out by the petitioner as well as other respondent groups, save R5 and his group, that the procedure under Section 186 of the Companies Act, 2013 is required to be followed and approval of the shareholders of R1 company is required to be obtained, as whole of the undertaking is sought to be transferred, namely, that of Hyundai Dealership Business or Division, which it is pointed out has not been obtained in accordance with law and in the circumstances in the absence of any formal agreement between the family members of the settlement as well as in the absence of procedural compliances as contemplated under the Companies Act, 2013, the transfer cannot be considered as legal. 74) Neither at the time of moving the petition nor in the petition, the petitioner had stated about any understanding, be it formal or informal , and as rightly contended by Learned Counsel for Respondent No.5, even though there indeed has been an understanding as between the parties, by way of two documents broadly termed as the First Family Settlement and the Second Family Settlement both dated 29.05.201.6. While the former had been signed by allthe directors of R1 Company, including the Petitioner, the latter has been signed by all the brothers, being the family elders of the respective family groups. While it is the contention of R5 that nothing more needs to be done for the division of Hyundai Business ,as well as in relation to the immovable property which had been leased to the R1 company by the owners of the land arrd in furtherance of the said two Family Settlements the parties have also chosen to act, which according to R5 reinforces the understanding between the parties, the same is sought to be objected to by the petitioner and as well as other respondents, save R5 and of his group, that in the absence of a formal document in relation to the family arrangement and more so in relation to the transfer of business from R1 company to RL0 company, it amounts to an act of diversion of business on the part of R5 and R2 thereby constituting a breach oftrust on the part ofthese respondents holding a fiduciary position in relation to R1 company and thereby constituting an act falling within the four corners of Section 24L of the Companies Act, 2013 under which this petition has been filed. Across the bar, on behalf of the petitioner as well as respondents R2, R3 and R5, Learned Counsels appearing for these parties have chosen to cite several decisions of both the Apex Court as well as the predecessor of this Tribunal, namely Company Law Board, as to the circumstances under which a family settlement arrived at between the family members in relation to the affairs of a family company should be upheld or otherwise by courts. The plethora of decisions cited in this connection and reading of the same in detail in itself offers a fascinating insight as to how the judicialforums have sought to grapple with the age old concept of joint family businesses carried on jointly by the family members of a particular family, based on the principles of a patriarchal structure , particularly still prevalent even amongst top business families of the country on the one hand, being extrapolated and juxtaposed into carrying of one or more of their businesses with the very same family structure into the framework of joint stock companies, being a concept alien and introduced by European countries during the course of colonization of this country which entities are primarily incorporated and regimented by laws specifically enacted for this purpose, say by the Companies Act. Thus, in the case of a dispute between the family members which also spills over into the businesses which they carry through the instrumentalities of different entities, including the vehicle of a company as in the present instance, and to resolve such dispute as between the family members, which also touches upon the business entity including a company and in the case of settlement arrived by the family members, the credence, if any, to be accorded to such settlement depending on the facts and circumstances of a particular case, as already stated, has been cited by the parties and on the part of the petitioner, the following decisions are canvassed to emphasize the point that in the present instance the Memorandum of Family Settlement arrived at should not be given credence to , namely:- Reliance Natural Resources Ltd Vs. Reliance lndustries Ltd MANU/SClO34LlzOtO Dr S.S.Agarwal and others Vs. Rajasthan Hospitals Ltd and Ors MANU/CL(OO36/2010 Dr G.L.Purohit Vs. Dr S.S.Agarwal and others in C.A.No.646 of 2008 in C.P.No.53(ND) of 2:008 order dated 05.08.2010 & 23 15) With a view to buttress the arguments of the Petitioner in this regard, Respondents 2 and 3 on their part have also cited certain decisions which are as follows:- Shanti Prasad Jain Vs. Kalinga Tubes Ltd AIR 1965 SCC 1535

V.B. Rangaraj .V. V.B.Gopalakrishnan AIR 1992 SC 20L Chatterjee Petrochemical Ltd .V. Haldia Petrochemicals Ltd MANU/SC/L1,49120L]i 16) However, on the other hand according to the 5th respondent that credence and sanctity should be accorded to the understanding as arrived at between the family members, and Memorandum recording the Family Settlement dated 2g.05.201-6 being a record of such an understanding and in this regard the following decisions are being cited:- Hansa lndustries (P) Ltd Vs. Kidarsons lndustries (P) Ltd (2006) 8 scc 531 Hari Shankar Singhania and others Vs. Gaur Hari Singhania and others (2006) 4 SCC 658 Kale Vs. Deputy Director of Consolidation (1976) 3 SCC 119 I7l tn the case of Reliance Natural Resources Ltd Vs. Reliance lndustries Ltd MANU/SC/O3 L|ZOLO as cited by the petitioner, it is seen that the provisions involved therein was that of Section 391-394 of Companies Act, 1956 and in relation to a Scheme by way of Arrangement as framed thereunder and one of the issues which arose for consideration in the said case was as to whether the terms of MOU entered into amongst the family members of the Promoter was binding upon the corporate entity - RIL which was opposed by it i.e. RlL, as compared to the stand taken by RNRL that the MOU as signed between Mukesh Ambani and Anil Ambani as well as their mother is binding on the entities, taking into consideration the importance of family arrangement (MoU) and its effect and value as espoused by the Apex Court itself in the decisions cited on behalf of RNRL, as well as taking into consideration the Doctrine of ldentification as projected by RNRL that Mr Mukesh Ambani being a party to the MOU and was and is also Chairman and Managing Director of RlL, his actions should be deemed to be action of RIL itself and RIL is deemed to be aware and bound by the actions of the Managing Director, and further the terms of the MOU between the mother and two brothers are required to be incorporated in the GSMA as held bythe Division Bench of the High Court. The Hon'ble SC after consideration of its own judgement on earlier occasions on the said point had gone on to answer the aforesaid issue at paragraphs 35 to 37 of the said judgement which is as follows:- companies have more than three million shareholders, in such a situation, one cannot make the companies personality the same as that of persons involved.

36. xxxxxxx

37. xxxxxxx 18) A careful perusal of the above paragraphs in the RIL Vs. RNRL case, even though passed in relation to a Scheme framed under Section 391 to 394 of the 1956 Act, as between two widely held Public Companies and hence the decision can be distinguished on the same as compared to the present one filed for redressal of oppression and mismanagement, however, brings to the fore that in relation to the applicability of the terms of the MOU as arrived at between family members being the promoters of a corporate entity, a distinction is sought to be made as between small undertakings on the one hand as compared to widely held companies, say RIL or RNRL and that while in the former i.e. small undertakings,

35. Firstly, the MoU is not technically binding between RIL and RNRL. [t is not in dispute that MoU is between three persons and the personality of the company must be construed separate from these persons' The principle emphasized by Mr. Jethmalani i.e. Doctrine of Identification may be applicable only in respect of small undeftakings but in the case of' RIL and RNRL, the the Doctrine of ldentification as projected by RNRL may be applicable, but not in the later. However, even in the latter case it has been held the MOU can be looked into as an external aid for the purpose of construing 'suitable arrangement' under the scheme and can be adopted as one of the ways for construing the scheme but not necessarily to be the only means to construe it as other aspects are also required to be looked into, namely government policies and regulations etc..,. Thus as rightly contended by the Ld.Counsel for R5, the above judgement of the Hon'ble Supreme Court, sought to be relied on by the Petitioner, does not enunciate a complete embargo, on the terms of the MOU as arrived at between the parties herein, particularly in relation to small undertakings being taken into consideration based on a family settlement on the the principle of Doctrine of ldentification. Further, it is pointed out from the said decision that the Hon'ble Supreme Court has gone on to hold that even in the case of widely held companies, a family settlement can be suitably taken into consideration for gathering the intention behind a scheme framed between two companies' ln light of the above discussion, we find that the decision of RIL Vs. RNRL cited above does not support the cause of the petitioner and on the other enunciates a principle that in the case of smaller undertakings, the Doctrine of ldentification can be applied to ascertain the arrangement as arrived at amongst or between the parties ., 19) Proceeding to the next decision cited by the petitioner namely Dr S.S.Agarwal and others Vs. Rajasthan Hospitals Ltd and Ors MANU/CL/OO36|2O1O and Dr G.L.Purohit Vs. Dr S.S,Agarwal and others in C.A.No.646 of 2008 in C.P.No.53(ND) of 2008 vide order dated 05.08 .20i:0, both the citations individually seems to be referring to the same order as passed by CLB. lt is gathered from the said decision upon a perusal that the same can be distinguished on facts in as much as from the facts as disclosed therein it is seen that the MOU had been signed only between two of the parties to tltt:1i:; and not by all the parties and in the circumstances reference in case of a dispute to arbitration as provided in the MOU, it was held will not be a deterrent for the petitioners therein to approach under the provisions of erstwhile Companies Act, 1956 in relation to relief for oppression and mismanagement which plea seems to have been accepted by the erstwhile Company Law Board and thereby allowed the petition to proceed. However, in the present instance that seems to be not the case,, as from the two Family Settlements, it is seen it has been arrived at amongst the parties defining their mutual rights and obligations vis-i-vis the 1't respondent company as recorded therein to which it is seen that the parties have also put their signatures in one or more of the Family Settlement thereby clearly indicating the division, namely Bharat Hyundai division to R5, of the R1 company and the remaining division to be managed by R2. Before proceeding to deal with the citations on behalf of R5, it will be appropriate at this stage to refer to the terms of the 2 Family Settlements, recording the terms of settlement as between the parties to better understand their intention and for ready reference are reproduced hereunder: First Familv Settlement signed bv the directors of R1 Companv. namelv Petitioner.R2, R3 and R5. We, Ashok Kumar Gupta, Mahesh Kumar Gupta and Rajender Gupta sons of Late Sh. Ram Kumar li Gupta and Navneet Gupta s/o Sh. Veer Karan Gupta are all Directors of M/s Bharat Tractors Pvt Ltd. At present, this company has got dealership of Hyundai cars and Bajaj Motorcycles. We all the four Directors of this company settle all our disputes pertaining to business dealings with mutual consent as per following manner: The Directors- Mahesh Gupta and Rajender Gupta of this M/s Bharat Tractors Pvt' Ltd. company will leave the post of "Director" and the company on the following conditions. Only Bajaj motorcycles dealership will remain with the company and this company will leave the dealership of Hyundai cars and this company will issue the NOC for Hyundai dealership in favour of Rajender Kumar Gupta and necessary proposal will be sent to Hyundai company in this regard stating that dealership be given to a newly formed company/partnership by Rajender Gupta. B. The shares of the company M/s Bharat Tractors Pvt. Ltd which are in the name of Rajender Gupta and Mahesh Gupta and their HUF and their wives and sons will be purchased by Ashok Kumar as per their book value and get the same transferred in his name. The capital gains tax levied on this transaction will be borne equally (half and half) by the purchaser and seller of the shares. C. At present, the accounts of Hyundai cars and Bajaj motorcycles division is separately maintained. The liabilities and assets of both these divisions is also maintained separately. Till the finality of aforesaid division, all the liasioning, assets, profit-loss of Hyundai division will be the responsibility of Rajender Gupta and that of Bajaj Division will remain with the present company'

2. The land beneath Hyundai division and Bajaj division is registered in separate names of Ashok Kumar, Mahesh Kumar and Rajender Kumar. At present, the land beneath Hyundai division is owned by Mahesh Kumar who will gift it to Rajender Kumar and the registration expenses of Gift will be borne/incurred by Rajender Kumar. Similarly, land measuring 25' x 57'9 beneath Hyundai division is owned by Ashok Kumar and land measuring 25' x 57'9 beneath Bajaj division is owned by Rajender Kumar' Both these saidlandwillbegotexchangedinbetweenthemand after completion of exchange process, the land beneath Bajaj division will be owned by Ashok KumarandlandbeneathHyundaidivisionwillbe owned by Rajender Kumar. Similarly, the balance land 1L'x 57i9 owned by Rajender Kumar will be gifted by him to Ashok Kumar and the registration 6*p"nt"t of Gift will be borne/ incurred by Ashok Kumar.

3. After the transfer of land as above rroted, the ownership of underground land beneath Bajaj division will be owned by Ashok Kumar' But as per agreement, in the above noted underground level w-herein Bajaj division work is going on will remain in the posseslion of M/s Bharat Tractors Pvt Ltd with aconditionthatBTPLwillusethisundergroundland for their automobile business only and will neither give it on rent to anybody nor get it transferred and[ne passage to this underground level will be through eTpL in the ownership and possession of BTPL

4. The passage to western-north route to the workshop frominsidetnepassageofHyundaidivisiononthe northern side is from the land owned by Ashok Kumar and some part of Bajai division workshop is owned by Rajender Kumar. These will remain as it is but the ownership of land will be got exchanged'

5. Besides the above, BTPL will take out separate passage from its land for going to its roof owned by

6. That there is one claim of Rs. 3 lacs on Punjab National Bank which is pending adjudication and on getting that claim BTPL will give that claim amount to Rajender Kumar.

7. Similarly some cases concerning Hyundai division are pending before the courts. All the responsibility pertaining to them will lie within Rajender Kumar' Ashok Kumar GuPta Mahesh GuPta Rajender GuPta Navneet GuPta - 29.5.2016 - 29.5.2016 - 29 .5 .2016 - 29.5.2016 20)WhiletheabovesettlementseemstopertaintothedirectorsoftheRlcompany, namely petitioner and R2, R3 and R5 who had affixed their signatures on 29'05'2016' other settlenrent seems to bear the signatures of all the five brothers of the family' namely R2, R3 and R5 aS well aS the father of the petitioner, namely Mr veer Karan Gupta as well as Mr s.K.Gupta and in order to understand the context and the compromise arrived at between the members of the family the same is also reproduced for ready reference:- and Mr.S.K,Gupta Consentee to the Petition' We, Veer Karan, Shiv Kumar, Ashok Kumar, Mahesh Kumar and Rajender Kumar are all sons of Late Sh' Ram Kumar Gupta. Through this family Agreement/ Settlement, we have decided that: -

1. Sh. Shiv Kumar Gupta had sufficiently helped his brothers- Ashok Kumar Gupta and [lainslt Kumar Gupta incurring expenses at regular intervals as per their requirerients. He will be paid Rs' 47 '5O lacs by Ashok Kumar, Rs. 47.50 lacs by Mahesh Kumar and Rs' 5lacs Rajender Kumar'

2. Navneet s/o Sh' Veer Karan will remain Director in M/s Bharat Tractors Pvt. Ltd. In case, Navneet is removed from the directorship or he himself leaves, then at that time Ashok Kumar will pay Rs' 75 lacs to Navneet' 3.ThereisonecarregisteredinnameofM/sBharatTractors PvtLtd'BearingregistrationNo.RJ-07-0043whichwillbe transferred to Mahesh Kumar free of cost'

4. Rajender Kumar will pay Rs' 1'80 lacs to Nakul and Rs' t.Bb lacs to Navneet through cheques as salary but the previously given cheque to Navneet will have to be returned to Rajender Kumar' 5.MaheshKumarwillretaintheDirectorshipofBTPLas beforeorforthreemonths,whicheverexpiresearlierand takeremunerationasalreadyreceived.Inthisway, Mahesh Kumar will keep receiving the remuneration and benefits as previously fixed till 31'08'2016' One plot in the name of Bharat Decors is situated at Cungunugur Road in Bikaner which will be of Mahesh fu."ul. iritieu of which he will pay Rs' 25 lacs to Ashok Kumar. As per this Agreement/ Settlement, Ashok Kumar Gupta will pay Rs. 1 crore 97 lacs 25 thousand to Mahesh Kumar Crpir'und Ruj"nder Kumar will pay Rs' 2 Crore 77 lacs

75 thousand to Mahesh Kumar' Aperiodofthreemonthshasbeenfixedforthefulfilment/ execution of above stated terms of the agreement' Today, Rajender kumar is giving one cheque of Rs' 25 tacs through one cheque to Uahesh Kumar and Ashok Kumar is Jlso paying Rs.25 lacs through one cheque to Mahesh Kumar. Veer Karan GuPta - 29'5'2016 Shiv Kumar GuPta - 29'5'2016 Ashok Kumar GuPta - 29'5'2Ot6 Mahesh Kumar GuPta - 29'5'2016 Rajender Kumar GuPta- 29'5'2016 We the undersigned have mutually arrived at a family settlement today on 29'05'2016 at the residence of Rajender Kumar Gupta and have executed a written ugiu"rn"nt to the same effect' Now, no dispute relatingi;*y business dealing is pending.prior to this date' This settlement is done with the mutual consent of all and we all are satisfied with it'

1. Veer Karan GuPta2. Shiv Kumar GuPta

3. Ashok Kumar GuPta4. Mahesh Kumar GuPta

5. Rajender Kumar GuPta Gouri Sankar Dhin Sain Jain Shiv Shankar GuPta 29.5,2016 29.5.20t6 29.5.20L6 29.5.2016 29.5.20t6 2l) perusal of the above said two family settlements and taken in tandem shows that in both the family settlements dated 2g.05 .2076, the pre-dominant subject matter dealt with concerns the affairs of the 1't respondent company. While in the first of the family settlement reproduced above, the directors of the first respondent company are parties including the petitioner, in relation to other Family Settlement of the same date, namely 29.05.2016 all the five brothers including Mr S.K.Gupta being one of the consentee to the petition which had enabled primarily the petitioner to move this petition are parties. Despite the same, the petitioner seeks to represent that since he is not a party to the second of the family settlement wherein only the five brothers have affixed their signature and in so far as the other family settlement in which the directors of the 1't respondent company alone is a party and not the other family members, the same cannot be treated as a family settlement and that there need to be a formal document wherein all the members of the family are to be made parties including the shareholders who also happens to be family members. This argument of the petitioner, we find it paradoxical for the reason that the family elders of the respective individual families have affixed their signature to the Memorandum recording the Settlement between the family groups as given in the earlier portion of the order and in addition the directors of the 1't respondent company have also affixed their signature to the other Memorandum, both taking note of the division of business. While the petitioner has affixed his signature to one of the Memorandums, his father has affixed his signature to the other Memorandum which in addition to the clauses contained in relation to the affairs of the 1't respondent company also records certain other properties as well in relation to which the petitioner's father may be concerned but not the petitioner. This cannot be used as a ruse by the petitioner to overturn the family settlement arrived at between the parties in relation to the disputes which even according to the parties had been festering for a considerable time. The attempt on the part of the petitioner to assail the family Settlements based on the affidavit of witnesses filed before this Tribunal along with the additional affidavit filed by the petitioner to the effect that no settlement took place clearlyevidencesthatthewitnesseswhohavetosoughttogivesuchanaffidavithastriedtooverreach themselves as the witnesses are basically called upon only to attest the veracity of the signatures which have been affixed to the documents and not the contents ofthe documents per se as contended in the additional affidavit of the petitioner dated 25.01.2018. ln any case, the affidavits are also not found as claimed to have been annexed as Annexure 41 and instead between pages 25 to 80 of the said additional affidavit filed by the petitioner contains only FlRs which have been annexed marked as Annexure AL'

221 lnthis connection the decisions in relation family understandings cited by the 5th respondent in support of the refrain that a family settlement should be accorded sanctity by the courts' if there is one as between the parties, is required to be noted. The Apex court in the matter of Hari shankar singhania

V. Gaur Hari singhania (2006) 4 scc 65g had occasion to deal with family arrangement/family settlement and as to how it should be accorded a treatment differently as compared to any other formal commercial settlement, after considering several of its own earlier decisions including that of Kale v' Dy'Director of Consolidation (1976) 3 SCC 119 cited in this regard, at paragraphs 42 and 43 of the said judgement which is to the following effect:-

42. Another fact that assumes importance at this- stage is thai, a family settlement is treated difierently fro* any other formal commercial settlement as such settlement in the eye of the law ensures peace and goodwill among the fomily memberi. Such family settlements generally meet with approval of the courts' Such settlement are gover;;d by a special equiQ principle where the "terms are.foir and bonafide, taking into account the well being of afamilY.

43. The concept of "family aruangement or settlement" and the present one in hand, in our opinion, should be treated dffirently' iechnicalities of limitation, etc. should not be put at risk of the implementation of a settlement drawn by a family, which is essential for maintaining peace andha.rmonyinafamily.Alsoitcanbeseenfrom decided ,iru, 'f this Court that' any such arrangementwouldbeupheldiffomilysettlements wereenteredintotoallaydisputesexistingor apprehended and even any dispute or dffirence apart,ifitwasenteredintobonafidetomaintain peace ir to bring about harmony in thefamily' Even a semblance of a claim of or some other ground' as say affection, may sffice as observed by this Court in Rim charan Das vs. Girianandini Devi AIR 1966 SC 323 ?.)) A similar view is echoed by the Hon'ble supreme court in relation to family arrangement or settlement in Hansa lndustries (P) Ltd and others Vs. Kidarsons lndustries (P) Ltd (2006) S scc 531 where the facts confronting the Apex court was in reration to a famiry settrement wherein it was agreed by a person to transfer his equity shares constituting a certain percentage of the share capital of a company in favour of other shareholders in lieu of transfer of an equal percentage of the assets of the said company to him accompanied with a marginal payment if found necessary taking into consideration the valuation of shares of the company. ln view of inter-se relations being acrimonious and strained' the Apex court while upholding the family settlement relying upon its earlier decision in Kale v' Dy'Director of consoridation (j.976) 3 scc 119 wherein the Hon'bre Supreme court had extracted with approval a passage appeanng rn Kerr on Fraud in relation to family arrangements being governed by a special equity peculiar to themselves if honestly made and although not been meant as a compromise' but have proceeded from an error of all the parties, originating in mistake or ignorance of fact as to what their rights actually are, or of points on which their rights actually depend, at paragraph no'13 of the said judgement goes on to enunciate the position of a family arrangement again referring to Kale's case as follows:-

13. This Court held that the courts have leaned in favour of upholding a family arrangement- ii*ri"od of diituriing the same on technical or trivial groundr. Where the courts find that the family "orrrng"*ent suffersfro* a legal lacuna or aformal defect the rule of estoppel is pressed into service ora f, applied to shut out the pleo of the personwho being o parQ to fomily arrangement seeks t: unsJtle i settled dispute and claims to revoke the fomily arrangement under which he has himself enjoyed some material benefits' The principles were cincretized and succinctly reduced to the following propositions; (SCC pp- 126-27, para 10) " 10. (t) The family settlement must be a bona fide onesoastoresolvefamilydisputesandrivalclaims by o fair and equitable division or allotment of iropirtt"s betwien the various members of the family; (2) The said settlement must be voluntary and 'siould not be induced by fraud, coercion or undue influence. (3) The family arrangement may be even oral in which cQSe no registration is necessary' (4) It is well settled the registration would be 'n"""rrrry onlY ,f the terms of the fo*ilY arrangement are reduced into writing' Here also' a distinition should be made between a document contoining the terms and recitals of a family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made either for the purpi" of the record orfor information of the court 'for'makiig necessary mutation' In such a case the memorandumitselfdoesnotcreatet;l'extinguish any rights in immtovable properties and therefore di"t iot fall within the mischief of Section 17(2) (sic)(Section l7(1)(b)?) of the Registration Act and is, therefore, not compulsorily registrable; (5) The members who may be parties to the family arrangement must have antecedent title, claim or interest even a possible claim in the property which is aclcnowledged by the parties to the settlement' Even if the other party relinquishes all its claims or titles in favour of such a person and aclwtowledges him to be the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld and the courts will find no dfficulty in giving assent to the same; (6) Even if bona fide disputes, present or possible, which may not involve legal claims are settled by a bona fide family arrangement which is fair and equitable the family aruangement is final and binding on the parties to the settlement. 2'3\ Thus taking into consideration the above decisions rendered by the Apex Court consistently in relation to a family settlement/family arrangement where in effect the Hon'ble Supreme Court has advocated the principle despite a legal lacunae or a formal defect being noticed as sought to be portrayed by the petitioner and the other respondents save the fifth respondent, the family settlement are required to be treated with soft gloves by applying the special equity principle as it results in saving the family as a whole from inter-se disputes and acrimonious relations but on the other hand promotes peace and harmony in the family. Further it is also required to be noted that under the provisions of Section 24L and Section 242 the jurisdiction exercised by this Tribunal is that of a ' just and equitable' jurisdiction what with the whole of the provisions being punctuated and permeated with it and which concept it is required to be noted is somewhat alien to civil courts bound by strict application of rules and procedure, barring a few exceptions, and even in relation to the same the Apex Court as already seen had laid down the application of special equity principle to be followed while confronted with family arrangement/settlement. Thus we do not find any merit, taking into consideration the nature of the 1't respondent company, being a small undertaking owned by families having a common ancestor, in order to put an end to their festering and acrimonious disputes having entered into two family settlements, one in relation to the affairs of the 1't respondent company and the other also involving inter alia in relation to the 1,t respondent company and its affairs and recording it by way of memorandums, to which signatures have also been affixed by the heads of the respective family groups being shareholders in the Lrt respondent company as well, or as the case may be and by all the directors of the 1't respondent company in the other, thereby identifying themselves , in the absence of a managing director of the L't respondent company, to such a family settlement thereby warranting the application of 'Doctrine of ldentification' and effectively binding in the process the 1't respondent company of such family settlements dated 2g.05 .20L6. Further as rightly contended by R5, the parties it is seen have also acted in furtherance of the said family settlements, including the petitioner by receiving his salary from Bajaj Division till 31.0g.20i.6 which have not been denied. Further it is also brought to the notice of this Tribunal that R2, R3 and R5 along with the consentee to the petition, namely Mr S'K'Gupta have also further entered into an arrangement dated z3.to.2ot6, pursuant to the family settlements dated 29.05.2016 in relation to the inter-se payments to be made as contemplated under the earlier two family settlements' ln the circumstances the parties are required to act and abide by the family arrangements, be it the petitioner or the respondents or for that matter the persons who have consented to filing of the petition and cannot seek to assail it based on technical grounds or legal lacunae as sought to be portrayed by the petitioner. Terms of the family settlements clearly discloses upon a combined reading of it that the parties have clearly spelt out as to how the Bajaj Division and the Hyundai division are to be dealt with and as to how the consideration are required to be paid after valuation. Further the two family settlements also specify as to how the interest of the Petitioner is to be dealt with. ln the circumstances the petitioner as well as the consentees who seems to have instigated the Petitioner to file the Petition, which is clearly evident from the manner in which the family settlements are sought to be dismissed offhand on technical pleas, that too after affixing their signatures all of which are required to be highly deprecated' lndividual rancour arising out of non-compliance by some of the parties to the family settlement cannot lead the petitioner or for that matter the consentees to approach this tribunal under the guise of a Petition under Section 24L1242 of the 2013 Act on the grounds of oppression and mismanagement ' Z4l Further even in relation to other allegations made by the petitioner against one or more respondents, other than the division of Hyundai Business, we do not find much merit and in any case it suffers from acquiescence and as well as laches as it is the averment of the petitioner himself that he has been involvecl in the affairs of the business of the L't respondent company since the year 2000, soon after incorporation. While so, no proper explanation has been given by the petitioner explaining the delay in seeking an appropriate remedy against the respondents or for his conduct, despite claiming consistently that he has been acting in the best interest of the company, as to what hlwas doing in relation to the pilferage of money as alleged to have been perpetrated by the respondents of the commission in relation to insurance, be it in relation to sale by Bajaj or Hyundai division, or in relation to bank incentives ' Consistently the petitioner had been privy to the financial statements of the 1't respondent company in the capacity as a director of the 1't respondent company. ln the circumstances to question the financial transactions after a lapse of considerable period of time is unacceptable on the part of the petitioner and more particularly so by the other respondents in relation to R5 on the one hand but however, seeking to deny when the same is made against them by the petitioner which clearly exposes the oblique motive of filing this petition by the petitioner and being supported by other respondents with a view to resile on their commitments enjoined by the family settlements under which monies to a major extent are required to exchange hands between one ofthe consentees and respondents 2 and 3 as evidenced from the family settlements, The collusion is manifest in the manner in which even though an allegation is made to the effect that Respondents 3 and 8 have siphoned monies of the 1't respondent company in relation to insurance incomes to M/s.Bharat Tractors, a partnership firm the same for reasons best known has not been impleaded nor any reliefs sought against it, all of which clearly exposes the intention of the petitioner. Further in relation to the immovable property and its exchange between the respondents 2,3, and 5 being the land owners, the enforcement of the same is beyond the realm of this tribunal' Further even in relation to the allegations pertaining to the illegal transfer of shares sought to be brought under Section 59 of the companies Act, 2013 the Petitioner cannot claim to be an aggrieved party. ln any case during the course of submission learned Counsel for the petitioner specifically represented that the petitioner is not pressing for any relief in relation to the same. 25) However, from the allegations and counter allegations traded against each other by the close relatives of the family against each other, it is evident that the conduct of the affairs of the l't company are seriously prejudiced as well as that of its shareholders due to internecine disputes and a dead lock exists to consider the invocation of winding up on just and equitable grounds. This is evident from the manner in which complaints have been lodged with police authorities by the petitioner annexed along with the additional affidavit as filed by the petitioner and as well as documents annexed along with lA No.50IpR/201g of which application in itself, vehement objection orally was taken by Respondent No'5, as to its maintainability in view of the matter having reached final stages of hearing and that the applicant /petitioner should not be allowed to seek for interim directions. Be that as it may, however it is seen from the documents annexed therewith, the 1't respondent company is unable to operate the credit facilities which had been granted to the 1't respondent company, in view of the pending dispute before this Tribunal as R5 was not inclined to extend co-operation for operating the bank account. The Hon'ble Supreme Court under such circumstances has evolved in the case of M.S.D.C. RADHARAMANAN v' M.S.D. CHANDRASEKARA RAJA AND ANOTHER in Civil Appeal No. 2006 of 2oo8 decided on March 14' 2008 and reported in (2003) 6 SCC 750 as to what should be the approach of this Tribunal in relation to a closely held family consisting of only family members, namely in that case of a father and son, whereunder even though a finding of fact had not been returned of a case of oppression and mismanagement which may not have been made out, still in the interest of the company it would not be powerless to protect the company,s interest taking into consideration the scheme of the provisions of the 1956 Act and also upon revisiting the earrier judgements passed by it as discussed in detair in the said judgement, the above position being brought forth at paragraph 15, paragrap h22,23and at paragraph 39 of the said judgement which are reProduced as below:- I5 Ordinarily, therefore, in a case where a case of oppressi;n has been made a ground for the- p*pot" of invoking the jurisdiction of the Board ierms of Sections 397 and 398 of the Act' a finding offact to that ffict would be necessary "to be-aiiived at. But, the iurisdiction of the Company Law Board to pass any other or furtier orde, in the interest of the company' if it is of the opinion, that the some would protect the inirest the company, it would not be powerless. Theiurisdiction of the Company Law 'Board in that regard must be held to be existing having regard to the aforementioned provisions' *:B{< {< * ** * 22.There cannot be any doubt whatsoever that the acts or omission and commission on the part of a member of a company should be qua the management of the company, but it is dfficult to accept the proposition that the just aid equitable test, which should be held to be appliiable in a case for winding up of a company is totally outside the purview of Seciion 397 of the Act' The function of a Company Law Board in such matters is first to see as to how the interest of the company vis-d-vis its shareholders can be safeguarded. The Company Law Board must also make an endeavour to find out as to whether an order ofwinding up will serve the interest of the company or subvert the same' Further, ,f on application is filed under Section 433 of the Act or Section 397 and/or Section 398 thereof, an order of winding up may be passed, but Board may not shut its doors only on sheer technicality even if it is found as of fact that unless the jurisdiction under Section 402 of the Act is exercised, there will be a complete mismanagement in regard to the affairs of the company- 23.Sections 397 and 398 of the Act empower the Compony Law Board to remove oppression and mismanagement. If the consequences of refusal to exercise jurisdiction would lead to a total chaos or mismanagement of the company, would still the Company Law Board be powerless to pass appropriate orders is the question. If a literal interpretation to the provisions of Section

397 or 398 is taken recourse to may be that would be the consequences. But jurisdiction of the Company Law Board having been couched in wide terms and as diverse reliefs can be gronted by it to keep the company functioning is it not desirable to pass an order whichfor all intent and purport would be beneficial to the company itself and the majority of the members? A Court of law can hardly satisfy all the litigants before it. This, however, by itself would not mean that the Company Law Board would refuse to exercise its iurisdiction, although the statue confers such a power on it. ***{<:l<**rl<*{<{<*< 39.1n a case of this nature, it is necessary to take a holistic approach of the matter. What might 4'J. not be permissible for the affairs of a public limited company or even a private company having large number of shareholders and Directors, may be permissible in a case of this nature where a company for all intent and purport is a quasi-partnership concern. Parliament, while enacting a statue cannot think of all situations which may emerge in giving effect to the statutory provision. The situation obtaining in the present case in that sense is a pathetic one. Both the Company Law Board as also the High Court hod no doubt that the acrimony between the parties is resulting in mismanagement of the conduct of affairs of the Company. Therefore, a conclusion as regards the deadlock in the affairs of the Company cannot be faulted with. 26) nusin the present instance too, we find that the situation as envisaged in paragraph 39 of MSDC Radharaman,s judgement extracted as above, is prevalent and the parties seems to have hit a dead end in giving effect to the family settlement as arrived at between the family members which has lead to an impasse resulting in a deadlock situation in relation to the affairs of the 1't respondent company (BTPL)' Further, the Hon,ble N6LAT in a judgement recently passed by it while upholding the order of NCLT' New Delhi in Amritsar swadeshi woollen Mills private Limited v. Vinod Krishan Khanna & ors, company Appeal (AT) No.256 of 2018 observed at paragraph no.45 to the effect that it is settled law when matter is before NCLT or before the Appellate Tribunal (NCLAT), arising under sectio ns 24t and

242 of the new Act, read with Rule 1L, irrespective of what the parties plead, say or do' the paramount consideration of the Tribunal is to keep in view as to what is in the interest of the company' The interest of the parties is subservient to the interests of the company. lt is necessary for the Tribunal to first consider the interest of the company. The health of the company reflects on the health of the economy and that is what matters. 27) The erstwhile company Law Board, when confronted with almost a similar situation as in the instant case, in the matter of K.N.Bhargava v. Trackparts of lndia Ltd in (2001) 104 Comp'cas 611 (CLB) at paragraph 18 has observed to the effect that in a proceeding under section 397 1398 of the 1956 Act' even if the allegations are not established, more so in a family company, it has always taken the view that to protect the interest of the shareholders and the company, appropriate directions should be given especially when there are irreconcilable differences between major group of shareholders' Again in the sameparagraph18ofthesaiddecisioninK.N.Bhargava,ScaSeithasgoneontohold,whichismaterial to the instant case, as followsl "The Company Law Board, being a court of equiQ' has to keep thesi aspects in mind while moulding appropriate relief. It is on record that both the groups agreed for the division of assets and as a matter offact, there has been a de facto division by which the petitioners are managing theforge division and the respondents other two divisions for nearly a year, : It is at the last minute that the respondent resiled from this stand. According to us, the most appropriate direction that we could give, with a view to put an end to the disputes between the parties is that there should be division of assets of the company by which the petitioners will continue to control and manage the forge division and the respondents the other two divisions. This would be in line with our decision in Jaidka Motor's case,[l99UlCompLJ268(CLB)whereinalso,even though the company was a public company, in view of the fr*ib nature of the company, we directed the division of the assets. Shri Sarkar pointed out that in the present case, the divisions are interdependent as such division of the company is not possible. we find that the forge division supplies certain raw materials to the track components division but such supplies are not large and constitute only a small percentage of the requirements of that division. It has been brought to our notice that there are other suppliers who could cater to the needs of the track components division, in case the respondents do not want to enter into a supply agreement on the terms and conditions applicable to other customers. In via,u of this, we are of the firm view that the division of the company is the only appropriate solution to bring to an end the disPutes between the Parties." 2g) Having decided thus CLB had gone further and ordered for the formalization of the divisions of the two divisions to be managed by the respective groups giving them independent charge without any interference from the other group, on and from a said cut off date from which date it was noticed a de-facto division had already taken place and to prepare balance sheets and profit loss accounts up till the said cut off date as well and in the exercise of individual valuation of the divisions involving the financial institutions and affording an opportunity to the parties to make their representation to the valuers in valuing the respective division and for the consequent purchase of shares from one group by company and the consequent reduction of share capital of the respondent company applying the decision of the Hon'ble Supreme Court in Cosmosteels P'Ltd v' Joiram Das Gupta, (1978) 48 Comp Cas j12.lt is also required to note that the above decision of CLB had been subsequently affirmed in appeal by Hon'ble High Court of Allahabad in the matter of M/s. Trackparts of lndia Ltd v' K'N'Bhargawa and others and reported in (2002) 109 Comp Cas 350; (2001) 41 CLA 98. 29) Thus taking into consideration the well established precedents of judicial forums including that of the Hon'ble Supreme Court and that of Hon'ble NCLAT as seen above, in relation to family companies and the overall scheme of the provisions of sections 241and 242 of the companies Act, 2013 where the welfare and interest of the company is paramount and required to be looked into rather than to that of the shareholders while exercising the just and equitable jurisdiction vested in this Tribunal and without any way detracting from the family settlements entered into between the parties and which can be identified as such to be in the knowledge of all the family members in light of the discussions in this regard made in detail in paragraphs supra of this order, the following order is passed:-

i. the Bajaj Division (Bajaj Motor cycle dealership) shall be retained ty the 1't respondent company and shall be exclusivell' managed by Ashok Kumar Gupta (Respondent No.2), the Hyundai Division (Hyundai Dealership) shall be exclusively managed by Rajender Kumar Gupta of which a defacto division has aiieady taken place on and from 31.05.2016 and hence this Tribunal formalizes the said division as contemplated by virtue of the family settlements arrived dated 29.05'2016; Since the books of accounts, it is evident from the family settlements, have been consistently maintained separately based on the two divisions, though accounted for in the I't respondent company, both the parties, namely ft/ and R5 are directed to prodr"" the books of accounts, to an independent Chartered Accountant to be named by the consent of the parties within a period of 2 weeks from the date of this order, failing which this tribunal will suo motto name and appoint the Chartered Accountant for the purpose of drawing the individual financial statements, including balance sheets and profit and loss account of the respective divisions; The Independent Chartered Accountant upon drawing up the financial statements including the profit and loss account and balance sheets of the divisions as on 31.05.2016 shall provide a copy of the draft of the financial statements including the detailed rch.drl.r and an opportunity to be given to the parties herein, including the petitioner, consentees and the respondents, save R10 and R11 to raise any objections, if any to the draft accounts circulated for which 15 days time shall be granted; upon receipt of the objections, if any and after considering the objections in light of well established accounting principles and standards and also taking into consideration the inter-se owing as between the 1't respondent and the respective parties and any amounts paid in light of the family settlements concerning the 1st respondent company and as are required to be paid, shall be drawn by the said independent chartered accountant who shall duly attest the same as 'true and fair' and reflective of the financial affairs of the l't respondent company having two independent divisions on the said date i.e 31.05.2016; 1lr.

v. Upon drawing the financial statements as above, all the parties shall attest the financial statements with their signatures, including the petitioner and consentees who are in support of the petition; In relation to individual transactions the parties shall act in accordance with the family settlements, if not already acted; the land owners to co-operate for an expeditious completion of transaction in relation to immovable properties to enable the independent operations of the respective divisions as contemplated in the Family Settlements by R2 and R5 to be carried by the respective individual entities; In relation to the division of the immovable property over which the two divisions are carrying on business and of which the tribunal has formalizedthe divisions on and from 31.05.2016 the same shall be done in accordance with the clauses 2 to 5 of the family settlement signed as between the directors of Rl company dated 29.05.2016;

viii. With a view to enable the banking operations of Rl company to proceed fufther, R5 shall co-operate with the petitioner, RZ and R3 by signing the necessary forms for smooth operations as underlaken and shall do so till the irnmovable properlies are finally divided as envisaged in the family settlements to enable the indivirJual divisions to carry on its business independently by Rl company and R5/R10 and till such time the amounts which are required to be settled by R5 are fully paid to the respective parlies under the family settlements in relation to the bifurcation of the divisions and for spin off of Hyundai Division; Parties are given liberty to approach this Tribunal in case of any difficulty in implementing this order

vii. with the above directions this petition stands disposed off.94- l E.VAR.ADHARAiAN;/ l- 'r MEMBER-JUDICIAL