C.A. No. 471 of 2009, C.A. Nos. 474 and 475 of 2010 and C.A. Nos. 500 of 2010, 131 and 166 of 2011. Case: 1. Vijay Sekhri, 2. Bhupinder Kumar and Bhupinder Kumar Sekhri Vs 1. Tinna Overseas Ltd. and Others, 2. Vijay Kumar Sekhri and Others. Company Law Board
| Case Number | C.A. No. 471 of 2009, C.A. Nos. 474 and 475 of 2010 and C.A. Nos. 500 of 2010, 131 and 166 of 2011 |
| Judges | Smt. Vimla Yadav (Member) |
| Issue | Company Law |
| Citation | 2012 (106) CLA 510, 2011 (168) CompCas 522 (CLB), 2011 (168) CompCas 522 (CLB) |
| Judgement Date | September 16, 2011 |
| Court | Company Law Board |
Judgment:
Smt. Vimla Yadav (Member), (New Delhi Bench)
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C. A. No. 471 of 2009 for execution of the consent order dated June 9, 2009, in C. P. No. 17 (ND) of 2008 passed by the Company Law Board has been filed by the petitioners under section 634A of the Companies Act, 1956 read with regulation 44 of the Company Law Board Regulations, 1991.
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The Tinna group of companies has been controlled and managed by the Sekhri family. In 2004, some disputes arose between the family members of the Sekhri family. Consequently, the petitioners, namely, Shri Vijay Kumar Sekhri and Shri Anil Kumar Sekhri initiated various legal proceedings against respondent No. 2, namely, Shri Bhupinder Kumar Sekhri and his immediate family members and his companies, Company Petition No. 17 of 2008 was also filed before the Company Law Board.
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The petitioner group and the respondent group in C. P. No. 17 (ND) of 2008 had agreed for broader family settlement as specified in order dated January 5, 2
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Bhupinder will take immediate steps to pass necessary resolution appointing Vijay and Anil as directors of Tinna Agro and Tinna Oil as the nominees of Tinna group.
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Till such time the remuneration for Vijay and Anil is fixed by Tinna Oil and Tinna Agro, Bhupinder will pay a sum of Rs. 5 lakhs per month jointly for both of them...
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The parties have also agreed that the terms agreed before me today is the last and final settlement superceeding all other prior oral or written arrangements between the parties in regard to the settlement...
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The parties shall prepare a memo of family settlement incorporating the above terms and submit the same to this Board on January 15, 2009, at 4.00 p.m.
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Pursuant to that order, the petitioner group and the respondent, group arrived at a memorandum of family settlement (MOFS) on March 27, 2009. Further, the petitioner group and the respondent group signed, the spheme of arrangement (SOA) on May 17, 2009. In view of MOFS and SOA the Company Law Board passed consent order dated June 9, 2009. The order dated June 9, 2009, is conclusive and is consent decree, the effective date of which is January 5, 2009.
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My attention was drawn to direction No. 4 in the consent order which reads as under:
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Till such time as Tina Oil and Chemicals Ltd., and Tina Agro Industries Ltd., fixes the remuneration of Mr. Vijay Kumar Sekhri and Mr. Anil Kumar Sekhri, TOL shall continue to pay Rs. 2,50,000 per month each to Mr. Vijay Kumar Sekhri and Mr. Anil Kumar Sekhri subject to VKS group continue to hold their existing shareholding in the aforesaid two companies. Mr. Vijay Kumar Sekhri and Mr. Anil Kumar Sekhri shall make endeavours to have their respective remuneration fixed by the aforesaid two companies as soon as possible.
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It was pointed out that the petitioners have made earnest efforts to have their respective remuneration fixed by TOCL and TAIL, but the respondents have refused to fix their remuneration and take the petitioners as whole-time directors in TOCL and TAIL. It was contended that in the order dated January 5, 2009, MOFS dated March 27, 2009, SOA dated May 17, 2009 and consent order dated June 9, 2009, which is agreed by the petitioner group and the respondent group it is clearly provided that the respondent group would make payment of monthly remuneration of Rs. 2,50,000 each to Shri Vijay Sekhri and Shri Anil Sekhri respectively of the petitioner group which they were getting remuneration before the effective date, i.e., January 5, 2009. The respondent group paid the remuneration of Rs. 2,50,000 each to Shri Vijay Kumar Sekhri and Shri Anil Kumar Sekhri respectively from the month of January, 2009 to the month of August, 2009 but stopped to make the payment from September, 2009 onwards.
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The petitioners' case is that the respondents have not adhered to the consent order dated June 9, 2009, related to the remuneration of Rs. 2,50,000 per month each payable to Shri Vijay Kumar Sekhri and Shri Anil Kumar Sekhri respectively since the month of September, 2009 which has accumulated to Rs. 95,00,000 as on March 31, 2011 and is accruing further. It was alleged that the respondent group has also failed to handover the charge of companies which came to the petitioner group. When this application was argued it was pointed out that the petitioners have even offered to JV partner in TOCL for buy or sell of their stake at fair value. (It is noted now that the petitioners' group has already settled the fair value for their stake with TOCL and TAIL). The petitioners' contended that the respondents have neither fixed their remuneration nor responded to the offer. Therefore, till such time, either of the arrangement is worked out, the respondents have to continue to make the remuneration to Shri Vijay Kumar Sekhri and Shri Anil Kumar Sekhri respectively.
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It was contended that the grounds raised in reply to C A. No. 471 of 2009 are frivolous for not implementing the consent order dated June 9, 2009. The respondent group cannot interpret the consent order differently after signing MOFS and SOA and passing of order dated January 5, 2009 and consent order dated June 9, 2009, passed by the Company Law Board.
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The petitioners relied upon the case law in C. F. Angadi v. Y. S. Hirannayya [1972] 1 SCC 191, wherein the hon'ble Supreme Court has held as follows (page 197):
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Although a contract is not the less a contract because it is embodied in a judge's order, or, as said by Parke J., in Wentworth v. Bullen (141 ELR 769) 9B and C, 840, 850 'the contract of the parties is not the less a contract, and subject to the incidents of a contract, because there is super-added the command of a judge', still we think it is something more than a contract.
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The Judicial Committee of the Privy Council in Charles Hubert Kinch v. Edward Keith Walcott, AIR 1929 PC 289, observed:
'An order by consent, not discharged by mutual agreement and remaining unreduced is as effective as an order of the court made otherwise than by consent and not discharged on appeal. A party bound by a consent order must when once it has been completed, obey it, unless and until he can get it set aside in proceedings duly constituted for the purpose. The only difference in this respect between an order made by consent and one not so made is that the first stands unless and until it is discharged by mutual agreement or is set aside by an other order of the court; the second stands unless until it is discharged on appeal'.
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Further, in Ravinder Kaur v. Ashok Kumar [2003] 8 SCC 289, the hon'ble Supreme Court has held as follows (page 294):
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In such circumstances, we fail to understand how this very issue can be reagitated in the execution proceeding by the tenants. It is also to be noticed that the executing court has rightly observed that reopening of this issue would amount to asking that court to go behind the decree which is impermissible in law...
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Courts of law should be careful enough to see through such diabolical plans of the judgment debtors to deny the decree holders the fruits of the decree obtained by them. These type of errors on the part of the judicial forums only encourage frivolous and cantankerous litigations causing law's delay and bringing bad name to the judicial system.
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Furthermore, in Ashok Kumar Aggarwal v. Gopal Corporation P. Ltd. [2010] 157 Comp Cas 487, the Company Law Board has held as follows
(page 501):
... I am of the considered view and hold that the mediation between the parties had finally concluded on October 12, 2009. The terms of settlement dated October 12, 2009, recorded and signed by the mediators and also the parties are binding on the parties and legally enforceable.
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Counsel for respondent No. 2 contended that in terms of order dated January 5, 2009, MOFA dated March 27, 2009, SOA dated May 17, 2009 and order dated June 9, 2009, respondent No. 2 was obligated to pay the petitioners till TOCL and TAIL were to decide/fix the salary of the petitioners. As TOCL and TAIL have fixed/decided the salary of the petitioners on August 12, 2009, in pursuance of the order dated July 14, 2009, respondent No. 2 is no longer obligated to pay salaries to the petitioners after August, 2009.
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Respondent No. 2's counsel pointed out that respondent No. 2 had paid remuneration to Shri Vijay Kumar Sekhri and Shri Anil Kumar Sekhri till June, 2009, thereafter, as the petitioners had made no endeavours, in terms of order dated June 9, 2009, to get their remuneration fixed, respondent No. 2 stopped paying them any remuneration. On July 14, 2009, the petitioners approached the Company Law Board seeking a direction to respondent No. 2 to pay remuneration to the petitioners. The Company Law Board after considering the arguments of both the parties and realising that respondent No. 2 cannot be obligated to pay salaries to the petitioners indefinitely, passed the following order:
Heard on the application. It has been agreed by counsel that the company would pay to the petitioners an amount of Rs. 2.5 lakhs each which has become due within a week along with a statement of expenditure incurred by the company on behalf of the petitioners and that the petitioners will reimburse the same within a week of receipt of the arrears of Rs. 2.5 lakhs each. The company will continue to pay the said amount for another two months.
I also direct that appointment of the petitioners as whole-time directors with remuneration should be decided by M/s. Tinna Oil. and Tinna Agro, latest by August 31, 2009.
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It was argued that all the previous orders and directions passed by the Company Law Board, pertaining to the appointment and fixing and payment of salaries of the petitioners in TOCL and TAIL, including the order dated June 9, 2009, stood modified and merged in effect into the order dated July 14, 2009. In effect if there is any order on this issue which can be executed is the order dated July 14, 2009. The order dated July 14, 2009, stipulates that...
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