Ashok Kumar Gupta & Ors vs Bharat Tractors Pvt. Ltd. & Ors

(Arising out of Order dated (07.06.2019) passed by National Company Law Tribunal, Jaipur Bench(Rajasthan) in CP No.112/ND/2017 (TA No.49 of 2018)

IN THE MATTER OF:

1.Navneet Gupta B-33, Karni Nagar Bikaner, Rajasthan - 334001 ...Appellant

Vs.

1.Bharat Tractors Private Limited Registered Office at Gangashahar Road, Bikaner, Rajasthan - 334001

2.Ashok Kumar Gupta S/o Late Ram Kumar Gupta B-29, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

3.Mahesh Kumar Gupta S/o Late Ram Kumar Gupta B-33, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

4.Mahesh Kumar Gupta (As karta of HUF of Mahesh Kumar Gupta) S/o Late Ram Kumar Gupta B-33, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

5.Rajendra Kumar Gupta S/o Late Ram Kumar Gupta

Company Appeal (AT) No. 199, 241 & 242 of 2019 2

B-28, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

6. Rajendra Kumar Gupta (As Karta of Rajendra Kumar Gupta HUF) B-28, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

7.Anita Gupta W/o Rajendra Kumar Gupta B-28, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

8.Chanda Gupta S/o Sh M.K Gupta B-33, Karni Nagar Nagnechiji Temple Road Bikaner, Rajasthan - 334002

9. Ashok Kumar Gupta (As karta of Ashok Kumar Gupta HUF) B-29, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

10.Riddhi Autowheels Pvt. Ltd Opposite Rail Dada Bari, Gangashahar, Bikaner Rajasthan

11.Hyundai Motor India Limited Having Office at 2nd, 5th and 6th Floor, Corporate One (Bani Building) Plot No.5, Commercial Centre, Jasola, New Delhi - 110025 ...Respondents

Present:

For the Appellant : Mr Palash Agarwal, Advocate. For the Respondents : Mr.Darpan Wadhwa, Sr.Advocate with

Company Appeal (AT) No. 199, 241 & 242 of 2019 3

Mr.Pallav Pandey and Mr.Pragalbh Bhardwaj Mr.Toyesh Tewari, Advocates for Respondent No.5,6,7 and 10. With

Company Appeal (AT) No.241 of 2019

(Arising out of Order dated (07.06.2019) passed by National Company Law Tribunal, Jaipur Bench(Rajasthan) in CP No.112/ND/2017 (TA No.49 of 2018)

IN THE MATTER OF:

1.Mahesh Kumar Gupta S/o Late Ram Kumar Gupta B-33, Karni Nagar Nagnechiji Temple Road Bikaner, Rajasthan - 334002

2. Mahesh Kumar Gupta (As Karta of HUF of Mahesh Kumar Gupta) S/o Late Ram Kumar Gupta B-33, Karni Nagar Nagnechiji Temple Road Bikaner, Rajasthan - 334002

3.Chanda Gupta S/o Sh M.K.Gupta B-33, Karni Nagar Nagnechiji Temple road Bikaner, Rajasthan - 334002 ...Appellants

Vs.

1.Bharat Tractors Private Limited Registered Office at Gangashahar Road, Bikaner, Rajasthan - 334001

2.Ashok Kumar Gupta S/o Late Ram Kumar Gupta B-29, Karni Nagar

Company Appeal (AT) No. 199, 241 & 242 of 2019 4

Nagnechiji Temple Road, Bikaner Rajasthan - 334002

3.Navneet Gupta B-32, Karni Nagar, Pawan Puri, Bikaner - 334001

4.Mr.Ashok Kumar Gupta (as Karta of Ashok Kumar Gupta HUF) B-29, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

5.Rajendra Kumar Gupta S/o Late Ram Kumar Gupta B-28, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

6. Rajendra Kumar Gupta (As Karta of Rajendra Kum ar Gupta HUF) B-28, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

7.Anita Gupta W/o Rajendra Kumar Gupta B-28, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

8.Riddhi Autowheels Pvt. Ltd Opposite Rail Dada Bari, Gangashahar, Bikaner Rajasthan

9.Hyundai Motor India Limited Having Office at 2nd, 5th and 6th Floor, Corporate One (Bani Building) Plot No.5, Commercial Centre, Jasola, New Delhi - 110025 ...Respondents

Company Appeal (AT) No. 199, 241 & 242 of 2019 5

Present:

For the Appellants : Mr.Sourabh Gupta, Mr.Puneet Yadav and Mr.Tarun Arora, Advocates. For the Respondents : Mr.Darpan Wadhwa, Sr.Advocate with Mr.Pallav Pandey and Mr.Pragalbh Bhardwaj Mr.Toyesh Tewari, Advocates for Respondent No.5,6,7 and 10, Mr.Palash Agarwal, Advocate for R3. With

Company Appeal (AT) No.242 of 2019

(Arising out of Order dated (07.06.2019) passed by National Company Law Tribunal, Jaipur Bench(Rajasthan) in CP No.112/ND/2017 (TA No.49 of 2018)

IN THE MATTER OF:

1.Ashok Kumar Gupta S/o Late Ram Kumar Gupta B-29, Karni Nagar Nagnechiji Temple Road Bikaner, Rajasthan - 334002

2. Mr.Ashok Kumar Gupta (As Karta of HUF of Ashok Kumar Gupta) B-29, Karni Nagar Nagnechiji Temple Road Bikaner, Rajasthan - 334002 ...Appellants

Vs.

1.Bharat Tractors Private Limited Registered Office at Gangashahar Road, Bikaner, Rajasthan - 334001

2.Navneet Gupta B-32, Karni Nagar, Pawan Puri, Bikaner - 334001

Company Appeal (AT) No. 199, 241 & 242 of 2019 6

3.Mahesh Kumar Gupta S/o Late Ram Kumar Gupta B-33, Karni Nagar Nagnechiji Temple Road Bikaner, Rajasthan - 334002

4. Mahesh Kumar Gupta (As Karta of HUF of Mahesh Kumar Gupta) S/o Late Ram Kumar Gupta B-33, Karni Nagar Nagnechiji Temple Road Bikaner, Rajasthan - 334002

5.Rajendra Kumar Gupta S/o Late Ram Kumar Gupta B-28, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

6. Rajendra Kumar Gupta (As Karta of Rajendra Kumar Gupta HUF) B-28, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

7.Anita Gupta W/o Rajendra Kumar Gupta B-28, Karni Nagar Nagnechiji Temple Road, Bikaner Rajasthan - 334002

8.Chanda Gupta s/o Sh M.K.Gupta B-33, Karni Nagar Nagnechiji Temple Road Bikaner, Rajasthan - 334002

9.Hyundai Motor India Limited Having Office at 2nd, 5th and 6th Floor, Corporate One (Bani Building) Plot No.5, Commercial Centre, Jasola, New Delhi - 110025

Company Appeal (AT) No. 199, 241 & 242 of 2019 7

10.Riddhi Autowheels Pvt. Ltd Opposite Rail Dada Bari, Gangashahar, Bikaner Rajasthan ...Respondents

Present:

For the Appellants : Mr.Vivek Malik,, Mr.Vivek Sinha Advocates. For the Respondents : Mr.Darpan Wadhwa, Sr.Advocate with Mr.Pallav Pandey and Mr.Pragalbh Bhardwaj, Advocates for Respondent No.5,6,7 and 10, Mr.Saurabh kalia and Mr.Palash Agarwal, Advocate for R2.

(29th November, 2019)

Dr. Ashok Kumar Mishra, Technical Member

1. These three Appeals i.e. Company Appeal (AT) No. 199, 241 and 242 of

2019 have been preferred by the Appellant and the Respondents against the

common order dated 07th June, 2019 passed by the National Company Law

Tribunal, Jaipur Bench ('for short Bench'). These Appeals were heard together

and disposed of by this common judgement.

2. The Appellants have filed the Applications under Section 421 R/w Section

241, 242 & 59 and other provisions of the Companies Act, 2013 and prayed for

quashing and set aside the impugned order dated 07.06.2019 passed by National

Company Appeal (AT) No. 199, 241 & 242 of 2019 8

Company Law Tribunal, Jaipur Bench in C.P No.112 (ND) of 2017 (T.A No.49

of 2018); common issue in all the three appeals i.e. Company Appeal (AT) No.

199, 241 and 242 of 2019 along with other reliefs.

3. M/s.Bharat Tractor Private Limited (Respondent No.1 Company) is a

Company 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. U29211RJ1999PTC016054 and that its registered office

is situated at Gangashahar Road, Bikaner, Rajasthan 334001. The Respondent

No.1 Company i.e. M/s.Bharat Tractor Private Limited was promoted &

incorporated by the three brothers i.e. Ashok Kumar Gupta, Shri Mahesh Kumar

Gupta & Rajendra Kumar Gupta with the main objects 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

etc. The Company is closely held Private Limited Company with family members

as shareholders established on the principles of equity, fairness and transparency

and no decision was ever taken independently by any of the Directors.

4. The Family tree is given hereunder as submitted by the

Appellants/Petitioners for easy reference:

Family Tree Late Sh.Ram Kumar Ji Gupta (13.09.1998) & Late Smt.Sudarshana Devi Gupta (21.03.2016)



Company Appeal (AT) No. 199, 241 & 242 of 2019 9

Veer Karna S.K.Gupta A.K.Gupta M.K.Gupta R.K.Gupta Gupta (Father)

    

Petitioner Petitioner Respondent Respondent Respondent Group Group No.2 No.3 No.5

Navneet Gupta Indu Gupta Nakul Gupta Chanda Gupta Anita Gutpa (Son) (Wife) (Son) (Wife) (Wife)

Petitioner Petitioner Respondent Respondent Group No.8 No.7

3 Sisters all -Disha Mukul Gupta Karikaya Gupta Rajat Gutpa married and (Daughter) (Son) (Son) (Son) settled -Sanket (Son) Vinayak Gupta Ridhi Gupta (Son) (Daughter)

5. The shareholding percentage in the 1st Respondent/Petitioner Company is

given hereunder for easy reference by way of a tabulation:

SL No. Name of the Respondent/Petitioner Shareholding percentage

1. Ashok Kumar Gupta 18.15%

2. Mahesh Kumar Gupta 20.31%

3. Mahesh Kumar Gutpa (HUF) 05.84%

4. Rajendra Kumar Gupta 19.21%

5. Rajendra Kumar Gupta (HUF) 05.84%

6. Anita Gupta 04.17%

7. Chanda Gupta 00.21%

8. Ashok Kumar Gupta (HUF) 05.84%

9. Navneet Gupta along with 20.44% consenter shareholders Total 100%

6. The Authorized share capital of the Company is Rs.5,000,000/- and the

paid up capital is Rs.23,97,900/-. The Company is a closely held family Company

Company Appeal (AT) No. 199, 241 & 242 of 2019 10

wherein all the shareholders are the family members. It was always in nature of

quasi partnership.

7. M/s. Bharat Tractor Private Limited was being run from the land measuring

108 × 110 sq. ft near Rail dadabari, Gangashahar Road, Bikaner, Rajasthan which

is owned by Mr.Ashok Kumar Gupta, Mr.Mahesh Kumar Gupta, Mr.Rajendra

Kumar Gupta and Mrs.Anita Gupta and all the family members have leased the

said land vide lease deed dated 11.01.2000 in favour of Respondent No.1

Company. All the three brothers had equal share in the said land.

8. The dealership with Bajaj Auto Ltd was started on 19th April, 2000 and

thereafter on 4th July, 2003, the dealership of Hyundai Car was started. Thus, the

entire business of the Respondent Company was with these two dealerships and

all the money required for starting the two dealerships was invested by Respondent

No.1 Company and all family members. Respondent No.1 Company transferred

unsecured loan of all shareholders and invested the same in Hyundai Motors

Dealership.

9. It is also observed that Mr.Rajendra Kumar Gupta i.e. Respondent No.5

was asked to apply for the dealership of Hyundai Motors on behalf of the

Respondent No.1 Company i.e Bharat Tractor Private Limited. All the money

required in starting the dealership of Hyundai Dealership was invested by the

Respondent No.1 Company and all the family members.

Company Appeal (AT) No. 199, 241 & 242 of 2019 11

10. Both the dealerships were taken after discussions between the parties and

having consent of majority of shareholders and after duly conducting proper

Board Meetings and Extra Ordinary General Meetings.

11. No one had complete control in any form and at no point any Director of

the Respondent No.1 Company managed the business of the Respondent No.1

Company independently. The Respondent No.1 Company was working smoothly

and reached great heights.

12. The Respondent No.1 Company in 2003 had two divisions one of Bharat

Bajaj which managed the business of Bajaj Auto dealership and other of Bharat

Hyundai which managed the dealership of Hyundai Motors. Both the divisions

were situated in the same premises wherein Respondent No.1 was established. In

the year 2005-2007 some disputes had started between the Appellants and the

Respondent No.5 i.e Rajendra Kumar Gupta. However, the dispute was resolved

through constant efforts of the family members.

13. Thereafter, in the year 2013 dispute arose on the issue of siphoning away

of huge sums of money from the Company by Respondent No.5 i.e. Rajendra

Kumar Gupta. Thereafter business continued as usual but on friction between the

various family members was affecting the business as there was completely loss

of faith amongst the family members on account of the actions of Respondent

No.5. However, the same was mutually resolved. In April-May, 2016 again

disputes arose between the various members of the family, and various meetings

Company Appeal (AT) No. 199, 241 & 242 of 2019 12

were held to resolve the dispute. During the course of such meetings, the said

Respondent No.5 offered to take over the Bharat Hyundai Business of the

Respondent No.1 Company pursuant of making certain amount of payments to

other family members, after which the business would be transferred to

Respondent No.10 Company owned and controlled by Respondent No.5.

14. Thereafter, a family settlement was signed by 5 family members i.e.Veer

Karan Gupta, Ashok Kumar Gupta, Shiv Kumar Gupta, Mahesh Kumar Gupta &

Rajender Kumar Gupta on 29th May 2016 and thereafter the Memorandum of

Undertaking/Understanding was signed by all the parties on 31st May, 2016. It was

further agreed to hold an EOGM and other compliance of law and agreed to be

conducted to formalize division.

15. However, the provisions of Section 180 of the Companies Act, 2013 is not

applicable to private limited Company which restricts powers of the Board of

Directors to certain extent. This refers to Ministry of Corporate Affairs

notification dated 05.06.2015 published in the Gazette of India. We have also

observed that the provisions of Section 180 of the Companies Act, 2013 is not

applicable to Private Limited Company.

16. We have seen the various documents as stated supra including the Auditors

Report up to 31st March 2016 submitted on 28th June, 2016. There is no Coercion,

Undue Influence etc. in accordance with the Indian Contract Act, 1872. We have

also observed that no party has claimed that they have signed MoU and family

Company Appeal (AT) No. 199, 241 & 242 of 2019 13

settlement under Coercion and Undue Influence etc. Hence, this is a valid contract

in terms of Section 10 of the Indian Contract Act, 1872. Once the contract is

concluded, in accordance with the Indian Contract Act, 1872 its terms cannot be

changed accordingly to the will of one party; (Karnal Distillery Co (P) Ltd vs.

Union of India, AIR 1977 SC 509; Ishwar Dass Nasa vs. State of Haryana, AIR

2012 SC 852, 2012 (1) SCC 753).

17. In the light of the above findings, the NCLT has given in its order dated 07th

June, 2019 which is fair and proper and also covered all the disputed issue raised

in the main Company Petition. The NCLT has gone into the family settlements

and also decision of the Apex Court and reached to a conclusion that the family

settlements 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.

18. The case was first heard on 30.07.2019, wherein the Appellate Tribunal

has suggested to the parties to propose amicable settlement and make proposal

for Mediator for settlement and also passed stay of impugned order dated 07th

June, 2019 until further orders. Thereafter, the said Appeals were listed on various

dates viz. 02.09.2019, 01.10.2019, 16.10.2019, 18.11.2019 & 19.11.2019 and it

was adjourned for reason due to paucity of time and others. However, both the

parties are not able to resolve the issue in question affording ample opportunities

Company Appeal (AT) No. 199, 241 & 242 of 2019 14

for the same. Therefore, there is no other alternative option for the Appellate

Tribunal except to decide the matters on merits.

19. The order passed by the NCLT is quite comprehensive and also adopted

the principle of fairness including the appointment of Independent Chartered

Accountants to draw up financial statements as of 31st May, 2016. The parties

are at liberty to raise objections to Draft Accounts and thereafter to be finalized

by Independent Chartered Accountants. Parties have been provided liberty to

approach the NCLT Jaipur Bench, in case of any difficulty in implementing order.

20. We, thus, find no merit in these appeals. Accordingly, the appeals are

dismissed. Pending Interlocutory Application(s), if any, is/are disposed of & stay

vacated. However, in the facts and circumstances of the case, there shall be no

order as to cost.

(Justice Jarat Kumar Jain) Member (Judicial)

(Mr. Balvinder Singh) Member (Technical)

(Dr.Ashok Kumar Mishra) New Delhi Member (Technical)

RK

Company Appeal (AT) No. 199, 241 & 242 of 2019