Gangar Opticians Private Limited vs Jayantilal Bhimshi Gangar

Company Appeal(AT) No. 45 of 2021

IN THE MATTER OF: Gangar Opticians Pvt. Ltd. Shop No. 11 , 162 Chinoy Mansion Warden Road, Mumbai 400 036 ...Appellant

Vs 1. Jayantilal Bhimshi Gangar Adult, Indian inhabitant, residing at 737, Meher Villa, Dr. Ghanti Road Parsi Colony, Dadar East, Mumbai 400 014 ...Respondent No.1

2. Pragnesh Jayantilal Gangar Adult, Indian inhabitant, residing at 737, Meher Villa, Dr. Ghanti Road Parsi Colony, Dadar East, Mumbai 400 014 ...Respondent No.2

3. Arun Devchand Gangar Adult, Indian inhabitant, residing at Plot No. 760, Shobhan Bhuvan 2nd Floor, Dinshaw Master Road, Parsi Colony, Dadar East, Mumbai 400 014 ...Respondent No.3

4. Rohit Jagdish Gangar Adult, Indian inhabitant, residing at Flat No. 702, Plot No. 770, Vimal Smruti Parsi Colony, Dr. Ghanti Road, DadarEa~ Mumbai 400 014 ...Respondent No.4

5. Jigar Champaklal Gangar Adult, Indian inhabitant, residing at Plot No. 146/4, Divan Prakash Building 1st Floor, Hindu Colony, Road No.6 Dadar East, Mumbai 400 014 ...Respondent No.5

6. Champaklal Bhimshi Gangar Adult, Indian inhabitant, residing at Plot No. 146/4, Divan Prakash Building 1st Floor, Hindu Colony, Road No. 6 Dadar East, Mumbai 400 014 ...Respondent No.6

7. Prabodh Devchand Gangar

Company Appeal (AT) No. 45 & 46 of 2021 1 Adult, Indian inhabitant, residing at Flat No. 7-8, 3rd Floor, Plot No. 775 Tuljaram Bhavan, Tilak Road Opp. Best Electric Bill, Dadar East Mumbai 400 014 ...Respondent No.7

8. Devchand Bhimshi Gangar Adult, Indian inhabitant, residing at Flat No. 7-8, 3rd Floor, Plot No. 775 Tuljaram Bhavan, Tilak Road Opp. Best Electric Bill, Dadar East Mumbai 400 014 ...Respondent No.8

9. Surendra Bhimshi Gangar Adult, Indian inhabitant, residing at Flat No. 601, Plot No. 770, Vimal Smruti, Parsi Colony Dr. Ghanti Road, Dadar East, Mumbai 400 014 ...Respondent No.9

10. Kishor Bhimshi Gangar Adult, Indian inhabitant, residing at 750, Bliss CHS Ltd., 3rd Floor Flat No. 301, Parsi Colony Road No. 6, Opp. Wadia Garden Dadar East, Mumbai 400 014 ...Respondent No.10

11. Jagdish Gangar Adult, Indian inhabitant, residing at Flat No. 701, , Plot No. 770, Vimal Smruti Parsi Colony, Dr. Ghanti Road, Dadar East ) Mumbai 400 014 ...Respondent No.11

12. Chetan Kishor Gangar Adult, Indian inhabitant, residing at 750, Bliss CHS Ltd., 3rd Floor Flat No. 301, Parsi Colony Road No. 6, Opp. Wadia Garden Dadar East, Mumbai 400 014 ...Respondent No.12

13. Jayesh Vira Adult, Indian inhabitant, residing at 1201, 1ih Floor Om Co-Housing Society Dr. MB Raut Road, Dadar West Mumbai 400 028 ...Respondent No.13

14. Manisha Gangar Adult, Indian inhabitant, residing at Flat No. 702, Plot No. 770 Vimal Smruti Parsi Colony, Dr. Ghanti Road, Dadar) Mumbai 400 014 ...Respondent No.14

Company Appeal (AT) No. 45 & 46 of 2021 2 15. Registrar of Companies, Mumbai Having its registered office at 100, Everest, Marine Drive, Mumbai 400 002. ...Respondent15 With

Company Appeal (AT) No. 46 of 2021

IN THE MATTER OF: Gangar Opticians Pvt. Ltd. Shop No. 11, 162 Chinoy Mansion Warden Road, Mumbai 400 036 ...Appellant

Vs.

1. Jayantilal Bhimshi Gangar Adult, Indian inhabitant, residing at 737, Meher Villa, Dr. Ghanti Road Parsi Colony, Dadar East, Mumbai 400 014 ...Respondent No.1

2. Pragnesh Jayantilal Gangar Adult, Indian inhabitant, residing at 737, Meher Villa, Dr. Ghanti Road Parsi Colony, Dadar East, Mumbai 400 014 ...Respondent No.2

3. Arun Devchand Gangar Adult, Indian inhabitant, residing at Plot No. 760, Shobhan Bhuvan 2nd Floor, Dinshaw Master Road, Parsi Colony, Dadar East, Mumbai 400 014 ...Respondent No.3

4. Rohit Jagdish Gangar Adult, Indian inhabitant, residing at Flat No. 702, Plot No. 770, Vimal Smruti Parsi Colony, Dr. Ghanti Road, DadarEa~ Mumbai 400 014 ...Respondent No.4

5. Jigar Champaklal Gangar Adult, Indian inhabitant, residing at Plot No. 146/4, Divan Prakash Building 1st Floor, Hindu Colony, Road No.6 Dadar East, Mumbai 400 014 ...Respondent No.5

6. Champaklal Bhimshi Gangar Adult, Indian inhabitant, residing at Plot No. 146/4, Divan Prakash Building 1st Floor, Hindu Colony, Road No. 6

Company Appeal (AT) No. 45 & 46 of 2021 3 Dadar East, Mumbai 400 014 ...Respondent No.6

7. Prabodh Devchand Gangar Adult, Indian inhabitant, residing at Flat No. 7-8, 3rd Floor, Plot No. 775 Tuljaram Bhavan, Tilak Road Opp. Best Electric Bill, Dadar East Mumbai 400 014 ...Respondent No.7

8. Devchand Bhimshi Gangar Adult, Indian inhabitant, residing at Flat No. 7-8, 3rd Floor, Plot No. 775 Tuljaram Bhavan, Tilak Road Opp. Best Electric Bill, Dadar East Mumbai 400 014 ...Respondent No.8

9. Surendra Bhimshi Gangar Adult, Indian inhabitant, residing at Flat No. 601, Plot No. 770, Vimal Smruti, Parsi Colony Dr. Ghanti Road, Dadar East, Mumbai 400 014 ...Respondent No.9

10. Kishor Bhimshi Gangar Adult, Indian inhabitant, residing at 750, Bliss CHS Ltd., 3rd Floor Flat No. 301, Parsi Colony Road No. 6, Opp. Wadia Garden Dadar East, Mumbai 400 014 ...Respondent No.10

11. Jagdish Gangar Adult, Indian inhabitant, residing at Flat No. 701, , Plot No. 770, Vimal Smruti Parsi Colony, Dr. Ghanti Road, Dadar East ) Mumbai 400 014 ...Respondent No.11

12. Chetan Kishor Gangar Adult, Indian inhabitant, residing at 750, Bliss CHS Ltd., 3rd Floor Flat No. 301, Parsi Colony Road No. 6, Opp. Wadia Garden Dadar East, Mumbai 400 014 ...Respondent No.12

13. Jayesh Vira Adult, Indian inhabitant, residing at 1201, 1ih Floor Om Co-Housing Society Dr. MB Raut Road, Dadar West Mumbai 400 028 ...Respondent No.13

14. Manisha Gangar Adult, Indian inhabitant, residing at

Company Appeal (AT) No. 45 & 46 of 2021 4 Flat No. 702, Plot No. 770 Vimal Smruti Parsi Colony, Dr. Ghanti Road, Dadar) Mumbai 400 014 ...Respondent No.14

15. Registrar of Companies, Mumbai Having its registered office at 100, Everest, Marine Drive, Mumbai 400 002. ...Respondent No.15

Present: Mr. Aman Kacheri, Mr. Zeeshan Hashmi, Mr. Siddhesh Bhole, Mr. Rishabh Dhanuka, Mr. Ankit Parashar, Advocates for Appellant. For Respondents: Mr. Jehan Fulwadiwala, Mr. Parameshwar, Mr. Anand Dilip Landge, Advocates for R1 & R2. Mr. Nilesh Tribhuvann, Mr. Burzin Barucha, Ms. A. Sreguru Priya, Advocates JUDGMENT

DR. ASHOK KUMAR MISHRA, TECHNICAL MEMBER

1. These two appeals i.e. Company Appeal (AT) No. 45 & 46 of 2021 is filed

by the 'Appellant' - 'Gangar Opticians Pvt. Ltd'., under Section 421 of the

'Companies Act, 2013' (in short 'Act') against the order dated 16.12.2020

passed by the National Company Law Tribunal, Mumbai Bench (for short

'Tribunal') in MA. No. 3803 of 2019 along with MA. No. 806 of 2020 in C.P.

No. 4065 of 2019 and another in M.A. No. 3144 of 2019 along with M.A.

No. 807 of 2020 in C.P. No. 403 of 2019.

2. It was submitted by the parties that all M.As as stated above were heard

together by the Tribunal and the orders were passed separately but the

order is the same and hence the parties have requested to the bench that

it would be prudent if both the appeals are heard together. Accordingly,

the appeals were heard together and considered for disposal. The parties

have also filed 'Common Written Submission' for the disposal of the interim

Company Appeal (AT) No. 45 & 46 of 2021 5 relief granted at the Tribunal stage. These Company Appeals No. 45 & 46

of 2021 are filed before this Appellate Tribunal and are seeking relief on

interim relief granted by the Tribunal.

3. The Tribunal has passed an impugned order dated 16.12.2020 for

appointing an 'Independent Valuer' who will value the assets of the

company within stipulated time.

4. It is undisputed that the Appellant Company is a closely held family

company but it is not admitted fact that Respondent No.1 has a

shareholding of 16.25% and is a founding 'Director' in the Appellant

Company until the unlawful removal by the Appellant Company. The

Respondent No.2 is his son and is also a shareholder with 5% shareholding

and was a 'Director' in the Appellant Company until his removal. The

Appellant company is one of India's leading optician eye-wear retail store

and is having over 60 stores in the State of Maharashtra, Gujarat & Goa.

This is a flagship company.

5. The learned Sr. Counsel for the Appellant has submitted that the

impugned order seeks to wrongfully and in an absurd manner and has

passed final relief without considering the merits. In an intrinsic way, this

is a hint for buy back that of Respondent No.1 & 2 shareholding in the

Appellant Company without their pleading to that effect at the Tribunal.

The Appellant has also submitted that the Respondent No.1 &2 have filed

a petition before the Tribunal for 'Oppression and Mismanagement' under

Section 241 & 242 etc., of the Act and seeking relief for the acts of

'Oppression and Mismanagement' at the Tribunal. The Appellant is

aggrieved that an order for its valuation has been passed without

Company Appeal (AT) No. 45 & 46 of 2021 6 considering the merits in the main petition. The Appellant has also stated

that the Respondent No.1 & 2 are harassing the Appellant by taking away

hard-disk contained confidential and sensitive data /information of the

Appellant Company and have provided the same to the outsiders etc. It

has also been alleged by the Appellant that Respondent No.1 has sent letter

to the Bank of Maharashtra to freeze the accounts of the Appellant

Company as a result of which the bank issued show cause notice on the

Appellant Company & has taken other actions leading to hampering of

business .He has also addressed letter to the 'Registrar of Companies'

(RoC) for ongoing disputes and related matter. The Respondent No.2 has

misused company email. The Learned Sr. counsel for the Appellant also

stated that the Respondent No.2 has again addressed the letter to the Bank

of Maharashtra on 22.01.2019, portraying himself to be the 'CEO' of the

Appellant without any authority vested in him and has created confusion.

The Respondent No.1 & 2 has caused to publish a misleading articles in

the local newspaper as a result of which the bankers have frozen their

accounts. They are working anti interest of the Appellant company as a

result of which 11 out of 13 Directors of the Appellant Company barring

Respondent No.l &2 addressed letter to the Appellant company to take

appropriate action against the Respondent No.1 &2.

6. The learned counsel for the Respondent No.1 & 2 have stated that they

have observed some illegality in transfers of shares in a sister concerned

of the Appellant Company. After they have raised these issues in the Board

Meeting, they were not allowed access to their offices and their personal

belongings were kept locked in. Even the Appellant Company has failed to

Company Appeal (AT) No. 45 & 46 of 2021 7 release their remuneration and has informed them their removal from

office of the 'Director'. They have also stated that considering their pathetic

condition, the Tribunal vide its order dated 26.09.2019 & 15.10.2019 has

provided them requisite relief, so that they are not removed from the Board

and have also provided them status quo with respects to the assets and

the share capital of the Appellant Company. The Respondents have

submitted that the relief of buy-back shares is an established relief in case

of 'Oppression and Mismanagement' and have cited multiple judgments to

supplement their arguments. They are also of prima facie view that interim

relief granting like final relief can be granted, if it is supported by

compelling reasons.

7. We have heard the parties at length and also gone through requisite

documents.

8. The Company is a 'flagship company' and resorting to valuation at this

stage without establishing the factual status is seems to be a questionable

issue. The business interest of the commercial world needs to be protected

by the Act and it is being protected by the Act. Chapter XVI of the Act have

adequate provisions for prevention of 'Oppression of Mismanagement'.

Similarly, Chapter XI & XII of the Act provides for the 'Appointment of

Directors and Management of the Board' respectively. What has emerged

that this is a case of a family dispute and the Directors are supposed to

restrain themselves from any irregularity which has an adverse impact on

the Company. The Company is more important than the individual

'Members' or 'Directors'. The image and value of the Company is more

important than internal disputes. Section 241 & 242 of the Act provides

Company Appeal (AT) No. 45 & 46 of 2021 8 'the way to manage the company in case of internal dispute'. Once the

company goes for valuation & bringing dispute at the platform of the

internal disputes among the Members and Directors , the valuation of the

Company will come down heavily. Past is the reference but future is the

determining factor in case of any valuation. Hence, what we feel that

valuation should not be resorted to at the initial stage i.e. at the interim

relief stage. Section 242 of the Act provides various methodology to arrest

such situations of internal fight.

9. Hence, we are of the considered opinion that resorting to valuation at this

stage is not proper. We are not interfering with the orders passed by the

Tribunal dated 26.09.2019 & 15.10.2019 and restricting it to the issue of

valuation and accordingly, we are setting aside the impugned order of the

Tribunal dated 16.12.2020 to appoint 'Independent Valuer' for the

valuation of the Company. With these observations, we are disposing of

these Appeals.

Pending IAs, if any, stands disposed of.

Interim order, if any, passed by this Appellate Tribunal stands vacated.

No order as to costs.

[Justice Jarat Kumar Jain] Member (Judicial)

(Dr. Ashok Kumar Mishra) Member(Technical)

2nd August, 2021

New Delhi Raushan.k

Company Appeal (AT) No. 45 & 46 of 2021 9