Shri Ratnankur Roychowdhury vs Pralayankurroychowdhuruy

Before NCLT Before NCLAT 1. Shibaankur Roychowdhury Ori. Resp. No.4 Appellant No. 1 Residing at P-227, C.I.T. Road Scheme - VI M, Kankurgachi Kolkata - 700054 2. M.P. Jewellers (Calcutta) & Co. Ori. Resp. No. 8 Appellant No. 2 R-59, C.I.T. Road, Scheme- VII M Kankurgachi, Kolkata - 700054 Versus. 1. Pralayankur Roychowdhury Ori. Pet. No. 1 Respondent No.1 Residing at 28W, Ramkrishna Samadhi Road, Kankurgachi, Kolkata - 700054 2. Rudrankur Roychowdhury Ori. Pet. No. 2 Respondent No.2 Residing at, Flat No. 402, Shadar Apartment 106, Southern Avenue, Kolkata - 700029 3. M.P. Jewellers Co. (1945) Pvt. Ltd. Ori. Resp. No. 1 Respondent No.3 P-227, C.I.T. Road, Scheme - VIM Kankurgachi, Kolkata - 700054 4. Biplabankur Roychowdhury Ori. Resp. No. 2 Respondent No.4 Residing at P-227, C.I.T. Road Scheme - VIM, Kankurgachi Kolkata - 700054 5. Ratnankur Roychowdhury Ori. Resp. No. 3 Respondent No.5 2

Residing at 28W, Ramkrishna Samadhi Road, Kankurgachi, Kolkata - 700054 6. M.P. Jewellers (G.B) &Co. Ori. Resp. No. 5 Respondent No.6 P-227, C.I.T. Road, Scheme- VI M, Kankurgachi, Kolkata-700054 7. M.P. Jewellers (B.S.) & Co. Ori Resp. No. 6 Respondent No.7 99, Vivekananda Road, Kolkata - 700006 8. M.P. Jewellers (JSK) & Co. Ori. Resp. No. 7 Respondent No.8 1, Vivekananda Road Kolkata - 700007. For Appellants: Mr. Dinesh Agnani, Sr. Advocate with Ms. Leena Tuteja, Advocate. For Respondent: Mr. Abhrajit Mitra, Sr. Advocate with Mr. Debanjan Mandal, Mr. Shaunak Mitra, Mr. Iram Hassan, Mr. Nitin Kumar Chahar, Mr. Mukul Katyal and Mr. Vikrant Pachnanada, Advocates for R-1 & 2.

Mr. Joy Saha, Sr. Advocate with Mr. Rajarshi Dutta, Mr. VVV Sastry, Ms. Wamika Trehan and Mr. Tridib Bose, Advocates for R-3 & R-4. Mr. Sanjay Gupta, Mr. Rahul Joshi and Mr. Rohit Keshari, (CS) for R-3 & 4.

Mr. P Nagesh, Sr. Advocate with Mr. Ashutosh Gupta, Mr. Ratnankur Roy, Mr. Akshay Sharma and Mr. Gaurav Rana, Advocates for R-5 & 8.

Mr. Krishnendu Datta, Sr. Advocate with Mr. Sholab Arora, Mr. Kunal Mimani and Mr. Kunal Vajani, Advocates for R-6.

With Company Appeal (AT) No. 132 of 2020

IN THE MATTER OF:

Before NCLT Before NCLAT 1. Biplabankur Roychowdhury Ori. Resp. No. 2 Appellant No.1

Company Appeal (AT) No. 141, 132 & 123 of 2020 3

Residing at 28W, Ramkrishna Samadhi Road, Kankurgachi, Kolkata - 700054 e-mail: biplab@mpjewellers.com 2. M.P. Jewellers (B.S.) & Co. Ori Resp. No. 6 Appellant No.2 99, Vivekananda Road, Kolkata - 700006

Versus. 1. Pralayankur Roychowdhury Ori. Pet. No. 1 Respondent No.1 Residing at 28W, Ramkrishna Samadhi Road, Kankurgachi, Kolkata - 700054 e-mail: parlay@mpjewellers.com 2. Rudrankur Roychowdhury Ori. Pet. No. 2 Respondent No.2 Residing at, Flat No. 402, Shadari Apartment 106, Southern Avenue, Kolkata - 700029 Email: rudra@mpjewellers.com 3. M.P. Jewellers Co. (1945) Pvt. Ltd. Ori. Resp. No. 1 Respondent No.3 P-227, C.I.T. Road, Scheme - VIM Kankurgachi, Kolkata - 700054 Email: ao@mpjewellers.com 4. Ratnankur Roychowdhury Ori. Resp. No. 3 Respondent No.4 Residing at P-227, C.I.T. Road Scheme - VIM, Kankurgachi Kolkata - 700054 Email: ratnankur17@gmail.com 5. Shibaankur Roychowdhury Ori. Resp. No.4 Respondent No.5

Residing at P-227, C.I.T. Road

Company Appeal (AT) No. 141, 132 & 123 of 2020 4

Scheme - VI M, Kankurgachi

Kolkata - 700054

Email: shibankur@mpjewellers.com 6. M.P. Jewellers (G.B) & Co. Ori. Resp. No. 5 Respondent No.6

Residing at P-227, C.I.T. Road

Scheme - VI M, Kankurgachi

Kolkata - 700054

Email: parlay@mpjewellers.com / rudra@mpjewellers.com 7. M.P. Jewellers (JSK) & Co. Ori. Resp. No. 7 Respondent No.7 1, Vivekananda Road Kolkata - 700007 Email: ratnankur17@gmail.com

8. M.P. Jewellers (Calcutta) & Co. Ori. Resp. No. 8 Respondent No.8

P-59, C.I.T. Road, Scheme-

VII M Kankurgachi, Kolkata - 700054

For Appellants: Mr. Joy Saha, Sr. Advocate with Mr. Rajarshi Dutta, Mr. VVV Sastry, Ms. Wamika Trehan and Mr. Tridib Bose, Advocates. Mr. Biplabankur Roy Chowdhury, in person.Mr. Sanjay Gupta, Mr. Rahul Joshi andMr. Rohit Keshari, (CS).

For Respondent: Mr. Abhrajit Mitra, Sr. Advocate with Mr. Debanjan Mandal, Mr. Shaunak Mitra, Mr. Iram Hassan, Mr. Nitin Kumar Chahar, Mr. Mukul Katyal and Mr. Vikrant Pachnanada, Advocates for R-1 & 2.

Mr. P Nagesh, Sr. Advocate with Mr. Ashutosh Gupta, Mr. Ratnankur Roy and Mr. Gaurav Rana, Advocates for R-4 & 7.

Mr. Dinesh Agnani, Sr. Advocate with Ms. Leena

Company Appeal (AT) No. 141, 132 & 123 of 2020 5

Tuteja, Advocate for R-5 & 8.

Mr. KrishnenduDatta, Sr. Advocate with Mr. Sholab Arora, Mr. KunalMimani and Mr. Kunal Vajani, Advocates for R-6.

With Company Appeal (AT) No. 123 of 2020

IN THE MATTER OF:

Before NCLT Before NCLAT

1. Ratnankur Roychowdhury Ori. Resp. No. 3 Appellant No.1 Residing at 28W, Ramkrishna Samadhi Road, Kankurgachi, Kolkata - 700054 2. M.P. Jewellers (JSK) & Co. Ori. Resp. No. 7 Appellant No.2 1, Vivekananda Road Kolkata - 700007

Versus

1. Pralayankur Roychowdhury Ori. Pet. No. 1 Respondent No.1 Residing at 28W, Ramkrishna Samadhi Road, Kankurgachi, Kolkata - 700054 2. Rudrankur Roychowdhury Ori. Pet. No. 2 Respondent No.2 Residing at, Flat No. 402, Shadari Apartment 106, Southern Avenue, Kolkata - 700029 3. M.P. Jewellers Co. (1945) Pvt. Ltd. Ori. Resp. No. 1 Respondent No.3 P-227, C.I.T. Road, Scheme - VIM Kankurgachi, Kolkata - 700054 4. BiplabankurRoychowdhury Ori. Resp. No. 2 Respondent No.4 Residing at P-227, C.I.T. Road

Company Appeal (AT) No. 141, 132 & 123 of 2020 6

Scheme - VIM, Kankurgachi Kolkata - 700054 5. Shibaankur Roychowdhury Ori. Resp. No.4 Respondent No.5

Residing at P-227, C.I.T. Road

Scheme - VI M, Kankurgachi

Kolkata - 700054 6. M.P. Jewellers (G.B) & Co. Ori. Resp. No. 5 Respondent No.6

Residing at P-227, C.I.T. Road

Scheme - VI M, Kankurgachi

Kolkata - 700054

7. M.P. Jewellers (B.S.) & Co. Ori Resp. No. 6 Respondent No.7 99, Vivekananda Road, Kolkata - 700006

8. M.P. Jewellers (Calcutta) & Co. Ori. Resp. No. 8 Respondent No.8

P-59, C.I.T. Road, Scheme-

VII M Kankurgachi, Kolkata - 700054 For Appellants: Mr. P Nagesh, Sr. Advocate with Mr. Ashutosh Gupta, Mr. Ratnankur Roy, Mr. Akshay Sharma and Mr. Gaurav Rana, Advocates.

For Respondent: Mr. Abhrajit Mitra, Sr. Advocate with Mr. Debanjan Mandal, Mr. Shaunak Mitra, Mr. Iram Hassan, Mr. Nitin Kumar Chahar, Mr. Mukul Katyal and Mr. Vikrant Pachnanada, Advocates for R-1 & 2.

Mr. Joy Saha, Sr. Advocate with Mr. Rajarshi Dutta, Mr. VVV Sastry, Ms. Wamika Trehan and Mr. Tridib Bose, Advocates for R-3 &4.

Mr. Sanjay Gupta, Mr. Rahul Joshi and Mr. Rohit Keshari, (CS) for R-3 & 4.

Mr. Dinesh Agnani, Sr. Advocate with Ms. Leena

Company Appeal (AT) No. 141, 132 & 123 of 2020 7

Tuteja, Advocate for R-5 & 8.

Mr. Krishnendu Datta, Sr. Advocate with Mr. Sholab Arora, Mr. Kunal Mimani and Mr. Kunal Vajani, Advocates for R-6.

JUDGMENT

(13th July, 2021)

A.I.S. Cheema, J.:

1. These Appeals are arising out of litigation between five brothers and

the Company and Partnership Firms established. Respondent Nos. 1 and 2-

Mr. Pralaynkur Roychowdhury and Mr. Rudrankur Roychowdhury

(Brothers) in the Appeal are Original Petitioner Nos. 1 and 2 who filed C.P.

No. 492/KB/2017 before Ld. NCLT, Kolkata Bench, Kolkata. The Original

Respondent No. 1 arrayed in the Company Petition is M P Jewellers & Co.

(1945) Pvt. Ltd. (Hereinafter referred as "Company"). Biplabaankur

Roychowdhury, Ratnankur Roychowdhury and Shibaankur Roychowdhury

are the brothers of the Original Petitioners arrayed in the Company Petition

as Respondent Nos. 2 to 4. M.P. Jewellers (G.B) & Co., M.P. Jewellers (B.S.)

& Co., M.P. Jewellers (JSK) & Co. and M.P. Jewellers (Calcutta) & Co. have

been arrayed as Respondent Nos. 5 to 8 in the Company Petition which are

registered partnerships established by these brothers.

For the sake of convenience (and order in which these Appeals have

been argued before us) we are treating Company Appeal (AT) No. 141 of

2020 as a leading matter for the purpose of reference (unless appearing

otherwise). When we refer to documents and page numbers unless

mentioned otherwise we would be referring the same form the record of

Company Appeal (AT) No. 141 of 2020.

Company Appeal (AT) No. 141, 132 & 123 of 2020 8

2. These Appeals are arising out of same Impugned order dated 3rd

August, 2020 passed by the Ld. NCLT in un-numbered I.A. No..../KB/2020

in CP No. 492/KB/2017. To put the same in short, during the pendency of

the Company Petition by an order dated 3rd December, 2019, the Ld. NCLT

had in I.A. No. 834/KB/2019 directed the Special Officer who had been

earlier appointed in the Petition to appoint valuer by taking names from the

Petitioners as well as the Respondents of their choice and the valuer was

asked to value all shares in terms of Prayer 'A' of the Application and to file

report. On receipt of the Report, when the un-numbered I.A. was moved by

the Original Petitioners, the Ld. NCLT passed the Impugned Order.

Operative part of Impugned Order reads as under:

"26. In view of the matter and in view of the above position of law it appears to me that it is just and equitable in the peculiar circumstances of the case, this application is to be allowed in part upon the following orders:

i). The reserve price of share value of one equity share is fixed at Rs. 277.00 based on the valuation report;

ii). Petitioners group and respondents group each shall quote respective price for buyout/sell out which shall be higher than Rs.

277.00 per shares of R1, in a sealed cover within one week form the date of this order before the Tribunal, with due intimation to the registrar, NCLT, Kolkata, preferably on or before 3 pm on 12.08.2020;

iii). The group quoting its price higher than the one quoted by the other group shall have first option to buy the shares of the group quoting the lower price and the group quoting higher price to purchase the shares of other group quoting lower price and the group quoted lower price shall transfer the shares to the successful bidder;

27. Unnumbered IA No. /KB/2020 in CP No. 492/KB/2017 is allowed in part. listed on confirmation of bidding and for hearing the CP along with the pending applications on 14.08.2020."

Company Appeal (AT) No. 141, 132 & 123 of 2020 9

3.(A). Company Appeal (AT) No. 141 of 2020 is filed by Original Respondent

Nos. 4 and 8-Mr. Shibaankur Roychowdhury and M P Jewellers (Calcutta).

(B). Company Appeal (AT) No. 132 of 2020 is filed by Original Respondent

Nos. 2 and 6 - Mr. Biplaankur Roychowdhury and M P Jewellery (BS) & Co.

(C). Company Appeal (AT) No. 123 of 2020 is filed in the name of the

Company Original Respondent Nos. 3 and 7- Mr. Ratnankur Roychowdhury

and M P Jewellers (JSK).

4. The litigation is between five brothers with regard to the M P Jewellers

(1945) & Co. and thus it is inherently a family dispute.

5. We now refer in short contents of the Company Petition. The Original

Petitioner Nos. 1 and 2 - Mr. Pralayankur Roychowdhury and Rudrankur

Roychowdhury in the Company Petition filed, stated as to how one Mr.

Phanindra Bikash Roy Chowdhury (since deceased) established in

Partnership the business of Gold, Gems, Silver Articles, Diamond, Platinum

Jewellery etc. in the name of M P Jewellers and on his expiry the Company

was incorporated in 2005 dissolving the earlier partnership which contained

the brothers. It is stated that the Company is holding of several trademarks

and four are registered trademarks. The Petition claimed that the Original

Petitioners and Original Respondent Nos. 2 to 4 (the five brothers) realised

that to conduct the jewellery business it was necessary for them to

constitute their own partnership firms and thus the four firms got

established. M P Jewellers (GB) & Company is of the Original Petitioner Nos.

1 and 2 and their family members; M P Jewellers (BS) & Co. is of Original

Respondent No. 2 and his family members; M P Jewellers (JSK) & Co. is of

Company Appeal (AT) No. 141, 132 & 123 of 2020 10

Original Respondent No. 3 and his family members and M P Jewellers

(Calcutta) & Co. is of Original Respondent No. 4 and their respective family

members. It is stated that Memorandum of Understanding (MoU in short)

was executed between the Original Petitioners and Original Respondent Nos.

2 to 4 on 25th February, 2009 and later the same was revised which Revised

Memorandum of Understanding was executed on 07th April, 2009 and the

MoU was to remain valid till 31st July, 2011. The Petition refers to the

contents of the MoU to make averments regarding violation of the MoU by

Respondents and that the Original Petitioners developed and expanded

business much more than the other groups of the Company and set up

several branches. The petition then refers to litigation started against the

Original Petitioners by Original Respondent Nos. 2 to 4 and filing of suit

before Civil Judge Senior Division, Alipore and obtaining ex-parte Order. The

Petition refers to litigation and as to how the Original Petitioners were now

not being made part of the Board Meetings and balance-sheets were being

settled without notice to the Original Petitioners. For such and other

reasons, the Petition claimed oppression and mismanagement on the part of

the Respondents.

6. We now refer to Defence raised by contesting Respondents in NCLT.

The Original Respondent Nos. 1 to 4, 6, 7 & 8 filed Reply in the Petition as

at Annexure A-3, Page 192. The fact about how the family patriarch started

the proprietorship business which converted into the Company and the fact

that the trademarks "M P" & "M P Jewellers" have gained substantial

goodwill is claimed by the Original Respondents. It is stated that these

Company Appeal (AT) No. 141, 132 & 123 of 2020 11

trademarks are registered with the Company. The floating of partnership

firms by the Brothers is also not in dispute. It is stated by the Respondents

in the Reply before Ld. NCLT that to have better control over the business

MoU was entered into between the directors/brothers on 25th February,

2009 and as to how the right to enjoy trade name was shared leading to the

establishment of the Partnership Firms as appearing in the Cause Title. The

Respondents have also referred to the contents of the MoU. It is stated that

each of the shareholders was to pay yearly royalty at the rate of 50,000/-

per annum for using the registered trademark to the Respondent No. 1

Company with an increase at the rate of 10 percent every year. It is stated

that Memorandum of Understanding was agreed to be valid till 31st July,

2011 as per the MoU but was carried on and continued by the acts and

conducts of the parties. Respondents claimed that the Petitioners were

starting unit within five kilometres radius of existing unit of Original

Respondent No. 2 which led to the filing of these title suits. The Reply before

Ld. NCLT makes averments against the Petitioners.

7. The above is bird's eye view of the set up between the parties, their

relationships and as to how relations between the parties who are brothers

strained. M P Jewellers (GB) & Co. has in Diary No. 23590 filed list of

litigations between the parties which reads as under:

Sr. No. Cause Title

1. IN THE COURT OF 9TH CIVIL JUDGE (SENIOR DIVISION) AT

ALIPORE

TITLE SUIT NO. 937 OF 2017

Company Appeal (AT) No. 141, 132 & 123 of 2020 12

Biplabankur Roychowdhury & Ors. .... Plaintiffs

Vs.

M.P. Jewellers (G.B.) & Co. & Ors. .... Defendants

2. IN THE COURT OF THE LEARNED DISTRICT JUDGE AT ALIPORE

TITLE SUIT NO. 11 OF 2017

M.P. Jewellers & Co. (1945) Pvt. Ltd. .... Plaintiff

Vs.

Pralaynkur Roychowdhury & Ors. ....Defendants

3. IN THE COURT OF LEARNED 9TH CIVIL JUDGE (SENIOR DIVISION)

AT ALIPORE

TITLE SUIT NO. 1009 OF 2017

M.P. Jewellers & Co. (1945) Pvt. Ltd. .... Plaintiff

Vs.

M.P. Jewellers (G.B.) & Co. & Ors. .... Defendants

4. IN THE COURT OF LEARNED 2nd CIVIL JUDGE (JUNIOR

DIVISION) AT ALIPORE

TITLE SUIT NO. 1667 OF 2017

Biplabankur Roychowdhury & Ors. .... Plaintiffs

Vs.

M.P. Jewellers (G.B.) & Co. & Ors. .... Defendants

5. IN THE COURT OF LEARNED 9TH CIVIL JUDGE (SENIOR DIVISION)

AT ALIPORE

TITLE SUIT NO. 1314 OF 2018

Topaz Advertising Services .... Appellants

Company Appeal (AT) No. 141, 132 & 123 of 2020 13

Vs.

Rudrankur Roychowdhury & Anr. .... Respondents

6. IN THE HIGH COURT AT CALCUTTA

C.O. NO. 486 OF 2018

Biplabankur Roychowdhury & Ors.

Vs.

M.P. Jewellers (G.B.) & Co. & Ors.

7. IN THE COURT OF LEARNED 6TH CIVIL JUDGE (JUNIOR

DIVISION) AT ALIPORE

TITLE SUIT NO. 343 OF 2019

M.P. Jewellers & Co. (1945) Pvt. Ltd. .... Plaintiff

Vs.

Pralaynkur Roychowdhury & Ors. ....Defendants

8. IN THE COURT OF LEARNED 6TH CIVIL JUDGE (JUNIOR DIVISION)

AT ALIPORE

MISC CASE NO. 59 OF 2019

(ARISING OUT OF TITLE SUIT NO. 343 OF 2019

M.P. Jewellers & Co. (1945) Pvt. Ltd. .... Plaintiff

Vs.

Pralaynkur Roychowdhury & Ors. ....Defendants

9. IN THE COURT OF THE LEARNED DISTRICT JUDGE AT ALIPORE

MISC. APPEAL NO. 100 OF 2019

Pralaynkur Roychowdhury & Ors. ....Appellants

Company Appeal (AT) No. 141, 132 & 123 of 2020 14

Vs.

M.P. Jewellers & Co. (1945) Pvt. Ltd & Ors. ....Respondents

8. Against the Impugned Order in Company Appeal (AT) No. 141 of 2020

it has been argued and the grievances of these Appellants (Original

Respondent Nos 4 and 8) is that the Original Petitioners have not

established acts of oppression or misconduct on the part of the Original

Respondents and the Ld. NCLT has not recorded any finding on this count.

It is argued that the Appointment of Valuer and Valuation Report was bad

and that it was the violation of the Orders of Ld. NCLT. These Appellants

(Original Respondents 4 and 8) claim that they had filed I.A. 174/KB/2020

seeking the report of special Officer along with documents. It is stated that

the Application was practically disposed by the Impugned Order and

documents relied on for arriving at the valuation were not given. It is argued

that although the Ld. NCLT had in its earlier Order directed the Special

Officer who were appointed to take names of the valuers from the Petitioners

and Respondents but this was not done by the Special Officer and this

Special Officer could not on his own appoint valuer. It is also claimed that in

the un-numbered I.A. in which the Impugned Order has been passed, no

opportunity was given to the Appellants (Original Respondents 4 and 8) to

file Reply. According to the Appellants, the Ld. NCLT wrongly recorded that

the despite directions Respondents had not filed written notes of defence. It

is argued that the matter was fixed for hearing by Order dated 24th July,

2020 which did not contain any such direction. Thus, it is claimed that

Company Appeal (AT) No. 141, 132 & 123 of 2020 15

there was violation of principles of natural justice. It is argued that I.A.

172/KB/2020 have been filed challenging the appointment of L.S.I.

Financial Services Pvt. Ltd. as the valuer. By the Impugned Order, the Ld.

NCLT disposed of said I.A. without referring to the same and modified its

Order dated 3rd December, 2019, as if the earlier Order was for appointment

of suitable person of the choice of Special Officer.

9. Against this, Respondent Nos. 1 and 2 of Company Appeal (AT) No.

141 of 2020 are supporting the Impugned Order and claimed that the

Company which was to carry on various aspects of jewellery business in

terms of MoU dated 07th April, 2009 the same was for limited duration

which expired by afflux of time on 31st July, 2011. It is claimed that

Company has no running business and the only asset is five registered

trademarks which are licensed to the five branches against which the

Company earns nominal license fee every year. Apart from that the

Company has some nominal fixed deposits. The Respondents 1 and 2

(Original Petitioners 1 and 2) are 40 percent shareholders in the Company

while the other brothers hold 60 percent shares. Based on the MoU, the

respective Appellants in these Appeals initiated proceedings against the

Original Petitioners and obtained ex-parte Orders which order ultimately

merged in the Order of District Judge on 31st January, 2018 and the Interim

Orders were set aside and that it was held that the MoU had expired by

afflux of time. It is stated that as per Article 53 of the Articles of Association

of the Company no business in the Board of Meetings can be transacted

without quorum with regard to the Company. The Article requires that 2/3rd

Company Appeal (AT) No. 141, 132 & 123 of 2020 16

of the Directors should remain present in person and 2/3rd of the directors

would constitute the quorum. This makes it necessary that four out of the

five of the brothers should be present for holding of board meeting. The

Learned Counsel for Respondents 1 and 2 (Original Petitioners 1 and 2) has

argued that in spite of such article 53, the Board Meetings were being held

without notice to the Original Petitioners and there was oppression and

mismanagement. It is claimed that for such reasons the Company Petition

was filed and NCLT was required to appoint Special Officer. It is stated that

because of Article 53 and the strained relation between the brothers there is

a deadlock in the management of the affairs. Ld. NCLT found the deadlock

to be there in its Order dated 05th July 2019 and deadlock was an admitted

position. It is argued that because of this situation, the Ld. NCLT had on 3rd

December, 2019 passed orders for valuation of the shares which order was

not challenged. The argument is that once the valuation was received the

Impugned Order directing parties to buy or sell off was consequential step to

be taken. The argument is that the valuer was appointed by Special Officer

after repeated opportunities given to the Appellants (Original Respondents)

to suggest names. The Valuation report was not challenged before Ld. NCLT

on its merits but only on the technicalities that further opportunity should

have been given to the respective Appellants (Original Respondents) to name

the valuer. The Learned Counsel for the Respondent 1 and 2 (Original

Petitioners 1 and 2) referred to Paragraph 34 (Page 232 of the Appeal) of the

Reply which was filed before Ld. NCLT. The said Paragraph reads as under:

"34. With reference to paragraph IV (62) of the said petition, it is denied that the petitioners can claim to have the largest

Company Appeal (AT) No. 141, 132 & 123 of 2020 17

shareholding as alleged. The respondents together admittedly have 60 percent of shares and in any event as the majority shareholders are entitled to enforce such rights as available in law, including the right to exercise the option to buy out the minority shareholding at fair value, if situation arises. It is denied that the petitioners have done everything to build the brand value of M.P. Jewellers or its respective trademarks as alleged."

Referring to this Paragraph, Respondents 1 and 2 (Original Petitioners

1 and 2) are submitting that even the respective Appellants claimed right to

exercise option to buy out the minority shares at fair value. Thus it is

argued that no fault can be found with the Impugned Order which has been

passed by the Ld. NCLT considering situation of deadlock between the

parties, keeping in view the interest of the Company. The Order directing

buy/sell shares is only with the object of bringing to clozure the disputes

between the parties.

10. It has been argued on behalf of the Respondents 3 and 4 (Original

Respondents 1 and 2) (Company Appeal (AT) No. 132 of 2020) adopting the

arguments of Original Respondents 4 and 8 that while dealing with and

disposing the un-numbered I.A. so as to pass the Impugned Order principles

of natural justice were not followed. It is claimed that these Respondents

were not given opportunity to file Affidavit in Reply to the I.A. which was

filed and that it was erroneous on the part of the Ld. NCLT to think that all

relevant material was on record. It is also argued that no case of oppression

or mismanagement was made out by the Original Petitioners. It is also

argued that the Ld. NCLT fell in error in its reasoning that the Respondents

were delaying the proceedings and business would be affected. It is argued

that the Original Petitioners have themselves claimed that the Company

Company Appeal (AT) No. 141, 132 & 123 of 2020 18

does not have any real earning business except earning royalty from the

trademarks which are licensed to the partnership firms. These Respondents

claimed that the Original Petitioners were not acting in terms of the

Memorandum of Understanding because of which Title Suit No. 937 of 2017

was required to be filed before CJSD, Alipore. It is claimed that the said Suit

is still pending and that the Application filed by Original Petitioners

challenging maintainability of the said Suit has been dismissed. These

Respondents claimed that as per MoU dated 25th February, 2009 and 7th

April, 2009 the five brothers are entitled to use trademarks having

particular regard to the fact that the Company is of Jewellery Company.

These Respondents 3 and 4 (Original Respondents 1 and 2) claimed that

before the Ld. NCLT following Interim Applications were pending:

a. I.A. 834 of 2019 filed by Original Petitioners for appointment of valuer.

b. I.A. 172 of 2020 filed by Original Respondent No. 3 Ratnankur Roychowdhury challenging the appointment of valuer.

c. I.A. 173 of 2020 filed by Original Respondent No. 2- Biplabaankur Roychowdhury challenging maintainability of the Company Petition.

d. I.A. 174 of 2020 filed by Original Respondent No. 4 - Shibaankur Roychowdhury seeking valuation report along with documents.

e. I.A. 175 of 2020 filed by Original Respondent No. 2- Biplabaankur Roychowdhury for rectification of Order dated 3rd December, 2019.

f. I.A. 176 of 2020 filed by Original Respondent No. 2 - Biplabaankur Roychowdhury alleging contempt by Special Officer of Orders passed by Ld. NCLT.

Company Appeal (AT) No. 141, 132 & 123 of 2020 19

g. I.A. 177 of 2020 filed by Original Respondent No. 2 - Biplabaankur Roychowdhury for rectification of order dated 3rd January, 2020.

11. These Respondents claimed that the Impugned Order has been passed

even without deciding such Applications and it is claimed that the

Appointment of the valuer and valuation report are both bad in law and the

same were in violation of orders dated 3rd December, 2019 of NCLT itself.

12. Respondents 5 and 8 in Company Appeal (AT) No. 141 of 2020

(Original Respondents 3 and 7-Ratnankur Roychowdhury and MP Jewellers

(JSK) & Co. in Company Appeal (AT) No. 123 of 2020) have also made

similar averments against the Impugned Orders.

13. Respondent No. 6 (Original Respondent No. 5) and the Original

Respondents 1 and 2 (Original Petitioners 1 and 2) are supporting the

Impugned Orders.

14. Now if the Impugned Order is perused the Order shows as to how the

present parties who are brothers have been litigating. The Order has been

criticised as un-numbered but it would be appropriate to record that

Impugned Order shows that said I.A. was moved on 24th July, 2020 through

Video Conferencing. That was some time after, when Covid-19 affected the

Country in March, 2020 and lockdown had been imposed and the Ld. NCLT

and other Tribunals were finding out ways to adopt the system of Virtual

Hearing. The Impugned Order shows that the Original Petitioners had

moved the Application through Video Conferencing upon notice to the

Respondents and had pleaded for urgent hearing of the un-numbered

application. The Impugned Order shows that when the un-numbered

Company Appeal (AT) No. 141, 132 & 123 of 2020 20

application was moved on 24th July, 2020 Ld. NCLT had recorded

satisfaction about the urgency and directed that the Application may be

listed on 3rd August, 2020. Even on 3rd August 2020 the Application was

taken up only as an un-numbered I.A. The difficulties with regard to

numbering appear to have been there but matters taken up - For Justice.

Only because the Impugned Order has been passed treating the I.A. as un-

numbered makes the position clear that in abnormal times of Covid-19 the

Judicial System was still trying to deliver.

15. The Impugned Order shows that Ld. NCLT referred to the prayer made

in the I.A. requiring the Original Respondents 2-4 (the brothers) to sell their

shareholding or in the alternative seeking open bidding for buyout/sell out

of shares. Impugned Order shows that the Application was taken up for

hearing through video conferencing and the Ld. NCLT considered the

contents of the Petition which was filed under Section 241 and 242 of the

Companies Act, 2013. Reference was made to Order dated 22nd September,

2017 that prima facie ground was made out that Respondents need to

comply with the Article 53 before holding of the Board Meetings and as to

how on 05th July, 2019 Sr. Advocate Shyamal Sarkar came to be appointed

as Special Officer to preside and hold meetings of the Board of Directors and

to implement the Resolutions passed. This shows the total break down of

relations. Impugned Order refers to how I.A. 834/2019 was filed making

allegations of illegal acts on the part of the Original Respondents and in view

of the continuing deadlock prayed for valuation of shares of the Company

Company Appeal (AT) No. 141, 132 & 123 of 2020 21

and in the I.A. 834/KB/2019 on 3rd December, 2019 the Ld. NCLT had

passed following Order:

"Ld. Counsel for the applicant and respondent no. 1 to 4 and 6 to 8 appeared.

IA No. 834/KB/2019 is filed by the petitioner for valuing the shares with an offer to buy back either to the respondent or he may buy the share. It is a family company and the Petitioner and Respondent cannot go together as it appears from the pleading.

We direct the Special Officer to appoint valuer by taking names from Petitioner as well as respondents of their choice. Valuer to value all shares in terms of prayer A of this application and file report within two weeks.

Matter to come up on 03/01/2020."

16. Paragraph 8 of the Impugned Order then reads as under:

"8. In compliance of the aforesaid orders the petitioners have suggested names of valuer to the Learned Special Officer but the respondents did not give any suggestion for appointment of a valuer nor reverted on the petitioners' suggestion. Ultimately, the Learned Special Officer on his own appointed M/s. L.S.I Financial Services Pvt. Ltd. having their Office at Sagar Trade Cube, 5th Floor, 104, S.P. Mukherjee Road, Kolkata 700026 requesting to submit report by 30/12/2019 to enable the Special Officer to file his report by 03/01/2020 before this Adjudicating Authority. The applicants-petitioners have annexed the minutes of the meeting held by the Learned Special Officer on 11/12/2019, 13/12/2019 and 18/12/2019 and collectively marked as Annexure 'C' with this application. Upon receiving the valuation report from M/s. L.S.I. Financial Services Pvt. Ltd. (Annexure D to this Application), the Learned Special Officer has filed the same along with his report (Annexure - 'E' to this application) and the same was recorded vide order dated 03/01/2020 as follows:

"Ld. Counsel for the Petitioner appeared. Mr. Biplabankur Roy Chowdhury appeared in person, Mr. Kumar Gupta appeared for the Special Officer.

Company Appeal (AT) No. 141, 132 & 123 of 2020 22

The Special Officer produced the report. It is taken on record. Copies made available to the respondent. Respondent seeks time to file a response to the report. It is to be filed within 10 days.

Today a copy of the report is handed over to respondent no. 2 by Ld. Counsel for the Special Officer in Court.

Matter to come up next on 30/01/2020.""

(Emphasis Supplied)

17. In Paragraph 9 of the Impugned Order reference is made as to how

Order was required to be passed on 3rd February, 2020 as number of I.As

were being filed for the Original Respondents. Impugned Order then refers to

Company Appeal (AT) No. 65 of 2020 which was filed before this Tribunal by

Original Petitioners and the directions of this Tribunal that the Company

Petition should be decided early on merits instead of adjourning the matter

based on Interlocutory Applications. Impugned Order then refers to the

Covid-19 situation and how the matter could not be taken up on 23rd March,

2020 as the normal functioning was hampered and that any such document

the un-numbered application had come to be filed which was being taken up

for consideration. The Impugned Order refers that the Ld. NCLT had heard

the both-sides and perused the documents as well as the valuation report. It

mentioned that despite direction to the Respondents no written-notes on

defence have been filed. The various Appellants have criticised this part of

the Impugned Order however we would not doubt the recording of the Ld.

NCLT as the words used is "direction" and not "order". Although the

observation in Paragraph 12 of the Impugned Order "Heard both-sides" is

also criticised by Original Respondents 3 and 7 that they were not heard.

Paragraph 17 of the Impugned Order itself mentioned that no one appeared

Company Appeal (AT) No. 141, 132 & 123 of 2020 23

for Original Respondents 3 and 7. Written Submissions of Respondent Nos.

5 & 8 (Ori. Respondent Nos.3 & 7) diary No. 23583 show in para "i" that

their representative had sent e-mail to Registry with copy to all parties on

31.08.2020 (should be 3.08.2020) about inability and furnished medical

prescription and thus 1/3 of the Respondents were not present. Thus they

were aware. There is no reason why Counsel could not appear.

18. Ld. NCLT referred to the averments being made by the parties against

each other and observed in Paragraphs 19 and 20 as under:

"19. Ld. Sr. Counsel Mr. Abhrajit Mitra, in his reply submitted that excepting Respondent No. 5, all the Respondents are objecting to this Application. When the Valuation report has been received, no one filed any objection to the Valuation Report. The Respondents cannot object to buy out and sell out the shares because the Valuation order was made on 03-12- 2019 without anybody's objection. Whenever there is a valuation done, the valuation order implies that the parties agree to buy and sell. The Order dated 03-12-2019 did not dispose of the Application. The Application is pending. Nobody challenged the valuation, appointment of Valuer etc. For directing buying out and selling out on the basis of valuation report, no consent is required because when the valuation order is made, order is made for the purpose of implementing it unless the parties object to it. The valuation is done with an object in mind that after valuation, somebody can sell or buy the shares. So far as the oppression and mismanagement is concerned, if the Petitioner establishes that the Respondents are oppressors, the Petitioner has the right to buy out the shares. Oppression does not compel to sell the shares. If the buying and selling of shares is done through auction, everybody will participate in the auction bid. The Respondents did not challenge the Order dated 03-12-2019. Last six months have been spent on valuation without objecting to it. That cannot be done by the Respondents when this application was moved for conducting sale of the shares to resolve the dispute with a finality. The valuation has been done for a radical purpose. The Company is on the verge of being struck off. In the

Company Appeal (AT) No. 141, 132 & 123 of 2020 24

interest of the Company, without anybody's objection buying and selling of shares should be allowed on the basis of valuation report.

20. In the above said background of the case in hand and considering the objection to sell out or buy out the shares of shareholding who are willing to exit from R1 or takes over R1 company without the other rival shareholders, it appears to me that the objections of the respondents in arriving at a competitive price higher than the price fixed by the valuer is unsustainable under law and devoid of any merits. Highlighting the Hon'ble NCLAT order dated 12.03.2020 that the Tribunal is expected to decide the CP on merits instead of adjourning the matter based on IA's, the Ld. Pr. CS has submitted that this Tribunal is prevented from conducting bidding to enable the parties to sell or buyout the shares of the R1. However, what he pressed before me is to hear the applications already pending for consideration and that he is filing another application for early hearing. Altogether six (6) application filed is pending for consideration. To have a better understanding of those IA's pending for consideration, and for an eye view to understand the litigation instinct in the respondents not to exit from the R1 company by selling out their shares, or they themselves will not take over the R1 buying the shares from the petitioners, even if a competitive price is arrived at upon conducting bidding between the parties, it is good to read some of the IA's."

(Emphasis Supplied)

19. Ld. NCLT after such observations referred to the manner in which the

Respondents had filed some of the I.As and observed in Paragraphs 22 to 23

as follows:

"22. An overall screening of the pending IA's, I am unable to find out any serious objections raised on the side of the respondents challenging the valuation done by the valuer. What is under challenge is that valuer has not given an opportunity to suggest the name of the valuer at their instances and appointing the valuer by the special officer is against the direction and hence the report of valuation is not binding on them. There are no averments in the application as to why the valuation done by the independent valuer is faulty. In fact, the valure's report is unchallenged on merits and the only ground

Company Appeal (AT) No. 141, 132 & 123 of 2020 25

for challenging the valuation is that the respondents did not get adequate opportunity to give names of valuers. This objection is also found devoid of any merits. The Special Officer's records pertaining to valuation annexed with the application clearly go to show that the Learned Special Officer went out of his way to accommodate the respondents' demand. It appears that Learned Special Officer in fact adjourned the meetings twice, i.e., on 11/12/2019 and 13/12/2019, so as to enable the respondents to attend the meeting for appointment of Valuer, which ultimately was held on 18/12/2019. Documents and more particularly letters to go to show that the date 18/12/2019 was fixed for meeting only because that was the only date suitable to the respondents. The Respondents have also not submitted any valuation report or even suggested any different valuation for the respondent no. 1 company's shares. In the above said factual background brought out from the case in hand the question is whether the prayer for bidding amongst the parties for buyout/sellout of shares followed by transfer of all the shares of the unsuccessful bidder/bidders to the successful bidder is allowed? If so in what manner the bidding is to be conducted?

23. The order in IA 894/2019 for appointing valuer dated 03.12.2019 no doubt became final. The valuation report filed by the Special officer also becomes final for want of filing objection within the period of time granted to the respondents. The Tribunal while passing the order directing to value the shares observed that the R1 company is a family company and the petitioners and respondents cannot go together. The challenge raised form the side of the respondents also shows that though they are brothers, they have no intention to have an amicable settlement in between them. It cannot be ruled out that the respondents would not like to allow a peaceful exit of the petitioners group or peaceful buyout of the respondents shares even if a competitive price is offered to them. The petitioners group and respondents group are brothers. They know each other better than me and their professionals. It is difficult to have a reunion when brotherhood between them is broken irrevocably. I am afraid they are controlled by their emotions despite the highs and lows of relationships between them. They want to add fuel to burning flame. In a situation brought out in

Company Appeal (AT) No. 141, 132 & 123 of 2020 26

the peculiar nature of the instant case why they disagree to buy the shares of the petitioners or selling out their shares to the petitioners not at a value fixed by the Tribunal or by the value, but in an auction in between them giving an opportunity to quote highest price to take over the company in their hand safely without any sort of interference from rival group of brothers? No valid explanation is forthcoming from the side of the Respondents."

(Emphasis Supplied)

20. Ld. NCLT relied on the Judgment in the matter of "Namtech

Consultants Pvt. Ltd. & Ors. Vs. G.E. Thermomatrix India Pvt. Ltd. & Ors."

MANU/KA/7403/2007 passed by the Hon'ble Karnataka High Court at

Bengaluru for a way out in situation recorded above and taking a clue from

observations in the said Judgment observed as under:

"24.............The proposition laid down in the cited decision is squarely applicable to the case in hand. By partly upholding the view of the CLB that "in view of the strained relationship between both the rival groups, one of them should quit the JV Co., by selling its shares to the other group but it was not justified in directing the appellant's group to sell their shares in favour of the respondents' group at the price to be determined by the independent firm of chartered accountants" the Hon'ble High Court allowed bidding in between the Patrice to resolve the dispute finally. Here in this case also the relationship between the two groups of brothers is strained. Their relationship is irrevocably broken. There is no chance of settlement. Multiple litigation is encouraged between the parties. Fed up with the litigation the petitioners choose either to exit from the company or to fully own the company. Is it not a fair and just to allow the said prayer. I do not find any reasonable objections raised in this regard from the side of the respondents so as to disallow the said prayer."

21. Ld. NCLT went to hold that it was just an equitable in the critical

situation of the case that the application filed by Original Petitioner should

Company Appeal (AT) No. 141, 132 & 123 of 2020 27

partly be allowed and passed orders as in Paragraph 26 and 27 reproduced

in earlier part of this Judgment.

22. Having heard Learned Counsel for both-sides at length and

considering the various averments made by the parties against each other,

we agree with the Ld. NCLT that it is a situation of deadlock where in view of

the Article 53 of the Articles of Association of Company with Original

Petitioners being on one side and the other three brothers being on the other

quorum of 2/3rd of the directors could not be achieved except with the

attendance of one of the Original Petitioners and considering the various

litigations between the parties, Ld. NCLT was right in observation that there

was a deadlock. When the record shows that the Ld. NCLT had earlier given

directions to call for valuation report of the shares, the natural corollary

would be that on receipt of the Report, if objections are not filed, the parties

can be asked to buy out or sell out. Given the facts of the matter, what

Appellants of these Appeals are, in the name of "Principles of Natural

Justice" seeking is that they should have been allowed to take their own time

before NCLT acted upon the Valuers Report that had been received. The

unnumbered I.A was only to give further Orders on Valuation received. It is

not that, for every application filed whole drill of Reply Affidavit, and

Rejoinder etc. must be compulsory. The Impugned Order and Record show

that multiple I.As were being filed by the Respondents and the Ld. NCLT has

found their conduct to be a litigation instinct. Ld. NCLT which has been

dealing with parties in the Company Petition has taken such view and it

would not be appropriate for us to question the observations of the Ld.

Company Appeal (AT) No. 141, 132 & 123 of 2020 28

NCLT. In appeal also, the Appellants instead of one Appeal preferred to file

multiple Appeals although it appears that in the Company Petition the

Original Respondent Nos. 1 to 4, 6, 7 and 8 (Brothers) filed common Reply

(Annexure A-3). Adding multiple I.As in NCLT and multiple Appeals here to

the docket shows justification in the observations of the NCLT that there was

a deadlock and that there is a litigation instinct. The appellants are critical

of the Special Officer appointed by the Ld. NCLT (who was appointed to

ensure smooth holding of Board Meetings) and took opportunity to file even

against such Special Officer a contempt application. The Impugned Order

shows that when the Original Respondents did not co-operate in naming a

Valuer the Special Officer selected a name and got the valuation done. The

Respondents have been agitating over this claiming that the Special Officer

could not have on his own gone ahead to appoint a valuer and should have

moved the NCLT for modification. The Ld. NCLT does not appear to have

found fault with such procedure adopted by the Special Officer.

23. Although Appellants are claiming that oppression and

mismanagement is yet not held proved, Reply to the Company Petition,

Annexure A-3, in Para 37 while responding to the Petition Para IV (72) claims

that it is denied that any Board Meetings or general Meeting has been held

without Notice to the Petitioners. It is claimed in Reply Para 37 that being

family Company, notices were mostly verbal and only occasionally by way of

exchange of email, and that it was never the practice of Respondent No. 1

Company for issuing formal notices in Writing. When relations are strained

and admittedly Court disputes were there, such pleadings themselves make

Company Appeal (AT) No. 141, 132 & 123 of 2020 29

out a case of oppression for Original Petitioners. With such material on

record, course adopted by NCLT must be said to be judicious approach.

24. Going through the Impugned Order as has been passed, taking overall

conspectus, in interest of the Company and with the object of bringing peace

between the brothers, we do not find that the Impugned Order as has been

passed should be interfered with. In the facts of the matter, it appears to be

appropriate course and it is open to the parties to quote higher price for buy

out/sell out as has been ordered by the Ld. NCLT.

25. We do not find any substance in these Appeals.

i. Company Appeal (AT) No. 141 of 2020 is dismissed.

ii. Company Appeal (AT) No. 132 of 2020 is dismissed.

iii. Company Appeal (AT) No. 123 of 2020 is dismissed.

iv. No Orders as to costs, in each of the Appeals.

[Justice A.I.S. Cheema] The Officiating Chairperson

[Mr. V.P. Singh] Member (Technical)

New Delhi 13th July, 2021 Basant B.

Company Appeal (AT) No. 141, 132 & 123 of 2020