Suresh Kumar Agarwal ∨S & Ors vs J.B Daruka Papers Ltd & Ors & Ors

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NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH NEW DELHI COMPANY APPEAL (AT) NO.261-263/2025 (Arising out of judgement and order dated 30.09.2025 passed by NCLT, Allahabad in Company Petition No. 29/ND/2009) In the matter of: Suresh Kumar Agarwal & Ors Appellant Vs J.B. Daruka Papers Ltd & Ors Respondent For Appellant: Mr Arun Kathpalia, Sr Advocate, Mr. Rajnish Sinha, Ms Aadiya Siunha, Mr Siddarth Shankar, Mr Ashutosh Sharma, Mr Aditya, Advocates. For Respondent: Mr. Yogesh Jagia, Ms Nitya Ahuja, Ms Diksha Varma, Mr Abhinav Anand, Advocates. JUDGEMENT

JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL)

This appeal has been filed against an impugned order dated 30.09.2025

passed by the Ld. NCLT, Allahabad alleging the Ld. NCLT has restored

Respondents No.2, 4 and 5 as directors inspite of ignoring they had handed over

their resignation letters to Ld. Mediator, Shri Murari Lal Mathahelia, their real

paternal uncle/Phupha, in February, 2008 itself.

2. It is the case of the appellants they have been managing Respondent No.1

company since 2008 i.e. for the last 17 years but by way of the impugned order,

the management has been displaced. It is argued Respondent No.1 is a family

company and earlier its management was with three groups viz the branches of 2

three brothers i.e., the Vishwanath Group-the appellants; Jagdish Group and

Mr. Shambhoo Nath Group, the respondents. The family was doing various

businesses and one of it was run by a company namely M/s J.B. Daruka Papers

Ltd i.e. Respondent No.1.

3. It was argued there were certain disputes between the parties in 2008 but

with the help of Mr. Murari Lal Mathahelia, their real paternal uncle/Phupha,

MOU was entered into, though orally and it was agreed there shall be a bid of

the company/Respondent No.1, by three groups above and it shall go to the

highest bidder. The terms of the bid were reduced in writing on 04.02.2008 and

were signed by the parties. Such bidding terms were as under: -

1. Reserve Price of Bid has been decided at Rs. 4.00 Crore,

2. Minimum Bid difference is 1 0.00 Laks between Two Bids, of each Bidder,

3. Terms of payment after Bid finalization are as under: -

a) Loan repayment of Loans of close friends & Relatives - shall be within ·15 days.

b) Payment of Share Capital and other payment shall be-

1. 25% of payment within next 15 days,

2. 25% of Balance within next 15 days,

3. 50% of Balance within next 15 days, but upto 31.03.08.

c) During this period interest @ 12% shall be paid on the payment duration.

d) Bid should be for land, Plant a machinery and Building (all),

4. In case of non-payment after 1.4.08, penal interest @ 36% Per Year shall be charged for first 15 days i.e. upto 15.4.08, and thereafter Penal interest @ 50% Per Year shall be charged on outstanding Payable balance,

5. Personal Guarantee of Directors who are outgoing shall be withdrawn from PNB (Term) Loan before use of Term Loan amount.

6. Interest on loan amount shall be paid upto 15.4.08 for the year ending 31.3.08.

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4. It is the alleged the bidding took place on 04.02.2008 and the appellants

became the highest bidder and in consequence thereof resignation letters were

submitted by the Respondents to their uncle namely Murari Lal, which letters

were then deposited with the ROC. Though as per the bid document, as alleged

amount of Rs.20.80 crores was payable by the appellants, though is disputed to

be Rs.36 crores by the Respondents.

5. It was also argued out of the bid amount, an amount of Rs.2.20,40,000/-

was paid by cheque to the respondents and the remaining amount was paid in

cash. Reliance thereto was made to an affidavit dated 12.07.2013 of Mr. C.L.

Kanoria, the brother of their Phupha, -Sh Murari Lal stating inter alia the

balance amounts were paid in cash to the Respondent's groups.

6. The appellants allege in April, 2009 Respondents came rushing to the

Court complaining of various acts viz they never received cash; their resignation

letters as well as settlements were all forged and right issue which was issued in

the meanwhile, they were not given any notice thereof.

7. Qua the denial of signatures by the Respondents uon the MOU as also

upon resignation letters, an application CA 2/12 was moved by the appellant for

sending the documents for forensic examination, but it was also dismissed

alongwith the impugned order.

8. It is thus alleged by the appellants there is no dispute the Respondents

have agreed to exit from the company; the bidding took place; the appellants

were the highest bidders and an "x" amount was paid and thus the rights of 4

parties stood determined and now the disputes left are qua the quantum of

money to be paid to the two different groups viz Shamboo Nath and Jagdish

Group. In support of his argument the learned counsel for the appellants

referred to paras 24 and 27 of the Company Petition filed by the Respondents

wherein they admitted they agree to exit; the appellants were the highest bidders

and the MOU was reduced in writing.

9. It is also alleged by the appellants in lieu of the bid settlement document,

the appellants had released the respondents from their personal guarantees and

there is no document filed by respondents wherein they can allege an amount

of Rs.36 crore was agreed to be paid by the appellants herein except their

pleading in para 24 of their Company Petition. It is argued the dispute now is

only qua determination of quantum of money to be paid to them and is to be

decided by Civil Court as, admittedly, a company court has no jurisdiction to

pass a decree of specific performance per Pradeep R Kamdar & Others Vs Rajiv

Sanghvi & Others MANU/MH/3520/2022.

10. It was argued where the Respondents admit of issuing of resignation

letters and of receiving part payments and have agreed to exit at a price, and did

not file any complaint from 05.02.2008 till April, 2009 qua non-payment of their

dues and also considering the affidavit of Mr. CL Kanoria, the younger brother

of their uncle/Phupha which duly notes an amount of Rs. 8 crores was paid to

the Respondents, there was no cause left to approach the Ld. NCLT. Thus it was 5

argued if the respondents allege some amount remained unpaid, they should file

a suit for specific performance before the Ld. Civil Court.

11. The learned counsel for Respondents No.2 to 7 have another story to tell.

They insist none of the clauses of settlement dated 04.02.2008 were fulfilled,

though personal guarantees of the directors were got replaced by the appellants

without their knowledge. It was argued instead of making payments under the

terms of the bid the appellants rather ousted them on the basis of forged letters

of resignation and pointed out to a legal notice dated 30.12.2010 sent on behalf

of the appellants to the Respondent herein, by their counsel Mr. Ram Kishan

Srivastava, Advocate which rather noted the appellants had only made payments

of Rs.2,20,40,000/- between 31.03.2008 to 22.07.2008 but the respondents

have not transferred their shares and the respondents were called upon to

transfer their shares and/or to repay the amount. Now if payment of Rs.6 crores

was made in cash, as alleged by the learned senior counsel for the appellants in

the year 2008 itself, then it ought to have been stated in their legal notice dated

30.12.2010, hence it prima facie show except an amount of Rs.2,20,40,000/-

nothing more was paid and the terms of the bid were violated by the appellants

themselves. The legal notice dated 30.12.2010 further clarified the shares were

never transferred and Respondents are still members of Respondent No.1

company and thus rights issue without informing them was rightly cancelled by

the Ld. NCLT as held to be an act of oppression. Further a letter dated

07.02.2009, written by the State Bank of India to Respondent was also relied

upon by the respondents which noted a family settlement had taken place on 6

04.02.2008 and family members have entered into an agreement on 05.06.2008,

and it was accompanied by a memorandum of oral family settlement, allegedly

executed on a stamp paper of Rs.100/-, purportedly signed by all the family

members, including the Respondents herein. However, a letter dated 17.07.2009

of the Treasury Officer filed on record rather confirmed the stamp paper of such

memorandum dated 05.06.2008, was in fact sold on 10.12.2008, thus it was

argued it could never be the signatures of Respondents herein and it shows

manipulation of record.

12. Further reference was made to letters dated 05.04.2010 written by

appellant No.1 Mr. Suresh Kumar and Respondent No.12 Mr. Umesh wherein

they admitted that signatures of Respondents were forged on the resignation

letters. It read as under:-

"Respected Rajju Bhaiya

Sadar Pranam.

There have been many mistakes on our part. We forged signatures of Santosh Bhaiya, Anand and you on the resignation from the directorship of the paper mill. The signatures of directors and guarantors on SBI's C/C limit, renewal and enhancement of Santosh Bhaiya, Purushotam Bhaiya. Shibbu Bhaiya, Anand and you were forged by me. Family settlement deed is completely fake and bogus. During partition, if unknowingly there has been any mistake from my younger brother Sanjay and Ramesh. apologies on their behalf too. Since I am not coming in front of you in person therefore, I am extending my apologies through this letter.

---sd--

[ Suresh Kumar] 5.4.2010

13. Another letter of R12 Mr. Umesh is as under:-

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"Respected Raj Kumar Bhai Sahab There have been many mistakes from both of us brothers during partition. Both of us extend our apologies for the insult and humiliation you had to undergo though knowingly or knowingly because of us. The settlement deed is bogus we again sincerely apologies hoping that you being elder to us will forgive us thinking us to be your younger brothers. We assure you that in future there will be no such mistakes repeated from our side.

Sd UMESH AGARWAL 5.4.2010 Thus it shows the conduct of the appellants herein.

14, Reference was also made to an order dated 30.04.2009 which noted no

decision shall be taken in the Board Meetings which would affect the interest of

the respondents herein and the appellants shall produce the books of accounts

as and when called by Company Law Board. The Ld. Company Law Board on

03.02.2010 then called for the books of accounts but in response an affidavit

dated 03.05.2011 was filed by the appellant as under:-

"Affidavit

1.xxx

2.xxx

3) I say that by order dated 3.2.2010 this Hon'ble Board directed the Respondent to produced documents mentioned in para 7 of C.A.No.589/09 more specifically as under:

a) Resignation letters of Petitioner Nos.1, 3 & 4 all dated 15.02.2008 resigning from board of directors.

b) Memorandum of family settlement deed dated 5th of June 2008.

c) Minutes of all the board and general meetings.

d) Attendance registers of members and directors.

8 e) Receipts executed by Petitioners for receipt of money as claimed by respondents in their counter affidavit.

f) Books of accounts for financial year 2007-08 and 2008-09.

4) I say that the memorandum of family settlement deed, resignation letter mand receipts executed by petitioner are not in the possession of the respondents and is in possession of the mediator Mr. Madhusudan Mathanelia and Mr. Murarilal Mathalia.

5) I further say that the attendance register of members and directors is also not in possession of the Respondents and is in possession of the Petitioners.

15. Nothing was alleged in the affidavit qua the cash amount paid and even

the documents, though directed by the Company Law Board, were ever

produced.

16. Thus it was argued except the bid document no other document was ever

executed and the terms of said document were never complied with. It was

argued Respondents No.2-7 had approx. 41% shares in Respondent No.1

company and they never executed any transfer deed. It was alleged on

01.02.2008 the Board was enlarged by the appellants without notice to

Respondents No.2-7 and two directors namely Mr. Ramesh and Mr. Niranjan

were added. On 01.02.2008, there was no discussion upon any alleged

settlement and only discussion was of bid dated 04.02.2008 but its terms and

conditions were never complied with by the appellants herein. The learned

counsel for the Respondent also referred to two sets of resignation papers

submitted by the appellant, i.e. one before the ROC and second filed alongwith

the Criminal Revision Petition No.2580/2010 before Hon'ble High Court of 9

Allahabad at Lucknow Bench and both resignation letters dated 15.02.2008 do

reveal contents and place of signatures were different.

17. It is submitted by the learned counsel for Respondent despite various

requests by the Respondents, the originals of resignation letters were never

produced by the appellant on the plea those were lying with the Ld. Mediator.

Rather Respondents No.2-7 filed an application for production of such

documents and despite the order dated 03.02.2010 these were never produced.

Rather the appellants filed an affidavit dated 30.05.2011 wherein the Appellant

No.1 stated the Memorandum of Family Settlement deed dated 05.02.2008,

resignation letters and receipts of payments were all in possession of Mediator

whereas in para 9 of their Cr. Revision Petition they had alleged the resignation

letters were given in the hands of appellants and their family members directly.

It was alleged on 01.02.2008, the Board was expanded without any notice to the

Respondents and the terms and conditions of the bid dated 04.02.2008 were

never complied with by the appellants and they ousted the Respondents vide

Board Resolution dated 09.02.2008 without notice and it was an act of

oppression.

18. Further the second issue raised by the learned counsel for the Respondent

was qua the increase of authorized share capital from Rs.4 crores to Rs.7 crores.

The reference was made to Form No.23 dated 31.03.2008 filed under Section

192 of the Companies Act, 1956 stating interalia it was an intimation for increase

in authorized capital of the company and then they passed a special resolution. 10

However, the extract of EOGM dated 31.03.2008 would show it was an ordinary

resolution passed to increase the share capital from Rs.4 crores to Rs.7 crores

and also to amend clause V of the Memorandum of Association and Article 2 of

the Articles of Association. The explanatory statement for such Board Meeting

is annexed at Page 754 of the Paper Book wherein the need for increase in share

capital was alleged to be for augmenting its present activities, hence the need to

amend Memorandum and Articles of Association. However, in their appeal in

para XVI at Page 42 the reason for increase in authorized capital was for

installing a chemical recovery plant as per the requirement of Pollution Control

Board. Thus everywhere the appellants were misleading the shareholders as in

para 12 of the Criminal Revision Petition No.2580/2010 filed before the

Allahabad High Court, the appellant alleged the authorized capital was increased

for uplifting the production skills of the company. No notice for increase in the

authorized share capital was ever given to Respondents No.2 to 7 upon the

allegation that they had resigned as directors. This was nothing but oppression

of the Respondents. Reference was also made to the schedule of unsecured loan

in the financial statement of the company wherein the only infusion of the capital

was Rs.23 lakh hence there was no need to bring rights issue, without notice to

the Respondents.

19. Reference was also made to an order dated 28.04.2009 of the Company

Law Board wherein it was directed no decision should be taken in the Board

Meeting which would affect the interest of the respondents herein and three

days be given to the Respondents with a copy of agenda and the respondents 11

shall be at liberty to send an Observor, but these directions were also never

followed. Further on 20.04.2010 an order was passed by the learned NCLT for

the interim joint arrangement to run the company i.e. 5 directors of the

appellants and 5 of the respondents on the Board but this was also not adhered

to. Reference was also made to an order dated 03.02.2012 wherein it was

directed that weekly statement of receipts and expenditure be furnished to the

Company Law Board and to the Respondents but it was also not complied with

and thus it was in these circumstances the order was passed under Section

420(b) of the Companies Act, 1956 for sale and purchase of the shares. It was

also argued after the impugned order dated 30.09.2025 the appellant have taken

away Rs.6 crores from the company and have transferred it to their family

concerns.

20. The learned counsel appearing on behalf of Respondent No.12 argued

otherwise viz the family settlement was never acted upon and Shambu Nath

Group comprised of Respondent No.11-Shambu Nath, since deceased and

Respondent No.12- Umesh Kumar son of Shambhu Nath, never got a penny out

of these Rs. 20 crores or Rs.36 crores and they still hold the shares of the

company to an extent of 16.4% and the register of members was never amended,

Further, though Respondent 12 was removed as a director but then was re-

appointed on 01.07.2008 and in proof thereof he referred to two Forms No.32,

both dated 01.07.2008 reappointing Respondent No.11 and 12 as directors and

also the letters dated 01.07.2008 issued by Respondents No.11 and 12,

accepting their appointments as directors. The Company Petition also records 12

in para 34(iii) the Respondents No.11 and 12 were re-inducted as directors of

Respondent company w.e.f. 01.07.2008 for which Form No.32 were filed. The

reply filed by the appellants herein to para 34(iii) stated it was only a matter of

record.

21. Now though the alleged family settlement dated 04.02.2008 talks of

withdrawal of personal guarantees in 2008 itself but the personal guarantees of

Respondents No.11 and 12 were withdrawn in 2023. Reference was given to the

sanction memo of Canara Bank dated 23.04.2009 wherein the personal

guarantees given by Respondents No.11 and 12 were duly noted. Further

supplementary affidavit filed by Respondent No.12 noted that Respondent No.12

had received a notice dated 25.09.2014 under Section 13(2) of SARFEASI Act

wherein both Respondents No.11 and 12 were shown as guarantors. Further a

letter dated 25th March, 2009 written by State Bank of India to the company was

shown wherein SBI had decided to release Mr. Raj Kumar Agarwal since

deceased -Respondent No.2; Shri Santosh Kr Agarwal-Respondent No.4 and Mr.

Anand Kumar Agarwal-Respondent No.5 viz Jagdish Parsad Group, but not the

group of Shambu Nath i.e. Respondents No.11 and 12. Thus the alleged family

settlement was never implemented qua Shambu Nath Group.

22. Admittedly the guarantee of Respondents No.11 and 12 were released in

the year 2023 when the OTS was entered into with the Bank. The Respondent

No.12 was removed vide a Board Resolution dated 30.03.2015 by the Board of

the Company in the interest of the company as he was allegedly writing various 13

letters to the company. Thus it was argued that alleged family settlement was

never implemented and though Jagdish Parsad Group was paid some amount

but Shambu Nath group was never paid a single penny.

23. We have also perused the record of the Appeal Paper Book and we find the

affidavit/reply of Respondent No.12 to the Company Petition which in fact was a

joint reply filed with the appellants herein and it notes an amount of

Rs.2,20,40,000/- was only paid to the Jagdish Parsad Group and it was also

stated if the Respondents have any grievance, they are bound to transfer to the

appellants the entire amount if not transferring their shares. Further in para 28

of this joint reply filed by the appellants and Respondent No.12 herein, it was

also alleged out of Rs.9 crores an amount of Rs.8,22,40,000/- was paid to the

Jagdish Parsad Group, thus on their own admission full amount was never paid.

24. During the course of arguments the appellant referred to an application

under Regulation 44 of Company Law Board Regulations filed by them wherein

also the appellants had admitted out of an amount of Rs.9 crores to be paid to

Respondent Jagdish Parsad's Group only an amount of Rs.8,22,40,000/- was

paid. Admittedly as of now, no proof of Rs.6 crores paid in cash, is filed before

us or is shown to us during the course of arguments. Further the notice dated

30.12.2015 of the appellants rather say only an amount of Rs.2,20,40,000/- was

paid between 31.03.2008 to 22.07.2008 for 1506400 equity shares of Rs.10 each

and the respondents No.2 to 7 were liable to pay interest @ 18% per annum on

the said amount. It did not specify if Rs.6 crore was paid in cash. Even the 14

affidavit of brother of Phupha also cannot be accepted as admittedly he was never

a mediator.

25. Thus what culls out from the arguments of the appellants is they entered

into an oral settlement which took place on 04.02.2008 under which certain

conditions were to be complied with, but were never complied. Admittedly full

amount, as alleged, under the settlement, was never paid to Jagdish Parsad's

Group and not a single penny was paid to Shambu Nath's group. Hence in these

circumstances, an Administrator was appointed by the Ld. NCLT vide the

impugned order to run the company with the help of petitioners and

respondents. However, we also note vide another order dated 30.09.2025 the

Company Application No.2/2012 filed under Regulation 44 (supra) was

dismissed wherein it was noted the Administrator after examining all records

and facts relating to running of the company shall make any investigation if

required to be done in the matter relating to fraud, collusion, diversion and

siphoning of funds etc as alleged against the company, though vide the said order

the request for forensic examination of the disputed documents was rather

rejected on the ground it would serve no purpose. But we are of the view if at

any time there is buy out, there again there would be a dispute of Rs.6 crore if

paid in cash or not by the appellants to the respondents No.2 to 7 and since the

appellants allege they have in their possession the receipts of cash paid to

Jagdish Group, hence in case such receipts are shown to the Ld. Administrator

and if are denied by the Respondents, the Ld. Administrator shall be at liberty

to move before the Ld. NCLT to send those receipts for forensic examination and 15

to this extent the impugned order is modified. However, we are not inclined to

grant any other relief. Accordingly the appeal is disposed of in terms of the

above.

Pending applications are disposed of.

(Justice Yogesh Khanna) Member (Judicial)

(Mr. Ajai Das Mehrotra) Member (Technical) Dated: 19.03.2026 Bm