CHATTERJEE PETROCHEM(I) PVT.LTD. Vs HALDIA PETROCHEMICALS LTD..
Bench: ALTAMAS KABIR,CYRIAC JOSEPH
Case number: C.A. No.-005416-005419 / 2008
Diary number: 27791 / 2007
Advocates: Vs
MEHARIA & COMPANY
REPORTABLE
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.5416-5419 OF 2008
CHATTERJEE PETROCHEM (I) PVT. LTD. … APPELLANT Vs.
HALDIA PETROCHEMICALS LTD.& Ors. … RESPONDENTS
WITH CIVIL APPEAL NOS.5420, 5437-5440 OF 2008
J U D G M E N T
ALTAMAS KABIR,J.
1. M/s. Haldia Petrochemicals Ltd., hereinafter
referred to as “H.P.L.”, was incorporated in 1985
for establishing a green field petrochemical
complex in Haldia in the State of West Bengal to be
established by the West Bengal Industrial
Development Corporation, hereinafter referred to as
“WBIDC”, and the R.P. Goenka Group. However, the
Goenka Group left the Company in 1990 and Tata
Chemicals and Tata Tea were inducted into the
project between 1990 and 1993. Not much headway was
made towards implementing the project till June,
1994 when Dr. Purnendu Chatterjee, hereinafter
referred to as “PC”, a Non-Resident Indian
industrialist and financier, expressed an interest
in the project. Accordingly, a Memorandum of
Understanding was entered into between WBIDC and
the Chatterjee Petrochem (Mauritius) Company,
hereinafter referred to as “CP(M)C” and the Tatas
on 3rd May, 1994. According to the said Memorandum,
the initial cost of the project was estimated at
Rs.3600 crores which was to be funded with a debt
of Rs.2400 crores and equity of Rs.1200 crores.
Initially, equity capital of Rs.700 crores was to
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be contributed by WBIDC, CP(M)C and the Tatas in
the ratio of 3:3:1 respectively. It was also
provided that the Board of the Company would
consist of four nominees each of WBIDC, CP(M)C and
two from the Tata group. This was followed by a
Joint Venture Agreement, hereinafter referred to as
“JVA”, between the three parties on 20th August,
1994, incorporating the terms which had been agreed
upon by the parties. It was decided that both WBIDC
and CP(M)C would invest Rs.300 crores each and the
Tatas would invest Rs.100 crores, while Rs.500
crores was to be obtained from the public,
including Non-Resident Indians and Financial
Institutions, towards equity, keeping the debt
equity ratio at 2:1. Certain other terms and
conditions agreed between the parties were also
included in the Agreement, of which one of the
specific terms was that in case of disinvestment by
WBIDC, the disinvested shares would be offered to
CP(M)C. One of the other terms agreed to by the
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parties is that they would be entitled to seek
specific performance of the terms and conditions of
the agreement in accordance with the provisions of
the Specific Relief Act, 1963, and the agreement
would remain in force as long as the parties held
the prescribed percentage of shares.
2. After the said agreement was executed, four
other letters dated 30th September, 1994, 6th
October, 1994 and 5th January, 1995, were exchanged
between the parties, whereby it was agreed that
between 24 months of commencement of commercial
production or within 60 months of the date of the
JVA, whichever was later, at least 60% of the
shareholding of the WBIDC would be offered to
CP(M)C at Rs.14/- per share. It was provided that
the role of the Government in the Company would be
limited to its promotion and guidance through the
initial phases of the project and that the nominee
of CP(M)C would be the Managing Director. In
March, 1995, the Articles of Association of the
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Company were altered to bring it in line with the
terms of the JVA. An addendum to the JVA was
executed on 30th September, 1996/4th October, 1996,
by which the project cost was revised to Rs.5170
crores and the equity participation was revised to
Rs.432.857 crores to be provided by WBIDC and by
CP(M)C, while Tatas were to provide Rs.144.286
crores. The remaining equity participation of
Rs.969 crores was to be from the public.
3. The project started in 1997 and commercial
production commenced in August, 2001. Thereafter,
further agreements were entered into between the
parties and the first of such agreements was
entered into on 12th January, 2002, whereby CP(M)C,
the Government of West Bengal, WBIDC and HPL, inter
alia, agreed on a certain course of action in
regard to HPL’s need of financial and managerial
restructuring. The object and exercise of such
restructuring was that CP(M)C would acquire a
controlling interest of 51% shares in the equity of
5
the Company and would have complete control over
the day-to-day affairs of the Company, including
the right to appoint key executives. WBIDC also
agreed to vote along with CP(M)C on all issues in
the shareholders meeting and its nominee would also
vote along with the nominee Directors of the
CP(M)C. It was specifically agreed that all other
rights and obligations of CP(M)C in terms of the
earlier agreement would continue till CP(M)C
acquired majority shares in the Company.
4. The aforesaid agreement was followed by
another agreement dated 8th March, 2002, wherein it
was recorded that in terms of the agreement dated
12th January, 2002, 155,099,998 equity shares of
WBIDC had been transferred and delivered to
CP(I)PL, on 8th March, 2002. It was also mentioned
that the said shares were pledged with WBIDC and,
accordingly, the shares had been duly lodged along
with the share certificates with WBIDC and the
pledge had been acknowledged. Certain other
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agreements in regard to the shareholding pattern
and the management of the Company were entered
into, wherein after allotment of shares to Winstar,
which had been brought in to infuse Rs.127.4 crores
towards equity, the collective shareholding of the
Appellants was shown to be 58.62% with a rider that
155 million shares transferred by WBIDC to CP(M)C
was subject to registration and lenders’ approval.
We may have recourse to refer to some of the said
agreements at a later stage.
5. One other agreement which is relevant to the
facts of this case was entered into between PC and
the Government of West Bengal, represented by the
Respondent No.8, Shri Sabyasachi Sen, on 14th
January, 2005, wherein it was indicated that the
Government of West Bengal would sell its entire
shareholding in HPL to CP(M)C, and that the price
of the shares would be determined by an independent
valuer selected by the Government of West Bengal
from amongst a panel of firms to be prepared by
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CP(M)C. It was further declared that the
recommendation of the valuer would be binding both
on the Government of West Bengal and CP(M)C.
6. In the months of January and February, 2005,
HPL had approved the issuance and allotment of
equity shares worth Rs.150 crores at par to Indian
Oil Corporation (IOC). Objecting to the proposed
allotment of shares to IOC and also on the ground
that WBIDC and the Government of West Bengal had
failed to fulfil their commitment to transfer their
balance 36% shares to the Appellants, the
Appellants filed Company Petition No.58 of 2009
before the Company Law Board under Sections 397,
398, 399, 402, 403 and 406 of the Companies Act,
1956, inter alia, for the following reliefs :-
“a) An order be passed directing the company to take immediate steps for modifying and/or altering and/or amending the Articles of Association of the Company to incorporate therein the complete agreement by and between the joint venture partners and special rights of the petitioner in relation
8
to the Company, as provided in the Agreements dated 20th August, 1994, 12th January, 2002, 8th March 2002 and 30th July, 2004.
b) Appropriate orders be passed directing the entire shareholding of the respondent No.2 in the Company to be transferred in favour of the petitioner at the agreed price of Rs.14/- per share in respect of such number of shares of HPL registered in the name of Respondent No.2 constituting 60% of the holding of the respondent No.2 in the Company and on such valuation in respect of the balance shares held by Respondent No.2 as this Hon’ble Board may think fit and proper;
c) Declaration that the resolution passed at the EGM of the Company held on January 14, 2005, is illegal, inoperative, null and void and not binding on the Company or any person connected therewith;
d) Permanent injunction restraining the respondents whether by themselves or by their servants or agents or assigns or otherwise howsoever from giving any effect or further effect to the resolution passed on the EGM held by the Company on January 14, 2005 in any manner whatsoever;
e) Permanent injunction restraining the Company from receiving any money or encashing any cheque that may have been issued by the Respondent No.6 to
9
the Company in pursuance of the Memorandum of Association and the resolution passed by the EGM of the Company held on January 14, 2005;
f) Permanent injunction restraining the Company and its Board of Directors from taking any major decision or policy decision relating to the management and affairs of the Company before the majority shareholding and management control in the Company is effectively established as per the Agreements dated 12th January, 2002, and 30th July, 2004, including the due recognition of the nominee of petitioner No.2 as Director of the Company pursuant to the letter of Petitioner No.2 dated 1st August, 2005;
g) Permanent injunction restraining the Company and its present board from dealing with or disposing of or alienating or encumbering any asset or property of the Company except strictly in the course of the business of the Company;
h) Permanent injunction restraining the Company and its Board of Directors from taking any decision in relation to the management and administration of the Company except with the previous approval of the petitioner;
i) Permanent injunction restraining the respondents and each of them from in any manner acting in derogation of the petitioner’s rights as majority shareholders in the company and the
10
petitioner’s right to control the management of the Company, including without limitation by way of sale of shares of the Company held by any of them to any third party except the petitioners;
j) …………………………………………………………………………………………………… k) ……………………………………………………………………………………………………
l) Direct the reconstitution of the Board of the Company to reflect the majority control and the special rights accorded under the Agreements between the shareholders to the petitioners;
m) …………………………………………………………………………………………………… n) ……………………………………………………………………………………………….”
Subsequently, on coming to learn that the
shares in question had already been allotted to
IOC, the Appellants filed an application for
amendment of the petition to challenge the
allotment in favour of IOC and seeking cancellation
thereof.
7. Before the Company Law Board, hereinafter
referred to as “the CLB”, not only was it
reiterated by the Chatterjee Group that PC had to
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rejuvenate the Company and to implement the
project, for which he was recognized as a
“promoter” in the Memorandum of Understanding
entered into on 3rd May, 1994, but that there was a
clear understanding that the Chatterjee Group would
have management interest in the Company. Before
the CLB it was further contended that the Company
was really a quasi-partnership with each of the
three groups having financial stakes and management
participation. The Chatterjee Group further claimed
that the Memorandum of Understanding not only
provided for the Appellants to hold 3/7th of the
shares of the Company, but also 2/5th of the
Directorship therein. WBIDC was also to have a
3/7th share in the Company so that the Company
remain as a private company.
8. The Chatterjee Group also reiterated that in
the JVA dated 20th August, 1994, the Chatterjee
Group had been given a right of pre-emption to
acquire the shares of WBIDC if it chose to
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disinvest its shares. Before the CLB it was also
emphasized that at the time of entering into a
Memorandum of Understanding on 3rd May, 1994, it had
been clearly understood between the parties that
the Company would remain in the private sector.
Repeating what has been indicated hereinbefore,
learned counsel for the Chatterjee Group submitted
before the CLB that in addition to the JVA, 4
letters had been exchanged between the Chatterjee
Group and the WBIDC/GoWB providing for the
Chatterjee Group to acquire at least 60% of the
shares held by WBIDC at Rs.14/- per share upon the
happening of certain events within a particular
timeframe. Before the CLB the Chatterjee Group also
contended that it was understood by the parties
that the role of the Government would gradually be
confined to promotion and guidance during the
initial stages of the project, after which the
control of the management would be in the private
sector and the nominee of the Chatterjee Group
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would be the Managing Director of the Company.
9. In support of its contention of mismanagement
and oppression by the Company towards the
Chatterjee Group, it was alleged that the decision
to allot 150 million shares to IOC by WBIDC/GoWB
had been taken behind its back with the sole
intention of preventing the Chatterjee Group from
acquiring the control of the Company’s affairs, as
was promised and understood at the initial stage
when PC agreed to participate in the equity
holdings of the Company. One of the major acts of
oppression complained of by the Chatterjee Group
before the CLB was that despite having received
payment in respect of 155 million shares and having
transferred the same to the Chatterjee Group, it
did not complete the transfer by registering the
transfer with the Company and altering its Register
of Members accordingly, which effectively deprived
the Chatterjee Group of having the promised
majority shareholding in the Company. Before the
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CLB it was further contended that had the said
shares been registered in the name of the
Chatterjee Group, the total shareholding of the
Chatterjee Group would have been 51% which would
have given them control of the affairs of the
Company. Hence, a prayer had been made before the
CLB for a direction upon WBIDC/GoWB to complete the
transfer of the 155 million shares in favour of the
Chatterjee Group.
10. On behalf of the Chatterjee Group it had also
been contended before the CLB that it had agreed to
induct IOC as a portfolio investor in the Company
at the instance of GoWB. However, subsequently, by
its letter dated 20th September, 2004, the
Chatterjee Group had indicated that in view of the
proposed public offer, there was no further
necessity of inducting any portfolio investor, but
the investment of Rs.150 crores by IOC could be
considered. A resolution was adopted by the Company
on 2nd November, 2004, to allot shares to IOC,
15
although the Chatterjee Group was against such
allotment. In order to maintain the private
character of the Company, the Chatterjee Group
called upon WBIDC to sell 60% of its shareholding
to the CP(M)C at the agreed price of Rs.14/- per
share as recorded in the letter dated 30th
September, 1994. It was further submitted before
the CLB that upon such demand being made,
discussions were held and it was mentioned that the
GoWB and WBIDC would give in writing that the
entire shareholding of WBIDC in the Company would
be sold to the Chatterjee Group. It was, therefore,
submitted that pursuant to such discussions and
representations that an Agreement was reached on
14th January, 2005, between one Dr. Sabyasachi Sen
and PC in the presence of Mr. Tarun Das, wherein
they agreed to vote in support of the Resolution to
allot 150 million HPL equity shares to IOC at par.
The grievance of the Chatterjee Group before the
CLB was that inspite of several letters written on
16
behalf of the Chatterjee Group, no steps were taken
by the Company to give effect to the Resolution
dated 14th January, 2005.
11. Another major grievance of the Chatterjee Group
before the CLB was that sometime before 15th July,
2005, doubts regarding IOC’s investment in HPL were
substantiated when the letter dated 10th November,
2004, written by the WBIDC to IOC was discovered.
It was contended before the CLB that by
deliberately suppressing the discussions between
WBIDC and IOC which would give IOC control over the
management of HPL, WBIDC/GoWB wrongly obtained the
consent of the Chatterjee Group to the Resolution
of the Extra-Ordinary General Meeting held on 14th
January, 2005, to allot shares at par to the
Respondent No.6 IOC. The Chatterjee Group also
complained that neither GoWB nor WBIDC had ever
intended to honour the agreement dated 14th January,
2005, and from the letter dated 10th November, 2004,
it was clear that GoWB and WBIDC did not intend to
17
sell the HPL shares held by the WBIDC to the
Chatterjee Group.
12. It was also contended before the CLB by the
Chatterjee Group that since HPL was not in
immediate need of funds, the allotment of shares to
IOC was not warranted despite the fact that the
Chatterjee Group was ready and willing to complete
the share purchase deal at the agreed price of
Rs.14/- per share. By virtue of the superior
bargaining power of the WBIDC and GoWB, the
Chatterjee Group could not enforce their special
rights on account of their continuing minority
status in the Company, nor could it acquire control
of the management thereof.
13. It was also contended that even the Articles of
Association had not been modified or altered to
reflect the rights which the Chatterjee Group
enjoyed and the clandestine arrangement arrived at
between the GoWB, WBIDC and IOC undermined the very
18
basis on which the request made by GoWB and WBIDC
had been accepted by the Chatterjee Group.
Accordingly, the said arrangement was required to
be brought to an end for resolving the oppressive
acts of the GoWB and the WBIDC.
14. On the basis of the aforesaid allegations, the
Chatterjee Group contended before the CLB that the
affairs of the Company were being conducted in a
manner which was prejudicial to the public interest
and oppressive to them. It was further contended
that winding-up of the Company would unfairly
prejudice the parties but that otherwise the facts
would justify the making of a winding-up order on
just and equitable grounds.
15. The aforesaid stand taken by the Chatterjee
Group was opposed on behalf of the Company on the
ground that inspite of having made several promises
to infuse equity into the Company, it had failed to
do so and in view of severe fund crunch faced by
19
the Company on account of such failure, the Company
had no other alternative, but to transfer the
shares in question to a party which was willing to
do so. In fact, it was the joint contention of
GoWB and WBIDC that since the Chatterjee Group had
failed to abide by its commitments to infuse equity
into the Company and as the affairs of the Company
were at a point of collapse, with creditors,
particularly the Indian Oil Corporation supplying
Naphtha, which was the essential ingredient in the
manufacturing process of the Company, demanding
their outstanding dues even under the threat of
taking appropriate action under the provisions of
the Companies Act, 1956, the Company had no option
but to transfer the 150 million shares to IOC as
per the decision taken earlier.
16. In addition to the above, it was also submitted
that the Chatterjee Group had agreed to the
decision to induct the IOC in the Company as a
portfolio investor.
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17. The Company Petition was disposed of by the CLB
by upholding the decision of the Company to allot
150 million shares to IOC, which would be at
liberty to deal with the same in any manner it
thought fit. Similarly, the transfer of 155 million
shares by WBIDC to the Chatterjee Group at Rs.10/-
per share was confirmed. A further direction was
given to GoWB and WBIDC to transfer the 520 million
shares held by them in HPL to the Chatterjee Group.
The Chatterjee Group was also directed to purchase
the 271 million preference shares held by GoWB and
WBIDC at par. The CP(I)PL was directed to pay a
sum of Rs.125 crores to WBIDC towards balance
consideration for the 155 million shares on or
before 28th February, 2007. It was further directed
that on payment of the said amount, the shares in
question would be deemed to have been
dematerialized and transferred in the name of
CP(I)PL, without any further deed or act or refusal
from anyone or production of any instruction to
21
transfer. Significantly, the Chatterjee Group was
also given liberty as soon as they paid the
consideration for the 155 million shares, to take
control of the day-to-day management of the Company
as they would then be holding 51% of the equity
shares, with the stipulation that no major
decisions would be taken without the approval of
the Court. The CLB also came to a definite finding
that the 150 million shares allotted to IOC had not
been so transferred suddenly or surreptitiously or
with any ulterior motive and the allegation of a
secret agreement between GoWB and IOC, though of
very little significance, has been magnified by the
Chatterjee Group in the Company Petition.
18. The Government of West Bengal, through its
Joint Secretary in the Department of Commerce and
Industry, filed an appeal before the Calcutta High
Court against the said order of the CLB dated 31st
January, 2007 under Section 10F of the Companies
Act, 1956, and the same was numbered as A.P.O.No.45
22
of 2007. Among the various grounds taken in the
Appeal, a question was raised as to whether the CLB
could have assumed jurisdiction on the Company
Petition filed by Chatterjee Petrochem (Mauritius)
Ltd. Co., Winstar India Investment Company Ltd.,
India Trade (Mauritius) Ltd. and Chatterjee
Petrochem (India) Pvt. Ltd., to enforce rights
under private contracts. Another ground taken was
that the CLB had erred in applying the doctrine of
legitimate expectation in a Petition under Section
397 read with Sections 398 and 402 of the Companies
Act, 1956, and in treating the Company to be a
quasi-partnership. As a corollary to the said
question, the Government of West Bengal also
questioned the jurisdiction of the CLB to convert
the Company Petition into a Suit for Specific
Performance of Contract. It was also contended
that the issues raised in the Company Petition were
with regard to the disputes of a contractual nature
between shareholders and the non-performance of
23
such contracts between the shareholders could not
be treated to be the “Affairs of the Company”. The
locus standi of the Chatterjee Petrochem (India)
Pvt. Ltd. to maintain a petition under Section 398
of the Companies Act was also questioned since on
the date of filing of the Petition before the CLB,
the said Company was not even a member of the Joint
Venture Company. It was also reiterated that no
case for mismanagement or oppression had been made
out and the application under Section 398 of the
above Act was liable to be dismissed.
19. Upon hearing the parties, the learned Single
Judge held that CP(I)PL had no locus standi to
maintain a petition under Section 397 of the
Companies Act and that CLB could not have assumed
jurisdiction on the Company Petition, in which
CP(I)PL was a petitioner, since CP(I)PL was not a
member of HPL. The learned Single Judge held that
such a petition for the purpose of enforcing rights
under private contracts would not be maintainable
24
and that the agreement entered into between CP(I)PL
and WBIDC for transfer of shares, being a private
contract between two shareholders, the same could
not be the subject matter of a petition under
Section 397 of the Companies Act, 1956. The
learned Single Judge also observed that such
agreements could not be treated to be “affairs of
the Company” and that, in any event, such a ground
had not also been pleaded in the Company Petition.
The learned Judge held that the order of the CLB,
which was based entirely on the question of
transfer of the 155 million shares by WBIDC to
CP(I)PL, stood vitiated by such jurisdictional
error.
20. The learned Single Judge also held that the CLB
was not justified in applying the concept of quasi-
partnership, which had been urged on behalf of the
Chatterjee Group, to HPL. According to the learned
Single Judge, the question as to why a Limited
Company should be considered to be a quasi-
25
partnership, would have to be decided on the facts
of each case. While, on the one hand, it would be
easy to apply the said concept to a closely-held
Family Company or a Private Limited Company, as in
cases where a partnership is converted into a
Company, such an assumption could not be arrived at
merely on the ground that the promoters of the
Company described themselves as partners.
21. The learned Single Judge further held that from
the entire pleadings in the Company Petition no
case whatsoever had been made out that in
conducting the affairs of HPL, the GoWB and WBIDC
had oppressed the Petitioners in any way so as to
attract the provisions of Section 397 of the
Companies Act. The learned Single Judge also held
that the CLB was not right in applying the doctrine
of legitimate expectation to the agreement entered
into between WBIDC and CP(I)PL on 8th March, 2002,
thereby converting the Company Petition into a suit
for specific performance of contract. The learned
26
Judge observed that by granting relief in the name
of the doctrine of legitimate expectation, the CLB
has actually enforced specific performance of the
contract and agreements, which was beyond its
jurisdiction.
22. Lastly, on the question of the induction of IOC
and the allotment of 155 million shares to the said
Company, the learned Single Judge held that the
induction of IOC was on the basis of the Debt
Restructuring Package and the Refinancing Scheme,
which were to the advantage of HPL, and had been
decided from time to time at the Board meetings of
the Directors, which had been presided over by PC.
On the basis of his aforesaid findings, the learned
Single Judge, relying on the decision of this Court
in Shanti Prasad Jain Vs. Kalinga Tubes Ltd.
[(1965) 2 SCR 720], held that an order granting
relief under Section 397 could be made only after
affirming and recording an opinion on each of the
three conditions mentioned in Section 397(2)(a) and
27
(b) of the Companies Act, 1956. The learned Single
Judge held that in the instant case, no such
opinion had either been formed or recorded by the
CLB relating to the said three conditions. The
learned Single Judge also rejected the submissions
made on behalf of the Petitioners that an opinion
with regard to the said two conditions would
automatically follow from the opinion formed by the
CLB on oppression, or such opinion could be
gathered from the order of the Board itself. The
learned Single Judge, accordingly, held that the
order passed by the CLB was contrary to the
provisions of Section 402(e) of the above Act,
since no relief under the said Section could be
granted without a finding having been arrived at
that a case of oppression had been made out within
the meaning of Section 397 of the aforesaid Act.
23. Appearing for the Chatterjee Group, Mr. Fali S.
Nariman, learned Senior Advocate, did not seriously
oppose the contention that the prayers in the
28
Company Petition were really for specific
performance of the various agreements entered into
by the parties, but that the same were on account
of the acts of oppression and mismanagement on the
part of GoWB, HPL and WBIDC with regard to the non-
registration of the 155 million shares which had
already been transferred by WBIDC in favour of the
Chatterjee Group. Mr. Nariman urged that although
the said shares had been transferred in favour of
the Chatterjee Group and although the price in
respect thereof had been duly received by HPL, the
Company had not registered the said 155 million
shares with the Company in the name of CP(I)PL and
the transfer of the said shares was also not
reflected in its Register of Members. Mr. Nariman
contended that by not registering the 155 million
shares in the name of the Chatterjee Group, which
deprived the Chatterjee Group of being the majority
shareholder, and, at the same time, allotting 150
million shares to IOC, the acts of the Company
29
reduced the Chatterjee Group from a majority
shareholder to a minority shareholder, which
amounted to oppressive treatment by the Company.
24. Mr. Nariman submitted that at the time of entry
of the Chatterjee Group through the CP(M)C in 1994,
the total issued share capital of HPL was 1010
million shares of Rs.10/- each and the shareholding
pattern was as under :-
CP(M)C - 433 million shares
WBIDC - 433 million shares
Tatas - 144 million shares
25. However, on 28th September, 2001, at the Board
Meeting of HPL, a Resolution was taken to offer a
Rights Issue to the existing shareholders so that a
further sum of Rs.223 crores could be infused in
HPL in the ratio of 107:107:36. Although, the
other shareholders subscribed to the Rights Issue,
the Chatterjee Group did not on the ground that
such equity could be infused once the financial
30
restructuring of HPL had been completed.
Accordingly, on 8th March, 2002, the shareholding
pattern as per the Register of Members in the share
capital of 1153 million shares was :
CP(M)C - 433 million shares = 37.56%
WBIDC - 540 million shares = 46.83%
Tatas - 180 million shares = 15.61%
26. Mr. Nariman submitted that in the Agreement
dated 30th July, 2004, which was supplemental to the
Agreement dated 12th January, 2002, executed by the
GoWB, WBIDC, CP(M)C and HPL, it was specifically
mentioned that GoWB had caused WBIDC to transfer to
CP(I)PL, an affiliate of CP(M)C, shares worth
Rs.155 crores and that CP(I)PL had become the
beneficial owner thereof. However, the registration
of the said shares in the books of HPL was kept
pending till approval was obtained from the
Lenders, being the Banks and Financial
Institutions. Mr. Nariman submitted that as a
31
result, despite the transfer by WBIDC of 155
million shares in favour of CP(I)PL, WBIDC
continued to be shown as owner thereof in the Share
Register of the Company. Mr. Nariman submitted that
once clearance had been obtained from the Lenders,
WBIDC could no longer refuse to register the said
155 million shares in the name of CP(I)PL, which
was an integral part of the Chatterjee Group.
27. Mr. Nariman submitted that the number of shares
transferred by WBIDC to CP(I)PL comprised 13.44%
of the total number of shares amounting to 1153
shares, which meant that along with the 36.56% of
the shares held by the Chatterjee Group, the total
worked out to 51% and gave the Chatterjee Group the
management control of HPL and reduced the
shareholding of WBIDC from 46.83% to 36.9%.
28. Mr. Nariman submitted that on the same day on
which the Supplemental Agreement had been signed, a
Share Subscription Agreement was executed by HPL,
32
CP(M)C, WBIDC and WINSTAR which, inter alia,
referred to the agreement entered into by GoWB,
WBIDC, CP(M)C and HPL on 12th January, 2002 and that
WBIDC, CP(M)C and CP(I)PL had entered into an
Agreement on 8th March, 2002, relating to the
transfer of shares in the Company at Rs.10/- per
share and pursuant to that agreement, CP(M)C came
to be in management control of the Company.
29. Mr. Nariman urged that by signing the Share
Subscription Agreement dated 30th July, 2004, WBIDC
and HPL had acknowledged the fact that pursuant to
the Agreements of 12th January, 2002 and 8th March,
2002, 155,099,998 shares had gone out of the
holding of WBIDC and were held by CP(I)PL, a part
of the Chatterjee Group. However, in the Company
Petition filed before the CLB, WBIDC and GoWB
denied the same and ascertained that the 155
million shares continued to be part of the holding
of the WBIDC and a further stand was taken that at
no point of time had the Chatterjee Group held the
33
majority shares in HPL. In addition to the above,
by transferring 150 million shares to IOC, the
WBIDC/GoWB had reduced the Chatterjee Group from a
majority to a minority, which clearly amounted to
oppressive treatment by the Company.
30. Mr. Nariman contended that on account of the
various defaults committed by the Chatterjee Group
in failing to infuse equity into HPL, in breach of
the Agreement dated 12th January, 2002, WBIDC and
the GoWB were absolved of the application to
register the 155 million shares in favour of
CP(I)PL. It was pointed out that under the
aforesaid Agreement, CP(M)C had agreed to infuse
Rs.107 crores into HPL, of which Rs.53.5 crores was
to be paid within 5 working days of signing of the
Agreement, which was executed on 25th January, 2002.
Taking into account the aforesaid sum, CP(M)C was
required to arrange for a minimum amount of Rs.500
cores, either as equity or equity-like instruments
and/or advance from outside sources, including
34
strategic partners. The CP(M)C also agreed to
organize Letters of Comfort to be issued within 30
days of signing of the Agreement for the purpose of
overall debt restructuring of HPL which was
concluded by 31st March, 2002. There was a further
stipulation that the balance of Rs.53.5 crores, out
of the sum of Rs.107 crores, was to be inducted by
CP(M)C within 5 days of the acceptance of the
Letters of Comfort.
31. Mr. Nariman further contended that the
assurance given in Clause 5 of the Agreement, which
assured CP(M)C 51% of the total paid-up equity of
HPL, was not conditional to the infusion of equity
worth Rs.500 crores by the Chatterjee Group. Such
assurance was subject to compliance with the
requirements of providing Letters of Comfort and
acceptance thereof by the GoWB and upon payment of
Rs.53.5 crores as stipulated. Mr. Nariman urged
that since the said conditions had been fulfilled
by the Chatterjee Group, it was incumbent upon GoWB
35
and WBIDC to transfer the 155 million shares to
CP(M)C which was the beneficial owner thereof. It
was submitted that the failure of WBIDC to effect
such registration and at the same time, registering
150 million shares in favour of IOC, thereby
reducing the Chatterjee Group to a minority
shareholder, was a positive act of oppression on
the part of the majority shareholder, which was
sufficient to attract the provisions of Sections
397 and 398 read with Section 402 of the Companies
Act, 1956. Mr. Nariman urged that even if the
allotment of 150 million shares to IOC was not
taken into consideration, the continuous refusal on
the part of the Company to register the 155 million
shares in the name of CP(I)PL, not only amounted to
breach of the agreement dated 12th January, 2002, by
which WBIDC and GoWB had agreed to ensure that the
Chatterjee Group would remain in majority, but that
the same also attracted the provisions of Section
397 of the Companies Act. Mr. Nariman submitted
36
that the said promise contained in the Agreement
dated 12th January, 2002, formed the very basis on
which PC had brought equity worth Rs.257 crores
into HPL, but for which the Company would not have
been able to restructure its debts. Learned
counsel submitted that for WBIDC and GoWB to
contend that the induction of the Chatterjee Group
on an understanding that it would always have a
majority control over the Company’s management, was
simply an agreement between two shareholders and
not an affair of the Company, was not acceptable.
Mr. Nariman urged that the refusal of the WBIDC to
register the 155 million shares transferred to the
CP(I)PL affected the shareholding pattern of the
Company and was, therefore, directly an affair of
the Company, which fact had been duly recognized by
the CLB. Mr. Nariman submitted that it is on
account of the various assurances given by WBIDC
and the GoWB that the Chatterjee Group had become
the owner of the 155 million shares, that it had
37
been the consistent stand of the Chatterjee Group
that they were the majority shareholders of the
Company.
32. Relying on the decision of this Court in Needle
Industries (India) Ltd. & Ors. Vs. Needle
Industries Newey (India) Holding Ltd. & Ors.
[(1981) 3 SCC 333], Mr. Nariman submitted that in
determining a question of oppression under Section
397 of the Companies Act, the Company Law Board was
entitled to take into account facts which had come
into existence after the company petition had been
filed. Learned counsel gave several instances
where despite having given assurances that the
shares in question would stand transferred in
favour of CP(I)PL, the GoWB and WBIDC had failed to
complete the transfer on one ground or the other,
despite stating that the GoWB stood committed to
the transfer of the shares to the Chatterjee Group
as per the Agreements dated 12th January, 2002, 8th
March, 2002 and 30th July, 2004.
38
33. Mr. Nariman submitted that the clandestine
manner in which WBIDC had transferred 150 million
shares in favour of IOC was in complete breach of
the agreement between WBIDC and PC that the
Chatterjee Group would remain the majority
shareholder and would also have the control and
management over the company’s affairs. Mr. Nariman
submitted that had it been brought to the knowledge
of the Chatterjee Group that such a secret
agreement to transfer 150 million shares to IOC was
being negotiated, it would have never voted at the
Extraordinary General Meeting of the Company on 14th
January, 2005, in support of the allotment of the
said shares to IOC.
34. Although, Mr. Nariman had made certain
submissions with regard to the Agreement of 8th
March, 2002, read with the requirements of the
Depositories Act, 1996, SEBI (Depositories and
Participants) Regulations, 1996 and the bye-laws
39
and business rules/operating instructions issued by
the depositories, we shall, if need be, refer to
the same at a later stage of the proceedings.
35. Mr. Nariman submitted that the concept of
oppression for the purposes of Sections 397, 398
and 402 of the Companies Act had been considered by
this Court in various cases. Learned counsel
pointed out that in the Needle Industries case
(supra), this Court had observed that the behaviour
and conduct complained of must be held to be harsh
and wrongful and in arriving at such a finding, the
Court has to look at the business realities of the
situation and not confine itself to a narrow
legalistic view and allow technical pleas to defeat
the beneficial provisions of the Section. Mr.
Nariman submitted that when the Company was in
substance, though not in law, a partnership, there
had to be utmost good faith between the members.
Mr. Nariman submitted that this Court had gone even
further to indicate that even if no oppression was
40
made out in a Petition under Section 397 of the
Companies Act, the Court is not powerless to do
substantial justice between the parties.
36. Learned counsel submitted that Company law had
developed seamlessly from the law of partnership
which is based on mutual trust and confidence, as
was observed by the House of Lords in O’Neill Vs.
Phillips [(1999)2 All ER 961], and in such a
situation, the highest standards of honour had to
be maintained. It was also submitted that the
aforesaid decision of the House of Lords which was
based on the earlier decision in Blisset Vs. Daniel
[68 E.R. 1022], was subsequently reiterated by the
House of Lords in Ebrahimi Vs. Westbourne Galleries
[(1972) 2 All ER 492] and also by this Court in the
Needle Industries case (supra). Mr. Nariman urged
that in Dale & Carrington Invt. P. Ltd. Vs. P.K.
Prathapan [(2005) 1 SCC 217], this Court had held
that if a Member who holds the majority of shares
in a Company is reduced to the position of a
41
minority shareholder by an act of the Company or by
its Board of Directors, the said act must
ordinarily be considered to be an act of oppression
to such Member.
37. Reference was also made to the decision of this
Court in Rajahmundry Electric Supply Corporation
Ltd. Vs. A. Nageswara Rao & Ors. [(1955) 2 SCR
1066], wherein, Venkatarama Ayyar, J., as His
Lordship then was, while referring to an equitable
and just principle, held that when the said
doctrine specifying the ground of winding-up by the
Court is not to be construed as ejusdem generis
then whether mismanagement of Directors is a ground
for passing of a winding up order under the Indian
Companies Act, 1913, becomes a question to be
decided on the facts of each case. Mr. Nariman
pointed out that in the aforesaid judgment, the
learned Judge had referred to the decision in Loch
Vs. John Blackwood Ld. [(1924) AC 783], in which an
order for winding-up of the Company was ordered on
42
the ground of mismanagement by the Directors and
the law was stated as follows :-
“It is undoubtedly true that at the foundation of applications for winding up, on the ‘just and equitable’ rule, there must lie a justifiable lack of confidence in the conduct and management of the company’s affairs. But this lack of confidence must be grounded on conduct of the directors, not in regard to their private life or affairs, but in regard to the company’s business. ………………”
38. Mr. Nariman submitted that following the
aforesaid principle, this Court had in M.S.D.C.
Radharamanan Vs. M.S.D. Chandrasekara Raja & Anr.
[(2008) 6 SCC 750], observed that once the Company
Law Board gave a finding that acts of oppression
have been established, an order in terms of
Sections 397 and 402 on the doctrine of winding-up
of the company on just and equitable grounds,
becomes automatic. Accordingly, the interference
43
by the learned Single Judge with the order of the
CLB was wholly unwarranted.
39. Appearing for Winstar India Investment Company
Ltd., Mr. Sudipto Sarkar, learned Senior Advocate,
while adopting the submissions made by Mr. Nariman,
emphasized Mr. Nariman’s submissions on quasi
partnership. In the said context, he submitted
that in dealing with a petition under Section
397/398 of the Companies Act the Court has to
consider business realities, instead of confining
itself to a narrow legalistic view. Learned
counsel argued that in the Needle Industries case
(supra), this Court, inter alia, observed that
technical pleas should not be allowed to defeat the
beneficent provisions of Section 397/398 of the
Companies Act. Mr. Sarkar submitted that the said
principle had been subsequently followed by this
Court in (i) Sangramsinh P. Gaekwad & Ors. Vs.
Shantadevi P. Gaekwad (Dead) through LRs. & Ors.
[(2005) 11 SCC 314]; (ii) Kamal Kumar Dutta & Anr.
44
Vs. Ruby General Hospital Ltd. & Ors. [(2006) 7 SCC
613]; (iii) M.S.D.C. Radharamanan’s case (supra).
Mr. Sarkar submitted that in Sangramsinh P.
Gaekwad’s case (supra) this Court had observed that
the jurisdiction of the Court to grant appropriate
relief under Section 397 of the Companies Act is of
wide amplitude and while exercising its discretion,
the Court was not bound by the terms contained in
Section 402 of the said Act, if in a particular
fact situation a further relief or reliefs was
warranted. Furthermore, in a given case, even if
the Court came to a conclusion that no case of
oppression had been made out, it could still grant
such relief so as to do substantial justice to the
parties.
40. Mr. Sarkar submitted that a Joint Venture
Agreement, in fact, contemplates a partnership, as
was indicated by this Court in New Horizons Ltd. &
Anr. Vs. Union of India & Ors. [(1995) 1 SCC 478],
where the expression “Joint Venture” was examined.
45
It was noted that the said expression connotes a
legal entity in the nature of a partnership engaged
in the joint undertaking of a particular
transaction for mutual profit or an association of
persons or companies jointly undertaking some
commercial enterprise wherein all contribute assets
and share risks. Mr. Sarkar submitted that the
terms and conditions of the Joint Venture Agreement
in the instant case satisfies all the requisites of
a partnership, which made it evident that the Joint
Venture Company was nothing but a quasi-partnership
as per the tests laid down by the House of Lords in
Ebrahimi Vs. Westbourne Galleries Ltd & Ors.
[(1972) 2 All ER 492], followed in Needle
Industries case (supra). Mr. Sarkar submitted that
in Ebrahimi’s case, Lord Wilberforce writing the
main judgment indicated that the reliefs prayed for
were for a direction upon the Respondent No.2 and
his son to purchase the appellant’s share in the
company. In the alternative, an order for winding
46
up of the company was sought. The learned Judge
found that some of the allegations made remained
unproved and that the complaint made did not amount
to such a course of oppressive conduct as to
justify an order under Section 210 of the Companies
Act, 1948, in furtherance of the first relief.
41. Mr. Sarkar then proceeded to the question of
legitimate expectation and contended that in
Company Law there was sufficient room for
recognition of the fact that there could be
individuals with rights, expectations and
obligations which may submerge in the corporate
structure. In this regard, Mr. Sarkar submitted
that the said doctrine of an enforceable
expectation was considered in Re Saul D Harrison &
Sons plc [1995] 1 BCLC 14, approved in O’Neill’s
case (supra). Several other decisions in this
regard were cited by Mr. Sarkar which do not
require elaboration.
47
42. Mr. Sarkar submitted that when joining the
Company in 2004, Winstar had a legitimate
expectation arising from the Subscription Agreement
dated 30th July, 2004, which indicated that the
Chatterjee Group was in management and control of
the affairs of HPL and that the Company would also
have its private auditors and had it not been for
the recitals in the Subscription Agreement, Winstar
may not have invested funds in HPL at all. Mr.
Sarkar submitted that the conclusion was
inescapable that even if no case of oppression had
been made out in the Company Petition filed by the
Chatterjee Group, relief under Section 397/398
could still be granted under Sections 397 and 398,
if it was just and equitable to do so. Referring
and placing reliance on a decision of this Court in
V.S. Krishnan & Ors. Vs. Westfort Hi-Tech Hospital
Ltd. & Ors. [(2008) 3 SCC 363], Mr. Sarkar urged
that once the conduct of the management was found
to be oppressive under Sections 397 and 398 of the
48
Companies Act, the discretionary power given to the
CLB under Section 402 of the Companies Act to put
an end to such oppression was very wide. Mr.
Sarkar urged that the expression “legitimate
expectation” had found its place in Indian
Jurisprudence and has been considered by this Court
in Needle Industries case (supra), which was
followed in V.S. Krishnan’s case (supra) and
several other cases. The Agreement of WBIDC to
transfer its entire shareholding to the Chatterjee
Group gave rise to an expectation that such an
expectation would be fulfilled. Mr. Sarkar
contended that since WBIDC did not fulfil its
reciprocal promise to sell its entire shareholding
in HPL to CP(M)C, it was not open to either WBIDC
or GoWB to contend that the direction given by the
CLB upholding the allotment of 150 million shares
to IOC and directing WBIDC/GoWB to transfer its
entire shareholding to the Chatterjee Group was
49
contrary to law or without jurisdiction or
erroneous.
43. Mr. Sarkar submitted that having transferred
155 million shares in favour of the CP(I)PL it was
not open to the GoWB and WBIDC to refuse to
register the same, despite having received the
entire price for the same. Mr. Sarkar also
reiterated that it is such a promise which had been
incorporated in the agreements dated 12th January,
2002 and 8th March, 2002 as also 30th July, 2004,
that had weighed with Winstar to invest Rs.147
crores in the Company. Accordingly, even if it was
held that no case of oppression had been made out
against the Company, it would still be open to the
learned Company Judge to grant suitable relief to
iron out the differences that might appear from
time to time in the running of the affairs of a
Company.
50
44. While considering the submissions made on
behalf of the Chatterjee Group, we might as well
refer to the arguments advanced by Dr. Abhishek
Manu Singhvi, learned Senior Advocate, appearing
for the India Trade (Mauritius) Ltd. (ITML), which
is part of the Chatterjee Group and was the co-
Petitioner No.3 in Company Petition No.58 of 2005
filed by the Chatterjee Group before the Company
Law Board. ITML is also the Appellant in Civil
Appeal No.5437-5440 of 2008. Incidentally, Dr.
Singhvi also appeared for Dr. Purnendu Chatterjee,
who was made Respondent No.20 therein.
45. Dr. Singhvi contended that ITML had infused a
sum of Rs.107 crores into HPL, which amount, along
with Rs.143 crores separately infused in HPL by the
Chatterjee Group of Companies, was vitally
necessary for the financial health of HPL and its
revival and prosperity. Dr. Singhvi submitted that
such investments had been made, without any written
agreement or commitment, on the clear understanding
51
and expectation that it would be a partnership and
a commercial enterprise where the Chatterjee Group
would have a controlling interest and HPL would,
therefore, be a non-government company. Dr. Singhvi
submitted that the subsequent conduct of GoWB, IOC,
Lenders, Chairman and Managing Director of HPL had
resulted in grave irreversible damage to ITML,
involving breach of fiduciary and corporate
obligations which was clearly oppressive and was
sufficient ground for interference by the CLB in
the proceedings initiated by the Appellants under
Sections 397 and 398 read with Section 402 of the
Companies Act, 1956.
46. Dr. Singhvi submitted that despite the attempts
of GoWB and WBIDC to make an issue of the non-
infusion of Rs.107 crores by the Chatterjee Group,
at no point of time had the Chatterjee Group
refused to invest the amount in HPL, though on
certain conditions. Referring to Dr. Chatterjee’s
letter dated 4th December, 2001, Dr. Singhvi pointed
52
out that in the said letter it had been clearly
indicated that CP(M)C was prepared to bring equity
into the company in the context of a comprehensive
restructuring of HPL’s balance sheet and management
control in line with the original promise made to
the Chatterjee Group for management control of HPL.
A suggestion was also made to avail of the
corporate debt structuring available under
established Reserve Bank of India procedure. Dr.
Singhvi submitted that the entire sum of Rs.107
crores which CP(M)C had agreed to invest had, in
fact, been infused by the Chatterjee Group, though
not by subscribing to the Rights Issue, but by
arranging loans for the entire amount. Dr. Singhvi
contended that the entire loan amount which had
been arranged by the Chatterjee Group was also
repaid by it without any liability to the Company.
Even the interest accrued on the loan of Rs.107
crores from 12th June, 2002, till the date of
repayment, was discharged by the Chatterjee Group
53
in full, which was duly acknowledged by HPL. Dr.
Singhvi submitted that subsequently a further sum
of Rs.53.5 crores was made available to HPL through
HSBC on the understanding that the interest accrued
on the loan, starting from the date of disbursement
of the loan until its conversion, would be borne by
CP(M)C.
47. Dr. Singhvi urged that Dr. Chatterjee had been
invited and had come into the project as an equal
co-owner, unlike the other private investors who
were neither promised nor given equal partnership.
As per the Agreement between GoWB and WBIDC, the
character of HPL was always intended to remain a
private non-Government Company by projecting a
shareholding ratio of 3:1:1 where four out of the
seven parts would be held by Dr. Chatterjee and the
Tatas.
48. Reiterating all that had been said on behalf of
the Chatterjee Group by Mr. Nariman and Mr. Sudipto
54
Sarkar, Dr. Singhvi submitted that the induction of
IOC into the Company was contrary to the wishes of
the Chatterjee Group since by not registering the
155 million shares in favour of the Chatterjee
Group and on the other hand allotting 150 million
shares to IOC, an imbalance was created which led
to HPL becoming a Section 619-B Company under the
Companies Act, 1956, thereby losing its private
character. Dr. Singhvi submitted that it had been
understood by GoWB, WBIDC and the Chatterjee Group,
that IOC would be brought in not as a strategic
partner but as a portfolio investor, but ultimately
negotiations were commenced by GoWB and WBIDC to
bring in IOC as a strategic partner with management
control, although such a proposal had earlier been
categorically turned down by GoWB on 2nd July, 2002.
49. Dr. Singhvi submitted that the observations
contained in the impugned judgment of the High
Court that Dr. Chatterjee was not in a position to
complete the deal and was trying to delay matters
55
by asking for transfer of the said 155 million
shares to the Chatterjee Group and the IOC’s
unconditional withdrawal from HPL, as a condition
precedent for completion of the deal, was without
any foundation, since from the records it would be
clear that on 22nd July, 2005, GoWB had indicated
that it wanted to conclude the transaction by 25th
July, 2005. As a matter of fact, by his letter of
25th July, 2005, Dr. Chatterjee had indicated his
willingness to conclude the transaction and
provided a letter from the Deutsche Bank, also
dated 25th July, 2005, indicating the availability
of funds to the tune of 266 million US dollars to
conclude the transaction.
50. Dr. Singhvi submitted that it was GoWB and
WBIDC which had fraudulently omitted to disclose
the secret arrangement for the induction of IOC
into HPL as a strategic partner in the Explanatory
Statement to the notice for the Extraordinary
General Meeting issued on 21st December, 2004. Dr.
56
Singhvi urged that there was no need to induct IOC
for effectuating the debt restructuring process,
since HPL had also taken steps for IPO of 300
million shares which would have fetched at least
Rs.540 crores based on the indicated price of
Rs.18/- per share. Dr. Singhvi submitted that Dr.
Chatterjee objected to the allotment of shares to
the IOC as that would immediately convert the
Company into a Section 619-B Company since 155
million shares transferred by WBIDC in favour of
the Chatterjee Group was yet to be registered.
51. Dr. Singhvi submitted that the allegation made
against Dr. Chatterjee that he had moved in a
calculated manner to obtain majority control of the
Company and to oppose the allotment of 150 million
shares to IOC, was without any foundation, since
155 million shares had already been transferred to
the Chatterjee Group and the same was a concluded
contract. Furthermore, when GoWB made a commitment
to sell to the CP(M)C all the HPL shares held by
57
WBIDC, there was no reason for Dr. Chatterjee to
oppose the induction of IOC as a portfolio
investor. All that Dr. Chatterjee wanted was that
GoWB and WBIDC should effect registration of the
155 million shares already transferred and for
which the price had already been paid. Dr. Singhvi
submitted that the observation made by the learned
Single Judge was wholly misconceived since the GoWB
and WBIDC had in the Agreements dated 12th January,
2002 and 8th March, 2002, already acknowledged that
on account of the transfer of the said 155 million
shares, the Chatterjee Group was in management and
control of HPL. The further finding of the learned
Single Judge that IOC had threatened civil and
criminal action against HPL and its Directors for
its unpaid dues for supply of Naphtha, was also not
justified, since Dr. Chatterjee had strongly
supported the refinancing package which had been
approved by the Board of HPL. Dr. Singhvi
submitted that Dr. Chatterjee and the Chatterjee
58
Group had always wanted to act in the interest of
the Company upon the assurance given by GoWB and
WBIDC that HPL would always remain a private
company and that the Chatterjee Group would always
have control over the management thereof.
52. Dr. Singhvi then submitted that HPL had played
an active role by supporting GoWB and WBIDC in the
ongoing litigation, contrary to the understanding
in terms of the Agreement dated 12th January, 2002
and the Share Subscription Agreement dated 30th
July, 2004, which contemplated that the Chatterjee
Group was to be in management of the Company. By
allowing the transfer of 150 million shares to IOC
and by not registering the 155 million shares
transferred to the Chatterjee Group by WBDIC, the
Company had created a situation in which the
Chatterjee Group, which was admitted to be in
control of the Company, was reduced to a minority.
Dr. Singhvi pointed out that the direct consequence
of the aforesaid acts of GoWB and WBIDC resulted in
59
decline of profit before tax in 2007-08 and 2008-
09, thereby adversely affecting the interest of the
Company and the shareholders.
53. Dr. Singhvi submitted that the part played by
Mr. Tarun Das, the Chairman of HPL, was also
partisan and was contrary to the interest of the
Chatterjee Group which, it had been agreed, was to
be in management and control of the Company and its
affairs. Reiterating the submissions made by Mr.
Nariman, Dr. Singhvi submitted that the secret and
clandestine move to convert HPL into a 619-B
Company by the arrangement entered into between
WBIDC and IOC went against the very grain of the
agreements entered into between the Chatterjee
Group and WBIDC/GoWB in that regard.
54. Dr. Singhvi submitted that in the entire
exercise, Mr. Tarun Das, the Respondent No.7, who
was also the Chairman of the Company, had
precipitated the allotment of 150 million shares to
60
IOC, although, the Re-financing Package approved by
IDBI on 27th May, 2005, and by the Board of HPL on
28th May, 2005, did not contemplate allotment of
shares to IOC. Mr. Tarun Das had on his personal
initiatives obtained and circulated an opinion from
a senior counsel relating to the issue of shares to
IOC and even the same had not been circulated to
the Members of the Board in full, and they were
deliberately kept in the dark in respect of certain
portions of the opinion. Dr. Singhvi pointed out
that under Section 289 of the Act the full opinion
was required to be circulated to the Members of the
Board and in the absence thereof, the opinion could
not be relied upon. Dr. Singhvi repeated his
earlier charge that GoWB/WBIDC had acted with the
sole intention of reducing the Chatterjee Group
from a majority shareholder in HPL to a minority,
which was sufficient ground for an application
under Sections 397, 398 and 402 of the Companies
Act, 1956.
61
55. Dr. Singhvi contended that despite having
acknowledged the Chatterjee Group as a prime
sponsor of HPL and that the CDR Package and the Re-
financing Package of HPL had been considered
because of Dr. Chatterjee, the Lenders sacrificed
their own interest by permitting the Chatterjee
Group to be ousted from the management of HPL after
the complaint was filed before the Company Law
Board by the Chatterjee Group.
56. Dr. Singhvi submitted that the appointment of
Mr. S.K. Bhowmick as Managing Director of the
Company, after being appointed as the Additional
Director as there was no vacancy on the Board and
his appointment as Managing Director, was wholly
illegal since only a Director could be appointed to
the said post. Dr. Singhvi submitted that the
Company played a dubious role in disallowing the
claim of Winstar to have a Director on the Board of
HPL on the ground that there was no vacancy,
62
although, a vacancy had arisen on the resignation
of Mr. Ratan Tata, which vacancy was utilized for
regularization of the irregular appointment of Mr.
Bhowmick and his subsequent re-appointment in view
of the Agreements entered into on 12th January, 2002
and 30th July, 2004, which provide that CP(M)C is to
be in management and control and the Managing
Director is to be nominated and appointed by the
Chatterjee Group. Dr. Singhvi submitted that the
aforesaid acts were sufficient to indicate the
manner in which the Company and the majority
shareholders had acted against the interest of HPL
in general, and had by their acts of oppression and
mismanagement, seriously affected the entire scheme
on the basis whereof the Chatterjee Group had
agreed to invest large amounts in HPL.
57. Learned Senior Advocate, Mr. Ashok Desai,
appearing for Haldia Petrochemicals Ltd., the
Respondent No.1 in all the appeals, repeated and
reiterated the submissions made on behalf of the
63
appellants regarding the manner in which the GoWB
conceptualised HPL as a showcase project of the
GoWB on its coming into existence. Mr. Desai
submitted that apart from equity, for the purpose
of starting the project HPL had planned to avail
credit from financial institutions and banks to the
extent of Rs.2,400 crores. The project involved a
total investment of Rs.3,600 crores. Mr. Desai
submitted that this in itself would indicate that
the principle of quasi-partnership, as urged both
by Mr. Nariman and Mr. Sarkar, could not apply to
the Company, both at the time when it was conceived
and during the subsequent period when the
shareholdings of the parties changed periodically.
Mr. Desai submitted that, in any event, HPL is
today recognized as a deemed Government Company
under Section 619-B of the Companies Act, 1956 and
steps have been taken by the Comptroller and
Auditor General of India under Section 619(2).
However, since its incorporation in 1985, HPL was
64
and continues to remain a Board-managed Company
with 16 Directors on its Board with equal
representation of the two major promoters, namely,
GOWB and the Chatterjee Group having 4 Directors
each, 5 Nominee Directors, 2 independent Directors
and 1 Managing Director.
58. Mr. Desai submitted that although on behalf of
the appellant it was contended that allotment of
shares to IOC was highly improper and oppressive,
such a course of action had to be resorted to since
not only was HPL suffering from severe financial
crunch, but that Naphtha, which is the main raw
material for production of Polymer and Chemicals,
was being supplied by IOC, which has its refinery
by the side of the HPL plant at Haldia. Mr. Desai
submitted that IOC, therefore, had a strong,
commercial and symbiotic relationship with HPL
which had developed over the years and HPL had also
started procuring Naphtha on credit basis and the
dues on such account had also multiplied. It was,
65
therefore, in the interest of HPL that when the
Chatterjee Group failed to infuse equity into the
Company, 150 million shares were allotted to IOC
for providing such equity.
59. Mr. Desai submitted that the case of the
Appellants could be summarised into a few specific
issues, namely,
(a) that the Chatterjee Group had all
along acted on the basis of the
promise which had been held out by
GoWB, WBIDC and the Company that the
Company would always remain a private
Company in which the Chatterjee Group
would have managerial control and that
it was towards that end that 155
million shares were transferred by
WBIDC to the Chatterjee Group, though,
ultimately it went back on its word
and refused to register the same;
66
(b) GoWB, WBIDC and HPL beguiled the
Chatterjee Group into agreeing to the
transfer of 150 million shares to IOC
by entering into agreements in which
it was admitted that upon transfer of
the 155 million shares to the
Chatterjee Group its shareholding was
51% and that the Chatterjee Group was
in management and control of the
affairs of the Company;
(c) even if the ingredients of Sections
397 and 398 of the Companies Act were
not proved during the hearing of the
Company Petition, the Company Law
Board had ample jurisdiction to pass
appropriate orders for the benefit of
and in the interest of the Company,
under Section 402 thereof.
67
60. Mr. Desai submitted that all the aforesaid
submissions made were misconceived and that in
order to file a complaint under Section 397 of the
above Act, the complainant had to be a Member (emphasis supplied) of the Company, having the
requisite standing under Section 399 of the Act.
It was also urged that the conduct complained of
had to be such as to be oppressive to the
complainant/complainants as shareholders/members.
Inasmuch as, CP(I)PL was not a member of HPL, it
could not have filed and maintained the complaint
under Section 397 before the Company Law Board.
Mr. Desai submitted that it was no doubt true that
upon transfer of the shares, the transferee became
the beneficial owner thereof, but till the shares
were registered in the Company’s Share Register and
subsequently, in the records of the Registrar of
Companies, the transferee did not acquire the right
to vote at a meeting of the Company on the basis of
acquisition of the said shares. Mr. Desai
68
submitted that for all practical purposes the
transferor remained in control of the transferred
shares and also enjoyed the right to vote on the
strength thereof. The failure of the transferor to
have the shares registered with the Company, did
not amount to an act of oppression of the Company,
but was an area of dispute between the transferor
and the transferee and it could not be said that
the inaction of the transferor amounted to
oppression within the meaning of Section 397 of the
Companies Act. Mr. Desai also submitted that the
oppression complained of should be such as would
lead to a conclusion that it would be just and
equitable to wind up the Company under Section
433(f) of the above Act.
61. Referring to the decision of this Court in
Shanti Prasad Jain’s case (supra), Mr. Desai
submitted that in the said decision it had been
emphasized that the oppression complained of had to
be shown as having been brought about by a majority
69
of members exercising a predominant voting power in
the conduct of the Company’s affairs and must
relate to the manner in which the affairs of the
Company were being conducted. Such conduct must
also be shown as being oppressive to a minority of
the members in relation to the shareholding in the
Company. It was also emphasized that although, the
facts disclosed might appear to furnish grounds for
the making of a winding up order under the “just
and equitable” principle, such facts must be
relevant in disclosing that the winding up order
would unfairly prejudice the minority members in
relation to the shareholders. Referring to the use
of the expression “legitimate expectation” by Lord
Justice Hoffmann sitting in the Court of Appeal, in
the decision rendered in Ebrahimi’s case (supra),
Mr. Desai submitted that subsequently in the case
of Saul D Harrison & Sons Plc (1995) 1 BCLC 14,
after referring to the decision in Ebrahimi’s case
(supra), Lord Justice Hoffmann held that such an
70
expression had been borrowed from public law to
describe the correlative right in the shareholder
to which such a relationship might give rise.
62. Mr. Desai also urged that the decision in
Kalinga Tubes Ltd.’s case (supra) was also relied
upon by this Court in the Needle Industries case
(supra), wherein it was held that on a true
construction of Section 397, an unwise, inefficient
or careless conduct of a Director in the
performance of his duties cannot give rise to a
claim for relief under that Section. The person
complaining of oppression must show that he has
been constrained to submit to a conduct which lacks
in probity, conduct which is unfair to him and
which causes prejudice to him in the exercise of
his legal and proprietary rights as a shareholder.
As to the findings of both the Company Law Board
and the High Court in relation to the applicability
of Section 398 of the above Act, Mr. Desai
submitted that since both the Courts had held that
71
the same was not attracted, there was really little
to add to the observations of both the forums that
there was absolutely no reason to say that GoWB and
WBIDC with their associates were conducting the
affairs of HPL in any manner prejudicial to HPL’s
interests. The allotment made in favour of IOC was,
in fact, in the interest of the Company and the
allotment of shares to IOC was part of the terms
and conditions of the debt restructuring package.
63. Regarding the failure of WBIDC to register the
155 million shares in favour of CP(I)PL, Mr. Desai
submitted that, in fact, there was no pleading in
that regard in the Company Petition filed by
CP(I)PL. Accordingly, neither could CP(I)PL
maintain the Company Petition, not being a member
of HPL, nor could any prayer have been made for a
direction upon the Company to register the said
shares in the name of CP(I)PL. Mr. Desai pointed
out that though such a pleading was subsequently
included in the Rejoinder Affidavit, no application
72
was ever made for amendment of the pleadings and
the prayers in the Company Petition.
64. To support his submissions, Mr. Desai referred
to the decision of the Calcutta High Court in Re.
Bengal Luxmi Cotton Mills Ltd. [1969 CWN 137],
Sangramsingh P. Gaekwad & Ors. Vs. Shantadevi P.
Gaekward & Ors. [(2005) 11 SCC 314], R. Ramanathan
Chettiar Vs. A & F Harvey Ltd. & Ors. [967 (37)
Comp. Case 212], wherein the principles laid down
in the Needle Industries case (supra) had been
followed. Mr. Desai submitted that the 155 million
shares transferred to CP(I)PL by WBIDC continued to
be held by WBIDC and were never lodged with the
Company.
65. Lastly, on the question of allotment of 150
million shares to IOC, Mr. Desai referred to the
observations of the Company Law Board which
recorded that such allotment could not be
questioned by the Chatterjee Group, since the same
73
was neither clandestine nor surreptitious and was
under contemplation from 2000 itself and the idea
of inducting IOC was initiated by Dr. Chatterjee
himself, as would be evident from the letter dated
24th March, 2000, addressed to the Chief Minister,
as the Company was in dire need of funds. Mr.
Desai pointed out that the said view was endorsed
by the learned Single Judge of the High Court by
observing that the Chatterjee Group had failed to
produce any evidence with regard to the allegations
that the allotment of shares to IOC was pursuant to
a clandestine agreement to permit IOC to
participate in the management of HPL.
66. Mr. Desai submitted that the case made out by
the appellants before the Company Law Board was not
only devoid of substance, but was entirely
misconceived, since the same was not maintainable
at the instance of CP(I)PL which was not a member
of HPL. Even the allegations of oppression remained
unproved, since the entire content related to the
74
transaction between WBIDC and CP(I)PL, which was
not the act of the Company, as contemplated in
Section 397, but a private dispute between two
groups of shareholders. Mr. Desai submitted that
the appeals were liable to be dismissed with
appropriate costs.
67. Mr. Dushyant Dave, learned Senior Advocate,
appearing for the Industrial Development Bank of
India (IDBI) pointed out that a loan agreement had
been entered into between HPL and IDBI for a sum of
Rs.12,500 lakhs and in the event the borrower
defaulted on the loan, the Bank would have the
right to convert upto 20% of the loan into fully
paid up equity of the Company. The Bank was also
given the right to appoint a Nominee Director on
the Board of HPL. Mr. Dave submitted that in 2003
the question of restructuring of the debt came up
for consideration and in its meeting held on 8th
August, 2003, the Company agreed to allow IDBI to
refer the Company to the Corporate Debt
75
Restructuring (CDR) Cell with a debt restructuring
proposal. Subsequently, on a 22nd January, 2004, at
a meeting of the Empowered Group, Dr. Chatterjee
agreed for conversion of debt to equity to the
extent of Rs.140 crores. Thereafter, on 23rd March,
2004, the Board of Directors of HPL approved a CDR
package and Dr. Chatterjee’s proposal to convert
debt to equity. Dr. Chatterhee was, in fact,
interested to give effect to the same. Mr. Dave
submitted that subsequently the debt restructuring
plan failed to fructify and the Bank was informed
by the Principal Secretary, Government of West
Bengal, on 27th July, 2005, that the permission
which had been granted in the credit restructuring
package, be treated as annulled.
68. In the pending proceeding before the CLB,
Chatterjee Petrochemicals Ltd. had got an interim
order in its favour staying further allotment of
shares of Rs.135 crores to IDBI. However, IDBI was
neither a party to the proceedings nor was any
76
relief, either final or interim in nature sought
against IDBI. But by virtue of the interim order
of injunction passed by the CLB, the allotment of
shares to IDBI was stayed, as that would have
reduced the Chatterjee Group to a minority. Mr.
Dave submitted that the application filed by IDBI
before the CLB was kept in abeyance and no order
was passed thereupon as it was likely to hamper the
progress of negotiation. Mr. Dave submitted that
the writ petition filed by IDBI against the said
order before the Delhi High Court was dismissed by
the learned Single Judge and the appeal preferred
therefrom was also dismissed by the Division Bench.
Ultimately, in its final judgment dated 31st
January, 2007, the CLB gave directions to the
effect that Chatterjee Group would purchase 155
million shares from GoWB/WBIDC at a minimum price
of Rs.28.80 per share. It was also directed that
the 155 million shares transferred to the
Chatterjee Group would be dematerialized and
77
registered and that the allotment to the IOC would
remain.
69. Mr. Dave submitted that the question of CP(I)PL
having any legitimate expectation did not arise and
such a case was not also pleaded before the Board.
Furthermore, since nothing had been proved before
the Board that the conduct of GoWB and WBIDC was
such as to justify an order of just and equitable
winding up, no order could have been passed by the
Board on the Company Petition filed by the
appellants and the learned Single Judge of the High
Court rightly allowed the appeals preferred against
the order of the Board.
70. Appearing for the Respondent No.16, Mr. Altaf
Ahmed, learned Senior Advocate, submitted that
nowhere in the Company Petition had any allegation
been made against the Managing Director as to his
involvement in any manner in the acts of oppression
alleged to have been committed against the
78
complainant. Accordingly, as had been held by the
CLB in its final order dated 31st January, 2007, the
Company Petition, though filed under Sections 397
and 398 of the Companies Act, was essentially one
under Section 397 of the aforesaid Act. Mr. Ahmed
submitted that the said finding of the CLB had been
duly upheld by the High Court.
71. Mr. Ahmed submitted that the question raised by
the Chatterjee Group with regard to the employment
of Mr. Bhowmik as the Managing Committee was
without any basis whatsoever, since he was
appointed unanimously by the Board of Directors
consisting of the nominees of the different
shareholders. Mr. Ahmed also pointed out that the
Respondent No.16 had been responsible for the
resurrection of HPL from the brink of financial
disaster which had been occasioned by the failure
of the promoters to infuse equity into the Company.
It was only after assessment of his performance
during the initial two year period of his tenure
79
that the Board of HPL reappointed him for a further
period of 3 years, inspite of the objection from
the Chatterjee Group.
72. Mr. Ahmed submitted that the Respondent No.16
has moved I.A.Nos.25-28 of 2009 for a direction
upon the Company to pay his arrears of salary as
per the resolution passed by the Board of Directors
on 28th May, 2008, for the period covering 29th
March, 2005 to 31st March, 2007. A further prayer
has also been made to fix the pay of the said
Respondent for the period from 1st April, 2007, till
31st March, 2010, at a rate as might be deemed just,
proper and reasonable.
73. As far as the Tatas are concerned, it was
submitted that the Tata Group was one of the
original promoters of HPL and continues to hold
more than 2% of the shares in the Company. It was
submitted that the Tatas were keen to see HPL
flourishing and had, accordingly, between 1994 and
80
2000 made significant infusion of funds into HPL,
including a sum of Rs.11.89 crores which was given
as an interest free loan. Even in 2000 when the
Company was in dire financial straits, the Tatas
brought in their share of Rs.35.71 crores along
with other shareholders, except for the Chatterjee
Group which failed to bring in its share of
Rs.107.14 crores. It was made clear that the Tata
Group had no faith in the Chatterjee Group since
from the very inception of HPL the Chatterjee Group
wanted control of HPL, without making any effective
contribution at times when such contribution was
most needed and had, therefore, worked against the
interest of the Company, its shareholders and the
public at large.
74. Mr. K.K. Venugopal, learned Senior Advocate,
who appeared for the Government of West Bengal and
its officials, urged that the relief prayed for in
the Company Petition for specific relief, could not
be granted under Section 397 of the Companies Act.
81
Since the said question had been adequately dealt
with on behalf of WBIDC, Mr. Venugopal chose to
deal with the directions given by the CLB to the
GoWB to disinvest its entire shareholding in HPL,
which was a Company set up in public interest and
for which a huge extent of land had been acquired
for the public purpose of maintaining supplies and
services essential to the life of the community, by
setting up a Petro Chemical Complex at Haldia. Mr.
Venugopal contended that it was settled law that
the decision of the Government to disinvest or not
to disinvest was not in the realm of public law and
was not, therefore, amenable to challenge or
interference, unless it amounted to an abuse of
power by the Government.
75. Mr. Venugopal submitted that the order and
directions of the CLB would exclude the State
Government from having any future role to play in
the running and management of HPL. Learned counsel
submitted that in a matter of this nature, the
82
public interest should have been considered first
before such directions are given. Mr. Venugopal
submitted that the proceedings under Section 397 of
the Companies Act should not have been allowed to
be made a vehicle for relief which was available to
the Chatterjee Group under the provisions of the
Specific Relief Act, 1963. It was also submitted
that the Company Law Board erred in applying the
principles of private law in the exercise of its
jurisdiction under Sections 397/398 and 402 of the
Companies Act, since the decision of the State
Government not to disinvest would have to be
decided by applying the public law in appropriate
proceedings. In this regard, Mr. Venugopal referred
to the decision of this Court in BALCO Employees’
Union (Regd.) Vs. Union of India & Ors. [(2002) 2
SCC 333], wherein it was observed that it is
neither within the domain of the courts nor the
scope of judicial review to embark upon an enquiry
as to whether a particular public policy is wise or
83
something better could be evolved. This Court also
observed that the courts are not inclined to strike
down a policy merely because it has been urged that
a different policy was fairer or wiser or more
scientific or more logical. This Court went on to
observe that the procedure of disinvestment is a
policy decision involving complex economic factors
and the courts have consistently refrained from
interfering with economic decisions, unless it was
demonstrated that economic expediency was so
violative of constitutional or legal limits on
power or is so abhorrent to reason, that such
interference was necessary. The Courts would in
given cases interfere if it could be demonstrated
that the policy was contrary to any statutory
provision or the provision of the Constitution or
there was illegality in the decision itself.
76. Mr. K.K. Venugopal submitted that from the very
inception, GoWB had played a major role in
conceptualizing and setting up of HPL with the
84
primary object of industrial development of the
region in particular, and the State in general and
subserving the underlying public interest. Mr.
Venugopal submitted that HPL had been conceived as
a showcase project of the GoWB. It was only
because of the active role of the State Government
that it was also possible to acquire a total of
1031.305 acres of land for the project at Haldia,
without any trouble and disturbance, from the year
1973 onwards. Mr. Venugopal submitted that the
direction given by the CLB would be against the
very grain of the concept of a Joint Venture
between WBIDC, which was owned by GoWB, and the
R.P. Goenka Group (RPG) and subsequently, with the
exit of the RPG Group, the Tata Group as well as
the CP(M)C. It was also submitted that even the
financial institutions, namely, IDBI and SBI, etc.,
who had a total stake of Rs.2989 crores in HPL,
drew great comfort from the continued presence of
the State Government and its active participation
85
in the management of HPL. On the other hand, on
several occasions the very same financial
institutions had expressed their concern regarding
the capability and intentions of the Chatterjee
Group in managing the Company and inducting funds
as necessary for the growth and development
thereof. Mr. Venugopal submitted that the acts of
oppression alleged by the Chatterjee Group and the
relief claimed by them, apart from being based on
alleged breach of contract, aimed at invoking the
jurisdiction of the CLB under Section 397 read with
Section 402 of the Companies Act, 1956, to compel
the Government to disinvest its shareholding in
HPL. Mr. Venugopal submitted that the CLB did not
have the jurisdiction to grant such relief and, in
any event, in view of the overriding public
interest, no relief should be granted to the
appellant in the instant appeals.
77. Mr. Anil Dewan, learned Senior Advocate, who
appeared for Mr. Tarun Das, who was functioning as
86
the Chairman of HPL, adopted the submissions made
by Mr. Desai and Mr. Venugopal and urged that the
Company Petition itself was not maintainable as it
had been filed by a Company which was not a member
of HPL, despite being the owner of 155 million
shares thereof. Mr. Dewan submitted that instead
of assisting the Company in meeting its financial
liabilities, the appellants not only failed to
infuse equity into the Company but also confined
their focus on acquiring only 51% of the
shareholding in order to maintain its control over
the management of the Company. Mr. Dewan submitted
that the judgment of the High Court did not call
for any interference in the instant proceedings.
78. In continuation of Mr. Desai’s submissions,
Mr. C.A. Sundaram, learned Senior Advocate
appearing for the Respondent No.2, reiterated the
factual aspect of the case as portrayed by Mr.
Desai. Mr. Sundaram, however, urged that the stand
now being taken by the Chatterjee Group that the
87
induction of IOC into HPL had adversely affected
their interest and had reduced the Chatterjee Group
to a minority shareholder in the Company, it was,
in fact, Dr. Chatterjee himself, who had initiated
the idea of allotting 150 million shares to IOC.
Dr. Chatterjee was the Chairman of the Committee
which prepared and sent the offer of allotment to
IOC which was accepted by its return letter
enclosing a cheque for Rs.150 crores in favour of
HPL. Between April, 2005 and July, 2005, eight
draft Share Purchase Agreements were exchanged
between the Chatterjee Group and the GoWB regarding
sale of the shares held by WBIDC to CP(M)C.
However, the Chatterjee Group never seemed to be in
a position to complete the transaction and
repeatedly asked for the inclusion of fresh
conditions, such as a pre-condition that IOC should
not be allotted any shares of HPL. In the
meantime, having accepted the offer of allotment of
150 million shares and having sent the price for
88
the same to HPL, IOC sent legal notices to HPL
calling upon the Company to issue and allot the
said 150 million shares to IOC and to credit the
same to the account of IOC after dematerialization.
79. Mr. Sundaram submitted that in the aforesaid
cauldron of events, the GoWB wrote to the
Chatterjee Group on 27th July, 2005, stating that it
had decided to defer its proposal to disinvest
shares in favour of the Chatterjee Group as it was
not in a position to conclude matters. On account
of the severe financial crunch being faced by HPL
and in view of the stand of IOC, which was the main
supplier of Naphtha to HPL, on 2nd August, 2005, HPL
allotted 150 million shares to IOC and a return of
allotment was also filed with the Registrar of
Companies in respect thereof. On 3rd August, 2005,
the cheque given to IOC for Rs.150 crores was
encashed by HPL.
89
80. Mr. Sundaram submitted that it was no doubt
true that at the initial stages it had been the
intention of GoWB and WBIDC to involve Dr.
Chatterjee and his Group of Companies as the prime
stakeholders in HPL with management control, but at
crucial times when support in the form of equity
was required, the Chatterjee Group failed to
provide the same. Mr. Sundaram submitted that even
when on 3rd June, 1996, GoWB wrote to Dr. Chatterjee
that on account of HPL’s financial crunch, all
promoters had been requested to induct 50% of the
equity and the last date for such infusion was 18th
June, 1996, the Chatterjee Group failed to make
such investments, although, both the Tatas and
WBIDC brought in their respective equity
contributions of Rs.35.5 crores and Rs.117 crores.
Once again, since the Lenders were insisting on
immediate infusion of Rs.581 crores into HPL and
HPL was on the threshold of becoming a Non-
Performing Asset, a Rights Issue Offer was made by
90
HPL to the existing shareholders for subscription
of 34,99,99,988 shares at the rate of Rs.10/- per
share. Despite Dr. Chatterjee’s assurance to bring
in Rs.53.5 crores immediately along with additional
fund of Rs.53.5 crores and a further sum of Rs.300
crores, the Chatterjee Group did not subscribe to
the Rights Issue, thereby depriving the Company of
Rs.107 crores at a very crucial time. In order to
re-assure HPL, the Chatterjee Group on 12th January,
2002, agreed to induct a minimum of Rs.500 crores
and such other further funds towards equity and
equity-like instruments to effectuate the Corporate
Debt Restructuring. However, despite such
commitment, till today, the Chatterjee Group has
not brought in the amount of Rs.500 crores
committed by it. On the other hand, acting on the
assurance given by the Chatterjee Group, WBIDC
agreed to transfer shares worth Rs.360 crores to
the Chatterjee Group to ensure that it controlled
51% of paid-up equity to enable it to remain in the
91
majority. Mr. Sundaram submitted that out of the
said number of shares, 155 million shares were, in
fact, transferred to CP(I)CL to maintain a
shareholding of 51%. However, WBIDC even agreed to
transfer shares beyond the said 155 million shares
to ensure that the 51% shareholding of CP(M)C was
maintained. It was also agreed that the transfer
would be effected within 10 days of the acceptance
of Letter of Comfort by WBIDC. Mr. Sundaram
submitted that although the shares were transferred
in the name of CP(I)CL, the said transfers were
never completed as they were not registered either
in the Company’s books or with the Registrar of
Companies and WBIDC continued to have voting rights
on the said 155 million shares. Mr. Sundaram
submitted that to cap it all, instead of bringing
in equity of an amount of Rs.53.5 crores, as
promised as per the decision taken by the Company
on 3rd June, 1996, to induct 50% of its equity, the
Chatterjee Group brought in only Rs.61.5 crores and
92
that too as debt and not equity, despite the fact
that post-dated cheques issued to vendors were
still bouncing and other commitments were not met.
In addition, the Corporate Debt Restructuring could
not be implemented since CP(M)C could not induct a
strategic investor. Ultimately, out of sheer
compulsion in order to save the Company from
becoming a Non-Performing Asset, a decision had to
be taken to induct IOC as a portfolio investor,
though there may have been discussion to bring in
IOC as a strategic investor.
81. Mr. Sundaram submitted that one of the
questions which arise in these proceedings is
whether the Company Law Board, acting under
Sections 397 and 398, read with Section 402 of the
Companies Act, could direct sale of shares in the
absence of a finding that there had been oppression
by one body of shareholders against another or
mismanagement of the Company. According to Mr.
Sundaram, the second question, which is directly
93
connected with the first, is whether in the absence
of such a finding the Company Law Board could
direct sale of shares in the absence of a further
finding that such sale of shares was necessary in
the interest of the Company. The third question
posed by Mr. Sundaram was whether in addition to
the findings indicated above, the Company Law Board
could direct sale of shares under Sections 397 and
398 read with Section 402 of the above Act in the
absence of a finding that without giving such a
direction it might be just and equitable to wind-up
the Company.
82. On the aforesaid issues, Mr. Sundaram
reiterated the submissions made by Mr. Desai that
the said questions have been answered by this Court
in Shanti Prasad Jain’s case (supra) and in the
subsequent decisions in Sangramsinh P. Gaekwad
(supra), M.S.D.C. Radharamanan (supra), V.S.
Krishnan (supra), the Needle Industries (supra) and
94
in the case of Hanuman Prasad Bagri Vs. Bagress
Cereals Pvt. Ltd. [(2001) 4 SCC 420].
83. Mr. Sundaram submitted that the next issue
involved the question as to whether the concept of
legitimate expectation of a body of shareholders
would be applicable to a large public limited
company or only in quasi partnerships and family
companies and whether in those situations also the
sale of shares could be directed in order to break
a deadlock. In this regard, reference was made to
the decision of this Court in Kilpest Pvt. Ltd. &
Ors. Vs. Shekhar Mehra [(1996) 10 SCC 696] and Hind
Overseas Pvt. Ltd. Vs. Raghunath Prasad
Jhunjhunwalla & Anr. [(1976) 3 SCC 259]. In Hind
Overseas Pvt. Ltd.’s case, this Court had held that
when more than one family or several friends and
relations together form a company and there is no
right as such agreed upon for active participation
of members who are excluded from management, the
principles of dissolution of partnership cannot be
95
liberally invoked. It was further observed that it
is only when shareholding is more or less equal and
there is a case of a complete deadlock in the
running of the company on account of lack of
probity in the management and there is no hope or
possibility of smooth and efficient continuance of
the company as a commercial concern, a case for
winding up may arise. However, in a given case, the
principles of dissolution of partnership may apply
if the apparent structure of the company is proved
not to be the real structure and on piercing the
veil it is found that in reality it is a
partnership. Mr. Sundaram submitted that, in any
event, the application of the just and equitable
clause would depend upon the facts and
circumstances of each case. A note of caution was
also introduced that even admission of a petition
could prejudice and cause immense injury to a
company in the eyes of the investors, if ultimately
the petition is dismissed. Mr. Sundaram urged that
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in a petition under Section 397/398 of the
Companies Act, it was not always incumbent on the
CLB to order the winding up of a company on the
just and equitable principle, but in order to pass
any order under Section 397, the Company Law Board
would have to arrive at a specific finding that
there was just and equitable reason to order such
winding up.
84. The next issue canvassed by Mr. Sundaram is
that the Court would have to examine as to whether
the direction given for sale of shares was in order
to maintain the status quo which was being
disturbed on account of the oppressive measures
taken. In this regard, Mr. Sundaram referred to
the decisions of this Court in Dale & Carrington
Invt. (P) Ltd. Vs. P.K. Prathapan & Ors. [(2005) 1
SCC 212] and M.S.D.C. Radharamanan’s case (supra),
along with the decision in Allianz Securities Ltd.
Vs. Regal Industries Ltd. [2002 (11) CC 764 =
(2000) 25 SCL 349 (CLB)]. On the concept of
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legitimate expectation, Mr. Sundaram submitted that
it has to be considered whether the same should be
restricted to maintaining the state of affairs at
the time when the parties became shareholders or
whether any subsequent understanding arrived at by
private treaty between the shareholders would fall
under the purview of the Company Law Board to
enable it to deal with such questions between
private shareholders.
85. Mr. Sundaram repeated that in this regard it
would have to be decided as to whether the CLB
could direct sale and transfer of shares to a group
to give it majority control on an application under
Section 397/398 read with Section 402 of the
Companies Act and to enforce specific performance
of agreement between the parties whether legitimate
or not, especially when such specific performance
was not necessary in the interest of the company,
or to prevent winding up of the company. Another
question of equal importance in this connection was
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whether specific performance could be directed at
the instance of a party whose own conduct had been
inequitable in failing to carry out its promises,
to the severe prejudice of the company.
86. Another issue raised by Mr. Sundaram, which has
a direct bearing to the facts of this case, is
whether a Company can effect transfer of shares in
the absence of transfer deeds and a request for
transfer, and whether the transfer of shares is
complete only when such transfers are duly
registered and entered in the Register of Members
of the Company. In this regard, Mr. Sundaram
referred to the decisions of this Court in Howrah
Trading Company Vs. CIT [AIR 1959 SC 775]; Life
Insurance Corporation of India Vs. Escorts Ltd.
[(1986) 1 SCC 264], Mannalal Khetan Vs. Kadarnath
Khetan [(1977) 2 SCC 424], Claude Lila Parulekar
(Smt.) Vs. Sakal Papers (P) Ltd. [(2005) 11 SCC
73], J.P. Srivastava & Sons Pvt. Ltd. Vs. Gwalior
Sugar Co. Ltd. [(2005) 1 SCC 172], Mathrubhumi
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Printing & Publishing Co. Ltd. Vs. Vardhman
Publishers Ltd. [(1992) 73 CC 80] and several other
decisions to which we shall shortly refer as they
have a bearing on the issue involving the rights
acquired by the Chatterjee Group on the transfer of
155 million shares by WBIDC, which were not,
thereafter, registered in the name of the
Chatterjee Group in the Register of Members of the
Company, nor was the factum of such transfer
communicated to the Registrar of Companies.
87. Mr. Sundaram also raised another question as to
why on failure of reciprocal promises in a contract
on account of non-performance of the promises made
by one of the parties, the benefits accrued to such
party through part performance should not be
restituted to the other party. In this regard,
reference was made to Sections 51 to 54 of the
Contract Act and the decision of the Privy Council
in Satgur Prasad Vs. Harnarayan Das [(AIR 1932 PC
89] and the decision of the Delhi High Court in
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Suit No.1481 of 1996, to which reference may be
made, if required.
88. Lastly, on the question of allotment of the 150
million shares by WBIDC to IOC, Mr. Sundaram
submitted that on account of the failure of the
Chatterjee Group to bring in equity when the
Company was in dire need of funds, such allotment
was fully justified under the doctrine of Indoor
Management. However, even if a legitimate dispute
could be raised in regard to such transfer, such
transaction could not be avoided by the Company Law
Board as the same was in the interest of the
Company, which would otherwise have been converted
into a Non Performing Asset.
89. What emerges from the materials on record and
the submissions made on behalf of respective
parties is that HPL was incorporated in 1985 by the
West Bengal Industrial Development Corporation and
the R.P. Goenka Group, and their nominees were the
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subscribers to the Memorandum of Association. Soon
thereafter, in 1990, the Goenka Group left the
Company and Tata Chemicals and Tata Tea were
inducted into the project between 1990 and 1993.
However, since the TATAs were not very keen to
continue with the Project, in June 1994, Dr.
Purnendu Chatterjee, a Non-Resident Indian
industrialist and financier, evinced his interest
in implementing the project. Accordingly, a
Memorandum of Understanding was entered into
between WBIDC and the Chatterjee Petrochem
(Mauritius) Company and the Tatas on 3rd May, 1994.
Certain assurances were given to Dr. Chatterjee
that the Company would remain a private enterprise
with the Chatterjee Group in control of the
management thereof. A further assurance was given
to the effect that WBIDC/GoWB would transfer their
entire shares in the Company to the Chatterjee
Group, which would then acquire a complete majority
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for the purposes of management and control of the
Company.
90. In addition to the above, certain duties and
obligations to be performed by the Chatterjee Group
were also indicated, mainly confined to the
question of bringing in equity in an otherwise
cash-strapped situation then prevailing in relation
to the Company’s finances. It also appears that
the assurances given by WBIDC/GoWB were on account
of the aforesaid assurances given by the Chatterjee
Group to bring in equity. Inasmuch as, the
Chatterjee Group failed to abide by its
commitments, the Company had no other alternative,
but to bring in IOC by selling and transferring 150
million shares to the said Company.
91. The parties also agreed that they would be
entitled to seek specific performance of the terms
and conditions of the Agreement in accordance with
the provisions of the Specific Relief Act, 1963.
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Various other terms and conditions were included
with the intention of guaranteeing that CP(M)C
would acquire a controlling interest to the extent
of at least 51% shares which would also give it
complete control over the day-to-day affairs of the
Company. In addition, it was agreed that in future
the composition of the Board would be altered to
reflect the revised shareholding structure and
WBIDC would vote along with CP(M)C on all issues in
the shareholders meeting and its nominee would also
vote along with the nominee Directors of the
CP(M)C.
92. Despite the concessions given and/or afforded
to the Chatterjee Group, it had failed to take
advantage of the same and a subsequent Agreement
dated 8th March, 2002, had to be entered into for
recording the fact that in terms of the Agreement
dated 12th January, 2002, 155,099,998 equity shares
of WBIDC had been transferred/delivered to CP(I)PL
on the same day. It was also indicated in the
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Agreement that all the aforesaid shares which had
been transferred and delivered to the Petitioner
No.4 would be pledged with WBIDC and, accordingly,
their shares had been duly lodged along with their
share certificates with WBIDC and such pledge had
been acknowledged.
93. It is in the aforesaid background that we have
to consider the Petition filed by the Chatterjee
group before the Company Law Board under Sections
397, 398, 399, 402, 403 and 406 of the Companies
Act, 1956, and the reliefs prayed for therein.
94. The law relating to grant of relief on a
petition under Sections 397, 398 and 402 of the
Companies Act, 1956, has been crystallised in
various decisions of this Court, including those
cited on behalf of the parties. The common refrain
running through all these decisions is that in
order to succeed in an action under Sections 397
and 398 of the Companies Act, the complainant has
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to prove that the affairs of the Company were being
conducted in a manner prejudicial to public
interest or in a manner oppressive to any member or
members. For better appreciation of the above,
Section 397 of the above Act is extracted
hereinbelow :
“397. Application to [Tribunal] for relief in cases of oppression.— 1) Any member of a company who complains that the affairs of the company are being conducted in a manner prejudicial to public interest or] in a manner oppressive to any member or members (including any one or more of themselves) may apply to the Tribunal for an order under this section, provided such members have a right so to apply in virtue of section 399.
(2) If, on any application under sub- section (1), the Court is of opinion—
(a) that the company’s affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members; and
(b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order
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on the ground that it was just and equitable that the company should be wound up,
the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit.”
However, as was observed by this Court in Shanti
Prasad Jain’s case (supra) the law has not defined
as to what would amount to “oppressive” for the
purposes of Section 397 and it is for the Courts to
decide on the facts of each case as to whether such
oppression exists which would call for action under
Section 397. It was also emphasized that the
conduct of the majority shareholders should not
only be oppressive to the minority, but must also
be burdensome and operating harshly upto the date
of the petition.
95. The main grievance of the Appellants appears to
be that having been induced into investing large
sums of money in establishing the petrochemical
complex on various promises, particularly that the
Company would continue to retain its private
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character and the Chatterjee group would have
control over its management, such promises,
although, reduced into writing in the form of
agreements, not only remained unfulfilled, but even
the character of the Company was altered with the
transfer and sale of 150 million shares by the
Company in favour of IOC. Coupled with the above,
is the other grievance that despite having
transferred 155 million shares in favour of
CP(I)PL, and having received the full price
therefor, the Company had not registered the same
in the Company’s Register of Share-holders, thereby
depriving the Chatterjee Group from exercising its
right to vote in respect of the said shares. The
third grievance of the Chatterjee Group is that by
not registering the transfer of the 155 million
shares in their favour, but, on the other hand,
transferring 150 million shares in favour of IOC,
the character of the Company was altered from a
Private Company into a Government Company and also
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reduced the Chatterjee Group to a minority, despite
the promises held out earlier and as incorporated
in the Agreements dated 20th August, 1994, 12th
January, 2002 and 8th March, 2002.
96. Let us examine as to whether any of the
complaints contained in the Company Petition before
the CLB make out a case that the affairs of the
Company are being conducted in a manner prejudicial
to public interest or in a manner oppressive to any
member or members, which was sufficient to justify
the passing of a winding-up order on the ground
that it was just and equitable that the Company
should be wound-up, but that to wind-up the Company
would prejudice such member or members. In Shanti
Prasad Jain’s case (supra), referred to
hereinabove, in a similar situation, it was
observed by this Court as follows :-
“It is not enough to show that there is just and equitable cause for winding up the Company though that must be shown as a preliminary to the application of Section
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397. It must further be shown that the conduct of the majority shareholders was oppressive to the minority as members and this requires that events have to be considered not in isolation but as part of a consecutive story. There must be continuous acts on the part of the majority shareholders, continuing up to the date of petition, showing that the affairs of the company were being conducted in a manner oppressive to some part of the members. The conduct must be burdensome, harsh and wrongful, and mere lack of confidence between the majority shareholders and the minority shareholders would not be enough unless the lack of confidence springs from oppression of a minority by a majority in the management of the Company’s affairs and such oppression must involve at least an element of lack of probity or fair dealing to a member in the matter of his proprietary rights as a shareholder.”
It will be evident that in order to pass orders
under Section 397 of the Companies Act, 1956, the
CLB has to be satisfied that the Company’s affairs
are being conducted in a manner oppressive to any
member or members and that the facts would justify
the making of a winding-up order on the just and
equitable principle, but that such an order would
unfairly prejudice the Applicant before the CLB.
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As was discussed by this Court in the Needle
Industries case (supra), unwise, inefficient or
careless conduct of a Director cannot give rise to
claim for relief under Section 397 of the Act. For
relief under this Section, the Applicant would have
to prove that the conduct of the majority of the
shareholders lacked probity and was unfair so as to
cause prejudice to the Applicant in exercising his
legal and proprietary rights as a shareholder.
This, in fact, is the golden thread of the various
decisions in relation to petitions under Section
397, 398 and 402 of the above Act. All the various
decisions cited by the learned counsel for the
various parties are ad idem on this issue and
applying the said principles, each complaint under
Section 397 will have to be judged on its own merit
for the CLB to arrive at a conclusion as to whether
the ingredients of Section 397 were satisfied and
pass appropriate orders thereafter.
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97. As has been indicated in some of the cases
cited, the language of Section 397 suggests that
the oppressive manner in which the Company’s
affairs were being conducted could not be confined
to one isolated incident, but that such acts would
have to be continuous as to be part of a concerted
action to cause prejudice to the minority
shareholders whose interests are prejudiced
thereby.
98. In the aforesaid context, what do the facts
reveal in the instant case and do they bring the
acts of oppression complained of within the purview
of Section 397 for grant of relief under Section
402 of the Companies Act?
99. The case of the Chatterjee Group is woven
around two particular issues, namely, that it had
been induced to invest in HPL so as to make it a
successful commercial enterprise on the promise
that the Company would always retain a private
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character and the Chatterjee Group would have
control over its management, but such a promise had
not been adhered to and, on the other hand,
negotiations were undertaken by WBIDC to induct
IOC, a Central Government Company, with the
intention of ultimately handing over the management
of the Company to IOC. The aforesaid case of the
Chatterjee Group is also based on the grievance
that while keeping the Chatterjee Group under the
impression that it intended to ensure that the
Chatterjee Group had the requisite number of shares
to allow it to have a majority shareholding and
thereby control of the Company’s management, the
Company carried on clandestine negotiations with
WIBDC to transfer all the shares held by it in the
Company to IOC to give it management and control
over the Company’s affairs.
100. The second ground, as made out by the
Chatterjee Group, was that despite having
transferred 155 million shares in favour of CP(I)PL
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on 8th March, 2002, it did not register the same in
the name of CP(I)PL, which remained the beneficial
owner, the right to vote on the basis thereof
remained with WBIDC. This was done despite the
fact that the price for the said shares had been
received by way of a private arrangement and the
Lenders and financial institutions had given their
consent to the same. According to the Chatterjee
Group, this one act of omission on the part of the
Company was sufficient to attract the provisions of
Section 397 of the Companies Act and for the CLB to
pass appropriate orders on account thereof. It is
on account of the second ground on which the
Company Petition was filed that a prayer had been
made therein for a direction upon WBIDC and IOC to
immediately register the transferred 155 million
shares in the name of CP(I)PL.
101.From the facts as revealed, it is clear that
when Dr. Purnendu Chatterjee expressed his interest
in setting up of the Haldia Petrochemicals Ltd.,
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various incentives had been offered to him by the
GoWB and WBIDC to invest in the Company and to make
it a successful commercial enterprise. Such
investments were, however, contingent upon Dr.
Chatterjee’s bringing in sufficient equity to set
up and run the Company. As would be seen, at the
very initial stage all the understanding between
Dr. Chatterjee and GoWB & WBIDC, both WBIDC and the
Chatterjee Group were to hold 433 million shares
each, while Tata was to hold 144 million shares.
The promise extended by WBIDC and GoWB to the
Chatterjee Group to provide at least 60% of the
shares held by WBIDC at Rs.14/- per share to the
Chatterjee Group so as to give the Chatterjee Group
the majority shareholding in the Company, as was
indicated in the Agreements dated 12th January,
2002, 8th March, 2002 and 14th January, 2005, did not
ultimately materialise and, on the other hand, the
Chatterjee Group was reduced to a minority on
account of its decision not to participate in the
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Rights Issue, and, thereafter, by transfer of 150
million shares by WBIDC in favour of IOC.
102. Although, the Chatterjee Group has complained
of the manner in which it had been reduced to a
minority in the Company, it is also obvious that
when the Company was in dire need of funds and the
Chatterjee Group also promised to provide a part of
the same, it did not do so and instead of bringing
in equity, it obtained a loan from HSBC through the
Merlin Group, which only increased the debt equity
ratio of the Company. Furthermore, while promising
to infuse sufficient equity in addition to the
amounts that would have been brought in by way of
subscription to the Rights Issue, the Chatterjee
Group imposed various pre-conditions in order to do
so, which ultimately led GoWB and WBIDC to
terminate the agreement to transfer sufficient
number of shares to the Chatterjee Group to enable
it to have complete control over the management of
the Company and also to retain its private
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character. It is at a stage when there was a
threat to the supply of Naphtha, which was the main
ingredient used by HPL for its manufacturing
process, that it finally agreed to induct IOC into
the Company as a member by transferring 150 million
shares to it. It may not be out of place to mention
that it was on Dr. Chatterjee’s initiative that it
had been decided to induct the IOC as a member of
the Company at meetings of the Directors which were
chaired by Dr. Chatterjee himself. Of course, as
explained on behalf of the Chatterjee Group, even
the induction of the IOC as a member of the Company
is concerned, was part of a conspiracy to deprive
the Chatterjee Group of control of the Company
since GoWB and WBIDC never intended to keep its
promise regarding transfer of at least 60% of its
shareholdings in favour of the Chatterjee Group.
Such a submission has to be considered in the
context of the financial condition of the Company
and the response of the Chatterjee Group in meeting
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such financial crunch. In our view, if in the
first place, the Chatterjee Group had stood by its
commitment to bring in equity and had subscribed to
the Rights Issue, which was a decision taken by the
Company to infuse equity in the running of the
Company, it would neither have been reduced to a
minority nor would it perhaps have been necessary
to induct IOC as a portfolio investor with the
possibility of the same being converted into a
strategic investment.
103. The failure of WBIDC and GoWB to register the
155 million shares transferred to CP(I)PL could
not, strictly speaking, be taken to be failure on
the part of the Company, but it was the failure of
one of the parties to a private arrangement to
abide by its commitments. The remedy in such a case
was not under Section 397 of the Companies Act. It
has been submitted by both Mr. Nariman and Mr.
Sarkar that even if no acts of oppression had been
made out against the Company, it would still be
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open to the learned Company Judge to grant suitable
relief under Section 402 of the Act to iron out the
differences that might appear from time to time in
the running of the affairs of the Company. No
doubt, in the Needle Industries case, this Court
had observed that the behaviour and conduct
complained of must be held to be harsh and wrongful
and in arriving at such a finding, the Court ought
not to confine itself to a narrow legalistic view
and allow technical pleas to defeat the beneficial
provisions of the Section, and that in certain
situations the Court is not powerless to do
substantial justice between the parties, the facts
of this case do not merit such a course of action
to be taken. Such an argument is not available to the Chatterjee Group, since the alleged breach of
the agreements referred to hereinabove, was really
in the nature of a breach between two members of
the Company and not the Company itself. It is not
on account of any act on the part of the Company
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that the shares transferred to CP(I)PL were not
registered in the name of the Chatterjee Group.
There was, therefore, no occasion for the CLB to
make any order either under Section 397 or 402 of
the aforesaid Act. If, as was observed in M.S.D.C.
Radharamanan’s case (supra), the CLB had given a
finding that the acts of oppression had not been
established, it would still be in a position to
pass appropriate orders under Section 402 of the
Act. That, however, is not the case in the instant
appeals.
104. In our view, the appellants have failed to
substantiate either of the two grounds canvassed by
them for the CLB to assume jurisdiction either
under Section 397 or 402 of the Companies Act,
1956, and it could not, therefore, have given
directions to WBIDC and GoWB to transfer 520
million shares held by them in HPL to the
Chatterjee Group and the High Court quite rightly
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set aside the same and dismissed the Company
Petition.
105. Consequently, all the appeals are dismissed.
Having regard to the peculiar facts of the case,
the parties shall bear their own costs.
…………………………………………J. (ALTAMAS KABIR)
New Delhi …………………………………………J. Dated: 30.09.2011 (CYRIAC JOSEPH)
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