Rajiv Sanghvi & Ors. v. Pradip R. Kamdar & Ors.

16. Being aggrieved by the said order dated 28th July 2021, the Defendant Nos. 1 and 2 filed Company Appeal Nos. 4588 and 4542 of 2021 before the Supreme Court challenging the said order passed by the NCLAT in the Appeals.

17. The Supreme Court disposed of the Civil Appeals inter alia directing the NCLAT to dispose of the Appeals pending before it by 28th October 2021 i.e. before the date fixed for the main hearing of the Company Petition.

18. The NCLAT disposed of the Appeals on 29th September 2021 directing the NCLT to hear the matter expeditiously uninfluenced by the observations made in paragraph 10(ii) and (iii) of the order dated 11th June 2021.

19. The Company Petition though listed before the NCLT, could not be heard due to paucity of time.

20. On 1st December 2021 an ‘Overview Note’ is filed by the advocates for Defendant Nos. 1 and 2 in the Company Petition which inter alia seeks fresh valuation and exit from Defendant No. 3 Company.

21. NCLT passed an order on 21st January 2022 directing that the Petition to be listed high on board and for final hearing on 17th February 2022.

22. The Plaintiffs filed the present Interim Application on 11th February 2022 inter alia seeking temporary injunction restraining the Defendants from directly or indirectly taking any steps towards valuation of the Defendant No. 3 Company and/or buyout of the shareholding in the Company.

23. Mr. Virag Tulzapurkar, the learned Senior Counsel appearing for the Applicants/Plaintiffs has made submissions in support of the relief sought for in the present Interim Application filed in the captioned Suit and has also filed the written submissions on 27th April 2022.

24. Mr. Virag Tulzapurkar has submitted that it has been stated in paragraph 3.[6] of the Plaint that the Defendant Nos. 1 and 2 have grossly been mismanaging the affairs of the Gujarat Division as a result of which, it has been losing, and have now lost, all dealerships and is making severe losses. As opposed to the Gujarat Division, the Maharashtra Division, Andhra Pradesh/Telangana Division of the Defendant No. 3 Company has consistently been making profits. He has submitted that the Defendant Nos. 1 and 2 had filed Company Petition No. 428 of 2018 before the NCLT alleging oppression and mismanagement of the Plaintiffs in the business of Defendant No. 3. It was the Plaintiffs’ contention in response to the Petition that this was nothing but an attempt by the Defendant Nos. 1 and 2 to scuttle efforts being made by the Board of Directors of Defendant No. 3 Company to revive the Gujarat Division and turn the division profitable. This Company Petition is pending for final hearing and disposal.

25. Mr. Virag Tulzapurkar has submitted that it is during the pendency of the Company Petition that the parties upon holding discussions arrived at a family settlement to separate amicably. The family settlement was arrived at and agreed to between the parties in the meeting held on 14th June 2019 and it was reduced to writing in a document titled as ‘Minutes of Discussion’. The Minutes of Discussion has been signed by the parties thereto, namely the Plaintiff and Defendant Nos. 1 and 2, accepting the same as a family settlement on behalf of their respective families. He has submitted that though the execution of the Minutes of Discussion is not in dispute what is really disputed by the Defendants is its characterisation as a “family settlement”.

26. Mr. Virag Tulzapurkar has made submissions on the Minutes of Discussion/Agreement which he has submitted is a family settlement and thus, enjoying a special equity. He has submitted that a bare reading of the Minutes of Discussion makes it clear that it is a family settlement. It is an undisputed position that the parties to the Minutes of Discussion are related to each other and are family members. The disputes between the parties to the Minutes of Discussion have been resolved by the execution of the Minutes of Discussion. The mere fact that the disputes in relation to Defendant No. 3 Company was the only dispute which was to be resolved, and in doing so the NCLT Petition was to be withdrawn, does not detract from the Agreement being a “family settlement”.

27. Mr. Virag Tulzapurkar has relied upon the decision of the Supreme Court in Kale Vs. Dy. Director of Consolidation[1] - paragraph 9 to 24 in support of his submissions that the Court in favour of upholding a family arrangement instead of disturbing the same on technical or trivial grounds. Where the courts find that the family arrangement suffers from a legal lacuna or a formal defect the rule of estoppel is pressed into service and is applied to shut out plea of the person who being a party to family arrangement seeks to unsettle a settled dispute and claims to revoke the family arrangement under which he has himself enjoyed some material benefits.

28. He has also relied upon the decision of Hari Shankar Singhania & Ors. Vs. Gaur Hari Singhania & Ors.[2] paragraph 42 onwards in support of his contention that a family settlement is treated differently from any other formal commercial settlement, as such settlement in the eye of the law ensures peace and goodwill among the family members. Such settlements are governed by a special equity principle where the terms are fair and bona fide, taking into account the well being of a family. Technical considerations should give way to peace and harmony in the enforcement of family arrangement or settlements.

29. He has also relied upon the decision of Shivanand Vassudev Salgaocar & Ors. Vs. Dattaraj Vassudev Salgaoncar[3] in particular, paragraphs 47 to 51, 64 to 67, 76 and 77 in support of his contention that the family settlement is required to be given effect to and one party cannot be allowed to scuttle the entire family arrangement. In that case, this Court had held that it is clear from the terms of the documents and the manner in which the parties conducted themselves that this was a binding and concluded Family Arrangement, one capable of specific enforcement.

30. He has also relied upon the decision of the Dinesh Gupta & Ors. Vs. Rajesh Gupta & Ors.[4] in support of his contention that a family settlement which settles disputes within the family should not be lightly inferred with especially if the settlement has already been acted upon by some members of the family.

31. Mr. Virag Tulzapurkar has submitted that in the Minutes of Discussion, it is categorically recorded that a settlement amount is payable to the Gujarat family, comprising of the Defendant Nos. 1 and 2 herein. The Minutes of Discussion also records that the contents thereof represents the understanding agreed upon between the Gujarat family, Maharashtra family and Andhra Pradesh/Telangana family. In the first sentence of the Minutes of Discussion, it is recorded that the “Minutes of Discussion and its mechanics of the family settlement agreed to between the participants…”. Thus, the parties to the Minutes of Discussion understood the Minutes of Discussion to be a family settlement. The issues of the three families in the Minutes of Discussion are the issues to be settled. Thus, the Minutes of Discussion records a full and final settlement among the three families of the issues pending and is therefore complete.

32. Mr. Virag Tulzapurkar has also submitted that from a reading of Clause 8 of Minutes of Discussion wherein it is stated that “no claim by the Gujarat family of any sort will be considered and this shall be treated as full and final settlement” makes it clear that the Minutes of Discussion was a full and final settlement between the three families namely the Gujarat family, Maharashtra family and Andhra Pradesh/Telangana family. The concluding words of the Minutes of Discussion that it was without prejudice to other rights and remedies available to the parties was only reference to such other rights and remedies available to the parties other than that recorded in the Minutes of Discussion. The reference to detailed understanding and mechanics documented by way of family settlement agreement and scheme of arrangement (demerger) in the Minutes of Discussion were not with reference to the subsequent execution of such formal documents and thereafter the withdrawal of existing Company Petition filed by the Defendants.

33. Mr. Virag Tulzapurkar has thereafter, referred to the conduct of the parties subsequent to the execution of the Minutes of Discussion and has submitted that this demonstrates that the parties understood and treated the Minutes of Discussion to be a final, binding and concluded contract. He has thereafter referred to the correspondence exchanged subsequent to the execution of the Minutes of Discussion, which was towards execution of the formal family settlement agreement as well as the scheme of arrangement (demerger) in implementation of the Minutes of Discussion. He has submitted that the exchange of drafts of the virtually finalised formal family settlement agreement between the parties/their respective advocates were as per the terms of the Minutes of Discussion and in any event a mere formality.

34. Mr. Virag Tulzapurkar has submitted that the pleadings before the NCLT in the Miscellaneous Application NO. 1008 of 2020 and the Rejoinder Affidavit filed therein which made reference to the settlement as being “a proposal” was obviously a reference to the formal agreements to be executed between the parties and to the which the Defendants had not reverted since February 2020. He has submitted that in fact the Plaintiffs had brought to the immediate notice of the NCLT, filing of the captioned Suit in January 2021 with a view to alert the NCLT of the same. He has submitted that there is no delay in moving the present Interim Application seeking interlocutory reliefs pending the disposal of the Suit. In any event, it is a settled law that delay by itself, without demonstrating corresponding prejudice caused to the other party by virtue of such delay, cannot disentitle a party from relief.

35. Mr. Virag Tulzapurkar has submitted that the parties have acted in furtherance and towards the implementation of the Minutes of Discussion and have inter alia taken the following steps:i. The Board of Directors unanimously approved buyback of shares of the shareholders at the 576th Board Meeting held on 14th June 2019 i.e. the same day of executing the said Agreement. As a result, approximately 8% out of the 12% outside shareholders of Defendant No.3 have exited from Defendant No.3 Company. The buy-back of shares caused increase of Defendant Nos.[1] and 2’s shareholding from approx. 17% to 19.31%. ii. Defendant No.1, promoter director of one Kimaya Enterprises Pvt. Ltd. addressed a letter dated 26th November 2019 to Defendant No.3 Company’s Board, requesting issuance of the NOC to enable Kimaya Enterprises to change the name to Automotive Manufactures (Guj.) Pvt. Ltd. iii. To establish a separate and independent entity, the Board of Directors in its 582nd Board Meeting held on 2nd December 2019 unanimously consented to issue a No Objection Certificate for allowing change of name of the said Kimaya Enterprises Pvt. Ltd. to Automotive Manufacturers (Guj.) Pvt. Ltd., so that it could be the resulting entity in the proposed demerger. iv. The Board of Directors caused payment of approx. Rs.56 Crores, partly from the cashflows of Maharashtra and Andhra Pradesh Divisions and partly by selling listed investments of Defendant No.3 Company to discharge bank/ financial institution liabilities of the Gujarat Division of Defendant No.3 Company. v. Defendant No.3 refunded the Fixed Deposits belonging to Defendant Nos.[1] and 2 amongst other shareholders by sale of liquid investments of vi. A funding of Rs.1.[5] Crores and subsequently of Rs.[3] Crore towards payment of salaries and wages of the employee of the Gujarat Division of Defendant No.3 Company from the cashflows of other two divisions. vii. A payment of an amount of approx. Rs.3.95 Crores towards payment of interest of Hinduja Leyland Finance Ltd./ Kotak Mahindra Bank Ltd. for Loan Against Property (LAP) taken for the Gujarat Division from the cashflows of other two divisions.

36. Mr. Virag Tulzapurkar has submitted that the Defendant Nos. 1 and 2 have acted in furtherance of the Minutes of Discussion by unanimously approving the buy-back of shares, which resulted in the increase of their own shareholding. They have only disputed one of the aforementioned steps as being in furtherance of the Minutes of Discussion i.e. the payment of Rs. 56 Crores in discharge of the bank liabilities. He has submitted that this payment was in the interest of Defendant No. 3 Company and presuming that the payment was to prevent the Defendant No. 3 Company from being declared as NPA, this is hardly relevant when the payments were made in good faith and in continuation of the discussions to finalise the formal scheme of arrangement (demerger) and the formal family settlement agreement.

37. Mr. Virag Tulzapurkar has relied upon the decision of this Court in Shivanand Vassudev Salgaocar (supra) in support of his submissions that the ordinary doctrines of estoppel apply where although no contract has come into existence the conduct of a party has been such that he is estopped from denying the existence of a valid and enforceable contract. In the present case, the conduct of the Defendant Nos. 1 and 2 is required to be viewed and from which it is apparent that these Defendants have acted in furtherance of the Minutes of Discussion and thus, are estopped from denying the existence of the valid and enforceable Minutes of Discussion.

38. Mr. Virag Tulzapurkar has thereafter made further submissions that from a plain reading of the Minutes of Discussion, it is clear that the parties understood that it is a concluded contract. The Minutes of Discussion was concluded in several rounds of negotiations and was not preliminary in nature. The parties to the Minutes of Discussion have agreed that the three-way demerger shall take place of Defendant No. 3 Company as advised by the consultants. An entitlement of Defendant Nos. 1 and 2 referred to as Gujarat family in the Minutes of Discussion was agreed upon by the parties i.e. the Gujarat Division along with its the assets and liabilities and monies/other assets at Rs.245 Crores. The parties had also agreed that the Defendant No. 3 Company shall offer buy-back of shares which would result in exit of outsider shareholders. Parties had further agreed that the appointed date for the demerger was 1st April 2020. Parties agreed that the settlement contemplated in the said Minutes of Discussion shall be treated as full and final settlement and no claims would be considered.

39. Mr. Virag Tulzapurkar has submitted that the Minutes of Discussion merely contemplated entering into a detailed document, as a formality, by which the terms already agreed upon are to be put in a more formal shape. Nothing prevented the existence of it being a binding contract. The understanding and the mechanism documented by way of a family settlement agreement and scheme of arrangement (Demerger) is not a condition so as to prevent the concluded agreement. He has relied upon the decision of the Supreme Court in Kollipara Sriramulu Vs. T. Aswathanarayana[5] in support of his submission that the understanding of the parties that the final, binding and agreed terms would be put into the form of a more formal document cannot prevent the Minutes of Discussion from constituting a concluded, valid and binding contract. He has also relied upon the decision of the Court in England, namely Branca Vs. Cobarro[6] and W.J. Rossiter, George Curtis & Ors. Vs. Daniel Miller, House of Lords 7 in this context.

40. Mr. Virag Tulzapurkar has thereafter made submissions on there being no bar, jurisdictional or otherwise to the filing of the present Suit or grant of interim relief as sought for by the Plaintiffs. He has submitted that there is no merit in the challenge of the Defendants to the powers/jurisdiction of this Court to entertain the present Suit and grant reliefs as sought for by canvassing that the NCLT is seized of the Company 5 AIR 1968 SC 1028 – Para 3 6 [1947] K.B. 854, W. J. pgs. 856-858 7 (1878) 3 App. Cas. 1124 pages 1132, 1143, 1144, 1148 and 1149 Petition and thus, the present Suit is therefore not maintainable. He has submitted that there is no section in the Companies Act, 2013 (and none was cited by the Defendants) that empowers the NCLT to grant the reliefs of specific performance as sought for in the present Suit or to grant a ‘decree’ of specific performance. He has submitted that Sections 420, 424 and 425 of the Companies Act, 2013 have been relied upon by the Defendants to contend that the NCLT is empowered to order specific performance. This contention is erroneous and contrary to the settled law. He has submitted that these sections do not confer any jurisdiction or power on the NCLT. Section 420 only empowers the NCLT to pass orders as it thinks fit in proceedings pending before it. The proceedings must be within NCLT’s jurisdiction prior to the power under Section 420 being exercised. The Supreme Court in Embassy Property Developments Pvt. Ltd. Vs. State of Karnataka[8] has clearly held that the matters that fall within the jurisdiction of the NCLT, under the Companies Act, 2013, lie scattered all over the Companies Act. Therefore, Sections 420 and 424 of the

Companies Act, 2013, indicate in broad terms, merely the procedure to be followed by the NCLT and NCLAT before passing orders. The Defendants have not identified any section which expressly confer on the NCLT a power to grant specific performance.

41. Mr. Virag Tulzapurkar has further submitted that there is no bar on the present Suit and/or Interim Application under Section 430 of the Companies Act, 2013. Section 430 bars jurisdiction in the courts only in respect of any matter which the NCLT or the NCLAT is empowered under the said Act. In the present case, the question that arises for consideration before this Court is whether the NCLT is empowered under the Companies Act, 2013 to decide the question of specific performance of an agreement. It is only if this question is answered in the affirmative that the Plaintiff can be non suited. He has referred to the decisions of the Supreme Court under Section 9 of the Code of Civil Procedure, 1908 (“the CPC”) in support of the submissions that the Civil Court has inherent jurisdiction to try civil disputes unless its jurisdiction is barred expressly or by necessary implication, by any statutory provision, and that jurisdiction is conferred on any other tribunal or authority. He has in this context, relied upon the decision in Dwarka Prasad Agarwal Vs. Ramesh Chander. This decision has held that the a provision seeking to bar jurisdiction of a Civil Court requires strict interpretation. The Court, it is well settled would normally lean in favour of construction, which would uphold retention of jurisdiction of the Civil Court. The burden of proof in this behalf shall be on the party who asserts that the civil court’s jurisdiction is ousted. He has submitted that the NCLT and NCLAT are Tribunals of limited jurisdiction as conferred by the statute and not Civil Courts. Only a Civil Court has jurisdiction to grant specific performance of a contract. NCLT/NCLAT are not empowered under the Companies Act, 2013 to grant specific performance nor does the Companies Act, 2013 confer any power on the NCLT/NCLAT to do so. In support of his submission that NCLT/NCLAT cannot decide the issues relating to enforcement of contractual provisions between the parties and/or the issue as to whether the agreement is valid, binding and subsisting which can only be decided by a Civil Court after examining the evidence and conducting a trial in the matter, he relied upon the following decisions:-

(i) Chatterjee Petrochem (India) Private Limited Vs.

(ii) Macquarie SBI Infrastructures Investments Pvt.

Ltd. and Ors. Vs. K. Sadananda Shetty & Ors. [2021] 167 SCL 743

(iii) Sekura Roads Ltd. Vs. IL&FS Transportation

(iv) Dhirubhai alias Dhirajlala H. Desai & Ors. Vs.

(v) Santosh Poddar V. Kamalkumar Poddar (1992)

(vi) Aslam Ali V. Narbada Valley Chemical Industries

Pvt. Ltd. & Ors. (2014) 183 Comp Cas 21 (vii)Mrs. Madhu Ashok Kapur & Ors V. Mr. Rana Kapoor & Ors. (2014) 183 Comp Cas 339

42. Mr. Virag Tulzapurkar has submitted that the above authorities have amply clarified that the Companies Act, 2013 does not confer the NCLT/NCLAT with jurisdiction to order or direct specific performance of a contract nor to adjudicate upon any dispute in that regard. No section of the Companies Act, 2013 has been pointed out that would confer jurisdiction on the NCLT to grant specific performance. The bar under Section 430 of the Companies Act, 2013 is not attracted at all in the instant case. The Suit is therefore clearly maintainable.

43. Mr. Virag Tulzapurkar has submitted that there is no bar on the grant of interim relief which is in aid of the final relief in the Suit. Since final relief of specific performance can be granted only by this Court, the interim relief can also be granted by this Court. He has referred to the second part of Section 430 of the Companies Act, 2013 and has submitted that this clearly follows from the first part. The second part of Section 430 provides that “no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal”. It thus, follows that though the NCLT and/ or NCLAT does not have jurisdiction to grant the final relief it can never be said that it still has jurisdiction to grant interim relief. Such relief would be outside the jurisdiction of the NCLT.

44. Mr. Virag Tulzapurkar has accordingly, submitted that the NCLT is not having jurisdiction over the subject matter of the captioned Suit. The Plaintiffs cannot seek such relief in the NCLT. He has accordingly, submitted that since the Minutes of Discussion is a valid and binding family settlement, it is required to be given effect to and accordingly, the relief sought for in the present Interim Application to restrain the Defendant Nos. 1 and 2 from taking any steps which would defeat the Applicants’ rights under the valid and binding family settlement be granted and which would include restraining the Defendant Nos. 1 and 2 from taking any steps towards the valuation of the Defendant No. 3 Company and/or buy-out of inter alia of the Defendant Nos. 1 and 2’s shareholding in the Defendant No. 3 Company.

45. Mr. Ravi Kadam, learned Senior Counsel appearing for the Defendant Nos. 1 and 2 has submitted that by the present Interim Application taken out in the captioned Suit, the Plaintiffs are seeking to disable the Defendant Nos. 1 and 2 from applying for and the NCLT from granting reliefs which are exclusively within its powers and in exercise of its jurisdiction under Sections 241 to 244 of the Companies Act, 2013. The Applicants/Plaintiffs have filed the present Suit with an attempt to harass and pressurize the Defendants into accepting unfair and prejudicial terms, purportedly on the basis of the Minutes of Discussion, which is neither a concluded nor binding agreement, and which is in the Plaintiffs’ own words, in the nature of without prejudice settlement discussions and/or proposals. He has submitted that the parties to the Minutes of Discussion were, at the material time, ad idem that the Minutes of Discussion merely recorded an interim proposal discussed and did not constitute a binding contract. He has submitted that from the Miscellaneous Application No. 1008 of 2020 filed by the Plaintiff Nos. 2 to 4 in the NCLT which was one year after the Minutes of Discussion, no mention or reference was made to the Minutes of Discussion being a settlement between the parties and in fact, it was categorically asserted therein that the parties had “failed to finalize the settlement proposal thus far”. This is further, apparent from the response of the Plaintiff Nos. 2 to 4 to the Miscellaneous Application No. 1064 of 2020 filed by the Defendants, wherein relief was inter alia sought of valuation of assets and liabilities of Defendant No. 3 Company. The Plaintiffs have in their Affidavit in Rejoinder as well as additional Affidavit maintained the position that there was no settlement between the parties. Clearly, the stand taken in the captioned Suit is contrary to the Plaintiffs' consistent pleaded position. It is only at the advanced stage of arguments in Miscellaneous Application No. 1064 of 2020 and Miscellaneous Application No. 1008 of 2020 before the NCLT that Plaintiff No.1 filed an Affidavit dated 27th January 2021 stating that the Plaintiffs had filed the captioned Suit before this Court for specific performance of the Minutes of Discussion. There was no application filed/moved by the Plaintiffs before this Court seeking to injunct Defendant Nos. 1 and 2 from seeking a valuation before the NCLT which was sought in Miscellaneous Application No. 1064 of 2020 on the basis that it would run counter to the pending Suit before this Court. He has submitted that it is only with a view to undermine the disposal of the Company Petition in its entirety and deny the Defendants from seeking their just entitlements before the NCLT, that the present Interim Application has been preferred.

46. Mr. Ravi Kadam has further submitted that the Suit is barred by Section 430 of the Companies Act, 2013 as the NCLT is empowered to determine whether the dispute before it is settled by a valid and lawful compromise. He has submitted that the Plaintiffs are obligated to file an application under Order XXIII Rule 3 of the CPC (read with Rule 11 of the NCLT Rules) before the NCLT based on the alleged compromise contained in the Minutes of Discussion. Considering the fact that the Minutes of Discussion has contemplated disposal of the proceedings brought by the Defendant Nos. 1 and 2 before the NCLT, an application ought to have been filed before the NCLT in the pending Company Petition. He has submitted that the Plaintiffs’ contention that NCLT does not have power to order specific performance of the Minutes of Discussion is misconceived. He has submitted that under the proviso to Order XXIII Rule 3 of the CPC, the Court or authority is expressly empowered to decide the question of whether “an adjustment or satisfaction has been arrived at” when one party asserts and the other party denies a compromise / agreement.

47. Mr. Ravi Kadam has submitted that under Section 424(1) of the Companies Act, 2013, the NCLT is ‘not bound’ by the provisions of the CPC. Thus, the NCLT has wide powers which include but not limited to the CPC. Furthermore, Section 424(3) of the Companies Act, 2013 specifically empowers the NCLT to enforce its order in the same manner as a decree made by a Court in a pending suit, which would include the power to record and enforce a compromise under Order XXIII Rule 3 of the CPC. Thus, these sections conferred wide powers on the NCLT. The relief sought for in the present Interim Application and the captioned Suit is in contravention with the powers of the NCLT to grant reliefs in the Company Petition under Sections 241 and 242 of the 2013 Act (as well as its inherent powers) including to take on record and order any alleged compromise under Order XXIII Rule 3 of the CPC.

48. Mr. Ravi Kadam has further submitted that the Minutes of Discussion is not a concluded contract. However, if according to the Plaintiffs, the Minutes of Discussion is a compromise or settlement and constitutes a binding contract, the Minutes of Discussion is not a typical family settlement wherein normally multiple family issues relating to family properties, businesses, personal assets like jewelry are settled. The present Minutes of Discussion only seeks to settle the disputes of the Defendants on one hand and the Plaintiffs on the other hand, as contained in the Company Petition. If the case of the Plaintiffs that the Company Petition and disputes therein had been settled by a valid binding compromise is to be accepted, the Plaintiffs were and are duty-bound in law obligated to approach the NCLT to record a compromise and for the NCLT to pass the order in terms of the compromise under Order XXIII Rule 3 of the CPC. The NCLT is empowered and able and has jurisdiction to record a compromise and pass an order in terms thereof. Further, the NCLT is empowered to determine the question whether there is a lawful agreement/compromise in writing and signed by the parties which effectively disposes of the pending Company Petition before the NCLT and the Civil Court is not entitled to do so, as its jurisdiction stands ousted by Section 430 of the Companies Act, 2013.

49. Mr. Ravi Kadam has relied upon decisions of the Supreme Court to the effect that the NCLT has power to record and order a compromise under Order XXIII Rule 3 of the CPC. These decisions are namely State of Karnataka Vs. Vishwabharathi House Building Coop. Society & Ors.10 and Industrial Credit and Investment Corporation of India Ltd. Vs. Grapco Industries Ltd. & Ors.11.

50. Mr. Ravi Kadam has thereafter submitted that under Section 430 of the Companies Act, 2013, it is provided that the Civil Court does not have jurisdiction in respect of any matter which the NCLT is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the NCLT. From a plain reading of the provisions under the Companies Act, 2013, it is clear that the

NCLT would have exclusive right to deal with and adjudicate upon all matters (including, valuation) for the purpose of deciding an oppression and management case and granting all reliefs including valuation and buyback. Section 242(2)(b) of the 2013 Act has specifically conferred a power upon the NCLT to direct the purchase of shares or interest of any member of the company by other members or by the company. Once the NCLT has the power to order a purchase of shares, and, as a consequence, the power to direct valuation, Section 430 of the 2013 Act operates with full vigor. He has submitted that no injunction can be granted against the NCLT carrying out a valuation, as this would have the effect of restraining the NCLT from exercising the powers given under the Companies Act,

2013.

51. Mr. Ravi Kadam has submitted that an attempt on the part of the Plaintiffs’ Counsel to contend that Section 10GB of the Companies Act, 1956 was pari materia with Section 430 of the 2013 Act is wholly misleading. In this context, he has relied upon the decision of the Supreme Court in Union of India Vs. R. Gandhi, President, Madras Bar Association12 which had struck down Section 10GB of the Companies Act, 1956 as unconstitutional. He has submitted that the Plaintiffs’ Counsel has relied upon the judgments prior to the enactment of Section 430 of 2013 Act, which judgments are inapplicable apart from being wholly inapposite. He has submitted that the present Interim Application is an ill-conceived attempt to restrain the Defendants from prosecuting the Company Petition filed by them before the NCLT. This Court ought not to interfere and/or circumscribe any of the powers of the NCLT as sought in the Interim Application. He has placed reliance upon decisions of the Supreme Court and this Court in support of his contention that the Suit and Interim Application are barred under Section 430 of the 2013 Act. Following are the decisions:-

(i) Shashi Prakash Khemka (Dead) through LR Vs.

(ii) SAS Hospitality Pvt. Ltd. & Anr. Vs. Surya

(iii) Shankar Assana Gaddam Vs. Achanak Associates

(iv) Invesco Developing Markets Fund Vs. Zee

52. Mr. Ravi Kadam has submitted that the Courts in the above decision have considered the bar under Section 430 of the Companies Act, 2013 that restrained the Courts from interfering with the wide powers of the NCLT under the 2013 Act and/or granting any order of injunction which would have the effect of preventing the NCLT from exercising such wide powers.

53. Mr. Ravi Kadam has submitted that the Minutes of Discussion is not a concluded contract at all. He has referred to the clauses in the Minutes of Discussion and has submitted that from a plain reading of these clauses, the document styled as a Minutes of Discussion would require a detailed mechanism of family settlement to be arrived at which would be subject to finalization, discussions and execution of further documents/agreements between the parties including the filing of a demerger scheme before the NCLT. The Minutes of Discussion is only “an understanding” and “without prejudice to the parties” rights. He has submitted that all the shareholders of the 1st and 2nd Defendants’ group namely, the Kamdar Group, who are parties to the Company Petition are not signatories to the Minutes of Discussion. Equally, they are not parties to the Suit. In their absence, there can be no settlement of the Company Petition qua them or the Suit. He has submitted that the Minutes of Discussion envisaged the payment of INR 245 crores to the Kamdar Group. In Clause 1, sub-clauses (g), (h) and (i) reference is made to the payments proposed from “the common kitty”. The Minutes of Discussion does not have any other reference to or explanation of the term “common kitty”, making it evident that the Minutes of Discussion was not a binding or conclusive contract but it was at best a tentative understanding between the parties, subject to further discussions, negotiations and agreements which were never concluded. He has submitted that even assuming that the Minutes of Discussion was a concluded agreement, it was merely an agreement to enter into an agreement, and could not by itself have resolved all disputes between the warring family groups. He has submitted that the Minutes of Discussion contemplated 100% of the Gujarat Division to vest with the Kamdar Group. If this was to happen, the outside shareholders would be required to give up their rights in the resultant company with the demerged Gujarat Division or be bought out prior to such demerger. This was not effected, nor were steps taken, nor was there any agreement with such outside shareholders that would ensure that the Gujarat Division was fully owned and controlled by the Kamdar Group in accordance with the Minutes of Discussion. Thus, the Minutes of Discussion could in no way have been termed as a valid and concluding settlement contract or a compromise of the Company Petition.

54. Mr. Ravi Kadam has submitted that assuming that the Minutes of Discussion is a contract, the Plaintiffs have breached and/or repudiated the same, and are not entitled to enforce the same. He has submitted that the Miscellaneous Application No. 1008 of 2020 was filed by the Plaintiff Nos. 2 to 4 before the NCLT wherein they expressly contended that there was no concluded settlement between the parties. Plaintiff Nos.[2] to 4 had by Miscellaneous Application No. 1008 of 2020 sought to wrest control over the Gujarat Division from the Defendants, thereby clearly repudiating Clause 5 of the Minutes of Discussion where the demerged Gujarat Division was to be carved and transferred to the Defendants.

55. Mr. Ravi Kadam has further submitted that the Plaintiffs had by filing the Miscellaneous Application No. 1008 of 2020 as well as challenging to the order of the NCLT rejecting the relief sought for in the Miscellaneous Application No. 1008 of 2020 and being party to the Appeal before the Supreme Court preferred by the Defendants had at no stage contented that the proceedings before the NCLT could not be proceeded with on account of the settlement arrived at by way of Minutes of Discussion and/or cited the captioned Suit, as an impediment to the proceedings before the NCLT. In fact, the Plaintiffs at proceedings before the NCLT admitted that the settlement discussions between the parties had failed and accordingly, proceeded with the hearing before the NCLT on that basis.

56. Mr. Ravi Kadam has submitted that there has been other breaches and repudiation of the Minutes of Discussion by the Plaintiffs. He has referred to the clause in the Minutes of Discussion which had contemplated the date for demerger of Defendant No. 3 Company and implementation and execution of a scheme of demerger as 1st April 2020. Admittedly, no such scheme of demerger was filed either before 1st April 2020 or otherwise. He has further drawn reference of paragraph 4 of the Minutes of Discussion which provides that Pune property was supposed to be given to the Defendants in lieu of money (which was also borne out by the draft scheme). However, at 592nd Board meeting of the Defendant No. 3 Company held on 15th December 2021 (Agenda No. 31), it was resolved to sell the property at the instance of the majority Sanghvi Group, i.e., the Plaintiffs herein. This is contrary to the draft family settlement agreement, where the Pune property was agreed to be transferred and demerged to the Gujarat Company. Similar provision was made under Clause 4.15 of the draft demerger scheme. Thus, it would be entirely up to the resultant Gujarat Company as to whether and when to sell the Pune property, which would then trigger the threshold for the consideration received. Thus, the Sanghvi Group effecting steps to sell the Pune property, rather than have it demerged and transferred to the Gujarat Division/Gujarat Company is an explicit repudiation of the terms of the Minutes of Discussion.

57. Mr. Ravi Kadam has further submitted that the Plaintiffs who are seeking specific performance of an agreement must be in a position to establish their readiness and willingness to perform to at all times. The Minutes of Discussion contemplated the detailed understanding and mechanics to be documented by way of a family settlement agreement and a scheme of arrangement to be filed with the NCLT. The family settlement agreement was never finalized, signed and acted upon by either of the parties. The correspondence reflects that the parties were not ad idem on the proposed terms of the Minutes of Discussion, let alone the draft family settlement agreement shared by the Plaintiffs’ advocates. He has submitted that the correspondence exchanged between the parties were relied upon by the Plaintiffs before this Court, inspite of the same were marked “without prejudice” and exchanged during settlement talks and discussions. In any case, the correspondence, assuming that they can be relied upon, clearly reflects that the parties were not ad idem and were only attempting to arrive at a settlement, which eventually did not fructify, as recorded in the pleadings filed before the NCLT and the orders of the NCLT and the Supreme Court.

58. Mr. Ravi Kadam has relied upon the decisions of the Supreme Court in support of his contention that the correspondence exchanged in the process of the parties seeking to compromise the action, the evidence of the content of those negotiations will, as a general rule, not been admissible. The correspondence will only be protected by without prejudice privilege if it is written for the purpose of a genuine attempt to compromise a dispute between the parties. The protection of privilege to “without prejudice” correspondence depends partly on public policy, namely the need to facilitate compromise and partly an implied agreement.

59. Mr. Ravi Kadam has relied upon the decisions of the Supreme Court in Peacock Plywood (P) Ltd. Vs. Oriental Insurance Co. Ltd.13 and Oberoi Constructions Pvt. Ltd. Vs. Worli Shivshahi Co-op Hsg. Society Ltd.14 in this context.

60. Mr. Ravi Kadam has further submitted that certain shareholders of Defendant No. 3 Company were neither

14 (2008) SCC Online Bom 102 consenting parties nor signatories to the Minutes of Discussion and thus, the Minutes of Discussion cannot be effected/performed without the consent of such outside shareholders, which was never taken. The only response offered by the Plaintiffs in their rejoinder submissions in the Company Petition is that, the Petitioner Nos. 2 to 5 therein had given a power of attorney dated 18th March 2018 in favour of the Petitioner No. 1 therein which allowed him to inter alia “compromise any of the aforesaid proceedings”. This cannot explain why though the Defendant No. 1 (Petitioner No.1 in the Company Petition) was entitled to compromise the Company Petition and bind the other Petitioners therein, in a Suit for specific performance of that alleged compromise (i.e. the Minutes of Discussion), the other Petitioners have not been joined in the said Suit for any orders to be passed herein to be binding upon them, including in any application for interim relief. If it is the contention of the Plaintiffs’ contention that all that the Minutes of Discussion does is to compromise the Company Petition, it would only strengthen the argument on behalf of the Defendants with regard to Order XXIII Rule 3 of the CPC. The compromise would require to be filed before the NCLT. If it is on the other hand, contended that the Minutes of Discussion is a wider settlement, not just of the Company Petition proceedings, it would be impossible for the Plaintiffs to show how Defendant No. 1 could bind the others. The Plaintiffs have never contended that the Defendants were acting for the other Petitioners in the Company Petition, or for the Kamdar Group as a whole group. Having not made such pleadings, the Plaintiffs cannot rely on the power of attorney to paper over the glaring deficiencies in the Suit / present Interim Application.

61. Mr. Ravi Kadam has submitted that the Plaintiffs have despite belatedly filing the present Suit on 25th January 2021 and the same pending adjudication, did not file an Interim Application or move for interim relief nor previously cited its pendency as a reason for not proceeding with the adjudication of the Company Petition. This is despite the matter having travelled to the NCLAT and the Supreme Court, even after the filing of the present Suit. The Plaintiffs have in fact, time and again consented to the Company Petition being heard finally, even as recently as on 21st January 2022. The present Interim Application was filed on 11th February 2022 and sought to be listed on 16th February 2022, exactly one day before 17th February 2022 being the scheduled final hearing of the Company Petition before the NCLT. The Suit was filed to derail the hearing of Miscellaneous Application No. 1064 of 2020 albeit unsuccessfully. The present Interim Application has been filed in a clear attempt to stall the hearing of the Company Petition. It is obvious that the attempt is to prevent the NCLT from passing orders for valuation and eventual buy-out, an event that would constrain the Sanghvi Group into giving the Kamdar Group a fair and equitable consideration for their shareholding is what motivated the Interim Application. The Interim Application has been taken out and moved by the Plaintiffs being perversely conscious of the fact that Defendant No. 2 is 99 years old and that the delay is only likely to benefit them and defeat the Defendants’ cause before the NCLT. The Plaintiffs were well aware of the orders passed by the NCLT as well as the Supreme Court directing the NCLT to expedite the hearing of the Company Petition and despite being aware of the orders had belatedly filed, served and moved the Interim Application exactly one day before hearing of the Petition in the NCLT.

62. Mr. Ravi Kadam has submitted that this is not the case of mere delay and that the Plaintiffs have abandoned their rights and had acquiesced before the NCLT, despite the alleged “settlement” in terms of the Minutes of Discussion. The Plaintiffs have categorically taken a stand before the NCLT that there was no settlement arrived at between the parties. The Plaintiffs thus, acquiesced for the NCLT to consider the prayer for valuation by participating in the proceedings before the NCLT, the NCLAT and the Supreme Court without demur. The Plaintiffs cannot fall back of their contention that the Interim Application was moved on the premise of the “Overview Note” dated 1st December 2021 which gave the Plaintiffs a cause of action. This contention is contrary to the Plaintiffs’ own submissions in the Plaint. The Overview Note had been filed by the Defendants to comply with the order dated 22nd November 2021 passed by the NCLT directing the Defendants to file a synopsis of dates along with the relevant orders.

63. Mr. Ravi Kadam has relied upon certain decisions in support of his contention that the Plaintiffs’ admissions and contentions in pleadings, in particular that the parties have failed to finalize the settlement proposal must be taken into consideration by this Court. He has in this context relied upon the decision of the Supreme Court in Nagindas Ramdas v Dalpatram Ichharam alias Brijram & Ors.15 and Sangramsingh Gaekwad Vs. Shantedevi Gaekwad.16

64. Mr. Ravi Kadam has distinguished the judgments cited by the Plaintiffs and which are set out in Annexure 2 to the written submissions filed on behalf of the

Defendants. He has distinguished the decisions relied upon by the Plaintiffs in support of their contention that necessarily the formal contract must be a condition / term of bargain without which there is no concluded contract. He has submitted that in the present case, the Minutes of Discussion was only a skeletal framework, which did not include “vital terms” and was incapable of implementation. In the cases relied upon by the Plaintiffs, the agreement had been arrived at between the parties, which contained vital terms of the contract as noted by the Supreme Court in Kollipara Sriramulu (supra). In the judgment of the Court of Appeal in England, namely, Branca Vs. Cobarro (supra) relied upon by the Plaintiffs, the agreement was styled as “agreement” albeit a “provisional agreement”. The provisional agreement was to continue until drawing up of a formal agreement and that the parties intended that the documents have some efficacy. In the facts of the present case, no such term was concluded in the Minutes of Discussion. In another decision of the House of Lords in England relied upon by the Plaintiffs namely W.J. Rossiter, George Curtis & Ors. (Supra), a clear contract has been made out from the correspondence. In the present case, Minutes of Discussion merely recorded the tentative discussion held between the parties and was expressly made subject to further discussions which failed to fructify between the parties. Thus, this decision is not applicable to the facts of the present case.

65. Mr. Ravi Kadam has thereafter, distinguished the other decisions on family settlement relied upon by the Plaintiffs, namely, Kale Vs. Dy. Director of Consolidation (supra), Hari Shankar Singhania (supra), Shivanand Vassudev Salgaocar (supra), Arun P. Goradia Vs. Manish Jaisukhalal Shah & Ors.17 and Commissioner of Wealth Tax, Mysore Vs. Her Highness, which are the cases where there was an admitted family settlement entered into between the parties and it was in that context, the Supreme Court has held that the family settlements are governed by a special equity and will be enforced, if honestly made. 17 2009(1) Mh.L.J. 611

66. Mr. Ravi Kadam has also distinguished the decisions relied upon by the Plaintiffs in support of their contention that the Civil Courts are not barred from considering Suits in all cases. He has submitted that most of these decisions are prior to the enactment of Section 430 of the Companies Act, 2013 where there is now an express bar to Civil Court’s jurisdiction where specific powers are given to the NCLT. He has submitted that the decisions relied upon by the Plaintiffs with regard to complicated question of fact such as issues as to the title and fraud/forgery can only be decided by a Civil Courts are inapplicable in the facts of the present case, as there are no complicated questions of fact/fraud/forgery that have arisen in the present case. He has submitted that the decisions on delay and latches relied upon by the Plaintiffs, namely The Lindsay Petroleum Company Vs. Prosper Armstrong Hurd19, Mademsetty Satyanarayana Vs. G. Yelloji Rao & Ors.20 and Dehri Rohtas Light Railway Company Limited v. District Board 21 are not in the context of interlocutory relief where delay would certainly be a 19 (1874) LR 5 PC 221 [Page 239]

21 1992 2 SCC 598 factor while deciding the present Interim Application. He has also distinguished the decisions relied upon by the Plaintiffs in Perry V. Suffields, Limited 22 in support of their contention that once there is a concluded contract, further negotiations do not supplant it, unless they themselves culminate in a contract. He has submitted that the Minutes of Discussion is not a concluded contract and hence this decision is inapplicable. Further he has distinguished the decision of the Delhi High Court in Dinesh Gupta (supra) where the family settlement was admittedly arrived at and where in which context it was held that it should not be lightly interfered with, especially if acted upon. This is not so in the present case.

67. Mr. Virag Tulzapurkar in his rejoinder submissions has submitted that there is no merit in the Defendants’ contention that the Minutes of Discussion was not a concluded contract and/or “an inchoate document” and “an incomplete document” and “a tentative document” as described by the Defendants in their oral submissions. The Minutes of 22 1916 2 Ch D 187 C.A Discussion was entered between the parties after several rounds of negotiations from 2014-15 onwards and thereafter, recorded/ reduced the writing. A plain reading of Clauses 6, 7 and 8 make it clear that the valid and enforceable contract came into existence and which was to be treated as in full and final settlement.

68. Mr. Virag Tulzapurkar has submitted that there is equally no merit in the Defendants’ contention that other members of the respective families and / or other parties to the Petition before the NCLT have not signed the Minutes of Discussion and therefore, the Minutes of Discussion is not enforceable. He has submitted that the Defendant Nos. 1 and 2 have not pleaded this in their case Affidavit in Reply dated 22nd February 2022. The Defendant Nos. 1 and 2 have signed Minutes of Discussion in respect of capacity of Gujarat family and the Plaintiff No. 1 has signed the Minutes of Discussion in a representative capacity of Andhra Pradesh and Telangana family and Plaintiff Nos. 2 and 3 have signed the said Minutes of Discussion in a representative capacity of the Maharashtra Family. This is clear from the Minutes of Discussion which records the presence of the parties in the meeting. The Gujarat family has itself considered Defendant Nos.[1] and 2 as their representatives. A comparison of the shareholding at the time of the execution of the Minutes of Discussion would show that the entire Gujarat family is before the Court and Minutes of Discussion can be performed against the family as a whole. The Defendant No. 1 is a joint shareholder with all members of the Gujarat family. The Gujarat Group also consist of Anjana Infinity LLP in which the partners are all members of Gujarat family.

69. Mr. Virag Tulzapurkar has further submitted that the Petitioners in the NCLT have given a Power of Attorney to Defendant No. 1 to represent them in the proceedings before the NCLT. The Power of Attorney is dated 18th March 2018 and is very wide in the language used and fully empowers Defendant No. 1 to execute the Agreement as well as enter into a compromise with the Plaintiffs on behalf of the Defendants entire Gujarat Family. The Power of Attorney continues to be valid and subsisting. The signatories to the said Minutes of Discussion for themselves and their family are bound by the Minutes of Discussion and the Minutes of Discussion is enforceable against them. The other outside shareholders need not be parties to the Minutes of Discussion or the Suit. The Suit seeks enforcement against the parties to the Minutes of Discussion as represented by the respective signatories.

70. Mr. Virag Tulzapurkar has further dealt with the Defendants’ contention that the correspondence between the Plaintiffs and Defendants is marked “without prejudice” and therefore, cannot be relied upon to demonstrate the conduct of the Defendants. He has in that context submitted that the expression “without prejudice” was first used in the email dated 16th August 2020 by the Plaintiffs’ advocate while discussing the modalities for implementing the said Minutes of Discussion. The expression was not used in the context of discussing the said Minutes of Discussion itself. The said Minutes of Discussion was executed long prior to the said email dated 16th August

2020. The said Minutes of Discussion is not a without prejudice document. He has submitted that it is a settled position of law that the expression “without prejudice” is to be understood on the fact situation and in the context in which it is used.

71. The parties clearly understood the said Minutes of Discussion to be a concluded contract and were merely discussing the modalities for implementing the same on a “without prejudice” basis. The fact that the said Minutes of Discussion was in fact a concluded contract is well established from the correspondence prior to July 2020 leading upto Defendant No. 1’s email of 24th June 2020, which clearly shows that the parties understood the said Minutes of Discussion was concluded and “in place”.

72. Mr. Virag Tulzapurkar has submitted that the decisions relied upon by the Defendants namely Oberoi Constructions Pvt. Ltd. (supra) itself has noted that correspondence marked “without prejudice” may have to be interpreted in different situations. Further in Peacock Plywood (P) Ltd. (supra) the Supreme Court has held that there are circumstances in which correspondence is initiated with a view to settlement but the parties do not intend that the correspondence should be without prejudice. It may be that the parties positively want any subsequent Court to see the correspondence and always had in mind that it should be open correspondence. He has submitted that it is a settled position of law that the reliance on a document which is ‘without prejudice’ would not render the earlier acceptance on the admissibility of the document nugatory. In this context, he has placed reliance upon the decision of the Supreme Court in ITC Limited Vs. Blue Coast Hotels Limited & Ors.23

73. Mr. Virag Tulzapurkar has thereafter, dealt with the contention of the Defendants that the Plaintiffs themselves have repudiated the said Minutes of Discussion by filing Miscellaneous Application No. 1008 of 2020 and referring to the said Minutes of Discussion as the proposed settlement or settlement proposal. He has submitted that the Miscellaneous Application No. 1008 of 2020 filed by the Plaintiff Nos. 2 to 4 before the NCLT was not to take control over the Gujarat Division, but to seek modification of an earlier order dated 6th April 2018 and that the Board of Directors of Defendant No. 3 including Defendant Nos.[1] and 2 to take decisions and be in effective management of Defendant No. 3 Company in its best interest and those of its shareholders. Even otherwise, each division of Defendant No. 3 Company is under the overall supervision of the Board of Directors.

74. Mr. Virag Tulzapurkar has submitted that the Plaintiffs have not repudiated the Minutes of Discussion. He has submitted that the words “settlement proposal”, “proposal of settlement” in the Affidavits filed in the Miscellaneous Application No. 1008 of 2020 and Miscellaneous Application No. 1064 of 2020 refer to the discussions and implementation of the Minutes of Discussion and exchange of draft of formal documents viz. family settlement agreement and scheme of arrangement (demerger) between the parties and respective advocates. This is borne out from the contents of the correspondence exchanged between the Plaintiffs and the Defendants. This cannot be read in the context of the concluded contract (Minutes of Discussion), as disingenuously sought to be portrayed by the Defendants. In this context he has placed reliance upon the decision in Perry (supra) which holds that when once it is shown that there is a complete contract, further negotiations between the parties cannot, without the consent of both get rid of the contract already arrived at. He has further referred to the decision of the Supreme Court in Udham Singh Vs. Ram Singh24 and Gautam Sarup Vs. Leela Jetly25 in support of his submission that it is a settled position of law that an admission can always be explained or clarified.

75. Mr. Virag Tulzapurkar has submitted that there is no merit in the contention of the Defendant Nos.[1] and 2 that by proposing to sell the Pune property, the Plaintiffs have repudiated the Minutes of Discussions. Clause 4 of the Minutes of Discussion itself contemplates sale of Pune property. The draft scheme of demerger also contemplated such sale.

76. Mr. Virag Tulzapurkar has further submitted that there is no merit in the Defendants’ contention that there is delay in filing the captioned Suit and seeking interim relief. He has submitted that delay by itself is no ground to deny the relief, where, as in this case, no prejudice has been caused to Defendant Nos.[1] and 2 by any such alleged delay. The Defendants have not even made an effort or endeavour to show any prejudice that would be caused on account of such delay, none has been alleged. He has submitted that the question of delay, if at all is required to be balanced against the likelihood of the plaintiffs ultimately succeeding in the action and where the strength of the plaintiff prima facie is strong, the plaintiffs’ delay (assuming there is delay) in filing the action would not disentitle the Plaintiffs to the relief. In this context, he has relied upon the decision of the Supreme Court in Mademsetty Satyanarayana (supra) and A.R. Madna Gopal etc Vs. Ramnath Publications Pvt. Ltd.26. He has further relied upon in the context of delay in the cases of The Lindsay Petroleum Company (supra), Dehri Rohtas Light Railway Company Limited (supra) and Hari Shankar Singhania & Ors. (supra).

77. Mr. Virag Tulzapurkar has distinguished the decisions relied upon by the Defendants namely in support of their contention that the jurisdiction of this Court to entertain the present Suit and to grant an injunction in the Interim Application is ousted by virtue of the Companies Act, 2013 namely Industrial Credit and Investment Corp of India (supra), State of Karnataka (supra), SAS Hospitality Pvt. Ltd. & Anr. V. Surya Constructions Pvt. Ltd.27, Shankar Assana Gaddam (supra) and Shashi Prakash Khemka (Dead) through LR (supra). He has submitted that as the NCLT did not have jurisdiction over the subject matter, the Defendants’ contention that the Plaintiffs

27 (2019) 212 Comp Cas 102 should have urged and sought relief in that behalf in the NCLT is untenable. In the aforementioned decisions relied upon, the NCLT was empowered by the sections of the Companies Act to grant relief that was sought for in the civil Suit and in that context the Court held that the bar under Section 430 of the Companies Act was applicable.

78. Mr. Virag Tulzapurkar has accordingly, submitted that the relief sought for by the Plaintiffs in the present Interim Application be granted.

79. Mr. Ravi Kadam has distinguished the decisions relied upon by the Plaintiff in rejoinder submission. He has distinguished the decisions of the Supreme Court in Udham Singh (supra) and Gautam Sarup (supra) which hold that a categorical admission may be explained or clarified by contending that the facts of those cases are different, as in the present case there is no ambiguity in the admission “proposed settlement proposal”, namely that the Minutes of Discussion was not a concluded contract. He has also distinguished the decisions relied upon by the Plaintiffs in support of their contention that abandonment is a positive voluntary act and inactivity or passive attitude does not constitute abandonment. He has submitted that in the present Suit there are positive acts on the part of the Plaintiffs by filing Miscellaneous Application No. 1008 of 2020 before the NCLT, dealing with the Pune property and repeatedly referring to the Minutes of Discussion, as a settlement proposal and representing to the NCLT that the matter could not be settled.

80. Mr. Ravi Kadam has further submitted that the decision of the Supreme Court in Embassy Property Developments Pvt. Ltd. (supra), which was relied upon by the Plaintiffs in support of the submission that Sections 420 to 424 of 2013 Act indicated only the procedure to be followed by the NCLT does not address Defendants arguments under Order XXIII Rule 3 of the CPC or Sections 420 or 424(1) of the Companies Act, 2013. He has submitted that NCLT’s orders are not toothless and the Plaintiffs could have gone before the NCLT to seek an enforceable order. In Embassy Property Developments Pvt. Ltd. (supra) the context was of Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016, whose role the NCLT currently exercises. It was not in the context of far broader powers vested in the NCLT under the Companies Act, 2013. The Supreme Court has distinguished this judgment in the case of Gujarat Urja Vikas Nigam Limited Vs. Amit Gupta28.

81. Mr. Ravi Kadam has distinguished the decisions of this Court in Sekura Roads Ltd. (supra) relied upon by the Plaintiffs in support of the contention that the NCLT has no power to grant specific performance. He has submitted that in this case, Section 430 of the Companies Act, 2013 did not apply as the NCLT could not be asked to extend the application, of long stop date in the agreement as it was outside its jurisdiction in the present case. In the present case, the Minutes of Discussion addressed all the disputes in the Company Petition, assuming whilst denying that the Minutes of Discussion is a binding contract. He has also distinguished the decision relied upon by the Plaintiffs namely Macquarie SBI Infrastructures Investments Pvt. Ltd. (supra), which holds that the NCLT under Sections 241 and 242 of the 2013 Act does not have jurisdiction to deal with the issues relating to enforcement of contractual provisions between the parties. He has submitted that this case is inapplicable to the facts of the present case where the Minutes of Discussion arises out of and would dispose off the pending Company Petition filed before the NCLT under Sections 241 and 242 of the Companies Act, 2013, which are matters over which the NCLT has exclusive jurisdiction under the Companies Act, 2013.

82. Mr. Ravi Kadam has accordingly, submitted that there is no merit in the present Interim Application seeking relief which would come in the way of exercise of powers of the NCLT and in particular, in view of the express bar under Section 430 of the 2013 Act, such Interim Application is not maintainable and no relief can be granted.

83. Having considered these submissions, it would be necessary to consider as to whether the Minutes of Discussion is in fact a family settlement agreement which is valid and subsisting. I am mindful of the fact that the present Suit seeking specific performance of the Minutes of Discussion was filed subsequent to the Company Petition having been filed by the Defendants before the NCLT under Section 241, 242 and 244 of the Companies Act, 2013 which sought to restrain the alleged oppressive acts of the Plaintiffs against Defendant Nos. 1 and 2. I am further mindful of the fact that the said Company Petition is at the stage of hearing and final disposal subsequent to the orders passed by the NCLT as well as by the NCLAT and the Supreme Court. However, in my prima facie view, a determination of the issue as to the Minutes of Discussion being a family settlement is an issue which arises before this Court having jurisdiction and for considering whether interim relief is to be granted in the Interim Application such a prima facie determination would be necessary. I will herein below deal with the submission of Mr. Ravi Kadam for the Defendants that there is an express bar under Section 430 of the Companies Act, 2013 and which would bar such Suit being determined by a Civil Court as NCLT is empowered to determine whether the dispute before it is settled by a valid and lawful compromise.

84. It is to be noted that the Minutes of Discussion has admittedly been executed by the Plaintiffs and the Defendant Nos. 1 and 2. It had been executed after rounds of negotiations spanning a few years and the Minutes of Discussion was arrived at in order to settle the disputes between what is described in the Minutes of Discussion as disputes between three families, namely the Gujarat family, Maharashtra family and Andhra Pradesh/Telangana family. It is further recorded in the first sentence of the Minutes of Discussion that “Minutes of Discussion and the mechanism of the family settlement agreed to between the participants…..”. The Minutes of Discussion thereafter, contemplates a scheme of demerger of the Defendant No. 3 Company whereby the Defendant Nos. 1 and 2’s entitlement to the Gujarat Division along with its assets and liabilities and monies/ other assets have been valued at Rs. 245 Crores, based on valuation agreed by the parties to the Minutes of Discussion, namely the Plaintiffs and the Defendant Nos. 1 and 2. The Minutes of Discussion, further records that the parties have agreed that the Defendant No. 3 Company shall offer buy-back of shares which would result in exit of outsider shareholders. The parties have further agreed that the appointed date for the demerger as 1st April 2020. What is most important is Clause 8 of the Minutes of Discussion which records that “no claim from the Gujarat family of any sort will be considered and this shall be treated as full and final settlement”. It would be necessary to advert to the concluding paragraph in the Minutes of Discussion which comes after Clauses 1 to 9 thereof have been executed by the Plaintiffs and Defendant Nos. 1 and 2. The concluding paragraph which has been further executed by these parties has been differently interpreted by Mr. Virag Tulzapurkar and Mr. Ravi Kadam in their oral arguments on behalf of the Plaintiffs and Defendant Nos. 1 and 2 respectively. These concluding words are reproduced as under:- “The above represents the understanding agreed to between the Gujarat family, Maharashtra family and AP & Telangana family and is without prejudice to the other rights and remedies available to the parties. The detailed understanding and the mechanics would be documented by way of family settlement agreement and Scheme of Arrangement (Demerger) to be filed with the National Company Law Tribunal and withdrawal of the existing Company Petition filed by the Gujarat family.”

85. The above concluding words in the Minutes of Discussion make it clear that this was an understanding agreed to between the Gujarat family, Maharashtra family and Andhra Pradesh/Telangana family. The words “and is without prejudice to the other rights and remedies available to the parties” are required to be interpreted according to its plain language and literal interpretation. The words “without prejudice” are followed by the words “to the other rights and remedies available to the parties” have been interpreted by Mr. Virag Tulzapurkar as encompassing those rights and remedies other than the matters covered by the Minutes of Discussion without affecting the binding nature of the Minutes of Discussion. This interpretation is in my view a plausible interpretation and one which requires acceptance. The contention of Mr. Ravi Kadam on behalf of the Defendants that the words “without prejudice to the others rights and remedies available to the parties” are to be read as the Minutes of Discussion not being of a binding nature would in my prima facie view be destructive of the plain language of the words used. Further, it is clear from the other clauses in the Minutes of Discussion, in particular, clauses 6, 7 and 8 that the Minutes of Discussion was to be given effect to and was to be treated as a full and final settlement and that no claim from the Gujarat family of any sort would be considered.

86. There have been further arguments canvassed by Mr. Ravi Kadam on behalf of the Defendants that the Minutes of Discussion can only constitute an agreement to enter into an agreement and for which he has relied upon the words “the detailed understanding and the mechanics would be documented by way of a family settlement agreement and scheme of arrangement (demerger) to be filed with the NCLT” and thereafter, the withdrawal of the existing Company Petition filed by the Gujarat family. It is necessary to note that the Minutes of Discussion has not been made conditional on the documentation of a family settlement agreement and scheme of arrangement (demerger).

87. The correspondence relied upon by the Mr. Virag Tulzapurkar which are subsequent to the execution of the Minutes of Discussion and which are from July 2019 till 9th September 2020 and subsequent to which the captioned Suit was filed by the Plaintiffs on 25th January 2021 shows that the parties had taken steps to implement the Minutes of Discussion. The parties/their respective advocates exchanged drafts of the formal family settlement agreement as well as exchanged the drafts of the scheme of arrangement (demerger). The Minutes of Discussion had set out the terms which have been agreed to between the Plaintiffs and the Defendant Nos. 1 and 2 and which terms were being given effect to by way of formal family settlement agreement and the scheme of arrangement (demerger). It has been well settled that unless the family agreement is made “conditional” or “subject to contract”, the agreement is considered as a valid and binding and subsisting contract between the parties, as containing the essential terms expressly recorded in the said agreement. In this context, the decision of the Courts in England relied upon by the Mr. Virag Tulzapurkar would necessary be applicable. In Branca Vs. Cobarro (supra), the Court of Appeal held as under:- “.. Down to the end of the paragraph preceding that final paragraph there can be no question to my mind that the document is a contract. If that final paragraph had not been there, no question could have been raised about it. The sole question is whether that paragraph introduces an element which destroys and contractual efficacy in the rest of the documents. It is in rather an unusual form. “This is a provisions agreement until.” That the parties contemplated and wished that there should be what they call a ”fully legalized agreement” drawn up by and signed is quite clear. But the first thing to notice about these words is that they are not words expressive of a condition of stipulation to that effect. The familiar words “subject to contract,” and many other forms of words that one has come across in this class or case are words of condition. …” [Pg.856 & 857] “… An agreement which is only to last until it is replaced by a formal document containing the same terms and drawn up by solicitor could I should have thought, be described by no more apt word than the word ‘provisional”. When the word “provisional” is linked up with the word “until”, the whole thing seems to me to fall into shape. My reading of this document is that parties were determined to hold themselves and one another bound. They realized the desirability of a formal document, as many contracting parties do, but they were determined that there should be no escape for either of them in that interim period between the signing of this document and the signature of a formal agreement, and they have used words which are exactly apt to produce that result and do not, in my opinion, suggest that the fully legalized agreement is in any sense to be a condition to be fulfilled before the parties are bound. The word ‘until’ is certainly not the right word to import a condition or a stipulation…” [Pg. 858] (Emphasis supplied)

88. Further, in W.J. Rossiter, George Curtis & Ors. (supra) the House of Lords has held as under:- “… I pause there for the purpose of pointing out to your Lordships that in these conditions there are to be found the terms – and the detailed terms – of a contract, such as might reasonably be expected to be proposed with regard to sales of plots of land of this description. There is no doubt a stipulation that the purchaser would be required to sign a contract embodying these conditions. That is an obvious and natural term, because the contemplation is that persons so offering will not be bound by anything; it will be necessary to bind them, and therefore they are told, beforehand, that at the time when their offer is accepted, or along with the acceptance of it, the matter will not be allowed to rest in dubio, or without legal obligation, but that they will be required to sign something which will bind them. But they are also told what they will be required to sign; it will not be a contract at the arbitrium of the vendors, not a contract the terms of which they do not know, not a contract the provisions of which they will see for the first time when it is offered to them to sign, but a contract as to which the vendors are content, beforehand, to bind and oblige themselves that it will assume the shape of these stipulations, and no other shape…” [Pg.1132] “… It has been established for far too long a time, and by some precedents in your Lordships’ house, that if you can find the true and important ingredients of an agreement in that which has taken place between two parties in the course of a correspondence, then, although the correspondence may not set forth, in a form which a solicitor would adopt if he were instructed to draw an agreement in writing, that which is the agreement between the parties, yet, if the parties to the agreement, the thing to be sold, the price to be paid, and all those matters, be clearly and distinctly stated, although only by letter, an acceptance clearly by letter will not the less constitute an agreement in the full sense between the parties, merely because that letter may say, We will have this agreement put into due form by solicitor… Both parties may desire that it shall be put into a formal shape by a solicitor who, in that case, will not be able to vary the agreement which had been completely formed with unity of purpose with reference to the sale and purchase by the two parties to the contract…” [Pg.1143 & Pg. 1144] “… Thereupon, I think, with the Master of the Rolls, that the contract was complete. Everything essential to the completion of it appears on the written documents – the parties, the premises, the conditions and the price. As offer is made; those who had full power to accept it did it, in terms, by their fully authorized agent. The purchaser thinks they are making a fresh condition; they answer that they are not, and again accept it, simply and absolutely, as he had asked them to do. I cannot conceive that anything remained but to carry out the bargain which was then and thus consummated…” [Pg.1148 & Pg.1149] (Emphasis supplied)

89. It can be seen from the case of Branca Vs. Cobarro (supra) that there was a provisional agreement, and it was held that unless the parties make the provisional agreement subject to what they call a “fully legalized agreement”, the parties are determined to hold themselves and one another bound to the provisional agreement. The fully legalized agreement cannot in any sense be a condition to be fulfilled before the parties are bound. Similarly, in the decision of the House of Lords in W.J. Rossiter, George Curtis & Ors. (supra), the parties had in correspondence stipulated the terms of the contract and though there was a stipulation that the purchaser would be required to sign a contract embodying these conditions, this was considered to be an obvious and natural term. However, this stipulation has been held to be not in variance of the agreement which had been completely formed with unity of purpose with reference to the sale and purchase by the two parties to the contract.

90. Mr. Ravi Kadam has sought to distinguish the aforementioned decisions by submitting that these decisions were on the facts that arose in those cases where there was clearly a contract arrived at between parties and only a formal agreement was required to be executed between the parties. He has submitted that in the present case, the Minutes of Discussion merely records tentative discussions between the parties and was expressly made further to discussions and negotiations which failed to fructify between the parties. I am unable to accept such a submission considering that in my prima facie view, the Minutes of Discussion embodied a full and final settlement between the parties and records that no claim from Gujarat family of any sort will be considered. The Minutes of Discussion is not made subject to the family settlement agreement being executed and in my prima facie view, the family settlement agreement and scheme of arrangement (demerger) are merely formal documents which are required to be executed between the parties to implement the said Minutes of Discussion. The mere contemplation by the Minutes of Discussion of entering into the formal family settlement agreement and scheme of arrangement (demerger), the terms which have already been agreed upon in the Minutes of Discussion and which are to be put in formal shape, does not prevent the existence of it being a binding contract. The decision of the Supreme Court in Kollipara Sriramulu (supra) is apposite in the present case.

91. Mr. Ravi Kadam has contended that the Minutes of Discussion contemplates an alleged compromise of the disputes pending before the NCLT, namely the Company Petition, as it requires the Defendant Nos. 1 and 2 to withdraw the Company Petition and completely disposes of the case before the NCLT. He has submitted that the Plaintiffs were obligated to file an application under Order XXIII Rule 3 of the CPC (read with Rule 11 of the NCLT Rules) before the NCLT based on the alleged compromise contained in the Minutes of Discussion. He has further submitted that the NCLT has the power to decide the question of whether “an adjustment or satisfaction has been arrived at” when one party asserts and the other party denies a compromise/agreement. He has further relied upon the wide powers of NCLT including Section 424(1) of the Companies Act, 2013, which provides that the NCLT is not bound by the provisions of the CPC.

92. In my prima facie view, the Minutes of Discussion cannot be contemplated to be a mere compromise of the proceedings before the NCLAT. The Minutes of Discussion is a contract in the nature of a family settlement and it is clear from the Minutes of Discussion that the Defendant No. 3 Company is considered to be a family run company, as the three divisions described as families, namely Gujarat Division, the Maharashtra Division, Andhra Pradesh/Telangana Division had run the Defendant No. 3 Company, as a family venture. It is clear from the Minutes of Discussion that the settlement arrived was among these three families/divisions. The Minutes of Discussion also records that the mechanics of the family settlement agreed to between the participants are provided for in the Minutes of Discussion. Thus, the Minutes of Discussion cannot be contemplated merely as a compromise of the NCLT proceedings and in fact, categorically records a settlement amount payable to the Gujarat family. The disputes in the Minutes of Discussion which have been settled are the only disputes among the three families. Hence, the submission of Mr. Ravi Kadam that this is not in the nature of family settlement deciding all disputes between the family, cannot be accepted. In my prima facie view, the Minutes of Discussion inspite of its nomenclature, is a full and final family settlement among the three families of the pending issues.

93. Having arrived at the prima facie finding that the Minutes of Discussion is a family settlement, the Supreme Court in Kale Vs. Dy. Director of Consolidation (supra), Hari Shankar Singhania (supra) as well as this Court in Shivanand Vassudev Salgaocar (supra), have held that family settlements are governed by a special equity principle where the terms are fair and bona fide, taking into account the well being of a family. These decisions are apposite to the Minutes of Discussion in the present case. I am of the prima facie view that Defendant Nos. 1 and 2 cannot resile from the family settlement by way of Minutes of Discussion and that the Minutes of Discussion should have been given effect to and/or implemented by entering into a formal family settlement agreement and the scheme of arrangement (demerger).

94. It is also necessary to take note of the fact that steps were taken by the parties to the Minutes of Discussion for its implementation. Out of the steps taken, the Defendants have disputed only one step as being according to them, contrary to the Minutes of Discussion i.e. payment of Rs. 56 Crores in discharge of bank liabilities. I am of the view that since the Defendant No. 3 Company was being run as a whole and the Plaintiffs being in management of the Defendant No. 3 Company, in order to protect the interest of the Defendant No. 3 Company, any decision made in good faith and in continuation of the discussions to finalise the scheme of arrangement and the formal family settlement cannot be considered to be an act in repudiation of the Minutes of Discussion. Further, the Defendants themselves have acted in furtherance of the Minutes of Discussion by unanimously approving the buy-back of shares, which resulted in the increase of their own shareholding. It has been held by this Court in Shivanand Vassudev Salgaocar (supra) that the ordinary doctrine of estoppel apply where although no contract has come into existence, the conduct of a party has been such that he is estopped from denying the existence of a valid and enforceable contract. In the present case, it would appear from the conduct of the Defendants that the Defendants have acted in implementation of the Minutes of Discussion and thus, will be estopped from denying the existence of a valid and enforceable contract by way of Minutes of Discussion.

95. The submission of Mr. Ravi Kadam to the effect that there has been a repudiation by the Plaintiffs of the Minutes of Discussion and for which he has placed reliance upon the proceedings, namely Miscellaneous Application No. 1008 of 2020 filed by the Plaintiffs before the NCLT whereby they have sought modification of an earlier order dated 6th April 2018 and in order for the Board of Directors of Defendant No. 3 Company including the Defendant Nos. 1 and 2, to take decisions and be in effective management of Defendant No.3 Company cannot be accepted. The Miscellaneous Application No. 1008 of 2020 which had been filed by the Plaintiff Nos. 2 to 4 before the NCLT cannot be considered, as an application to take control over the Gujarat Division, but merely to take decisions as Directors in effecting management of Defendant No. 3 Company, in its best interest and those of its shareholders.

96. Further, it has been submitted by Mr. Ravi Kadam that in the Affidavits filed in Miscellaneous Application No. 1008 of 2020 and Miscellaneous Application No. 1064 of 2020 filed before the NCLT, the Plaintiffs have referred to a ‘settlement proposal/proposal of settlement’ and that there was a failure to finalise the settlement proposal. These admissions made by the Plaintiffs are required to be taken into consideration and which shows that the Plaintiffs themselves considered that there was no settlement between the parties. Reference has been made to the decisions of the Supreme Court on admissions in pleadings which are required to be taken into consideration by the Court. In my view, it is necessary to note the context in which the said admissions have been made by the Plaintiff Nos. 2 to 4, which would necessarily be with reference to the formal documents, namely family settlement agreement and scheme of arrangement (demerger), drafts of which exchanged between the parties and respective advocates and which had not been settled. This is borne out by correspondence exchanged between the Plaintiffs and Defendant Nos. 1 and 2 subsequent to the execution of the Minutes of Discussion. Though, the correspondence has been marked without prejudice, this does not depart from the fact that the Minutes of Discussion had been executed prior in point of time and was not marked ‘without prejudice’ and is as held above prima facie an agreement/family settlement between the parties. I am thus not inclined to accept the submission of Mr. Ravi Kadam that the Plaintiffs had admitted the Minutes of Discussion not to be a full and final settlement and referred to it as a settlement proposal/ proposal for settlement which had failed.

97. The decision relied upon by Mr. Virag Tulzapurkar namely Perry (supra) which is of the English courts has clearly held that when once it is shown that there is a complete contract, further negotiations between the parties cannot, without the consent of the parties get rid of the contract already arrived at. It is settled law that an admission of a party can always be explained.

98. Further, I do not accept the submissions on behalf of the Defendants that the Plaintiffs repudiated the Minutes of Discussion by proposing to sell the Pune property. In my view, the Plaintiffs have acted in conformity with the terms of the Minutes of Discussion and in particular, Clause 4 thereof which contemplates sale of the Pune property and that if the sale proceeds of the Pune property is less than Rs. 40 Crores, Andhra Pradesh and Telangana family would compensate the Gujarat family for the shortfall upto maximum of Rs.20 Crores. Further, if the sale proceeds of the Pune property is more than Rs. 40 Crores, the amount in excess of Rs.40 Crores would be on account of Andhra Pradesh and Telangana family.

99. Now it will be necessary to consider the submissions of Mr. Ravi Kadam for the Defendants that there is an express bar under Section 430 of the Companies Act to the Civil Court entertaining the Suit, the subject matter of which the NCLT or NCLAT is empowered to determine.

100. In this context, it would be necessary to extract Section 430 of the Companies Act, 2013:- “Section 430: Civil court not to have jurisdiction.

430. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal.”

101. From reading of this section, it is clear that the Civil Court does not have jurisdiction to entertain the Suit or proceedings in respect of the matter which the Tribunal or Appellate Tribunal is empowered to determine by or under the Companies Act or any other law for the time being in force. The second part of this section follows from the first part, namely that no injunction shall be granted by the Court or authority in respect of action taken or to be taken in pursuance of power conferred by or under the Companies Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal. Thus, it would be necessary to determine as to whether the NCLT is empowered to determine the subject matter of the present Suit which is for specific performance of the Minutes of Discussion.

102. Mr. Ravi Kadam on behalf of the Defendants has submitted that NCLT has wide powers to pass any orders as has been provided in Section 420, 424 and 425 of the Companies Act, 2013. He has submitted that in view of the Company Petition having been filed before the NCLT for oppression and mismanagement, prior to filing of the present Suit, Section 242 (2)(b) of the Companies Act specifically empowers the NCLT to direct the purchase of shares or interest of any member of the company by other members or by the company. He has submitted that in view of the NCLT being empowered under the Companies Act, 2013, to order purchase of shares and, as a consequence the power to direct valuation, it would not be open for this Court to restrain the NCLT from exercising such power. In my view, this submission has lost sight of the fact that in the first part of Section 430 of the Companies Act, the NCLT would necessarily have to be empowered to determine the subject matter of the present Suit filed before this Court and then only the second part, of not granting injunction shall follow.

103. It has been held in paragraph 31 of the decision relied upon by Mr. Virag Tulzapurkar namely Embassy Property Developments Pvt. Ltd. (supra) as under:- “31. NCLT and NCLAT are constituted, not under the IBC, 2016 but under Sections 408 and 410 of the Companies Act, 2013. Without specifically defining the powers and functions of the NCLT, Section 408 of the Companies Act, 2013 simply states that the Central Government shall constitute a National Company Law Tribunal, to exercise and discharge such powers and functions as are or may be, conferred on it by or under the Companies Act or any other law for the time being in force. Insofar as NCLAT is concerned, Section 410 of the Companies Act merely states that the Central Government shall constitute an Appellate Tribunal for hearing appeals against the orders of the Tribunal. The matters that fall within the jurisdiction of the NCLT, under the Companies Act, 2013, lie scattered all over the Companies Act. Therefore, Sections 420 and 424 of the Companies Act, 2013 indicate in broad terms, merely the procedure to be followed by the NCLT and NCLAT before passing orders. However, there are no separate provisions in the Companies Act, exclusively dealing with the jurisdiction and powers of NCLT.” (Emphasis supplied)

104. Thus, it is clear from this decision that the Sections 420 and 424 relied upon by the Defendants in support of their contention that the NCLT has wide powers to pass any orders cannot be accepted. It has been held in the above decision of the Supreme Court that these Sections indicate in broad terms merely the procedure to be followed by NCLT/NCLAT before passing the orders. The matters that fall within the jurisdiction of the NCLT under the Companies Act, 2013 is scattered over the Companies Act. There has been no attempt made on behalf of the Defendants to identify any particular provision under the Companies Act, 2013 which empowers the NCLT to grant specific performance. The decisions relied upon by Mr. Ravi Kadam in support of his submissions that the NCLT has wide powers to determine the issues and/or to pass any orders have not held that the NCLT has power to grant specific performance. I cannot accept the submission of Mr. Ravi Kadam that the above extracted paragraph in Embassy Property Developments Pvt. Ltd. (supra), amounted to nothing more than passing observations by the Supreme Court. In my view, the Supreme Court after due consideration of the provisions of the Companies Act has rendered its finding on the jurisdiction of the NCLT, a matter directly for consideration in that case. These observations are binding on this Court. The decision of the Supreme Court in Gujarat Urja Vikas Nigam Limited (supra) which has considered the decision in Embassy Property Developments Pvt. Ltd. (supra) and observed that the latter case dealt with the NCLT’s jurisdiction on matters of public law, does not comment and / or distinguish the ratio set out in the extracted paragraph, namely paragraph 31 of the judgement in Embassy Property Developments Pvt. Ltd. (supra). Thus, the Defendants reliance on this judgment is misplaced.

105. I have considered the decisions relied upon by Mr. Virag Tulzapurkar in support of his submission that the Civil Court has inherent jurisdiction to try all types of civil disputes unless its jurisdiction is barred expressly or by necessary implication by any statutory provision and/or jurisdiction conferred in any other Tribunal or Authority. Having arrived at a prima facie finding that the NCLT/NCLAT are not empowered by any of the provisions of the Companies Act, 2013 to grant specific performance, this well settled position of Civil Court having inherent jurisdiction to try all types of civil disputes would be apposite.

106. It is further of significance that the Courts have held that the NCLT/NCLAT does not have jurisdiction to deal with the issues relating to enforcement of contractual provisions between the parties and they have no jurisdiction to decide a civil Suit of specific performance.

107. The decisions relied upon by Mr. Virag Tulzapurkar are of significance, namely Macquarie SBI Infrastructures Investments Pvt. Ltd. and Ors. (supra) and Sekura Roads Ltd. (supra). These decisions are subsequent to the enactment of Section 430 of the Companies Act. These decisions amply clarify that the Companies Act, 2013 does not confer the NCLT/NCLAT with jurisdiction to deal with the issues relating to the enforcement of contractual provisions between the parties. Further, it has been held that the NCLT / NCLAT cannot stay the specific performance Suit, one that they cannot in any case decide. Thus, in my prima facie view, the NCLT/NCLAT having no jurisdiction to grant final relief of specific performance of contract cannot grant interim relief as such relief will be outside their jurisdiction. Further, in my prima facie view, there would be no bar to grant of interim relief, which is in aid of the final relief in the Suit.

108. The decision relied upon by Mr. Ravi Kadam namely Invesco Developing Markets Fund (supra) in support of his contention that a Civil Suit is barred under Section 430 of the Companies Act is not applicable to the present case. As in that case, the contention raised by the Authority before the Civil Court in the Suit filed could have been raised before the NCLT as Section 98 of the Companies Act expressly conferred power on the NCLT. In the present case, there is no such provision of the Companies Act, which confers power on the NCLT to grant specific performance of contract. The other decisions relied upon by Mr. Ravi Kadam to contend that the jurisdiction of this Court to entertain the Suit and/or to grant injunction are ousted by virtue of Section 430 of the Companies Act, 2013 are not applicable in the present case, as none of these decisions have considered whether the NCLT is empowered to grant specific performance and in fact in those cases, the NCLT was clearly empowered by the provisions of the Companies Act to grant the relief sought for in the civil Suit.

109. Insofar as the submissions on delay in filing of the Suit and seeking interim relief is concerned, in my view, the delay by itself is no ground to deny the relief. In the facts of the present case, no prejudice has been caused to Defendant Nos. 1 and 2 by such alleged delay. There has been no attempt made by the Defendants to show any prejudice caused to them on account of the delay in filing of the present Suit and seeking interim relief. There is much substance in the submission of Mr. Virag Tulzapurkar that the question of delay, if at all, is required to be balanced against the likelihood of the Plaintiffs ultimately succeeding in the action and where the strength of the Suit is prima facie strong, the Plaintiffs’ delay (assuming there is delay) in filing the action would not disentitle the Plaintiff to the relief. The Supreme Court in Dehri Rohtas Light Railway Company Limited (supra) has held that the principle on which the relief to the party on the grounds of latches or delay is denied, is that the rights which have accrued to others by reason of the delay in filing the petition should not be allowed to be disturbed unless there is a reasonable explanation for the delay. In my view, there has been no right which has accrued to the Defendants by reason of alleged delay in filing the captioned Suit and seeking interim relief.

110. Considering that the Minutes of Discussion which in my prima facie view, amounts to a family settlement was being implemented in its true spirit and intent as well as the fact that it was in September 2020 that the Defendant Nos. 1 and 2 in correspondence chose not to execute the formal family settlement agreement and scheme of arrangement (demerger) as borne out from the correspondence, the Plaintiffs had no choice but to take steps in filing the present Suit on 25th January 2021 seeking specific performance of the Minutes of Discussion. The Plaintiffs, upon filing the present Suit, two days later i.e. on 27th January 2021 filed an Affidavit placing on record before the NCLT the Plaint filed in the captioned Suit. The Interim Application has also been taken out and interim relief sought in view of the Defendants filing an ‘Overview Note’ in the Company Petition before the NCLT seeking their buy-out and sell-out on a fresh valuation of shares and other assets. The Company Petition was listed high on board for final hearing on 17th February 2022 and in view thereof, the Interim Application was filed on 11th February 2022 and the Applicants/Plaintiffs pressed for ad-interim/interim relief prior to considering of the relief sought for by the Defendant Nos. 1 and 2 by the NCLT. Such relief sought for by the Defendants would result in defeating the Plaintiffs’ rights under the Minutes of Discussion and/or relief prayed for in the captioned Suit. Thus, in my view, no case has been made out on behalf of the Defendants that the alleged delay in filing the present Suit and seeking interim relief would disentitle the Plaintiffs from being granted the interim relief sought.

111. Having arrived at the finding that in my prima facie view, the Minutes of Discussion is a family settlement and requires to be specifically performed, the relief sought for by the Applicants/Plaintiffs to restrain the Defendant Nos. 1 and 2 from taking any steps which would defeat the Applicants’ rights under the Minutes of Discussion and/or relief prayed for in the captioned Suit are required to be granted. This, particularly considering the fact that the Defendants are acting contrary to the Minutes of Discussion by seeking relief of buyout and sellout on fresh valuation of shares and other assets before the NCLT.

112. In view thereof, following interim order is passed:-

(i) Defendant Nos. 1 and 2, their servants/agents or any other person directly or indirectly acting for or on behalf of Defendant Nos. 1 and 2 are restrained by temporary injunction from acting in any manner contrary to the Minutes of Discussion and/or defeating the Applicants’ rights under the Minutes of Discussion and/or the reliefs prayed for in the captioned Suit.

(ii) Interim Application No. 571 of 2022 is disposed of in the above terms.

(iii) There shall be no order as to costs.