ORDINARY ORIGINAL CIVIL JURISDICTION v. M/s Sanghi Motors (Bombay) P. Ltd

Judgment

1 This is a Company Application moved by the Applicants seeking the following reliefs:- “(a) The Respondents be ordered and directed by this Hon’ble Court to forthwith handover to the Applicants the *4* ca.328.90.cp..sxw (i) (ii) following assets which belong to the Applicants: The Liquid Oxygen (LOX) Tank referred to in item II(2) of Schedule I to the Scheme i.e. Exhibit A to the Affidavit in support together with a rental at Rs.17,000/-. All documents including cylinder hire agreements, challans of issue of cylinders since the last cylinder account confirmation, copies of cylinder issue index since start of operations with these parties, copies of cylinder rent bills issued during 1985 to 1989, receipt and any other documents relating to the alleged issue of cylinder to the customers i.e. Maharashtra Gas Company, M/s Durgapur Oxygen and M/s Kishanchand & Company. (iii) 548 Gas cylinders collected by the Respondents on behalf of the applicants but not returned to the applicants as required by the said Court’s order dated 6th July, 1989. (iv) 451 gas cylinders collected by the Respondents on behalf of the Applicants at their Cadell Road Depot but not returned to the Applicants or challans of issue, cylinder hire agreements, annual cylinder confirmation as received from such of these customers as have not returned the cylinders to the depot yet. (v) To take all steps forthwith to recover from the aforesaid customers 4472 cylinders and on recovery to hand over to the Applicants the said cylinders. (a)(vi) in the alternate to prayer clauses (a)(i) to (a)(v), this Hon’ble Court be pleased to order and direct the Respondent Nos.1 to 6 to pay to the Applicants the sum of Rs.8,16,88,548/- as more particularly set out in the particulars of claim, being Exhibit ‘E’ to the further Affidavit of the Applicant No.2 in support of the Judges Order/ Company Application with further interest @ 18% p.a. or such other rate as may be determiend by this Hon’ble Court on the aforesaid amount of Rs. 8,16,88,548/- from 11th May 2010 till date of payment thereof. (a)(vii) That in the event this Hon’ble Court comes to a *5* ca.328.90.cp..sxw conclusion that Respondent No.14 is responsible for the loss caused to the Applicant No.1 Company as a result of Respondent Nos.1 to 6 not returning the assets of the Applicant No.1 Company and therefore, liable to make good the loss so caused, then, Respondent No.14 be ordered and directed to pay to the Applicants a sum of Rs. 8,16,88,548/- as more particularly set out in the particulars of claim, being Exhibit ‘E’ to the further Affidavit of the Applicant No.2 in support of the Judges Order/ Company Application with further interest @ 18% p.a. or such other rate as may be determined by this Hon’ble Court on the aforesaid amount of Rs. 8,16,88,548/- from 11th May 2010 till date of payment thereof.” 2 Prayer clauses a(vi) and a(vii) have been inserted by amendment which is permitted to be carried out in terms of the order of a Division Bench of this Court in Appeal No.618/2006 decided on

15.04.2010. Certain parties were added as Respondents and deletions were also carried out to the title and aforestated prayers have been added. 3

Mr.Ratan Kumar Sanghi (Applicant No.2), Managing Director of the Applicant No.1 has filed the affidavit in support in which it is stated as under:- “1. Applicant No.1 is a private limited company incorporated under the Companies Act, 1956. Respondent No.1 is a public limited company also incorporated under the Companies Act, 1956. Respondent No.2 is also a public limited company, which is under the control and management of Respondent Nos.3 to 6. Applicant No.2 and Respondent No.3 are brothers. Respondent No.4 is the wife of Respondent No.3. Respondent Nos.5 and 6 are their children. Respondent Nos.3 to 6 are the present directors and shareholders of Respondent Nos.1 and 2. *6* ca.328.90.cp..sxw Prior to 10th July, 1989, Applicant No.1 Company was a division of Respondent No.1 Company. Prior to 10th July, 1990, Respondent No.1 Company had two distinct undertakings i.e. (i) “Sanghi Oxygen” with its factory at Andheri and (ii) “Sanghi Motors” with its business of automobiles, sales and services and factory showroom at Hughes Road and at Prabhadevi in Bombay.

2. In or about 1985, Respondent No.3 filed a Company Petition in this Hon’ble Court seeking reliefs under sections 397, 398, 402 and other applicable sections of the Companies Act, 1956, inter alia, against Applicant No.2 herein in regard to the management of Respondent No.1 Company. 3(a). The said petition was finally disposed off by an order dated 6th July, 1989 whereby a learned Single Judge (S.N.Variava, J.) of this Hon’ble Court sanctioned a scheme of reconstruction of Respondent No.1 Company.” 4 It is then stated that under the said order and sanctioned Scheme of Reconstruction, the Oxygen undertaking of the Respondent No. 1 including its factory at Andheri, Mumbai consisting of plant, machinery, equipments, cylinders, land and buildings thereon etc. as more particularly set out in the scheme and all its assets, vested in and were transferred to the Applicant No.1. Under the said scheme, the “effective date” was 10.07.1989. On and from the said date, whole of the said undertaking of Sanghi Oxygen including all its assets, namely, immovable properties, plant, machinery, cylinders etc. lying at Andheri factory and more particularly set out in Annexure-I to the scheme, but excluding what has been stipulated therein, vested in and were transferred to the Applicant No.1 at their book value aggregating to Rs.14,03,384/-. 5 It is stated that it was clarified in the order passed on *7* ca.328.90.cp..sxw

06.07.1989 that some of the assets which have been purchased by Mr.A.P.Yagnik, Receiver of the Respondent No.1 appointed by interim order dated 11.09.1987, were not the assets of the said Sanghi Oxygen and were not required to be transferred to the Applicant No.1. It was also envisaged in the scheme, according to the Applicants, that the Respondent No.1 shall transfer to the Applicant No.1 a sum of Rs.6 lacs being the amount of security deposit for cylinders and that from the effective date the Applicant No.1 shall take over and liable to discharge the entire liability towards security deposit aggregating to Rs.24,74,990/- received by the Company and a list of which was set out in Annexure-II of the scheme. Then there is reference to direction to the Respondent No.2 to pay to the Applicants a sum of Rs.10,02,118/- being balance of the security deposit towards cylinders received by the Respondent No.2. In these circumstances, it is stated that the statutory compliance with regard to the cylinders and particularly payment of income tax etc. has been made. After referring to order, it is then stated that following assets stood vested in the Applicant No.1:- (b) “(a) The V.I.T.T. (transport) tank (called Lox Tank), whose book value was Rs.34,000/- but market value is Rs.11 lacs. Its rental value is Rs.17,000/- per month or more. 15,396 numbers of cylinders, of which 2467 cylinders were lying at the factory and the balance cylinders were certified by applicant No.1 to be lying with customers. The cost of each cylinder is approximately Rs.1,800/-. 1,399 Medical cylinders also vested in and were agreed to be transferred to Applicant No.1. the benefits of the cylinder hire agreements in respect of the said balance cylinders lying with customers.” (d) (c) 6 It is stated that pursuant to the order dated 06.07.1989, the Applicant No.2 received the assets, movable and immovable property etc. *8* ca.328.90.cp..sxw being at Andheri factory and the ground floor tenanted premises at Mani Mahal, Mathew Road. By a letter dated 10.07.1989, the Applicant No.2 acknowledged on behalf of the Board of Directors of the Applicant No.1, receipt of the said assets. The said letter stated that the details of assets at Andheri were as per Annexure-I to the Scheme as ordered by this Court. By the said letter dated 10.07.1989, the Applicant No.2 confirmed that he had also taken charge of the cylinders including the medical cylinders as per the Cylinder Trial Balances of 10.07.1989 duly signed which were enclosed along with the said letter. The Applicant No.2 also undertook to return 615 cylinders belonging to Sanghi Motors in exchange of the cylinders to be collected by them i.e. Sanghi Motors at Prabhadevi from the customers of the erstwhile City Depot of Sanghi Motors. These letters are annexed as Annexures B and B-1 to the affidavit in support of this Company Application. In paragraphs 6 and 7 of the affidavit in support, this is what is alleged:- “6. The said cylinder trial balances were prepared by Respondent No.2 on the basis of its records and signed by Mr.Yagnik, the Receiver and Mr.Ramavatar, Chief Executive of the Respondent No.1 in the presence of Respondent No.5 and by Applicant No.2 for identification. The said trial balance showed that 15396 industrial cylinders and 1,399 medical cylinders had been handed over by the Court Receiver to Respondent No.2 as per the inventory on 15.09.1987. The trial balance also showed that 14,997 industrial cylinders were lying with the customers as per the index (which included 1295 cylinders returned to Respondent No.1 during July, 1989). 2,467 medical cylinders were shown as physically lying on the ramp of the said factory. Hereto annexed and marked as Exhibit “B-2” is a copy of the said cylinder index. It was these 2467 cylinders of which the Applicants took physical possession on 10th July 1989, Applicant No. 1 company manufactured, at all material times industrial gases including oxygen, nitrogen and acetylene gases. The gases are sold to customers mainly filled in cylinder

7. *9* ca.328.90.cp..sxw which are bought by the company and are its asset. The cylinders are thereafter filled with oxygen and other gases by the company and are taken by various customers of the company on hire, under cylinder hire agreements. Customers are required to pay rent for the period that these cylinders are retained by them. From time to time, the empty cylinders are returned to the company and the same may be rehired after re-filling gas to the same party or to any other customer. The customers are also required to keep deposited with the company some amounts by way of “Security Deposits” which are to be refunded to the customers when the cylinders are finally returned to the company. Since July 1983, Respondent No.3 was in charge and management of the said “Sanghi Oxygen”. The said company Petition No.128 of 1985 was filed by Respondent No.3 in February 1985. During 1985 to 1987, various applications were made to the Hon’ble Court for interim reliefs, including by applicant No.2. In his said applications, applicant No.2 stated inter alia that Respondent No.3 was selling and disposing off and removing various cylinders of the said Sanghi Oxygen. Ultimately, by an interim order dated 11th September 1987, Shri A.P.Yagnik was appointed as Receiver of the entire Sanghi Motors, including all its undertakings, assets, divisions. By the said order, Respondent No.3 was directed to furnish to the Receiver an inventory of the Oxygen Division as on 15.11.1987. By the said order, the Receiver was to give to any shareholder of the company on conducting basis all the undertakings and businesses of the company, as his agent. Accordingly, an inventory was furnished by Respondent No.3 to the Court Receiver setting out the assets of Oxygen Division including cylinders.” 7 It is, thus, alleged that if the Respondent No.2 (M/s Vitesse Trading Pvt.Ltd.) was appointed as the Conducting Agent as per the order and on the terms and conditions agreed between it and the Receiver and *10* ca.328.90.cp..sxw was put in possession of all assets of Sanghi Motors including its Oxygen Division, then, the inventory as on 03.10.1987 showed total stock of 15396 cylinders and 1399 medical oxygen cylinders of the Oxygen Division and the same were handed over to the Respondent No.2 by the Receiver. In addition, an IOL Liquid Oxygen Transport Tank was also transferred to the Respondent No.2 as such Agent. The Respondent No.2 undertook to this Court to pay and discharge all liabilities in relation to this conducting business and on termination of the same or expiration thereof by efflux of time, the Respondent No.2 would return the business and all assets of the Company to the Receiver. The order of this Court passed on 06.07.1989 contemplated the termination of this conducting agreement w.e.f. 10.07.1989. The Receiver also stood discharged and he was directed inter-alia to hand over to the Applicant No.2 all assets of the undertaking of Sanghi Oxygen which under the Scheme of Reconstruction will have vested in Sanghi Oxygen (Bombay) Limited. Once again reiterating that the Applicant No.1 became entitled to the number of cylinders and tanks as indicated above, it is stated that 2467 cylinders of the Company were handed over to the Applicant No.1 and it was certified by the Respondent No.2 that remaining cylinders were lying with the customers of the Company according to the list. It is stated that after the order dated 06.07.1989, the customers of the Applicant No.1 continued to return the empty cylinders at the Depot at Cadell Road which under the said order vested with the Respondent No.1. Equally, the customers of the Respondent No.1 continued to return the empty cylinders to the factory at Andheri which under the said order vested with the Applicant No.1. As on

10.07.1989, 1295 cylinders have already been returned to the Respondent No.1. Out of balance 615 cylinders, the Applicant No.1 received 308 cylinders from the Respondent No.1’s customers and these were *11* ca.328.90.cp..sxw exchanged between the parties with the Respondent No.1 returning 308 cylinders belonging to the Applicant No.1 and collected by them. However, this issue remained outstanding and there were several claims raised by the Respondents on the Applicants. Equally, in the correspondence, the Applicants pointed out as to what amounts were payable by the Respondents to them. After referring to the amounts in that behalf and payments, what has been alleged is that the Applicants were unable to obtain the following cylinders:- 2181 from Maharashtra Gas 1100 from Durgapur Oxygen “(i) (ii) from Kishanchand & Co. (iii) 500 332 from Anwar Gas, (83) from Vimal Gases, (49) (iv) from Indl. Engineers, (27) from Nalwa Metals and 57 from May & Baker aggregating to 548 cylinders, which have been collected by the Respondents but not returned to the Applicants. 451 cylinders collected by the Respondents at the Cadell Road Depot from various other customers and not returned to the Applicants. (v) ---------------------- TOTAL 4780 cylinders. ----------------------” Total costs of these cylinders is estimated at Rs.97,04,000/- and it is stated that the amount has not been remitted although the issue was taken up in the correspondence. It is in these circumstances, what the Applicants claim is the direction to the Respondents to handover the following:- “(i) (ii) The Liquid Oxygen (Lox) tank referred to in item II(2) of schedule I to the Scheme together with rental at Rs. 17,000/- per month from 10th July, 1989 till the date of actual return. All documents including cylinder hire agreements, challans, receipts, etc. relating to the alleged issue of *12* ca.328.90.cp..sxw cylinders to the following customers:- (a) Maharashtra Gas Company. (b) (c) Durgapur Oxygen. Kishanchand & Co.. (v) (iv) (iii) 548 cylinders collected by the Respondents on behalf of the applicants, but not returned to the applicants as required by the said order dated 6.7.1989. 451 cylinders collected by the Respondents on behalf of the applicants at their Cadell Road depot but not returned to the applicants. To take all steps to recover from the aforesaid customers the said cylinders totaling to 4,472 Nos. and on recovery, to handover to the applicants the said cylinders or alternatively to pay to the applicants the sum of Rs. 80,49,600/- being the cost and/or price of the said cylinders at the rate of Rs.1,800/- per cylinder with interest thereon at 18% per annum from 10th July, 1989 or from such date fixed by this Hon’ble Court till payment.” 8 It is also alleged in paragraph 23 as under:- “The Respondents are presently unable to locate the particular 308 cylinders alleged to be of the new stock among the cylinders now with the Applicants as all the cylinders are similar and difficult to separate. It is possible that these cylinders are among the 999 cylinders that are yet to be received from the Respondents. The Respondents are ready and willing and have been so at all material times to return 308 cylinders to the Applicant No.1.” 9 The basis on which the above directions and reliefs are claimed, according to the Applicants, is that this Court, having sanctioned the Scheme of Reconstruction, has power to supervise its working and compel the parties to abide by its terms. The Respondents have not only violated the Scheme by their conduct, but also disregarded the orders of *13* ca.328.90.cp..sxw this Court. The Applicants’ interests are not being protected and their valuable properties and assets have been lost. The Respondents, with a view to causing them further loss and damage, will attempt to tamper with and/or secrete away and/or otherwise, deal with and dispose of the 999 cylinders belonging to the Company which they have collected on behalf of the Applicants. Therefore, protective interim orders have been sought. This application and the affidavit is filed on 05.10.1990. 10 It appears from the record that an order was made on

23.04.2006 disposing of this Company Application. Being aggrieved by the said order, two appeals being Appeal No.618/2006 and Appeal No. 577/2006, first filed by the Applicants and other filed by the Respondent No.1, came to be preferred. These appeals have been disposed of on

15.04.2010. The Division Bench, while disposing of these appeals, was pleased to set aside the earlier order and remitted this Company Application for de-novo consideration and decision in accordance with law. The Division Bench was pleased to grant leave to the Applicants to amend this Company Application and to implead additional Respondents within four weeks from the date of the said order. 11 In terms of the order of the Division Bench, further affidavit has been filed on 11.05.2010 by the Applicants in which the following statements are made in paragraphs 4, 6, 7 & 8:- “4. I further say that the Applicants through their advocates letter dated 5th May 2010 called upon the advocate for Respondent Nos.1 to 6 to give inspection of certain documents as more particularly set out therein. Hereto annexed and marked as Exhibit B is a copy of the said letter. I say that till date inspection of the said document have not been given to the Applicants and/or their advocate. In the circumstances, I reserve the right to file a

6. *14* ca.328.90.cp..sxw further affidavit if so advised. It is submitted that the Applicant No.1 Company’s claim to the said cylinders and/or the LOX tank is based on the Hire Agreements which were entered into by the Respondent No.1 Company prior to the Scheme of Reconstruction with various customers of the said Company, including Respondent Nos.7 to 13 which Agreements are in the possession of Respondent Nos.1 to 6. It is further submitted that in order to recover the aforesaid assets belonging to the Applicant No.1 Company, a suit being Suit No.179 of 1993 was filed by the Applicants herein. I say that Respondent Nos.7 to 13 herein were Defendant Nos.7 to 13 therein. I say that some of the Defendants therein filed their written statements in the said suit. I crave leave to refer to and rely upon a copy of the plaint and the written statements when produced. I say that as the present Application was pending and as the title documents in respect of the said assets were in the possession of Respondent Nos.1 to 6, the Applicant No.1 Company was advised to withdraw the aforesaid suit. I say that by an order dated 29th April 2005 passed in the aforesaid suit, I was permitted to withdraw the said suit. I say that Respondent Nos.1 to 6 herein, being the Defendant Nos.1 to 6 therein, objected to withdrawal of the suit on the ground that the suit should be withdrawn unconditionally. The learned Judge rejected the aforesaid objection and clarified that the Plaintiffs therein i.e. the Applicants herein, would be entitled to pursue legal proceedings, if any, under the right available to them in law. I crave leave to refer to and rely upon a copy of the said order dated 29th April 2005. I say that as the present Application was filed before the aforesaid suits, Respondent Nos.7 to 13 were not made party Respondents. However, in view of the aforesaid order dated 29th April 2005 and the order dated 15th April 2010 passed by the Division Bench of this Hon’ble Court, I have impleaded Respondent Nos.7 to 13 as party Respondents herein.

7. In the circumstances, I submit that due to the various acts of omission and commission of Respondent Nos.1 to *15* ca.328.90.cp..sxw 6 as set out hereinabove and in the other affidavits filed by the Applicants, the Applicant No.1 Company has not been able to recover cylinders from the various customers. The Applicants had informed the Respondent and the Receiver that the Applicant No.1 Company was unable to recover a large number of cylinders and therefore, they should do what they can to recover them, but no action was taken by the Respondent Nos.1 to 6 as they were aware that in fact the cylinders had been sold and there was no possibility of recovering them. It is therefore submitted that it is the responsibility of Respondent Nos. 1 & 2 to either recover and return the cylinders to the Applicant No.1 Company for and on behalf of the Applicant No.1 Company or to compensate the Applicant No.1 Company in the sum of Rs.8,16,88,548/- as more particularly set out in the particulars of claim, being Exhibit ‘E’ hereto with further interest @ 18% p.a. or such other rate as may be determined by this Hon’ble Court on the aforesaid amount of Rs.8,16,88,548/- from 11th May 2010 till date of payment thereof. It is further submitted that in the event this Hon’ble Court comes to a conclusion that Respondent No.14 i.e. the Receiver, is responsible for the loss caused to the Applicant No.1 Company as a result of Respondent No.1 and/or No.2 not returning assets of the Applicant No.1 Company and is therefore liable to make good the loss so caused, then, Respondent No.14 be ordered to pay to the Applicant No.1 Company a sum of Rs.8,16,88,548/- as more particularly set out in the particulars of claim, being Exhibit ‘E’ hereto with further interest @ 18% p.a. or such other rate as may be determined by this Hon’ble Court on the aforesaid amount of Rs.8,16,88,548/- from 11th May 2010 till date of payment thereof.”

8. 12 However, it would be necessary to refer to the affidavits of the Respondent No.1 which were filed earlier and prior to the amendment. By the affidavit affirmed on 14.01.1991, the Respondent No. *16* ca.328.90.cp..sxw 1 submitted that this Court has no jurisdiction to entertain and try the Company Application because the Company Petition No.128/1985 was finally disposed of by an order dated 06.07.1989. This order has become final and binding on the parties. The Company Application is liable to be dismissed because this Court has no jurisdiction to entertain and try the same. Without prejudice thereto, what has been stated is that the Applicants are filing vexatious and false proceedings including the criminal proceedings. It is stated that there was meeting held after passing of the final order and a sum of Rs.3,14,000/- was paid and it was accepted in full and final settlement of all claims of the Applicant No.2. Now, it is falsely alleged that this final settlement was only in respect of the issue raised by the Respondents in letters dated 18.07.1989 and

22.07.1989. In paragraphs 7, 8, 9 and 10 of this affidavit of the Respondent No.1, this is what is stated:- “7.

8. Prior to 6th July 1989 Sanghi Motors (Bom) Ltd., hereinafter called the Company, had two distinct undertakings or divisions one called “Sanghi Oxygen” and the other “Sanghi Motors”. The undertaking of “Sanghi Oxygen” consisted of a factory situate at Andheri, Bombay and an office-cum-show room at Mathew Road, Opera House, Bombay. Sanghi Oxygen carried on the business of manufacture of industrial gases such as oxygen and nitrogen and manufacture of plant and machinery for the production of industrial gases. As stated in the Company Petition No.128 of 1985 prior to 6th July 1989 at all material times the Company was a family company in which the four brothers viz. late N.K.Sanghi, Mr.A.K.Sanghi, Mr.R.K.Sanghi and myself together with our respective family members were shareholders. Some shares were held by our cousin’s and married sisters. The relevant facts with regard to the Company and other family businesses are as set out in the said Petition. I crave leave to refer to and rely upon *17* ca.328.90.cp..sxw

9. (a) (b) (c) (d) (e) the Petition. The relevant facts stated in the Petition and relevant for the purpose of the present application can be summarised as follows:- Late Shri Motilalji Sanghi, our father had set up vast family businesses at Rajasthan, Delhi and Bombay. After the demise of our father in 1961 the Bombay businesses viz. ‘the Company’ was looked after and managed by Mr.R.K.Sanghi, the 2nd Applicant and myself who until about July 1989 were also the two Managing Directors of the Company. In 1964 the Company set up the said undertaking “Sanghi Oxygen” and which upto about July 1983 was in the exclusive charge and management of R.K.Sanghi, the 2nd Applicant. The accounts of Sanghi Oxygen were maintained separately and at the end of each financial year incorporated in the corporate accounts of the Company. As R.K.Sanghi, the 2nd Applicant was siphoning away the assets and funds of the “Sanghi Oxygen” and with which in fact he had set up his own personal businesses including a firm called Sanghi Gases, disputes and differences arose between R.K.Sanghi and myself which came to a head in July 1983. The unlawful acts of R.K.Sanghi are more particularly set out in the Petition. These disputes were sought to be resolved by the four brothers and the members of our family by entering into a Family Arrangement dated 6th July 1983 whereunder the said “Sanghi Oxygen” was given to me and the rest of the businesses of the Company including Sanghi Motors were given to R.K.Sanghi. “Sanghi Oxygen” manufactures industrial gases viz. Oxygen, Nitrogen and Acetylene gases. These gases are sold to the customers mainly filled in the cylinders belonging to the Company. These cylinders after they are emptied are returned by the Customer to be replaced with filled cylinders. In the ordinary course and depending upon the volume of the business a security deposit is normally taken by “Sanghi Oxygen” from the customers. This security deposit is at times adjusted or appropriated if the cylinders are damaged or not returned by the *18* ca.328.90.cp..sxw (f)

10. customer. The Company at all material times had over 600 customers for each of whom Sanghi Oxygen maintained separate cylinder account. These accounts will show that at any given time about 90% of the cylinders of the Company would be with the customers in the ordinary course of business. Disputes and differences continued between R.K.Sanghi and me and ultimately the said petition came to be filed by me sometime in February 1985 for reliefs under Sections 397 and 398 of the Companies Act, 1956.” 13 Thereafter, it is stated that certain interim applications were disposed of and the position of cylinders and particularly after inventory is stated in paragraphs 14, 15, 16 and 17 as under:- “14. As directed by the said order and as provided by the minutes of the said order, clause 6 thereof, we furnished to Mr.A.P.Yagnik, the Receiver, an inventory with regard to Sanghi Oxygen as on 15th September 1987, which inter alia included an inventory of the cylinders. A copy of the said inventory is hereto annexed and marked Exhibit No.5. The said inventory was prepared on the basis of the records of Sanghi Oxygen which included record prior to July 1983 i.e. the record which were maintained by R.K.Sanghi during the time he was in the exclusive charge and management of Sanghi Oxygen. On the basis of the record, in the said inventory it was shown that from out of the total stock of 15396 cylinders, 12876 cylinders were lying with the customers – that 2637 cylinders were lying in stock at factory – that there was an error in posting of 28 cylinders and that 89 cylinders belonged to the customers. In the 12876 lying with the customers were included the cylinders with the said Maharashtra Gas Co., the said Kishan Chand & Co. and the said Durgapur Oxygen Pvt.Ltd. about which a false grievance is made in the present Judge’s Summons. *19* ca.328.90.cp..sxw

17. The said inventory was physically verified by the Receiver Shri Yagnik in the presence of R.K.Sanghi and no objection whatever was taken with regard to the correctness of the said inventory. At the auction which was held on 5th October 1987 Vaibhav was declared the highest bidder and he having nominated M/s Vitesse Trading Limited, the Receiver gave the businesses of the company including the business of the said Sanghi Oxygen on conducting basis to Vitesse Trading Limited, the 2nd Respondent on the terms and conditions recorded in a Conducting Agreement dated 6th October 1987. I crave leave to refer to and rely upon the said agreement at the time of the hearing of this Judge’s Summons. As provided by the said agreement, against payment of the 1st installment of the royalty amount Vitesse Trading Limited took over all the Undertakings including the said Sanghi Oxygen of the Company on “as is where is” basis from the Receiver. So far as the said cylinders were concerned, such of the said cylinders as were shown in the aforementioned inventory and which were with the customers they remained with the customers and the Vitesse Trading Limited was given physical possession of only 2637 cylinders which were lying in stock at the factory.” 14 Thus, it is stated that after final order of this Court dated

06.07.1989 and after Cylinder Trial Balance which was prepared jointly, the matter has been completely worked out and the parties were discharged from their respective obligations and nothing remains which could be now done in the matter. Reiterating this position and denying all allegations in the affidavit in support of the application, it was prayed that the same be dismissed. *20* ca.328.90.cp..sxw 15 There is rejoinder affidavit which is filed after reply was received and equally, there is sur-rejoinder. Yet, it appears that once it was brought to the notice of this Court that a suit was filed, in the last affidavit dated 24.08.2005 prior to the amendment, the Respondents pointed out thus:- “I am filing this further affidavit on behalf of all six Respondents to put on record certain further factual developments which are relevant to demonstrate that the present Company Application is liable to be dismissed with compensatory costs. The said further developments are:- The present application alleges non-compliance of the order passed by this Hon’ble Court on 6th July 1989 in Company Petition No.128 of 1985. This alleged non- compliance is in respect of non-delivery of 4753 gas cylinders and one liquid oxygen tank. The Applicant had also filed a suit. In the said suit also prayer (a) was for return of 4723 cylinders and one liquid oxygen tank. In the said suit there was a prayer that Defendants No.7 to 13 in the suit, if the cylinders be found with them, be ordered and decreed to hand over the same. Copy of the plaint without the annexures thereto is annexed and marked Exhibit A hereto. In the said suit the Defendants No.8, 9 and 12 who were the customers of Sanghi Motors Oxygen Division had filed Written Statement, contending that they were entitled to retain the cylinders and were not liable to return them and raised other contentions. Hereto annexed and marked Exhibits B, B1 and B2 are copies of the said Written Statements filed by the said Defendants. The present Company Application was adjourned to be heard alongwith the above suit by an order dated 25th November, 1994. Copy of the said order dated 25th November, 1994 is annexed as Exhibit C hereto. The above suit was withdrawn by the Applicant on 29th April, 2005 with the order that the suit is allowed to be withdrawn and dismissed as withdrawn. Hereto annexed and marked Exhibit D is a copy of the said order dated 29th April, 2005. i) ii) iii) iv) v) *21* ca.328.90.cp..sxw vi) By withdrawal of the said suit the issue which the Applicant had raised stands concluded as if it is dismissed in view of the provisions of the Code of Civil Procedure, 1908. The Applicant by his action of withdrawal of the suit has prevented an effective adjudication on the question whether the cylinders have been returned to the Plaintiff or not and whether the orders of this Hon’ble Court in the Company Petition have been complied with or not. This opportunity having been availed of and having been given up, it is not now open for the Applicant to continue to agitate that grievance.

2. I say that in view of the withdrawal of the suit, the grievance of the Applicant which was sought to be raised is deemed to be dismissed and therefore, there cannot be any question of reagitating the same.” 16 After amendment to the memo of this Company Application pursuant to the Division Bench order, the Respondent Nos.1 and 3 to 6 have filed an affidavit and have stated that this Company Application is liable to be dismissed on the legal submissions which are pointed out in paragraph-7 clauses (a) to (d) and thereafter, what is contended is that the scheme sanctioned by this Court on 06.07.1989 provided that the Oxygen Division of Sanghi Motors (Bombay) Limited (the Company in this case) would stand transferred from 10.07.1989 to Sanghi Oxygen (Bombay) Pvt.Ltd. (Applicant No.1 herein) without any further order and such transfer was complete on the order being passed. This transfer was of the existing business as it existed on the date of passing of the order, therefore, the transfer must be taken on “as is where is” basis and “going concern” basis. Therefore, nothing remains to be executed and enforced as per the order of this Court and the Company Application is, thus, not maintainable. *22* ca.328.90.cp..sxw 17 It is then summarized that on 11.09.1987, an order was made by the Company Court appointing the Receiver in respect of all assets, properties and business of the Company including Oxygen Division. The word “company” means “Sanghi Motors (Bombay) Limited”. The Court Receiver by a Conducting Agreement dated 06.10.1987 appointed M/s Vitesse Trading Pvt.Ltd. (Respondent No.2) as Agent for conducting business of the Oxygen Division. Subsequently, by order dated

06.07.1989, the Oxygen Division was directed to be transferred and stood transferred to the Applicant No.1. The Agent of the Court Receiver on

16.07.1989 handed over possession of the Oxygen Division as it existed on that day to the Receiver who in turn handed it over to the Applicant No.1 for which the Applicant No.1 has issued a receipt on 10.07.1989. This concludes the transaction of going concern which was custodia legis and the matter came to an end. The Applicant No.1 acknowledged the receipt of all assets and properties of the Oxygen Division of the Company from the Court Receiver by receipt dated 10.07.1989 without any demur, in execution and implementation of the order passed by this Court. Therefore, nothing survives on that ground, so also, this application not disclosing any cause of action against these Respondents, that it deserves to be dismissed. 18 It is contended that in any event the dispute now raised in respect of 04 matters, namely, liquid oxygen tanks, balance cylinders and exchange of cylinders, cylinders with third parties and documents in respect of cylinders, is deemed to have been concluded on handing over by the Court Receiver to the Applicant Company, the Oxygen Division. It is stated that after hive-off of the existing Company, the Applicants cannot make a claim on the basis that prior to 1987 there were outstanding *23* ca.328.90.cp..sxw claims, counter claims and issues. Even if they are existing, it is denied and they cannot be adjudicated in the Company Application. Once the transfer is w.e.f. 06.07.1989, then, prior matters and issues cannot be raised in the Company Application. It is in such circumstances and by pointing out other objections, namely, non- joinder of necessary parties, that it is prayed that the Company Application be dismissed. 19 It is also contended that the suit was filed by the Applicants in this Court and that suit is withdrawn. Withdrawal of that suit must have some impact and what could not have been made subject matter of the suit on account of bar of limitation, cannot be introduced in this Company Application. This is sum and substance of the stand taken and alleging that there are several false and misleading statements made by the Applicants, that it is prayed that the Company Application be dismissed. 20 There is an additional affidavit of the Respondent No.8 in which it is contended that the order withdrawing the suit passed by this Court does not grant any liberty to initiate fresh proceedings based on the same cause of action. Therefore, this Company Application as against this Respondent deserves to be dismissed. It is further contended that the joinder of the Respondent could not have been without hearing the Respondent. The Respondent was not heard before such impleadment and joinder. Reliance is placed on the Written Statement filed in Suit No. 179/1993 and therefore, it is prayed that the Company Application be dismissed. 21 More or less, same stand is taken by the Respondent No.12 *24* ca.328.90.cp..sxw and the affidavit of Mr.Vimal Gupta, sole proprietor of the Respondent No. 12 is on identical lines. Record also indicates that there is additional affidavit of Vaibhav Singhi filed on behalf of the Respondent Nos.1 and 3 to 6 on 05.03.2011 and it is contended that there was possession receipt dated 10.07.1989 and even thereafter, there was an offer of amount which was in full and final settlement of all claims and counter claims. Reliance is placed on meeting between the Applicant No.2 who is elder brother of the Respondent No.3 and uncle of the Respondent Nos.5 and 6. Finally, it is also contended that an Execution Application was filed, copy of which is at page 504 of the paper book, to execute the order passed in the Company Petition No.128/1985 on 06.07.1989 and seeking to recover Rs.2,68,95,227/-. This Execution Application was withdrawn on

25.02.2011. Reliance is placed on the order on Notice No.1166/2001 dated 25.02.2011 which is in the following terms:- “1. (i) (ii) Execution Application No.348 of 2000 is not on record. Notice No.1166 of 2001 is not on record. Learned Counsel appearing for Ratan Kumar Sanghi states that in view of Application No.328 of 1990 taken out by Ratan Kumar Sanghi, said Ratan Kumar Sanghi would like to withdraw this execution application. In view of this request, following order is passed. Execution Application No.348 of 2000 is allowed to be withdrawn with no order as to costs. Notice No.1166 of 2001 is allowed to be withdrawn with no order as to costs.” 22 The above completes narration of the factual controversy between the parties in the present proceedings and their respective stands as emerging from several affidavits filed from time to time. 23 On the above material, I have heard Mr.Sandeep Parikh, *25* ca.328.90.cp..sxw learned counsel appearing for the Applicants and Mr.Milind Sathe, learned Senior Counsel appearing on behalf of the Respondent Nos.1 to 6. 24 Mr.Parikh strenuously contended that this Company Application is filed on the premise and foundation that the order dated

06.07.1989 has been passed by this Court disposing of the Company Petition No.128/1985. That is a petition under Sections 397 and 398 of the Companies Act, 1956. That petition sets out that prior to 1950, three brothers, namely, Motilal Sanghi, Mohanlal Sanghi and Sohanlal Sanghi carried on business in the names of various partnerships and limited companies in which all partners and shareholders respectively were members of their families. Sometime in 1950, family arrangement was arrived at by which the management of separate businesses were given to the respective groups of each brother. However, all members of family continued to remain partners/ shareholders in all businesses. The family members, thereafter, formed a company which was Respondent No.28 to the Company Petition. This Company is closely held association in the nature of corporate partnership and is founded on mutual trust and confidence on each other. There were disputes and differences between two brothers and in or about December, 1983 the Respondent No.1 to the Company Petition filed in this Court the Company Petition No.741/1983 seeking winding up of the Respondent No.28. There were affidavits filed in this proceedings in which serious allegations were made against each other. Thereafter, the parties met in February, 1984 and an agreement for partition of all family businesses was drawn up and that is how the Company Petition for winding up was withdrawn. Even thereafter, relationship deteriorated and a civil suit was filed by Mahendra Sanghi in the City Civil Court at Mumbai being Suit No.3976/1984. During the *26* ca.328.90.cp..sxw course of suit, an arbitration agreement was arrived at between the family members and their disputes were referred to arbitration of one Mr.H.K.Sanghi. In that suit, certain orders were passed returning the plaint for presentation to the proper court. Therefore, this Court proceeded on the basis that there was complete deadlock on account of continuing disputes and reference was made in the order dated

06.07.1989 to several proceedings. Mr.Parikh emphasized the conclusions of the learned Single Judge in the order dated 06.07.1989 and argued that this order should be seen as taking on record the Scheme to remove the deadlock. The Court, thereafter, ordered as per the operative directions (1) to (6) and at the same time recorded the undertakings of the parties. The petition was disposed of. 25 However, Mr.Parikh would argue that the disposal of the petition after referring to the Scheme and clauses therein in great details, so also, recording of undertakings of parties, cannot be seen as this Court loosing its authority, power and control over the subject matter of the proceedings themselves. The Court can and in this case, has envisaged that it will continue to oversee and monitor the implementation of the Scheme as recorded and forming part of the order of the learned Single Judge. Therefore, this is not a case where the Court has become functus officio or has lost its authority to pass any further orders and directions. In any event, section 402 of the Companies Act, 1956 is clear. That enables the Court, exercising power under the Companies Act, 1956, to issue incidental and ancillary directions. Once a situation of deadlock emerges from the record and it becomes clear to the Court, exercising jurisdiction under sections 397 and 398 of the Companies Act, 1956, that smooth and efficient functioning of the affairs and business of the Company is *27* ca.328.90.cp..sxw adversely affected, then, to take care of such a situation and to find out solution to the deadlock, the Court can issue such directions. Once such directions are issued, then, it cannot be said that there is no power in the Court to take cognizance of the requests and prayers in this Company Application. Mr.Parikh submits that all technical objections now being raised are with a view to delay the proceedings and to siphon of the properties and assets belonging to the Applicants which have legitimately come to the Applicants. 26 Mr.Parikh has emphasized the clauses (1) to (5) of the Scheme and has submitted that in terms of clause (6), recovery of amount from third party is permitted. Receiver was appointed for the purpose of receiving and recovering these outstanding amounts. Receiver was given certain directions. The directions include operation of bank account. Although the order discharges the Court Receiver, he has still to carryout certain functions. Therefore, the undertakings of parties have been recorded. The sums have also to be paid. It is in these circumstances that no hyper technical view of the present proceedings can be taken and this Court, therefore, should pass necessary orders in accordance with law. Mr.Parikh submits that this Court retains control over the proceedings and even future course of action. If intent is to put an end to all disputes between parties, then, it is futile to urge that this Company Application is not maintainable and deserves to be dismissed. 27 Mr.Parikh has placed strong reliance on the following decisions in support of the above contentions:- (1) 1990 Company Cases (Bombay) 233 Mohinidevi Choraria and another v/s Apsara Cinema Pvt.Ltd. and others. *28* ca.328.90.cp..sxw (2) (3) (1994) 2 Comp.LJ 102 (CLB) Yashraj Govindbhai Patel and others v/s Patel Engineering Co.Ltd. and others. 1997 Company Cases (Mad) 1 Shoe Specialties P Ltd. and others v/s Standard Distilleries & Breweries P. Ltd. and others.. 28 On the other hand, Mr.Milind Sathe, learned Senior Counsel appearing on behalf of the contesting Respondents, reiterated the objections which have been summarized by me above and as are found in the additional affidavit filed on 05.08.2010. He submits that for the reasons that are set out therein and even on merits this Company Application is not maintainable. This cannot be said to be a case where this Court has retained any control over the proceedings. Mr.Sathe has emphasized that the jurisdiction of the Company Court under sections 397 and 398 of the Companies Act, 1956 is clear. Once the transfer of assets and properties is on “as is where is” basis, then, all claims that have been made can only be made against the Court Receiver and this Company Application is not maintainable against the Respondent Nos.1 to

6. My attention is invited to certain annexures to the Applicants’ affidavit in support of the instant application and it is urged that this Court cannot take cognizance of any of the requests once the Applicants cannot invoke its jurisdiction. This is not a case where the Court retains control over the proceedings as enumerated in cases covered by sections 392 and 394 of the Companies Act, 1956. Prayers in the Company Application are seeking substantive reliefs based on the events after the order passed by this Court, therefore, this is not a question of implementation of the Court’s order, but an adjudication involving rights of the parties and title to the *29* ca.328.90.cp..sxw properties. That is not a permissible exercise and particularly when the Applicants had filed a civil suit in this Court and later on withdrawn it. That itself is indicative of the fact that they were aware that they cannot seek any relief in the instant Company Application. They also filed an application to execute and implement the order passed on 06.07.1989 in Company Application No.128/1985. However, that Execution Application has also been withdrawn. Merely because the Division Bench’s order permitted them to amend this Company Application and incorporate certain reliefs therein after impleading additional Respondents, without anything more, does not enable them to seek very same reliefs as were claimed in the civil suit. For all these reasons, this Company Application must be dismissed. 29 Mr.Sathe has relied upon the following decision in support of his above contentions:- (1) (1963) 2 SCR 168: AIR 1963 SC 250 Kapurchand Godha v/s Mir Nawab Himayatalikhan Azamjah. 30 With the assistance of Mr.Parikh and Mr.Sathe, I have perused the application and the affidavits on record. I have perused the statutory provisions and the decisions brought to my notice. 31 thus:- Sections 397, 398 and 402 of the Companies Act, 1956 read “397. Application to [Tribunal] for relief in cases of oppression:- (1) Any member of a company who complain that the affairs of the company [are being conducted in a manner prejudicial to public interest or] in a manner oppressive to any member or members (including any one or more of *30* ca.328.90.cp..sxw (2) themselves) may apply to the [Tribunal] for an order under this section, provided such members have a right so to apply in virtue of section 399. If, on any application under sub-section (1), the Court is of opinion- (a) that the company's affairs [are being conducted in a manner prejudicial to public interest or] in a manner oppressive to any member or members; and (b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up; the [Tribunal] may, with a view to bringing to an end the matters complained of, make such order as it thinks fit.

398. Application to [Tribunal] for relief in cases of mismanagement:- (1) Any members of a company who complain- (a) that the affairs of the company [are being conducted in a manner prejudicial to public interest or] in a manner prejudicial to the interests of the company; that a material change not being a change brought (b) about by, or in the interests of, any creditors including debenture holders, or any class of shareholders, of the company has taken place in the management or control of the company, whether by an alteration in its Board of directors, [or manager], or in the ownership of the company’s shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company [will be conducted in a manner prejudicial to public interest or] in a manner prejudicial to the interests of the company, may apply to the [Tribunal] for an order under this section, provided such members have a right so to apply in virtue of section 399. If, on any application under sub-section (1), the [Tribunal] is of opinion that the affairs of the company are being conducted as aforesaid or that by reason of any material change as aforesaid in the management or (2) *31* ca.328.90.cp..sxw control of the company, it is likely that the affairs of the company will be conducted as aforesaid, the [Tribunal] may, with a view to bringing to an end or preventing the matters complained of or apprehended, make such order as it thinks fit.

402. Powers of [Tribunal] on application under section 397 or the regulation of the conduct of the company’s 398:- Without prejudice to the generality of the powers of the [Tribunal] under section 397 or 398, any order under either section may provide for:- (a) affairs in future; (b) the purchase of the shares or interests of any members of the company by other members thereof or by the company; (c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital; (d) the termination, setting aside or modification of any agreement, howsoever arrived at, between the company on the one hand; and any of the following persons, on the other, namely:- the managing director, any other director, the manager, (i) (ii) (v) upon such terms and conditions as may, in the opinion of the [Tribunal], be just and equitable in all the circumstances of the case; (e) the termination, setting aside or modification of any agreement between the company and any person not referred to in clause (d), provided that no such agreement shall be terminated, set aside or modified except after due notice to the party concerned and provided further that no such agreement shall be modified except after obtaining the consent of the party concerned; the setting aside of any transfer, delivery of goods, (f) payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under section 397 or 398, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent *32* ca.328.90.cp..sxw preference; any other matter for which in the opinion of the (g) [Tribunal] it is just and equitable that provision should be made.” 32 A perusal of these sections would indicate that they provide remedy to the members of Company to seek redressal and relief in case of oppression and mismanagement. Right to apply for such relief is regulated by section 399 of the Companies Act, 1956. Sections 400 and 401 of the Companies Act, 1956 deal with the role of the Central Government and by section 402, powers of the Tribunal on such application are enumerated. A perusal of section 402 together with the clauses (a) to (g) would reveal that the order passed under section 397 or 398 may provide for these matters and that is discretion given to the Court or Tribunal making an order under section 397 or 398 of the Companies Act, 1956. 33 In the decisions that have been relied upon by Mr.Parikh and particularly that of this Court in case of Mohinidevi Choraria (supra), it was clear that the applications were moved under these provisions to seek an order that the Agreements dated 12.02.1987 and 20.03.1987 be set aside and an Administrator be appointed. In that context and in the factual background in Mohinidevi’s case (supra), this Court held that the Court has authority to regulate the conduct of the Company’s affairs not only in the present, but also in future, but such power should be exercised by the order made under sections 397 and 398 of the Companies Act,

1956. The Court in the facts of that case came to the conclusion that by consent order the Court retained seisin over the matters which might arise in future. Therefore, in view of events subsequent to the disposal of the *33* ca.328.90.cp..sxw petition under sections 397 and 398 of the Companies Act, 1956 that the Court exercised its power under section 402 and particularly because the consent order recorded that the Board of Directors managed the affairs of the Company. The only narrow area of specified disputes was left to the decision of Gala/Lewis. Thus, the Court which made the consent order limited its control over the matter and the reference to Gala/Anthony Lewis. Therefore and when the Court retained control over the proceedings, the learned Judge thought it fit to issue directions to Gala/Lewis and therefore, relied on other decisions in the field and section 402 of the Companies Act, 1956. 34 For the Applicants to rely upon this case and that of the Company Law Board, so also, of the Madras High Court, it will have to be demonstrated that the Court has retained control or seisin over the proceedings. All this is of some assistance to the Court when it is not functus officio. The word “functus officio” in Black’s Law Dictionary means having fulfilled functions, discharged office, accomplished purpose and therefore, no further force or authority. The present case would indicate that the Court has not retained control over the proceedings as in other cases. The narration of the events that led to the Court passing the order dated 06.07.1989 is already given in the same. The Court directed as under:- “1.

2. That Sanghi Motors (Bombay) Limited, being Respondent No.28 be reconstructed as per the Scheme of Reconstruction annexed hereto. Declared that with effect from date hereof Vitesse Trading Company Pvt.Ltd. (hereinafter referred to as “Vitesse”) shall not be liable to pay any further or other amounts whatsoever under the Conducting Agreement dated 6th October 1987 entered into by them with Mr.A.P.Yajnik (who has been appointed the Receiver of the Company by

6. *34* ca.328.90.cp..sxw the interim order dated 11th September 1987). Declared that the said Conducting Agreement stands terminated with effect from 10th July 1989 and all Bank Guarantees given by Vitesse Trading Co. Pvt.Ltd. in favour of Mr.A.P.Yajnik stand discharged and Mr.A.P.Yajnik is directed to return the said Guarantees to Vitesse duly cancelled. As and from the effective date Mr.A.P.Yajnik to stand discharged as the Receiver without passing any accounts but on payment of his costs, charges and expenses. Mr.Yajnik to hand over to the Petitioner charge and possession of the Company and all its assets and funds and to hand over the assets of the undertaking of Sanghi Oxygen which under the Scheme of Reconstruction will have vested in Sanghi Oxygen Bombay Pvt.Ltd. to Respondent No.1. Directed that Messers Jassubhai Chandabhoy who were appointed as Auditors of the Company by the interim order dated 11th September 1987 shall cease to be Auditors of the Company from the date of the holding of the Annual General Meeting of the Company for the accounting period ended on 31st March 1989. The said meeting for the purpose of the adoption of account and for appointment of Auditors shall be held on 20th July 1989 at the Registered Office of the Company at 11 a.m.. Mr.A.P.Yajnik is hereby appointed as the Chairman of that meeting. As in relation to the conducting business under the Conducting Agreement on the effective date Vitesse will still have to recover amounts from third parties (as per the list that shall be provided by them to Mr.A.P.Yajnik) Mr.A.P.Yajnik is hereby appointed as Receiver for the purposes of receiving and recovering these outstanding amounts. Mr.A.P.Yajnik shall, after discharging therefrom the current liabilities of Vitesse in relation to the conducting business (a list whereof shall also be given by Vitesse to him) pay over the balance, if any, to Vitesse. For the above purpose the bank accounts in the name of “Sanghi Oxygen” with the Syndicate Bank (Marol Branch), Andheri (East), and the State Bank of India (N.S.Patkar Marg Branch) shall be operated upon by Mr.A.P.Yajnik from the Effective Date and papers and *35* ca.328.90.cp..sxw documents necessary for that purpose should be executed by the concerned parties.” 35 Thus, the Court directed that Sanghi Motors (Bombay) Limited be reconstructed as per the Scheme of Reconstruction. The Court declared that with effect from 06.07.1989 M/s Vitesse Trading Company Pvt. Limited shall not be liable to pay any further amounts or other amounts whatsoever under the Conducting Agreement dated 06.10.1987 entered into by them with Mr.A.P.Yagnik, Receiver. The Court terminated the Conducting Agreement and discharged the Receiver. The Receiver was directed to handover to Mahendra Sanghi the charge and possession of the Company and all its assets and funds and handover the assets of Sanghi Oxygen which under the Scheme of Reconstruction will have vested in Sanghi Oxygen to Ratan Kumar Sanghi (original Respondent No. 1). The Court discharged the auditors and issued other directions. From reading of this order, it is apparent that all that the Court gave effect to was to the Scheme of Reconstruction between Sanghi Oxygen and Sanghi Motors. The Scheme envisages as under:- “2.

3. Sanghi Oxygen (Bombay) Private Limited is an existing Company (being Respondent No.29 to the Petition) having an issued capital of Rs.22,000/- divided into 2 equity shares of Rs.1,000/- each and 20 Preference shares of Rs.1,000/- each. All the said shares are held by the Company. The said shares are being held by M.K.Sanghi and R.K.Sanghi as nominees and directors of the Company. On and from 10th July 1989 (the Effective Date) the whole of the said Undertaking of Sanghi Oxygen including all its assets, movable and immovable properties and the plant machinery and equipment, furniture and fixtures lying and being at the said Andheri factory and more particularly set out in Annexure I hereto but excluding stock, stock in processes and *36* ca.328.90.cp..sxw finished goods but including the industrial gas either stored or in the process of being manufactured together with the trade name “Sanghi Oxygen” its goodwill and as incidental thereto (but without any consideration thereof) the tenanted premises on the ground floor of “Mani Mahal”, Mathew Road, Opera House, Bombay as a going concern together with all licenses and the benefits of the outstanding hire agreements for cylinders but without any liability whatsoever save and except as expressly provided herein shall without any further act, deed, matter or thing vest in and be transferred to Sanghi Oxygen (Bombay) Private Limited as its present book value aggregating to Rs.14,03,384/- stated in the said Annexure I hereto free from all encumbrances but subject however to all charges, if any, now affecting the same. The said amount of Rs.14,03,384/- shall be paid by Sanghi Oxygen (Bombay) Private Limited on the Effective Date to the Company. It is clarified that the assets purchased by Mr.A.P.Yajnik who has been appointed Receiver by an interim order dated 11th September 1987 are not the assets of the Undertaking of Sanghi Oxygen and hence shall not be transferred to Sanghi Oxygen (Bombay) Private Limited. On the Effective Date the Company shall transfer to Sanghi Oxygen (Bombay) Private Limited a sum of Rs. 6,00,000/- being the amount of security deposit for the cylinders. However from the Effective Date, Sanghi Oxygen (Bombay) Private Limited shall take over and be liable to discharge the entire liability towards the security deposits aggregating to Rs.24,74,990/- which was received by the Company, a list of which is set out in Annexure II hereto.”

4. 36 Thereafter, the Scheme contemplates further things so as to transfer equity shares etc. and reconstitution of the Board of Directors. Therefore, there is nothing in the Scheme and the order passed thereon which would enable me to come to the conclusion that the Court has retained any control over the matter, save and except, enabling recovery *37* ca.328.90.cp..sxw of certain monies and giving liberty to the Vitesse Trading Private Limited to apply for discharge of Mr.A.P.Yagnik as a Receiver. Beyond that, the Court clearly hoped that all disputes and differences would come to an end by this final attempt made at reconstruction of the Company. To my mind, therefore, it is not possible to agree with Mr.Parikh that the Court retained seisin or control over the proceedings after disposal of the main petition by the order dated 06.07.1989. The limited regulation as contemplated by operative direction No.6 does not cover the dispute about the assets and properties which are to vest in Applicant No.1 and particularly the cylinders. 37 That even the Applicants did not act on these lines because it is apparent that they instituted substantive suit and claimed all reliefs as in this application and also tried to enforce the order passed by this Court on 06.07.1989 by instituting an Execution Application. Those proceedings, namely, the suit and the execution application have been withdrawn and that by itself is no answer to the objection raised by the contesting Respondents to this application. This objection will have to be satisfied by pointing out that there is something in the order or in the scheme which enables this Court to exercise such power to recover and redeem Assets and Properties claimed even after disposal of the main petition by the final order. It is in these circumstances that I am unable to accept the argument of Mr.Parikh that the decision in the case of Mohinidevi (supra) and the view taken by the Madras High Court in the case of Shoe Specialities (supra), would be of any assistance to the Applicants. 38 Once such is the conclusion that I have reached, strictly it is *38* ca.328.90.cp..sxw not necessary to go into other aspects, but what I find from the record is that the Applicants proceeded on the basis that the contesting Respondents, under the orders and Scheme, are bound and liable and should be, therefore, ordered and directed by this Court to forthwith handover to the Applicants, the assets as particularly set out and reproduced herein above. Now, the application has been extensively amended and the Respondent Nos.7 to 14 have been impleaded. Subsequently, the Applicants deleted the Respondent Nos.10, 11, 13 and 14 which included Mr.A.P.Yagnik, Receiver. Now, which of these Respondents are obliged and liable to handover the assets and properties claimed by the Applicants and whether, these Respondents can be said to be, in any manner, bound by the order passed upon the Scheme of Reconstruction passed in the year 1989, has not been clarified at all. On the other hand, upon amending this Company Application and impleading these Respondents, what has been alleged is that the Receiver did not take physical possession of any of the cylinders at any time whatsoever and hence, he was not made Respondent earlier. The cylinders were transferred from the Respondent Nos.1 and 2 and the Receiver has all by means recovered them as per the list of customers holding the cylinders. Although it is urged at one such stage in this affidavit that in view of the undertakings given by the Respondent No.2 to this Court, the Respondent No.2 is primarily responsible and accountable to the Court for the assets in terms of the undertakings given by them as Agent of the Receiver and prior to 10.07.1989, the Respondent Nos.3 to 6 were in control and management of the Respondent No.2. Yet, what has been alleged further is that the Applicants found subsequently that certain assets, details whereof have been set out earlier, had not been handed over by the Respondent No.1 or the Respondent No.2 to the Receiver and thus, in *39* ca.328.90.cp..sxw turn, were not handed over to the Applicant No.1 by the Receiver. The list given to the Applicants by the Respondent Nos.1 and 2 is alleged to be incorrect and fraudulent. It is alleged that the Respondent Nos.1 and 2 have sold large number of cylinders to the Respondent Nos.7 to 13 and probably received costs thereof without raising bill of sale in the Company’s book so as to evade income tax or sales tax and also to cheat the Applicants. It is in this context, the Applicant No.1 is making claim of those cylinders which have not been returned to the Applicant No.1 because some of the holders claimed that these cylinders have been sold to them and the same are not liable to be returned. It is pertinent to note that the allegations are made against the Respondent No.8 and it is stated that it was not the customer of the Respondent No.1 yet, they have paid for 1100 cylinders to the Respondent No.1 and/or the Respondent No.2. The Respondent No.2 as a Conducting Agent has no right to sale the Receiver’s properties, but has done so, amounting to fraud on the Receiver and the Applicant No.1 and committed contempt of the Court. Such allegations are made even against the Respondent No.9. Thus, this is a clear case where not only the parties who were stated to be before the Court when the Court approved the Scheme and passed the order on the Company Petition who are sought to be proceeded against, but there are additional parties and it is not the case of the Applicants that they were parties to the Scheme or to the proceedings in which the order was made. They have not been held to be bound by the orders and directions. Therefore, by widening the scope of these proceedings and including therein disputes in relation to the title to the properties and assets claimed by the Applicants, the Applicants themselves have brought about a situation wherein it must be held that there is no control or seisin of this Court over the proceedings any further. *40* ca.328.90.cp..sxw 39 The allegations in the additional affidavit dated 11.05.2010 have been reproduced by me with a specific purpose and to impress and highlight my conclusion that even though the Division Bench has set aside the earlier order passed on this Company Application and it has been remitted for de-novo consideration and for decision in accordance with law, that order of the Division Bench, with respect, by no stretch of imagination, can be held as directing that the Single Judge must go into the merits and adjudicate the matter by investigating and probing the allegations and rival versions as if it is a civil court, nor this order indicates that the Court must proceed on the basis that it is enforcing or executing its own order, therefore, it has all powers to proceed not only against the original parties, but also against newly added Respondents. Such being not mandate of the order nor the Court retaining control over the original proceedings, that directions and reliefs based on subsequent events and developments cannot be granted. The ambit and scope of the powers of this Court under section 402 of the Companies Act, 1956 is very clear. The reliefs in this Company Application would indicate that the Applicants desire that this Court should undertake an exercise by which it must decide the disputed issues with regard to title to the assets and properties. 40 That it is not possible for me to undertake the above exercise is apparent from the fact that the Respondents in their affidavits have invited my attention to the contradictions and inconsistencies in the statements in the Company Application. It is then stated that in the particulars of claim Exhibit-E to the further affidavit dated 11.05.2010, the Applicants have, without any basis, introduced for the first time two *41* ca.328.90.cp..sxw new claims for the alleged recovery of rent on 4472 cylinders for 7609 days and rent on the Liquid Oxygen Tank for 250 days. There is no pleading much less any justification or basis in support of these new claims. In any event these new claims are barred by the Law of Limitation. These two new claims purport to aggregate Rs.3.83 crores approximately. In this behalf and as far as this aspect is concerned, what has been pointed out is that there are false statements made by the Applicants themselves. They have been accused of interpolating and altering certain portions of the Cylinder Trial Balance. It is stated that there is false statement that the Receiver was not made the Respondent to the original Company Application on the basis that he did not take physical possession of any of the cylinders at any time whatsoever. In this behalf, paragraph 19 of the affidavit in reply of the Respondents is highlighted. It is then alleged that there are further false statements in paragraphs 5(c), 5(m) and 5(r) of the further affidavit of the Applicants. It is stated that as pointed in the earlier affidavits, the case of the Respondents is that the Respondent No.2 (M/s Vitesse Trading Limited) on 10.07.1989 handed over to Mr.A.P.Yagnik, all properties, movable and immovable, businesses, assets, stock in trade etc. of the Respondent No.1 Company including Sanghi Oxygen. The Receiver has acknowledged the receipt of possession by his letter dated 10.07.1989 (Exhibit-6 to the affidavit in reply). The question of the Respondent No.1’s certifying where the balance cylinders were lying, therefore, does not arise. Further, only assets referred to in clauses (3) and (4) of the Scheme of Reconstruction enclosed to the final order dated 06.07.1989 were to be handed over to the Applicant No.1 Company. It has been stated that it is false to the knowledge of the Applicant No.2 that on 10.07.1989, the Respondent Nos.3 to 6 allegedly handed over the business of the Respondent No.2 back to the Receiver or *42* ca.328.90.cp..sxw gave the Receiver a list of customers holding gas cylinders as alleged. There is inconsistency in the allegations made in paragraph 6 of the affidavit in support and paragraph 6 of the plaint in Suit No.179/1993. It is clear, according to the Respondents, that the Cylinder Trial Balance as on 10.07.1989 was prepared jointly and was an agreed trial balance. It was agreed by the Receiver also. It is on this basis that the assets and properties have been handed over to the Applicant No.2 and the Applicant No.2 in his capacity as Director of the Applicant No.1 has acknowledged the receipt of same and he has confirmed having taken charge of the cylinders including medical cylinders as per this Cylinder Trial Balance which is signed by him, Receiver and Mr.Ramavatar (Exhibits-7 and 8 to the affidavit in reply). It is, therefore, incorrect, according to the Respondents, that the Receiver transferred the cylinders based on the list of customers holding them given to the Receiver by the Respondent No.2. According to the Respondents, therefore, these allegations are an afterthought and are being made only to claim some reliefs and by over looking and bypassing the objection to the maintainability of this Company Application. 41 Thus, there are allegations which are made and there are counter allegations as well. This is not a case where the Court can proceed on the strength of the affidavits filed by the Applicants and their further affidavit dated 11.05.2010. Their affidavits and versions therein have been countered and the contents thereof are seriously disputed by the Respondents who were originally impleaded and even by the added Respondents. The inconsistencies in the statements made in the plaint in civil suit, execution proceedings and in this Company Application have been pointed out. It is in these circumstances that I am of the view that no relief can be granted to the Applicants in this Company Application. *43* ca.328.90.cp..sxw 42 The Applicants have monetary claims and pertinently of damages. They are virtually seeking a Money Decree on the basis that if the Assets cannot be handed over, the Respondents must compensate the Applicants in Monetary Terms. The allegations that have been made in support of the case and the prayers of this application are such which would require oral and documentary evidence. Further, it would be difficult for the Court, exercising jurisdiction under the Companies Act, 1956, to proceed against those who were not parties to the original Company Petition and the order made therein. If there is Scheme of Reconstruction as between two entities referred to above, then, all those who are impleaded must be proved to be claiming through these entities and therefore, are accountable and liable for the obligations undertaken by these entities under the Scheme of Reconstruction. That link will have to be established and proved. Further, the Receiver who was impleaded as a party to these proceedings, has been deleted because it is stated that he has since expired. Even if that is taken to be case, there is no explanation forthcoming as to why others who are impleaded as Respondents to this application have been deleted. In fact the affidavits that are filed on behalf of M/s Vitesse Trading Private Limited would go to show that it handed over the affairs of the Company including Oxygen Division to the Receiver who in turn passed receipt in favour of M/s Vitesse Trading Pvt.Ltd. on 10.07.1989. If the business is transferred on “as is where is” basis and on “going concern” basis, then, according to this Respondent, nothing further needs to be done by it and it is discharged of all obligations. It has heavily relied upon this receipt. That is receipt given by R.K.Sanghi (Director of Sanghi Oxygen) to Mr.A.P.Yagnik who is stated to *44* ca.328.90.cp..sxw be no more. The affidavit on behalf of the Respondent No.8, apart from raising serious issues on the point of maintainability, states that the Company Application cannot be proceeded further after withdrawal of the suit unconditionally. The proceedings are based on the same cause of action as set out in the suit. To the suit several persons have been impleaded as Defendants. Same stand is taken by the Respondent No.12 as well. In addition, both Respondents rely upon their Written Statements in the suit. Apart from stating that the claim as against them is barred by limitation, what they have stated is that they deposited Rs.1,12,500/- with Sanghi Motors (then having Sanghi Oxygen as its division). They have credit balance on or about April, 1985 of Rs.20,000/- with the Company and 83 cylinders were adjusted against this credit balance. They were scrap cylinders and the account between the Company and the M/s Vimal Gases was, accordingly, settled. There was no question of any cylinder lying with M/s Vimal Gases on 10.07.1989. Now when such are nature of allegations which have been made, it is inconceivable that this Court can grant any relief by going into further details and undertaking deeper and relatively unnecessary probe. More so, when the Civil Suit was the appropriate remedy, according to the Applicants themselves. That having been withdrawn, the same must affect the alleged claims of the Applicants. Their conduct is, thus, an important aspect which cannot be ignored. 43 As a result of the above discussion, the Company Application fails and it is, accordingly, dismissed. But, in the circumstances, there will be no order as to costs. (S.C. Dharmadhikari, J)