Probir Kumar Misra v. Ramani Ramaswamy

4. The Learned Counsel appearing for respondents aredirected to produce all subsequent records to this courtduring the course of arguments."The said order was passed taking note of the fact that SubarnarekhaPort Project is a public project and public interest is involved.6. Even though under the relief granted by the Company Law Boardin paragraph 9(iv) there was a direction against the petitioners tokeep informed the second respondent of any major developments in theSubarnarekha Port Project every month, the complaint was that thesame was not followed, for which the contention raised on behalf ofthe petitioners is that if the above said direction is accepted,respondents 2 to 6 must withdraw their appeals. 7.1. Before going into the contentions raised by the respectivecounsel and merits of the case relating to the impugned order of theCompany Law Board, it is relevant to point out some of the factualcircumstances to arrive at a proper conclusion in these appeals.7.2. The scope of this Court in deciding appeals against theorder of the Company Law Board under Section 10F of the Act islimited to the extent of deciding on a question of law arising out ofthe order. Section 10F of the Act is as follows:"Section:10F. Appeals against the order of the CompanyLaw Board.- Any person aggrieved by any decision ororder of the Company Law Board may file an appeal to theHigh Court within sixty days from the date ofcommunication of the decision or order of the CompanyLaw Board to him on any question of law arising out ofsuch order:Provided that the High Court may, if it is satisfiedthat the appellant was prevented by sufficient causefrom filing the appeal within the said period, allow itto be filed within a further period not exceeding sixtydays."7.3. The Andhra Pradesh High Court in D.Ramkishore and othersv. Vijayawada Share Brokers Ltd. and others, [2008] 144 Company Cases326 (AP), by referring to a series of judgments of the Apex Courtregarding the scope of Section 10F of the Act has held as under:"8. Under Section 10F of the Companies Act, 1956, any https://hcservices.ecourts.gov.in/hcservices/ person aggrieved by any decision or order of the CompanyLaw Board may file an appeal to the High Court on anyquestion of law arising out of such order. It is only ona question of law, and not of fact, that an appeal wouldlie against the order of the Company Law Board to theHigh Court. There is no jurisdiction to entertain anappeal on grounds of erroneous findings of fact, howevergross the error may seem to be, for if the question tobe decided is one of fact it does not involve an issueof law. (Deity Pattabhiramaswamy v. S. Hanymayya AIR1959 SC 57). It is only an error of law which can becorrected by the High Court in exercise of itsjurisdiction under Section 10F of the Companies Act. Ifthe finding recorded by the Company Law Board is one oflaw or of mixed law and fact, the High Court cancertainly examine its correctness, but if it is purelyone of fact, the jurisdiction of the High Court would bebarred. (Mattulal v. Radhe Lal, AIR 1974 SC 1596). Afinding on a question of fact is open to attack aserroneous in law only if it is not supported by anyevidence, or if it is unreasonable and perverse, butwhere there is evidence to consider, the decision of theCompany Law Board is final even though the High Courtmight not, on the materials, have come to the sameconclusion if it had the power to substitute its ownjudgment. (Sree Meenakshi Mills Ltd. v. CIT, AIR 1957 SC49). In between the domains occupied respectively byquestions of fact and of law, there is a large area inwhich both these questions run into each other, formingenclaves within each other. The questions that arise fordetermination in that area are known as mixed questionsof law and fact. These questions involve first theascertainment of facts on the evidence adduced and thena determination of the rights of the parties on anapplication of the appropriate principles of law to thefacts ascertained. The ultimate finding on the issuemust, therefore, be an inference to be drawn from thefacts found, on the application of the proper principlesof law, and in such cases an inference from facts is aquestion of law. In this respect, mixed questions of lawand fact differ from pure questions of fact in which thefinal determination, equally with the finding orascertainment of basic facts, does not involve theapplication of any principle of law. The propositionthat an inference from facts is one of law will becorrect in its application to mixed questions of law andfact but not to pure questions of fact. When the findingis one of fact, the fact that it is itself in inferencefrom other basic facts will not alter its character as https://hcservices.ecourts.gov.in/hcservices/ one of fact (Sree Meenakshi Mills Ltd. v. CIT)." 7.4. The scope of Section 10F of the Act, which provides for anappeal against the order of the Company Law Board, has beenenunciated by the Apex Court in V.S.Krishnan and others v. WestfortHi-Tech Hospital Ltd. and others, [2008] 3 SCC 363 as under: "It is clear that Section 10F permits an appeal to theHigh Court from an order of the Company Law Board onlyon a question of law i.e., the Company Law Board is thefinal authority on facts unless such findings areperverse based on no evidence or are otherwisearbitrary. Therefore, the jurisdiction of the appellateCourt under Section 10F is restricted to the question asto whether on the facts as noticed by the Company LawBoard and as placed before it, an inference couldreasonably be arrived at that such conduct was againstprobity and good conduct or was mala fide or for acollateral purpose or was burdensome, harsh or wrongful.The only other basis on which the appellate Court wouldinterfere under Section 10F was if such conclusion was(a) against law or (b) arose from consideration ofirrelevant material or (c) omission to construe relevantmaterials."7.5. By virtue of the limited powers of this Court whiledeciding as an Appellate Court under Section 10F of the Act whereinthe question of law has to be considered, the basic questions thatare raised before this Court in these appeals are:(i) as to the jurisdiction of the Company Law Board togrant remedy for the breach of Investment Agreement andthe Memorandum of Understanding dated 14.11.2007;(ii) when the respondents have given an undertaking toact as per the Investment Agreement, whether in spite ofthe same the oppression will continue;(iii) whether there was any oppression at all on thefactual matrix of the case before the Company Law Board;(iv) whether it was within the power of the Company LawBoard in not deciding about the Contempt Applicationwhile disposing the Company Petition;(v) as to whether it was lawful for the Company LawBoard to permit the petitioners to reconstitute theBoard of Directors of the Company without even securing https://hcservices.ecourts.gov.in/hcservices/ the payment of consideration;(vi) as to whether the Company Law Board was right inallowing the reconstitution of the Board of Directors,without the approval of the shareholders and whether thesame is within the provisions of the Act;(vii) as to whether the claim on Machilipatnam PortProject, which is based on the Memorandum ofUnderstanding, can be a subject matter of oppression;(viii) as to whether it is proper for the Company LawBoard to rely upon the Memorandum of Understanding dated14.11.2007, which is held by the Company Law Boarditself as not enforceable;(ix) as to whether it is within the jurisdiction of theCompany Law Board to decide an issue which is referableto arbitration as per the Investment Agreement;(x) as to whether respondents 3 to 5 can be personallymade responsible in respect of an amount stated to havebeen received by the second respondent; and (xi) as to whether the relief granted by the Company LawBoard by virtue of the powers conferred under Section402 of the Act can be sustained.7.6. The grounds of oppression which are broadly raised by thepetitioners before the Company Law Board alleged against respondents2 to 6 were:(i) the Machilipatnam Port Project is a project of thefirst respondent-Company and the second respondent,being an Investor under the Investment Agreement dated26.5.2006, instead of working for the benefit of thefirst respondent-company has chosen to transfer itsshares in the said project in favour of third parties,namely Maytas and NCC, thereby taking away the saidproject granted by the Government of Andhra Pradesh,which is prejudicial to the interest of the Company;(ii) the second respondent, being an Investor boundunder the Investment Agreement dated 26.5.2006, who hasto fund the various projects has failed to do the samewhich is detrimental to the interest of the members aswell as the Company;(iii) the second respondent, having agreed under aMemorandum of Understanding dated 14.11.2007 to exitfrom the first respondent-Company, has chosen to go backfrom the agreement which is detrimental to the interestof the Company and its members; https://hcservices.ecourts.gov.in/hcservices/ (iv) the second respondent, being the majorityshareholder of the first respondent-Company holding 70%of the shares, has frozen the bank accounts which isprejudicial to the interest of the company;(v) the second respondent, in whose premises theregistered office of the first respondent-Company wassituated, has deliberately locked the premises therebyclosing the registered office of the first respondent-Company which is not only detrimental to the affairs ofthe Company, but it had blocked the entire process ofthe business of the company.7.7. On the other hand, it was the contention of respondents 2to 6 as a defence that:(i) Machilipatnam Port Project is not a project of thefirst respondent-Company and it was between theConsortium of Maytas, NCC, SREI and SARAT, andtherefore, it was never treated as a project of thefirst respondent-Company. The Investment Agreementdated 26.5.2006 in respect of the Machilipatnam PortProject can at the most be treated as a contractualobligation and in the guise of complaint under Sections397 and 398 of the Act, contractual obligations aresought to be enforced, which is not permissible;(ii) the second respondent had been always willing tomake funding and the funding as per the InvestmentAgreement is not as and when the petitioners have beendemanding, and it is only those demands which arepertinent to the projects of the Company, the secondrespondent-Investor can be expected to fund. On thefacts of the case, an enormous amount has been claimedas strategic expenses without explaining the reasons andin such circumstances, it cannot be said to be a refusalto fund when the explanation from the petitioners, whoare in the day-to-day affairs of the Company, has notgiven the reasons for such extraordinary claim ofstrategic expenses and even assuming that there is abreach of funding obligation under the InvestmentAgreement, the same cannot be attempted to be enforcedin the guise of oppression and mismanagement;(iii) the Memorandum of Understanding dated 14.11.2007is not valid and enforceable since there is no contractin existence, but the real intention of the petitionerin approaching the Company Law Board complaining underSections 397 and 398 of the Act is only to enforce thesaid Memorandum of Understanding dated 14.11.2007, https://hcservices.ecourts.gov.in/hcservices/ thereby to make exit of respondents 2 to 6 at any cost.It is also the case that by virtue of the subsequentagreement by the petitioners in constituting a newCompany in the name of Subarnarekha Port PrivateLimited, by which there has been a subrogation of therights of the Concession Agreement entered with theGovernment of Orissa in favour of the newly constitutedcompany, the said newly constituted company has enteredinto a Memorandum of Understanding with Signature GroupInternational Limited, Cayman Islands of U.A.E. on4.6.2009 to the extent of Rs.6000 Million equivalent toUS$ 125 Million and therefore, the very purpose offiling the petition under Section 397 of the Act beforethe Company Law Board is with an ulterior desire thatrespondents 2 to 6 should exit from the firstrespondent-Company so that by virtue of the newMemorandum of Understanding stated above, thepetitioners can earn enormous profit and that cannot bethe reason for approaching the Company Law Board forrelief under Sections 397 and 398 of the Act, andfurther, the Memorandum of Understanding dated14.11.2007 attempts to purchase the shares of themajority shareholders, namely respondents 2 to 6 andsuch conduct of the minority cannot be a ground tocomplain about oppression and mismanagement;(iv) there was absolutely no business of the Companyexcept in respect of the two projects. While in respectof Machilipatnam Port Project the same is not connectedwith the first respondent-Company, the only remainingproject, viz., Subarnarekha Port Project, is at apreliminary stage and even lands have not been allottedby the Government of Orissa and therefore, by freezingof bank accounts there is no prejudice to the Company'sinterest or the interest of the members. Moreover, thefreezing of accounts was not with an intention ofcausing prejudice to the first respondent-Company'saffairs, but was only to prevent the conduct of thepetitioners in attempting to make exit of respondents 2to 6, which has been proved to be a correct assessmentby the respondents as evident from the documentsobtained under the Right to Information Act. Evenduring the pendency of the proceedings before theCompany Law Board, the petitioners have created a newCompany-Subarnarekha Port Private Limited withoutinforming the same to the majority shareholders of thefirst respondent-Company, namely respondents 2 to 6;(v) locking of the premises is not only due to thereason that the premises belongs to the second https://hcservices.ecourts.gov.in/hcservices/ respondent, which has been granted to the firstrespondent-Company to have its registered office, but onthe basis that the petitioners have been carrying ontheir own private and other activities in the saidpremises, which are detrimental to the interest of thefirst respondent-Company and the sealing itself was onlyafter the intention of the petitioners was known, viz.,that they have not been acting in the interest of thefirst respondent-Company and therefore, there was noquestion of oppression or mismanagement.7.8. The Company Law Board, while holding that the Memorandum ofUnderstanding dated 14.11.2007 is not enforceable, has directed thesecond respondent to transfer all its shares in the first respondent-Company in favour of the petitioners for a consideration of Rs.52.50Crores, which is stated to form part of the Memorandum ofUnderstanding dated 14.11.2007. The Company Law Board, whilearriving at such conclusion, has decided that the second respondentwas only an Investor/Money Lender and cannot be treated as a Promoterof the first respondent-Company and therefore, as an Investor itsinterest is only to earn money out of the money invested. To come tosuch a conclusion the Company Law Board has referred to variousdocuments to show that the second respondent has itself voluntarilydecided to go out of the Company and in such event, by exercising thepowers under Section 402 of the Act, the Company Law Board hasconcluded that no useful purpose would be served in retaining thesecond respondent and it was based on the said concept the CompanyLaw Board has passed the above said order directing the secondrespondent to transfer its shares in favour of the petitioners forconsideration.7.9. The Company Law Board has further found that the secondrespondent has committed breach of its obligation in funding and thatlocking of premises and closing of the accounts is prejudicial to theinterest of the first respondent-Company. That apart, the CompanyLaw Board in the impugned order has found that the Machilipatnam PortProject is project of the first respondent-Company and by the conductof the second respondent the project has been thwarted and takingadvantage of the project it found that the second respondent hasearned certain profits and therefore, directed the second respondentto transfer 30% of the profit to the petitioners who are 30%shareholders in the first respondent-Company.8.1. The first respondent – Creative Port Development PrivateLimited was incorporated as a company under the Act on 6.2.2006. Itis true that in the Memorandum and Articles of Association of the https://hcservices.ecourts.gov.in/hcservices/ first respondent-Company, the petitioners are the subscribers, eachholding 5000 equity shares. In the Articles of Association of thefirst respondent-Company, in Clause 22.a, the petitioners as well asthe fourth respondent are shown as first and permanent Directors ofthe company. The said Clause 22.a is as follows:"22.a. The following shall be the first and permanentDirectors of the Company.1. Mr.RAMANI RAMASWAMY2. Mr.R.RANGARAJAN3. Mr.PRABIR KUMAR MISRA"8.2. Clause 23 of the Articles of Association also states thatno share qualification is required to be held by any Director in theCompany. There is a provision in the Articles of Association formaking "Nominated Directors".8.3. The main objects of the first respondent-Company, viz.,Creative Port Development Private Limited, are as follows:"1. To own, develop, design, construct, erect, build,repair, re-model, demolish, develop, improve, grades,curve, pave, macadamize, cement, and maintain sea andsea ports, dams, bridges, buildings, structures,apartments, hospitals, malls, places of worship,highways, roads, educational institutions, food storage,power plants, energy installations, marine structures,desalination plant, distribution utilities, energytrading, convention centers, water treatment anddistribution facilities, alleys and to do other similarinfrastructure and for these purposes to purchase, takeon lease, or otherwise acquire and hold any lands andprepare lay-out thereon or buildings of any tenure ordescription wherever situate, or rights or intereststherein or connected therewith.2. To own, develop, sell, distribute, lease, hire,license, use, operate, assemble, record, maintain,repair, recondition, work, alter, convert, improve,procure, install, modify and to act as consultants orotherwise deal in all kinds of infrastructure projectsand developments and to promote, encourage, develop,maintain, organize, undertake, manage, operate, conduct, https://hcservices.ecourts.gov.in/hcservices/ and to act as consultants, Advisors, negotiators andservice providers."8.4. It is not in dispute that before floating of the firstrespondent-Company, the petitioners had their partnership in the nameof "Creative Infrastructure". The petitioners themselves claim onlytwo projects, namely Machilipatnam Port Project of Andhra Pradesh andSubarnarekha Port Project of Orissa, as the projects of the Companyafter its formation, while it is the case of the second respondentthat Machilipatnam Port Project is not forming part of the firstrespondent-Company. 8.5. Even before the first respondent-Company was floated therewere discussions and exchange of views on the Port Project of theGovernment of Orissa between the petitioners and the authorisedrepresentative of the second respondent (SREI). In the communicationof the first petitioner dated 14.12.2005, writing as a partner ofCreative Infrastructure, it was made clear that as per the wish ofthe Government of Orissa which want a person from infrastructure, thesecond respondent was made as a Lead member of the Consortium byreplacing JV. The discussion in respect of the Machilipatnam PortDevelopment Project also appeared to be in existence between thepetitioners and the second respondent-Investor even before theincorporation of the first respondent-Company, which is evident fromthe email communication dated 5.2.2006. In the said communication ofthe authorised representative of the second respondent addressed tothe Managing Director of the second respondent-Hemant Kanoria, it isstated that in respect of the Machilipatnam Port Development Projecta meeting of presentation of consortium members Maytas, NCC has takenplace on 4.2.2006 at Hyderabad and in that email it is stated aboutthe first petitioner as follows:"Mr.Ramani Ramaswamy approach was very impressive andvery convincing and all the participants in the meetingwere very much pleased with him and his comprehensiveanswers with logical explanation to all the questionsposed during the 3 hour session.With my limited 2 years plus exposure to the portsector, I would describe the presentation & theexplanation of Mr.Ramani Ramaswamy as EXCELLENT."A reading of the said communication also reveals that at one stagethe members of the consortium – Maytas and NCC wanted to exclude thesecond respondent which was not acceptable to the petitioners. The https://hcservices.ecourts.gov.in/hcservices/ letter states as follows:"Maytas & NCC have a wild opinion of proposing a 80:20equity sharing between Maytas & NCC group and SREI &Ramani group respectively. It is understood that theyare serious on not letting go anything more than 26% tous. In the worst case, they may propose 60:40.Mr.Ramani highlighted and made it very clear in thepresentation itself by SREI-Ramani group needs to holdmajority stake since SREI-Ramani group has the expertisewhich is very critical for the entire project. Maytas &NCC appeared to have been a bit inconvenient with thefirm statement made by Mr.Ramani on the majority stake."In the said communication, it is also stated as follows:"SREI-Ramani group will be the Lead Member/Partner ofthe bidding consortium. The preliminary terms fordrafting the (i) Consortium Agreement; (ii) JointVenture Shareholders Agreement; (iii) Work DistributionAgreement; (iv) Non-compete Agreement; (v) Agreement onpermission to use Technical Data/Documents/Know-how;(vi) Agreement on Selection of Other Operators &Subcontractors; and (vii) Advisory Services Agreementetc., may be included in the MOU to avoid disputes at alater stage."The fund requirement for the Machilipatnam Port Project as estimatedon 5.2.2006 was around Rs.1100 Crores with range of 50 Crores plus orminus. It was stated in the above said communication as follows:"Gangavaram Port development was estimated to costRs.2300 Crore although it costed only about Rs.1675Crores and similarly Dhamra Port was estimated to costRs.1300 Crores but has costed less. When referred thesethings to him, Mr.Ramani Ramaswamy assures that theMachilipatnam Port Development Project cost will also befar less than the Govt. estimated Rs.1100 Crores.However, he has not confirmed any approximate figure atleast with a range of about Rs.50 cfrores plus or minusto have an understanding on the fund requirement for theproject.Although the studies conducted for this bid submissionand the experience gained will help us tremendously intaking part in the bids to develop other minor ports https://hcservices.ecourts.gov.in/hcservices/ that are in the pipeline for development, I request toget clarifications from Mr.Ramani Ramaswamy on the aboveaspects exempting those on which you are convincedand/or have the required clarification/information."8.6. It was during pendency of such discussions in respect ofthe said two projects between the petitioners and the representativesof the second respondent and its Managing Director, the firstrespondent-Company came to be incorporated on 6.2.2006.8.7. The argument advanced on behalf of the petitioners is thatthey are the only promoters of the first respondent-Company and thesecond respondent has nothing to do with the floating of the firstrespondent-Company, while it is the contention on behalf of thesecond respondent that even before the incorporation of the firstrespondent-Company, discussions were going on between the petitionersand the second respondent and its officials, as found on record, atthe time when the petitioners were only a partnership firm "CreativeInfrastructure" and during the course of discussion, the Company wasfloated and therefore, the second respondent should also be treatedas a promoter of the company which floated the affairs.8.8. Whether the second respondent is a joint promoter of thefirst respondent-Company along with the petitioners may not be ofmuch relevance for the purpose of deciding the issue involved inthese appeals, nevertheless, on the basis of the communicationexchanged before incorporation of the first respondent-Companybetween the petitioners and the representatives of the secondrespondent, it is clear that the second respondent has been taken asa Lead Member in respect of the said projects, as admitted by thepetitioners themselves when they were partners of the CreativeInfrastructure before incorporation of the first respondent-Company.It is true that at the time when the first respondent-Company wasincorporated none of the representatives of the second respondent-Company were made a signatory to the Memorandum and Articles ofAssociation. But, the presence of the representative of the secondrespondent as a first and permanent Director of the company isavailable under the Articles of association as stated above.8.9. It is well known that the promoters of the Company, who actbefore the incorporation of the legal person, need not necessarily beeither a signatory of the Memorandum and Articles of Association orshareholder or the Director of the Company. The promoter, who iscalled as a "midwife" of the business as coined by Henn and Alexanderin Law of Corporations, has not been defined under the provisions of https://hcservices.ecourts.gov.in/hcservices/ the Act. Nevertheless, before the legal person has come intoexistence, it is the promoter who does the major role for the purposeof bringing the corporate person into existence like proposing theobjects of the company to be incorporated, arranging finance,formation of the original scheme, making arrangement to get thecompany registered, preparing prospectus, Memorandum and Articles ofAssociation, etc., which are very crucial for the company to comeinto existence. In fact, they perform vital functions to bring outa corporate person and are made liable to the Company as well as thethird parties in respect of their conduct and contracts entered bythem during pre-incorporation stage including the statement inprospectus, either treating them as the agents or trustees of theCompany to be incorporated, but still they are not recognized inorder to focus the legal fiction of corporate personality. Law isclear that while the company which has come into existence is notbound by the conduct of the Promoter, at the same time it is entitledto make claim against such promoter in case it was subsequently foundthat the conduct of the promoter was detrimental to the interest ofthe company incorporated on the basis of principles of breach oftrust.8.10. As per Section 62(1)(c) of the Act, "for any misstatementin the prospectus every person who is a promoter of the company"could be made liable for any loss or damages. Section 62(1) of theAct is as follows:"Section:62. Civil liability for misstatements inprospectus.(1) Subject to the provisions of this section, where aprospectus invites persons to subscribe for shares in ordebentures of a company, the following persons shall beliable to pay compensation to every person whosubscribes for any shares or debentures on the faith ofthe prospectus for any loss or damage he may havesustained by reason of any untrue statement includedtherein, that is to say,-(a) Every person who is a director of the company at thetime of the issue of the prospectus;(b) Every person who has authorised himself to be namedand is named in the prospectus either as a director, oras having agreed to become a director, eitherimmediately or after an interval of time;(c) Every person who is a promoter of the company; and https://hcservices.ecourts.gov.in/hcservices/ (d) Every person who has authorised the issue of theprospectus:Provided that where, under section 58, the consent of aperson is required to the issue of a prospectus and hehas given that consent, or where under sub-section (3)of section 60, the consent of a person named in aprospectus is required and he has given that consent, heshall not, by reason of having given such consent, beliable under this sub-section as a person who hasauthorised the issue of the prospectus except in respectof an untrue statement, if any purporting to be made byhim as an expert."A reading of Section 62(1) of the Act makes it clear that even if apromoter is not chosen to become a Director, he is liable for anysuch loss or damages. 8.11. Section 62(6)(a) of the Act, while explaining theexpression "Promoter" in the context of the liability formisstatement, states as follows:"Section 62: Civil liability for misstatements inprospectus.(1) to (5).....(6) For the purposes of this section-(a) the expression "promoter" means a promoter who was aparty to the preparation of the prospectus or of theportion thereof containing the untrue statement, butdoes not include any person by reason of his acting in aprofessional capacity for persons engaged in procuringthe formation of the company; and(b) ........ "8.12. It is also abundantly clear that a promoter need notbecome a Director. On the facts of the present case, thecommunication between the parties stated above makes it clear thesecond respondent in the pre-incorporation stage of the firstrespondent-Company has, in fact, participated in framing the objectsof the Company, in the sense created basis for the two projects ofthe company to be incorporated, namely Machilipatnam Port Project ofAndhra Pradesh and Subarnarekha Port Project of Orissa. https://hcservices.ecourts.gov.in/hcservices/

8.13. Whether Machilipatnam Port Project has formed part of thefirst respondent-Company after its incorporation is an issue to bedecided, while it is not in dispute that the Subarnarekha PortProject of Orissa, which has been in discussion between thepetitioners and the representatives of the second respondent beforethe incorporation of the first respondent-Company has formed part ofthe first respondent-Company's project. Considering the same alongwith the undisputed fact of making the nominee of the secondrespondent, viz., the fourth respondent as the first and permanentDirector of the first respondent-Company, makes it clear that thesecond respondent has been a promoter of the company, of course alongwith the petitioners who are, no doubt, the principal architects andthe brain behind the formulation of the project, which cannot be putinto action but for the financial assistance of the investor, namelythe second respondent. Inasmuch as in the said projects both thecreative idea of the petitioners as well as the finance of the secondrespondent-Investor are so intrinsically linked with each other, itcannot be said that the petitioners alone were the promoters of thefirst respondent-Company.8.14. It is in this context, the definition of "Member" underSection 41 of the Act is relevant. The said provision makes it clearthat if a promoter becomes a subscriber of the Memorandum andArticles of Association, he becomes a member of the Company on itsregistration. In addition to that, any other person who becomes amember after incorporation also becomes a member under the provision.After the Depositories Act, 1996, which has come into effect from20.9.1995, such depositors who are holding equity share capital ofthe company and whose name is entered as beneficial owner are alsodeemed to be members of the company, thus making three types ofmembers under the Act. Section 41 of the Act is as follows:"Section 41. Definition of "member"(1) The subscribers of the memorandum of a company shallbe deemed to have agreed to become members of a company,and on its registration, shall be entered as members inits register of members.(2) Every other person who agrees in writing to become amember of a company and whose name is entered in itsregister of members, shall be a member of the company.(3) Every person holding equity share capital of acompany and whose name is entered as beneficial owner inthe records of the depository shall be deemed to be amember of the concerned company." https://hcservices.ecourts.gov.in/hcservices/

8.15. Therefore, the second respondent, who has acted as apromoter of the Company, who has not been made as a subscriber of theMemorandum of Association but its representative was only made as afirst and permanent Director, has become a member by virtue ofSection 41(3) of the Act as an investor after the InvestmentAgreement dated 26.5.2006 has come into existence.8.16.I am, therefore, of the considered view, on the factsand circumstances of the present case and as submitted by the learnedSenior Counsel appearing for the appellants herein that the secondrespondent-investor has been a promoter of the first respondent-Company along with the petitioners. The said fact has been expresslyadmitted by the first petitioner himself, being a signatory to theMemorandum of Understanding dated 8.2.2006 entered between Maytas andNCC on the one hand and the second respondent and the firstrespondent-Company on the other hand. In the said agreement thefollowing clause is relevant:"Whereas, Maytas Nagarjuna Combine approached CreativeInfrastructure, a BOT Port development firm operatingfrom Chennai for assistance/joint participation in theBid process and Whereas, Creative Port Development Pvt.Ltd., is the project development company jointly floatedby Creative Infrastructure and Infrastructure ProjectDevelopment Fund (IDPF), a fund promoted by SREIInfrastructure Finance Limited, Kolkata."8.17. Inasmuch as it is specifically admitted that the secondrespondent has jointly floated the first respondent-Company alongwith the petitioners, there is nothing more required to show that thesecond respondent was a promoter jointly with the petitioners.8.18. My above view is fortified by the following decisions. InLydney and Wigpool Iron Ore Company v. Bird, 1886 [Vol.XXXIII] Ch.D.85, Lindley,L.J., while speaking about the term "promoter" observedas under:"... for the word "promoter" is ambiguous, and it isnecessary to ascertain in each case what the so-calledpromoter really did before his legal liabilities can beaccurately ascertained. In every case it is better tolook at the facts and ascertain and describe them asthey are"It was further held that: https://hcservices.ecourts.gov.in/hcservices/ ".... Although not an agent of the company nor a trusteefor it before its formation, the old familiar principlesof the law of agency and of trusteeship have beenextended, and very properly extended, to meet suchcases; and using the word "promoter" to describe aperson acting as James Bird did, it is perfectly wellsettled that a promoter of a company is accountable toit for all moneys secretly obtained by him from it justas if the relationship of principal and agent or of thetrustee and cestui que trust had really existed betweenthem and the company when the money was so obtained.Nor in such a case is it necessary for the company torescind the whole transaction of which the payment bythe company of the money in question is found to bepart."8.19. The Court of Appeal in Twycross v. Grant and others, 1877[Vol.46] LJ QB 636, while deciding about the status of promoters inissuing prospectus of the company, in the words of Cockburn, CJ, heldas under:"... The question as to when one, who in the outset wasa promoter of a company, continues or ceases to be so,becomes, therefore, as it seems to me, one of fact. Apromoter, I apprehend, is one who undertakes to form acompany with reference to a given project, and to set itgoing, and who takes the necessary steps to accomplishthat purpose."8.20. This Court in G.Thiruvenkatachariar, Official Liquidatorof the National Live Stock Registrtion Bank Ltd. (In liquidation) v.A.T. Velu Mudaliar and Anr., [1937] 2 MLJ 820, after referring to thedecision in Twycross v. Grant and others, referred supra, in thewords of Alfred Henry Lionel Leach, CJ. has held as under:"3. I will first discuss the question whether the firstrespondent can be deemed to be a promoter. In Twycrossv. Grant (1877) 2 C.P.D. 469 Cockburn, C.J., defined theword 'promoter ' as being one who undertakes to form acompany with reference to a given project, and to set itgoing, and to take the necessary steps to accomplishthat purpose. Other definitions have been given bylearned Judges from time to time, but it is impossibleto define accurately what is meant by the word"promoter". The difficulty is discussed at length by thelearned author of Palmer's Company Precedents at pages103 to 109. After referring to a number of the moreprominent cases the learned author observes at page 106: https://hcservices.ecourts.gov.in/hcservices/ It is obvious, therefore, that a person who originatesthe scheme for the formation of the company, has thememorandum and articles prepared, executed andregistered, and finds the first directors, settles theterms (if any), and makes arrangements for advertisingand circulating the prospectus and placing the capital,is emphatically a promoter in the fullest sense. Hecontrols the formation and future of the company, and itis this control which lies at the root of the fiduciaryrelation of the promoter to the company. Nor is he theless a promoter if all or most of these activities areperformed nominally by a company which he controls.But a person who has done much less than this--takes amuch less prominent part--may bring himself within themeaning of the term and may be held liable as apromoter.4. Each case must be decided according to the evidence.If it is clear that the persons charged were merelyservants or agents of the promoters or servants oragents of the company they cannot be classified aspromoters, and in this connection the learned authormakes mention of brokers, bankers and solicitors. Ofcourse, brokers, bankers and solicitors could putthemselves in the position of being promoters, but inorder to do so they would have to travel outside theirordinary spheres."8.21. In D.R.Patel v. A.S.Dimellow, AIR 1961 MP 4, whilespeaking about promoters, it was held as follows:"9. ...... This principle of the promoter's personalliability is only a fair one. Otherwise, a third partywho does something at the instance of a promoter will beobliged to run after the company with which he has nonexus and can have no nexus, until with his consent ittakes over the promoter's liability."8.22. A Division Bench of this Court in The Weavers MillsLimited, Rajapalayam v. Balkis Ammal and Others, AIR 1969 Madras 462=[1969] 2 MLJ 509, summed up the position of Promoter as under:"16. There is very little guidance in the Companies Act,1913 and the new Act to decide the question before us. https://hcservices.ecourts.gov.in/hcservices/ One of us in W. P. Nos. 475, 555 and 1249 of 1960 (Mad),Nandi Transport (P.) Ltd. v. S. T. A. T., had occasionto consider in a different context the legalimplications in relationship of a promoter and thecompany under incorporation. There was there anelaborate consideration of that matter with reference toauthorities, A Division Bench in appeal W. A. Nos. 85and 86 of 1963 (Mad), Palaniswami v. Nandi Transports(P.) Ltd., and etc, arising out of those petitions alsocovered the question in some detail. But, for ourpresent purpose, we think it is not necessary to coverthe entire ground. A pro-motor according to Cockburn C.J. in Twycross v. Grant. (1877) 2 C. P. D. 469 is onewho undertakes to form a company with reference to agiven project and to set it going and who takes thenecessary steps to accomplish that purpose. 6 Halsbury'sLaws of England, 3rd Edn, page 91 and Palmer's CompanyLaw 19th Edn. 322, elaborate this idea. In the writpetitions, one of us after referring to theseauthorities summed up the position of a promoter :--"A 'Promoter' therefore, is a compendious termgiven to a person who undertakes, does and goesthrough all the necessary and incidentalpreliminaries, keeping in view the objects, tobring into existence an incorporated company.This process leading to the genesis of a companymay include a variety of things, not the least ofthem, I think, being some of the steps taken by apromoter to ensure commencement, within areasonable time, of the business, for thecarrying on of which the company is formed. Hemakes purchase of moveable and immovable assets,enters into contracts involving rights andobligations and applies to authorities for avariety of things, all on behalf of the companyto be formed"8.23. At this juncture, it is also relevant to point out thatthe concept of promoter as enunciated in the Securities ExchangeBoard of India (Disclosure and Investor Protection), 2000 is mostlyfrom the disclosure perspective. Some of the basic duties which thepromoter has towards the company are: (i) he must not make any secretprofit out of the promotion of the company; and (ii) he must makefull disclosure to the company of all relevant facts material to anytransaction made by him with the company and thereby use his positionfairly and reasonably and in the interest of the company and must https://hcservices.ecourts.gov.in/hcservices/ abstain from exercising undue influence and fraud.9.1. The Company Law Board under the impugned order dated27.5.2009 has chosen to rely upon the contents of the InvestmentAgreement dated 26.5.2006 to conclude that the second respondent isnot a promoter for the purpose of the Act. The said InvestmentAgreement was entered into between the second respondent being "VCInvestor", which is an Infrastructure Project Development Fund, ascheme of SREI Venture Capital Trust and the petitioners, referred toas Promoters, as seen in Schedule-I of the Investment Agreement basedon the number of shareholdings. Clause 15.5 of the said InvestmentAgreement relied upon by the Company Law Board for holding that thesecond respondent is not a promoter is as follows:"15.5. PROMOTER: Notwithstanding anything set out inClause 15.2 the VC Investor shall at no point in time beconsidered/deemed to be the "promoters" (as defined inthe SEBI Guidelines for Disclosure and InvestorProtection and in the Companies Act) of the Company."9.2. The term "Promoter" under SEBI (Disclosure & InvestorProtection) Guidelines, 2000 is in the form of instruction issued toMerchant Bankers relating to issue of capital issue from time to timeby Primary Market Development. By the Guidelines of 2000, the rightsand liabilities of the promoters as per the SEBI Guidelines have beendemarcated to the effect that the promoters contribution for publicissues by unlisted as well as listed companies has been made uniformat 20% in respect of issue size. Likewise, in respect of offer forsale of securities of unlisted companies, the promoters shareholdingsubject to lock-in has been increased to 20%, apart from making itclear that all securities issued to the promoters not forming part ofpromoters contribution are locked-in for a period of three yearswhether issued to the promoters or persons other than promoters. Theobligations of such promoters as per the SEBI Guidelines, as amendedin the Guidelines 2000, are as follows:"5.3.5 Undertaking5.3.5.1 The issuer shall submit an undertaking to theBoard to the effect that transactions in securities bythe `promoter', the 'promoter group' and the immediaterelatives of the promoters during the period between thedate of filing the offer documents with the Registrar ofCompanies or Stock Exchange as the case may be and thedate of closure of the issue shall be reported to thestock exchanges concerned within 24 hours of thetransaction(s). https://hcservices.ecourts.gov.in/hcservices/

5.3.6 List of Promoters’ Group and other Details.5.3.6.1 The issuer company shall submit to the Board thelist of the persons who constitute the Promoters’ Groupand their individual shareholding.5.3.6.2 The issuer company shall submit to the StockExchanges on which securities are proposed to be listed,the Permanent Account Number, Bank Account Number andPassport Number of the promoters at the time of filingthe draft offer document to them."9.3. In fact, it is based on the said Guidelines, in theInvestment Agreement Clause 11.7 contains an indemnity clause by thepetitioners in favour of the second respondent by treating thepetitioners as promoters and the second respondent as VC Investor,which is as follows:"11.7. INDEMNIFICATION: The Promoters and the Companyhereby agree jointly and severally to indemnify and keepindemnified the VC Investor and each of its Affiliatesand agree to hold each of them harmless from and againstany and all damage (including any claim, charge, action,depletion or diminution in value of the assets of theCompany or the Ordinary Shares), loss, liability andexpense (including, without limitation, reasonableexpenses of investigation and reasonable attorneys' feesand expenses in connection with any action, suit orproceeding) (hereinafter referred to as "Loss") incurredor suffered by the VC Investor or any of its Affiliatesarising out of any misrepresentation or breach ofwarranty, covenant or agreement made or to be performedby the Promoters or the Company pursuant to thisAgreement."9.4. Therefore, the term "Promoter" as per SEBI Guidelines isonly in respect of the instructions to Merchant Bankers relating toissue of capital with various stipulations, including the rights andobligations of the promoters, which is evident from the very Clause11.7 of the Investment Agreement, wherein the petitioners indemnifythe second respondent and to that extent of indemnity towards thesecond respondent, the petitioners are treated as promoters as perthe SEBI Guidelines. Otherwise, it cannot be said that thepetitioners alone are promoters within the concept of Corporate Law.9.5. In fact, the petitioners are termed as promoters only forthe purpose of safeguarding the interest of the second respondent andto that limited extent as per the lock-in period mentioned in theSEBI Guidelines and that has been consciously incorporated under https://hcservices.ecourts.gov.in/hcservices/ Clause 15.8 of the Investment Agreement as follows:"Clause 15.8. LOCK IN PERIOD: The Promoters undertake tosubmit such number of shares for lock-in as may berequired under the SEBI Guidelines for Disclosure andInvestor Protection prevailing at that time and/or anyother regulatory authority. In the event that the VCInvestor' are considered to be promoters of the Companyunder any regulation then in force, due to theirshareholding in the Company exceeding a certainpercentage or otherwise, the Promoters agree tonegotiate a solution to ensure that the VC Investor arenot considered "promoters" including without limitation,purchasing from the VC Investor, such excess number ofshares, which would otherwise be required to besubmitted for lock-in by the VC Investor."9.6. By the said Clause, the petitioners have specificallyexcluded the second respondent within the meaning of promoters of theCompany to ensure that the second respondent, as Venture CapitalInvestor, is not considered as a promoter without limitation andtherefore, the term "promoter" has been restricted towards thepetitioners alone only to safeguard the interest of the secondrespondent-Investor.9.7. The Company Law Board in the impugned order itself narratesabout various protections which are conferred to VC Investor undervarious clauses of the Investment Agreement, but has chosen to statethat the letter and spirit of the Investment Agreement does notsupport the plea that the second respondent is a joint promoter ofthe Company. This is certainly an erroneous finding. The furtherfinding by the Company Law Board that the fourth respondent was madea permanent Director of the first respondent-Company pursuant to theInvestment Agreement and not at the time of formation of the Companyis also factually incorrect, since, on record, it is shown in theMemorandum and Articles of Association of the first respondent-Company that the fourth respondent is the first and permanentDirector of the first respondent-Company even at the time of itsinception, namely on 6.2.2006. The manifest error committed by theCompany Law Board in this regard by not distinguishing the status ofa person as a promoter in the incorporation of the Company and theterm "promoter" for the purpose of SEBI Guidelines is a patent errorand is a total mis-appreciation of the terms of the InvestmentAgreement in relation to the term "promoters".9.8. By applying the General Law of Corporations which has been https://hcservices.ecourts.gov.in/hcservices/ consistent from the beginning to the facts and circumstances of thepresent case, as narrated above, during the pre-incorporation stageof the first respondent-Company, it has to be necessarily held thatthe second respondent-Company has jointly floated the firstrespondent-Company, as it is seen in the Memorandum of Understandingdated 8.2.2006, which was just two days after the incorporation ofthe first respondent-Company along with the petitioners. The secondrespondent and also the first respondent-Company have specificallyadmitted that the Creative Port Development Private Limited as aProject Development Company jointly floated by CreativeInfrastructure (the petitioners partnership) and the InfrastructureProject Development Fund (IPDF), a fund promoted by SREIInfrastructure Private Limited, Calcutta, which is the sixthrespondent to which the second respondent is a wholly ownedsubsidiary.9.9. Therefore, on law, this is a patent error committed by theCompany Law Board in holding as if the second respondent cannot betreated as a promoter for the purpose of the Act, ignoring the factthat the Investment Agreement intends to magnify the petitioners aspromoters only to protect the second respondent-Investor and thatitself shall not take away the real fact as admitted between theparties and the Memorandum of Understanding dated 8.2.2006 whereinthe parties have specifically admitted the joint participation of thesecond respondent in promoting the first respondent-company.9.10. Be that as it may, now that it is clear that the facts ofthe case show that it is not as if the second respondent is beingmade liable for any pre-incorporation liabilities either towards thepetitioners or towards any third parties or towards the firstrespondent-Company, the finding as to whether the second respondentis also a promoter of the first respondent-company is purelyacademic. In spite of the same the matter has been dealt with insome detail only for the purpose of making out the legal positionclear in respect of the conduct of the parties in the pre-incorporation stage.10.1. The Memorandum of Understanding dated 8.2.2006 enteredbetween Maytas Infra Private Limited and Nagarjuna Construction Co.Ltd. on the one hand and SREI Infrastructure Finance Limited and thefirst respondent-Company on the other hand, wherein the first twoparties are termed as MAYTAS-NAGARJUNA Combine, while the secondparties, viz., SREI Infrastructure Finance Limited and Creative PortDevelopment Pvt. Ltd., are jointly called SICP makes it clear thatMAYTAS-NAGARJUNA Combine were already qualified in the development ofMachilipatnam Port Project of Government of Andhra Pradesh and they https://hcservices.ecourts.gov.in/hcservices/ approached the Creative Infrastructure, the partnership of thepetitioners, for assistance and joint participation in the bidprocess and it was in those circumstances, the second party, asstated above, was considered to supplement the already qualifiedMAYTAS-NAGARJUNA Combine for submitting a proposal for development ofMachilipatnam Port Project on BOOT basis (build, own, operate andtransfer basis) and in that agreement there was a consensus to sharethe equity between MAYTAS-NAGARJUNA Combine and SICP at the rate of51:49, agreeing thereby that the said percentage will be adoptedafter the successful award of the project based on which a SpecialPurpose Vehicle (SPV) was agreed to be constituted. Out of the 49%allotted to SICP, the SICP has to identify the Port Operator to whom11% is to be given as an equity stake and accordingly, SaratChatterjee & Co. (VSP) Private Limited was identified as the PortOperator to whom 11% should go by retaining the remaining 38% betweenthe SICP.10.2. Under the said Memorandum of Understanding dated 8.2.2006,SICP has been entrusted with the responsibility of trafficstudies to assess the hinterland, apart from identifying andappointing technically competent agency for conducting bathymetry inthe identified region of the port mouth and for designing the portconcept layout and appointing a competent agency to assess andprepare traffic report in a phased manner, while MAYTAS-NAGARJUNAwere entrusted the responsibility for all strategic relations withthe Government and Port region information for bid finalization.10.3. It is also further agreed under the Memorandum ofUnderstanding, which was a pre-bid arrangement in respect of theMachilipatnam Port Project, that the Memorandum of Understanding willbe valid up to the earliest of the following two events:"10. This MOU will be valid up to the earliest of thefollowing event:•Rejection of the proposal submitted by the MaytasNagarjuna Combine & SICP led Consortium.•Entering into a more detailed shareholders'agreement between SICP and/or its associate andMaytas Nagarjuna Combine upon winning of the projectby the Consortium."10.4. On the same day, viz., 8.2.2006, there was anotherMemorandum of Understanding entered between the Consortium of Maytas https://hcservices.ecourts.gov.in/hcservices/ Infra Private Limited, Nagarjuna Construction Company Limited, SREIInfrastructure Finance Limited, Kolkata and Sarat Chatterjee & Co(VSP) Private Limited on the one hand and Creative Infrastructure,the partnership of the petitioners, on the other hand. The saidMemorandum of Understanding shows that it was MAYTAS as a lead memberof the Consortium, who along with Nagarjuna Construction CompanyLimited has submitted their bid for the Machilipatnam Port Project ofGovernment of Andhra Pradesh and were financially qualified, while tomake further proposal as per the stipulations laid down in theRequest for Proposal (RFP), having found that CreativeInfrastructure, partnership of the petitioners, have strong BOT PortDevelopment experience in the development of Kakinada Portprivatization, Dhamra Port development, Haldia Port Development,etc., sought support from Creative Infrastructure in the biddingprocess and subsequently, on the development of the port uponsuccess.10.5. In that Memorandum of Understanding also it is stated thatthe Creative Infrastructure, the partnership of the petitioners,shall undertake the traffic study for the proposed port atMachilipatnam and develop a phased market plan and the said Creativeshall associate with the Consortium till the award of the project andupon successful award till commencement of commercial operations ofthe port on the terms to be mutually agreed.10.6. It was in accordance with the combined effect of the saidtwo Memorandums of Understanding dated 8.2.2006, a ConsortiumAgreement came to be entered on 25.3.2006 among M/s.Maytas InfraPrivate Limited as a first party, M/s.Nagarjuna Construction CompanyLimited as a second party, M/s.SREI Infrastructure Finance Limited,the second and sixth respondent, as a third party and M/s.SaratChatterjee & Co. (VSP) Private Ltd., as a fourth party.10.7. In the Consortium Agreement dated 25.3.2006, neither thepetitioners nor the first respondent-Company are parties, while thesecond and sixth respondents are parties to the same. It is in thesaid Consortium Agreement, the advertisement of the Government ofAndhra Pradesh (GOAP) calling for Expression of Interest (EOI) dated26.9.2005 and 8.10.2005 in respect of the selection of a Developerfor Machilipatnam Port was stated as under:"The Transport, Roads & Buildings (Ports) Department,Government of Andhra Pradesh hereinafter referred to as"GOAP", invites sealed proposals for Development of amodern, multipurpose, all weather, deep water port atMachilipatnam in Krishna District, Andhra Pradesh,India, on BOOT (Build, Own, Operate and Transfer) basis,hereinafter referred to as "PROJECT"." https://hcservices.ecourts.gov.in/hcservices/

10.8. The contents of the earlier Memorandums of Understandingdated 8.2.2006 that MAYTAS and NAGARJUNA Combine have submittedExpression of Interest is mentioned in the following words in theConsortium Agreement:"The proposals are due for submission on 29th March 2006and in the line with the requirements of the proposaland so as to make a strong and competitive proposal theshortlisted Consortium has inducted additional memberswith a view to strengthen the Consortium with portspecific experience and also fulfilling certainstipulations of the RFP."This shows that in order to fulfill Request for Proposals additionalmembers are inducted, which probably means the induction of theCreative Infrastructure, namely the partnership of the petitionersand may also include SICP, namely the combination of the sixthrespondent and the first respondent, as stated in the Memorandum ofUnderstanding dated 8.2.2006, referred above.10.9. Even though such clause about the additional members isprovided in the said Consortium Agreement under which a SpecialPurpose Company (SPC) was agreed to be incorporated on award ofcontract by the Government of Andhra Pradesh to the Consortium toundertake the project, the nominated members of the Consortium arestated as follows:"a. Mr.T.Nagarjuna ..MAYTAS b. Mr.Chiranjeevi Rao..NCC c. Mr.T.K.Bharathan..SREI d. Mr.B.Rama Gopal..SCC"10.5. It is also specifically stated in Clause No.5 of theConsortium Agreement that "it is agreed that the Members of theConsortium shall be jointly and severally liable for theimplementation of the PROJECT". There is also an arbitration clauseunder the Consortium Agreement, further stating that the ConsortiumAgreement shall be terminated on the happening of following twoevents:"a. Rejection of the Bid submitted by the Consortium.b. Upon formation of the SPC and subscribing to theequity in the SPC in the proportion mentioned in clauseNo.4 above." https://hcservices.ecourts.gov.in/hcservices/

10.6. Under Clause 4 of the Consortium Agreement theshareholdings and roles and responsibilities of each member in theSPC after the same is incorporated on award of contract by theGovernment of Andhra Pradesh was stated as follows:MAYTAS40% (forty)Lead Member/Developer/ContractorNCC11% (eleven)Member/Co-Developer/ContractorSREI38% (thirtyeight)Member/Co-Developer/TerminalMarketingSCC11% (eleven)Member cum O&M operator10.7. Admittedly, this Consortium Agreement does not containeither the petitioners as partners or the first respondent-Company asparties. While it is the contention of the petitioners that theMachilipatnam Port Project of Government of Andhra Pradesh is theproject of the first respondent-Company, the reason given in notincluding the first respondent-Company either in the Memorandum ofUnderstanding dated 8.2.2006, wherein Creative Infrastructure,partnership, is alone made as a party, or in the Consortium Agreementdated 25.3.2006 is that the first respondent-Company was in theinfant stage having been incorporated only on 6.2.2006 and therefore,its name has not been incorporated, but still the first respondent-Company is one of the parties to the project.10.8. The contents of the email dated 28.3.2006 sent by thesecond and sixth respondents to the first respondent-Company, reliedupon by the petitioners to substantiate that even though under theConsortium Agreement in respect of the Machilipatnam Port Projectdated 25.3.2006 the first respondent-Company was not a party, thefirst respondent forms part of the project, is as follows:"All payments to consultants etc vil have to be paidfrom CPDP, SREI vil fund CPDP for such expenses as loan.I m working out the modalities of the investment inCPDP. This being year end, vil probably transfer fundsin first week of April.The bill u sent is related to Machilipatnam port whichis jointly done by us and Maytas. Isn't this billsupposed to be borne by the concerned JV. Also what isthe total pre op cost for this project ?? https://hcservices.ecourts.gov.in/hcservices/ Best regards:Bajrang Kumar ChoudharyVice PresidentSREI Infrastructure Finance Limited86C, Topsla Road (South)Kolkata-700 046."It is to be remembered that at the time of the said email, theInvestment Agreement dated 26.5.2006 between the second respondentand the petitioners has not come into existence. 10.9. It was on 20.1.2007, the Government of Andhra Pradeshissued a Letter of Intent (LOI) to M/s.Maytas Infra Private Limited,Hyderabad directing the said Maytas to furnish performance securityfor Rs.10 Crores based on the Request for Proposal (RFP) document inthe form of an unconditional and irrevocable bank guarantee from ascheduled bank in India acceptable to Government of Andhra Pradeshand also directed Maytas to pay Rs.1 Crore as project developmentfund, of which 50% was to be paid at the time of signing theConcession Agreement as first instalment and the balance as secondinstalment on the date of financial closure.10.10. The email of the first respondent-Company dated 12.4.2006addressed to Mr.Farooque refers to the Consortium Agreement to besigned among the Consortium members and it also refers to variousfinancial particulars about the Members of the Consortium signed bythe Company Secretary or Auditor or Chartered Accountant, etc. But,by the time the said email was sent by the first respondent-Company,the Consortium Agreement has already been signed in respect ofMachilipatnam Port Project on 25.3.2006 itself, in which neither thefirst respondent nor the petitioners were made as parties. It showsthat without the knowledge of the Consortium Agreement, the firstrespondent has chosen to send the said email on 12.4.2006.10.11. The email of Bajrang Chowdhary, Vice President, SREIInfrastructure Finance Limited, dated 3.5.2006 addressed to the firstrespondent shows that there has been some exchange of views betweenthe petitioners on behalf of the first respondent-Company and thesecond and sixth respondents and during the course of the discussionthe contents of the Investment Agreement have been considered, while,on fact, the Investment Agreement has not come into existence on thesaid date and was entered only on 26.5.2006.10.12. The Government of Andhra Pradesh by letter dated 8.5.2006addressed to Maytas asked for certain clarifications regarding the https://hcservices.ecourts.gov.in/hcservices/ technical proposals titled "project design/ construction/development/ operation / management experience for similar portprojects". The clarification required by the Government of AndhraPradesh runs as follows:"Bidder has furnished details of experience of CreativeInfrastructure with whom only a Memorandum ofUnderstanding is signed. They do not form a part of theConsortium. However, the main capability of theConsortium for port development is claimed from thiscompany. Therefore, Bidder should submit a definitecommitment from Creative Infrastructure." 10.13. The above said clarification required by the Governmentof Andhra Pradesh shows that there has been some communication fromMaytas to the Government regarding the experience of the CreativeInfrastructure based on the Memorandum of Understanding dated8.2.2006 and the Government was conscious that CreativeInfrastructure was not a party to Consortium and insisted for adefinite undertaking or commitment from the Creative Infrastructure.The said letter also shows that the Government has not required suchcommitment from the first respondent-Company, but from thepetitioners as partners of Creative Infrastructure based on theirtechnical competency. Even though by the time the letter was sent bythe Government on 8.5.2006 the first respondent-Company has alreadycome into existence on 6.2.2006 itself, there is no reference aboutthe first respondent-Company in the said letter dated 8.5.2006.10.14. While replying the said letter of the Government ofAndhra Pradesh dated 8.5.2006, the second and sixth respondents,through its Vice President – Bajrang Choudhary, in the letter dated19.5.2006, has stated as under:"With reference to your letters mentioned above and withspecific reference to point no.18 therein, we wish toclarify that we are a member of the consortium for thisproject. Our share in this project would be undertakenthrough a Special Purpose Port Development Vehicle namedCreative Port Development Company Private Limited(CPDP), wherein M/s.Ramani Ramaswamy and R.Rangarajan(joint promoters of Creative Infrastructure) holdsubstantial stake as individual investors and primepromoters of the company. Therefore the ownersM/s.Ramani Ramaswamy and R.Rangarajan of M/s.CreativeInfrastructure would have a direct commitment in thedevelopment of Machilipatnam Port. This is further tothe already signed MOU between Creative Infrastructureand the Consortium for the development & operation of https://hcservices.ecourts.gov.in/hcservices/ the Port.This we hope would clarify the commitment and bindingnature of Creative Infrastructure's role in thedevelopment of the port for the Consortium."10.15. No doubt, it is true that in this letter dated 19.5.2006,the said respondents have referred to the first respondent-Companystating that it would undertake the project as a Special Purpose PortDevelopment Vehicle and that the petitioners are holding substantialstake as prime promoters of the said Company. The said letter,however, states that the petitioners, as partners of CreativeInfrastructure, would have commitment in the development of theMachilipatnam Port Project, thereby referring to the Memorandum ofUnderstanding already entered between the Consortium and CreativeInfrastructure dated 8.2.2006, referred supra.10.16. In the reply dated 24.5.2006 to the clarification assought for by the Government of Andhra Pradesh in its letter dated8.5.2006, the Lead Member – Maytas has clarified about theconstitution of SREI Infrastructure Finance Limited with a list ofits Directors, apart from the list of Key Management Personnel ofMaytas and various particulars about Sarat Chatterjee & Co. (VSP)Private Limited have been given with all technical particularsregarding the staff in the management as well as the skilled workerslevel, apart from tariff structure and in respect of Point No.18,Maytas have informed the Government as follows:"As mentioned in our bid document, an MOU has beenentered into with Creative Infrastructure forassisting/advising us in port development.This MOU shall be converted into an agreement upon awardof the project."10.17. Obviously, Maytas has referred about the secondMemorandum of Understanding dated 8.2.2006 entered between Maytas asLead Member and the petitioners as Creative Infrastructure(partners). In the said clarification, there are absolutely noparticulars given about either the first respondent-Company or aboutthe petitioners themselves as partners of Creative Infrastructure inrespect of Machilipatnam Port Project, except referring about thesecond Memorandum of Understanding dated 8.2.2006, as stated above. https://hcservices.ecourts.gov.in/hcservices/

10.18. It is relevant to remember that at that stage the secondand sixth respondents – SREI has 38% share in the Machilipatnam PortProject as per the Consortium Agreement dated 25.3.2006.10.19. As stated above, while awarding contract in respect ofthe Machilipatnam Port Project, the Government of Andhra Pradesh hasgranted it only to Maytas and in the said order dated 20.1.2007 thereis nothing to show that the grant of project to Maytas is dependingupon the participation of the first respondent-Company.10.20. It was in that background, the Investment Agreement cameto be entered on 26.5.2006 between the newly constituted scheme ofSREI Venture Capital Trust called Infrastructure Project DevelopmentFund, the trust having been incorporated and registered as VentureCapital Fund under SEBI (Venture Capital Funds) Regulations, 1996called as "VC Investor" represented by the second respondent, whichis a company registered under the provisions of the Act, asInvestment Manager of VC Investor as a party of the first part, thepetitioners referred to as promoters as a party of the second partand the first respondent-Company as a party of the third part.10.21. As per the said Investment Agreement, in addition to thepresent paid up equity share capital of the first respondent-Companywhich was Rs.3 Lakhs comprising in 30000 ordinary shares which weresubscribed to by the petitioners as its promoters - each 15000shares, VC Investor has agreed to subscribe to 70000 equity shares asfresh shares of face value of Rs.10/- each aggregating to the freshshare capital of Rs.7 Lakhs, thereby making VC Investor, representedby the second respondent-Company as its Investment Manager, as 70%shareholder in the first respondent-Company, while the shareholdingsof the petitioners as promoters remained as 30%.10.22. The said Investment Agreement also defines CreativeInfrastructure as partnership firm consisting of the petitioners andrefers to the second respondent-Company as an Investment Manager ofthe Infrastructure Project Development Fund. The term "ProjectDevelopment Expenses" is defined as:"1.1.33. "Project Development Expenses", means theexpenses incurred by the Company to operate, identify,develop and procure the identified Projects eitherthrough the MOU route or through Tender participation orany other innovative process." https://hcservices.ecourts.gov.in/hcservices/

10.23. As per Schedule-5 of the said Investment Agreement, thefourth respondent, who has been termed as First and PermanentDirector in the Memorandum and Articles of Association of the firstrespondent-Company, was recognized as a nominee Director ofInfrastructure Project Development Fund with two more nomineedirectors. It is not in dispute that the third and fifth respondentswere nominated by the Infrastructure Project Development Fund as theDirectors, who were of course nominated only pursuant to theInvestment Agreement dated 26.5.2006, while the already existingpermanent Director, viz., the fourth respondent, who was nominatedfrom the date of incorporation of the first respondent-Company, hasbeen re-designated as nominee Director of Infrastructure ProjectDevelopment Fund after the Investment Agreement has come intoexistence.10.24. Under the Investment Agreement, which in effect has madesome change in the basic documents of the first respondent-Company,one of the petitioners was made to continue as the Managing Directorand the VC Investor was empowered to nominate the Directors based onwhich the nominations have been made and the management has beenvested with the Board consisting of the Directors, including thenominee Directors of the second respondent. Clause 8 of theInvestment Agreement confers rights to VC Investor, which shows thatthe management of the first respondent-Company is under its control,while the Managing Director post remains with one of the petitioners.The financial control of the petitioners has been restricted to theminimum of 30% of the issued and paid up capital of the company atall times.10.25. The pre-emption right of the petitioners as promoters ofthe first respondent-Company has been waived under the terms of theInvestment Agreement. As enumerated above, Clause 11.7 of theInvestment Agreement indemnifies VC Investor jointly by thepetitioners and the first respondent-Company in respect of any lossor liability or expenses incurred by VC Investor by the conduct ofthe petitioners as well as the first respondent-Company.10.26. In respect of the powers of the Board of Directors,Clause 13 of the Investment Agreement makes it clear that anydecision or resolution of the Board which may affect the borrowing,amalgamation, etc. shall be with the concurrence of VC Investor'sDirector voting in favour of such resolution, which includes anychange in the corporate name, address of the company or any of itsdivisions, branches, works or offices, etc., as it is seen in Clause13.1.9. https://hcservices.ecourts.gov.in/hcservices/

10.27. Clause 16 of the Investment Agreement relates to theundertakings of the VC Investor in providing of financial support tothe Company and the undertakings of the Key Promoters to the VCInvestors that they would devote their full time for the business ofthe Company and the petitioners are to concentrate on the project ofthe first respondent, except three projects, viz., (i) M/s.MargConstructions Limited; (ii) M/s.Rajakkamangalam Thurai DevelopmentTrust; and (iii) M/s.Thengapattinam Fishing Harbour DevelopmentTrust, in respect of which the Creative Infrastructure, partnershipof the petitioners, has already entered agreements.10.28. As per Clause 17 of the Investment Agreement, in theevent the petitioners, being promoters, want to sell their shares,the pre-emption right has been given to VC Investor.10.29. There is also a clause regarding dispute resolution andarbitration under Clause 23 of the Investment Agreement. It is alsostated that in cases where there is conflict between the terms of theagreement and the Memorandum and Articles of Association and the newMemorandum and Articles of Association provided in the agreement, thenew Memorandum and Articles of Association as per the agreement shallprevail.10.30. Therefore, an overall reading of the Investment Agreementmakes it clear that it is by virtue of the investment made by VCInvestor, through the second respondent, the second and sixthrespondents developed a control over the first respondent-Company andthe funding agreed by VC Investor is in respect of the projects ofthe first respondent-Company. The Investment Agreement nowherespeaks about either the Machilipatnam Port Project about whichvarious terms have been discussed admittedly between Maytas and thesecond respondent, in which the second respondent has joined thepetitioners either as partners of Creative Infrastructure orotherwise, or about the Subarnarekha Port Project.11.1. As stated above, the Government of Andhra Pradesh hasgranted the project to the Lead Member of the Consortium – Maytas asper its letter dated 20.1.2007 and required Maytas to furnish aperformance security of Rs.10 Crores. Pursuant to the said letter,it is seen that Maytas in the letter dated 25.1.2007 addressed to theGovernment of Andhra Pradesh has enclosed the performance securityamount of Rs.10 Crores in the proper format provided by Maytas andNagarjuna Construction Company equally on behalf of the consortiumand seeking permission to replace the said two guarantees with https://hcservices.ecourts.gov.in/hcservices/ guarantees from all four members of the consortium equally, namelyMayta, NCC, SREI and SARAT.11.2. In the letter of the second respondent dated 15.3.2007addressed to the Government of Andhra Pradesh, while referring to theConsortium Agreement dated 25.3.2006 and also the Memorandum ofUnderstanding dated 8.2.2006, in addition to the clarification issuedby Maytas in the letter dated 24.5.2006, the second respondent hasinformed the Government of Andhra Pradesh that the petitioners asowners of M/s.Creative Infrastructure have direct commitment in thedevelopment of the said port. 11.3. By the subsequent letter dated 21.6.2007 addressed to theGovernment of Andhra Pradesh, the second respondent has reiteratedthat the 38% obligation of the consortium member, viz., SREI will bethrough the first respondent-Company, which is based on theInvestment Agreement dated 26.5.2006 entered between the secondrespondent and the petitioners along with the first respondent-Company.11.4. By letter dated 10.7.2007, Maytas, viz., the Lead Memberof the Consortium to whom the contract has been awarded by theGovernment of Andhra Pradesh in respect of Machilipatnam PortProject, have only forwarded the above said letter of the secondrespondent informing that the equity portion of 38% of SREI forMachilipatnam Port Project will be through the Creative PortDevelopment Company as an associate of the second respondent.11.5. The Government of Andhra Pradesh in its letter dated15.6.2007 addressed to Maytas, obviously referring to the letter ofthe second respondent through Bajrang Chowdhary, Vice President, SREIInfrastructure Finance Limited dated 19.5.2006 straight-awayaddressed to the Government of Andhra Pradesh and the subsequentletter dated 15.3.2007 has informed, by referring to Clause 4.4 ofRequest for Proposal (RFP) issued to the bidders, that any change inthe consortium without approval of the Government would lead todisqualification of the bidder and that any communication can be madeonly through the Lead Member Maytas to whom the contract has beenawarded.11.6. While there is no difficulty to construe that the secondrespondent being one of the members of the Consortium Agreement dated25.3.2006 is bound to meet 38% in respect of the Machilipatnam PortProject with Lead Member-Maytas, it has been only the case of thesecond respondent that under the Investment Agreement between it andthe petitioners and the first respondent, the petitioners and the https://hcservices.ecourts.gov.in/hcservices/ first respondent being experts should also meet the liabilities.That itself cannot be construed to mean that Machilipatnam PortProject which has been awarded to the Lead Member-Maytas, on behalfof the consortium to which the second respondent is a member, is aproject of the first respondent-company, while admittedly neither thepetitioner nor the first respondent is a member of the consortium.11.7. It was after referring to the letter of the Government ofAndhra Pradesh dated 15.6.2007, quoting Clause 4.4. of the Requestfor Proposal threatening to cancel the contract, the secondrespondent by subsequent letter dated 6.11.2007 addressed to theGovernment of Andhra Pradesh has withdrawn its earlier letter dated21.6.2007. It is this letter which is sought to be the reason forthe petitioners to agree for making exit of the second respondentfrom the first respondent-Company completely by fearing that the newproject from Orissa, viz., Subarnarekha Port Project also would bespoiled by improper funding of the second respondent. 11.8. It is the case of the petitioners that it was due to thatreason the new Memorandum of Understanding was entered on 14.11.2007and that was alleged to be a conduct of oppression on the part of thesecond respondent, being a majority shareholder of the firstrespondent-Company. The oppression sought to be raised against thesecond respondent in this regard was that due to the non-funding ofMachilipatnam Port Project, the petitioners as well as the firstrespondent-Company had to be compelled to enter Memorandum ofUnderstanding on 14.11.2007 agreeing to part away a huge amount ofRs.52.50 Crores for Subarnarekha Port Project and for sale of theinterest held in Machilipatnam Port Project to the extent of Rs.35Crores. In fact, the pleadings in this regard show that thepetitioners have specifically pleaded that the conduct of the secondrespondent regarding Machilipatnam Port Project in not providing bankguarantee to the Government of Andhra Pradesh is only in breach ofthe Investment Agreement.11.9. It is relevant to point out that the petitioners and thefirst respondent-Company issued legal notice to Maytas-NCC statingthat they are interested in the Machilipatnam Port Project andwithout their consent the same should not be executed, marking copiesof the said notice to various officers of the Government of AndhraPradesh, including the Chief Secretary, Special Secretary toGovernment, Principal Secretary to the Chief Minister and PrincipalSecretary, Finance Department, Government of Andhra Pradesh. In thereply issued to the said legal notice on behalf of Maytas on5.3.2008, it has been made clear that neither the petitioners nor thefirst respondent-Company have any right or interest over the https://hcservices.ecourts.gov.in/hcservices/ Machilipatnam Port Project and are not the parties to ConsortiumAgreement dated 25.3.2006 and that a reference to the Memorandum ofUnderstanding dated 8.2.2006 is of no avail as in the subsequentConsortium Agreement dated 25.3.2006, the petitioners and the firstrespondent were not made parties, also stating that they are notparties to the Special Purpose Vehicle, viz., Vajra Seaport PrivateLimited.11.10. The Company Law Board while dealing with the said aspect,having found that the Consortium Agreement dated 25.3.2006 isconspicuously silent on the participation of the first respondent-Company in implementation of the Machilipatnam Port Project, hasrelied upon the contents of the Consortium Agreement that theconsortium has inducted additional members with a view to strengthenthe consortium with port specific experience and also to fulfill thestipulations of Request for Proposal and therefore, it should bedeemed that the additional members should be Creative Infrastructureas well as the first respondent-Company in terms of the Memorandumsof Understanding dated 8.2.2006, and has come to a conclusion thatthe Machilipatnam Port Project is the project of the firstrespondent-Company. 11.11. It is very strange that the Company Law Board to arriveat such a conclusion has relied upon a letter of Maytas dated22.4.2006 wherein a reference has been made to the expertise ofCreative Infrastructure, of which the petitioners are partners, andinasmuch as Creative Infrastructure has entered into a Memorandum ofUnderstanding on 8.2.2006 and by the communication of the secondrespondent dated 19.5.2006 and 15.3.2007 has made a commitment thatthe first respondent-Company, wherein the petitioners are holdingsubstantial stake, would have direct commitment in the development ofMachilipatnam Port Project, ignoring the fact that even by theconduct of the second respondent if it is incumbant on it as per theInvestment Agreement between it and the petitioners dated 26.5.2006,inasmuch as neither the petitioners nor the first respondent-Companyare, admittedly, members of the Consortium Agreement dated 25.3.2006,neither the petitioners nor the first respondent-Company can be mademembers of the Consortium to which the contract was awarded byGovernment of Andhra Pradesh.11.12. Again, in my considered view, the Company Law Board hascommitted gross error in concluding that the first respondent-Companyis a party to the award of the contract of Machilipatnam Port Projectby Government of Andhra Pradesh due to reason that Maytas, the Leadmember of Consortium Agreement has enclosed its letter of assuranceto the first petitioner and the second respondent in the email dated https://hcservices.ecourts.gov.in/hcservices/

17.5.2007 sent to the first respondent-Company and informed that SREIportion of equity would be contributed by the first respondent andtherefore, it should be presumed that the Machilipatnam Port Projectis that of the first respondent-Company. There is absolutely noreason for arriving at such a conclusion. Even assuming that thesecond respondent has taken a stand that as a member of theConsortium for which contract was granted its portion of contributionto the Machilipatnam Port Project will be contributed through thefirst respondent, the non-funding by the second respondent towardsthe project cannot at all be deemed as either a conduct oppressive tothe first respondent-Company or against the interest of its members.11.13. The further finding that the letter of intent dated20.1.2007 issued by the Government of Andhra Pradesh in favour ofMaytas, Lead Member of Consortium shall form part of the ConcessionAgreement dated 21.4.2008 between Government of Andhra Pradesh andVajra, and that it makes an unequivocal commitment of Maytas and thesecond respondent, acted upon by the petitioners and Government ofAndhra Pradesh and therefore, it should be presumed that thepetitioners as far as the first respondent-Company form part of theconsortium is certainly a perverse finding.11.14. A reference to the Concession Agreement dated 21.4.2008makes it very clear that the contribution of equity capital afterconcession is in the form of 51% for Maytas-NCC Combine and 49% forthe second respondent and Sarat Chatterjee & Co. (VSP) Pvt. Ltd. Theshareholding pattern is specifically stated as follows:"3.4. Shareholding Pattern in SPCThe Authorised Share Capital of the Special PurposCompany is Rs.1 Million. This maybe increased from timeto time if required. The subscribed capital of thisSpecial Purpose Company is Rs.1 Million.In the equity share capital of the Concessionaire, notless than 51% and 13% of the total subscribed equitycapital will be held by the lead member of theConsortium along with Nagarjuna Construction CompanyLimited and other Associate and Affiliate companies andPort Operator respectively, atleast till the expiry of 5years from the Commercial Operations Date.The equity capital of the Concessionaire shall becontributed by the Consortium Members by cash asfollows: https://hcservices.ecourts.gov.in/hcservices/ (a) Maytas Infra Ltd and (40%)(b) Nagarjuna Construction Company Limited (11%)Both (a) and (b) combined to contribute 51%, subject tominimum of 26% from (a)(c) SREI Infrastructure Finance Limited (38%) andSarat Chatterjee & Co. (Visakhapatnam) PrivateLimited (11%)The lead member of the Consortium shall have Controlover the Associate and Affiliate companies as shown in(b) above. "Control" shall mean:(i) control over the appointment and removal ofmajority of the board of directors of thecompany; or(ii) control of at least 26% (twenty-six percent)of the issued equity share capital and votingpower of the company."11.15. There is nothing to presume under the ConcessionAgreement as if the first respondent-Company or the petitioners asCreative Infrastructure have become party to the awarding of contractby Government of Andhra Pradesh in respect of Machilipatnam PortProject. Merely because there is a private agreement between thesecond respondent and the petitioners and the first respondent-Company for the purpose of financing under the Investment Agreement,in the absence of any proof to show that the Machilipatnam PortProject has been awarded to the first respondent-Company, it cannotbe held by any stretch of imagination that even in the absence of anycontribution by the second respondent towards its share under theConcession Agreement to the Government of Andhra Pradesh, by sharingwith Maytas, the lead member, the same can be taken as an oppressionon the part of the second respondent towards the first respondent-company based on the Investment Agreement dated 26.5.2006. In suchcircumstances, the withdrawal of an earlier letter by the secondrespondent addressed to the Government of Andhra Pradesh dated6.11.2007 is in no way connected with the first respondent-Companyand its objects and functions. https://hcservices.ecourts.gov.in/hcservices/

11.16. If that be so, the second respondent's letter ofwithdrawal cannot be taken as a failure of fiduciary responsibilityor suppression of any material fact made either by the secondrespondent or by the other respondents, who are the nomineedirectors. In such circumstances, the consequential finding by theCompany Law Board as if there is a loss caused to the business andprofit of the first respondent-Company has absolutely no meaning.11.17. A further reference to the letter of Vajra SeaportPrivate Limited dated 29.4.2008 calling upon the second respondent tocontribute the first call of Rs.19 Crores out of the total equityamount of 38%, which certainly proves the involvement of the secondrespondent in the project, cannot be a ground for the Company LawBoard to come a conclusion that the second respondent has proposed toexit from Machilipatnam Port Project for a consideration of Rs.52.50Crores based on an email communication of the third respondent dated30.10.2007.11.18. The email of the third respondent dated 30.10.2007addressed to Maytas with the following clause namely "it has beenagreed upon that a sum of Rs.15 Cr is to be paid on signing of thisagreement, and the balance of Rs.35 Cr within 7 days of theoccurrence of point no.3.2(b)" and the subsequent email by Maytasdated 3.11.2007 has been taken into consideration by the Company LawBoard to come to a conclusion that the second respondent and SarateChatterjee & Co. (VSP) Private Limited have agreed to sell theirequity shares held in Vajra in favour of Maytas and NCC and thesubsequent allotment of shares in Vajra to third parties as it isfound out from Form-2 dated 22.9.2008, are all not absolutelyrelevant for the purpose of deciding the issue about the oppressionstated to have been committed by the second respondent towards thefirst respondent-Company.11.19. The reliance placed by the Company Law Board on Section88 of the Indian Trust Act, 1882 for the purpose of arriving at aconclusion that the second respondent has obtained unjust benefit inthe Machilipatnam Port Project by not funding adequately and thesubsequent result of sale of its share towards Maytas and NCC amountsto breach of trust and therefore, the second respondent is liable torepay the 30% of benefit received out of the said conduct is totallyuncalled for. 11.20. As I have stated earlier, inasmuch as on admitted factsit is seen, as it is also found by the Company Law Board, that thefirst respondent-Company is not a party to the Consortium Agreement https://hcservices.ecourts.gov.in/hcservices/ to which the Government of Andhra Pradesh has granted the contract,the mere failure of the second respondent as one of the members ofthe consortium in fulfilling its obligation towards the Government ofAndhra Pradesh is only harmful to the lead member-Maytas to whom thecontract was granted and if in their process of negotiation thesecond respondent is asked to go out of the project for aconsideration, it cannot be said that the second respondent shoulddisclose his interest in the said project to the first respondent-Company or the petitioners, being its Directors. There is absolutelyno question of fiduciary relationship in this regard and theapplication of Section 88 of the Indian Trusts Act is totallymisconceived.11.21. It is relevant to point out that it is not even in thepleadings of the petitioners that in respect of Machilipatnam PortProject the second respondent and other respondents stood infiduciary relationship. There is nothing to show that MachilipatnamPort Project has been granted to Maytas based on the obligation ofthe second respondent towards the first respondent-Company under theInvestment Agreement dated 26.5.2006.11.22. Section 88 of the Indian Trusts Act reads as follows:"Section 88. Advantage gained by fiduciary - Where atrustee, executor, partner, agent, director of acompany, legal advisor, or other person bound in afiduciary character to protect the interests of anotherperson, by availing himself of his character, gains forhimself any pecuniary advantage, or where any person sobound enters into any dealings under circumstances inwhich his own interests are, or may be, adverse to thoseof such other person and thereby gains for himself apecuniary advantage, he must hold for the benefit ofsuch other person the advantage so gained."11.23. While making a director liable under the fiduciaryrelationship with the company, the conduct must be relating to theaffairs of the company. In any event, respondents 3 to 6 cannot bemulcted with the liability. Law is settled that duty to disclose onthe part of a Director in relation to his conduct towards the companyin fiduciary relationship and that the director should not bepermitted to retain the benefit of any contract entered on behalf ofthe company and such breach will be termed as violation of fiduciaryrelationship, as it was held by the Privy Council in Cook v.G.S.Deeks, AIR 1916 PC 161. The dictum laid down by the PrivyCouncil cannot be made applicable to the facts and circumstances ofthe present case to make respondents 3 to 6 liable under the conceptof fiduciary relationship. https://hcservices.ecourts.gov.in/hcservices/

11.24. Taking into consideration the overall picture that in theletter of intent by the Government of Andhra Pradesh dated 20.1.2007,the first respondent was not a party and contract was awarded only toMaytas, Lead Member of the Consortium, to which the second respondentis a party along with others, that in the Concession Agreement dated21.4.2008 entered between the members of Vajra and the Government ofAndhra Pradesh, the first respondent-Company is not a party, andneither the first respondent nor the petitioners conduct has everbeen discussed in the Concession Agreement and that apart fromMaytas, NCC and Sarat Chatterjee & Co. (VSP) Pvt. Ltd., it was onlythe second respondent who was a party, and that in the shareholdersagreement dated 3.3.2008, which is an agreement entered again betweenMaytas, NCC, SREI and Sarat Chatterjee & Co. (VSP) Pvt. Ltd., whereinthe Maytas-NCC Group and SREI-SCPL Group have been collectivelycalled as Vajra Sea Port Private Limited, the petitioners or thefirst respondent-Company is not a party and there is no referenceabout them anywhere in the said agreement, it is patently improperfor the Company Law Board to consequently direct respondents 2 to 6to reimburse in favour of the first respondent-Company 30% of allbenefits enjoyed by the second respondent from and out of theMachilipatnam Port Project as on 30.3.2008.11.25. A reference to the pleadings, especially relating to thefinding of the Company Law Board as if there is a breach of fiduciaryduty on the part of the respondents 2 to 6, shows that there isnothing in the Company Petition filed by the petitioners in thatregard. What is stated in the pleading in respect of MachilipatnamPort Project is that the second respondent pursuant to the obligationunder the Consortium Agreement with Maytas, NCC and Sarat has failedto contribute the amount of 38% to the Government of Andhra Pradesh,by which the benefit of the project could not be enjoyed by the firstrespondent-Company. That is merely based on the Memorandum ofUnderstanding dated 8.2.2006. Consequently, that has resulted in thepetitioners, who in the meantime got another project from Governmentof Orissa - Subarnarekha Port Project, feel that the secondrespondent would not fund in accordance with the Investment Agreementdated 26.5.2006 and out of that fear they were compelled to enterinto a Memorandum of Understanding dated 14.11.2007, thereby thesecond respondent has agreed to go out of the first respondent-Company on receipt of consideration of Rs.52.50 Crores and that it isthe only ground as far as the Machilipatnam Port Project is concernedas could be seen in the pleadings before the Company Law Board.11.26. In such factual situation, it cannot be said that thebreach of fiduciary relationship has been pleaded by the petitionerbefore the Company Law Board. Law is well settled as it was held bythe Supreme Court in Sangramsinh P.Gaekwad and others v. Shantadevi https://hcservices.ecourts.gov.in/hcservices/ P.Gaekwad (Dead) through Lrs. And others, [2005] 11 SCC 314=AIR 2005SC 809, by referring to a judgment of the Calcutta High Court in Inre Bengal Laxmi Cotton Mills Ltd., [1965] 35 CC 187 (Cal), that:"200. It is now well settled that a case for grant ofrelief under Sections 397 and 398 of the Companies Actmust be made out in the petition itself and the defectscontained therein cannot be cured nor the lacuna filledup by other evidence oral or documentary. (See BengalLuxmi Cotton Mills Ltd., In re,[1965] 35 CC 187 (Cal))"11.27. In the absence of such pleading regarding fiduciaryrelationship, the finding and the consequential decision of theCompany Law Board as directed in 9(ii) is perverse. In any event,making the nominated directors of the second respondent, namelyrespondents 3 to 5 liable to indemnify to the extent of 30% to thepetitioners is absolutely unwarranted and cannot be accepted by anystretch of imagination.11.28. The reliance placed on the judgment of the Madras HighCourt in Syed Mohamed Ali v. M.R.Sundaramurthy and others,MANU/TN/0089/1958=AIR 1958 Madras 587=[1958] 2 MLJ 259 for theCompany Law Board to come to a conclusion that even without a prayera wider power is available under Section 402 of the Act, is notapplicable to the facts and circumstances of the present case. It istrue that under Section 402 of the Act there is ample jurisdiction tothe Company Law Board in the larger interest of the company and thepublic interest to investigate. It is also true that even in theabsence of specific prayer in the petition under Section 397 of theAct, the powers of the Court to investigate under Section 402 of theAct are wider. But that does not mean that in the absence ofspecific plea of breach of fiduciary relationship, the court canenter into the same to hold that there is a breach of fiduciaryrelationship. In any event, as held by the Supreme Court, as statedabove, even for a grant of relief under Section 397 of the Act, acase must be made out in the petition which cannot be cured at alater stage, even if lacuna is found out by evidence which is oral ordocumentary. On the factual matrix which has been discussed above,in this case there is absolutely nothing for any one to presume thatthere has been any breach of fiduciary relationship.12.1. The next submission relating to improper funding isactually connected with Subarnarekha Port Project of Government ofOrissa predominantly.12.2. The said complaint relating to funding by the secondrespondent and its obligation thereof emanates from the InvestmentAgreement dated 26.5.2006. As already elicited above, the funding https://hcservices.ecourts.gov.in/hcservices/ obligation of VC Investor on behalf of the second respondent is asper Clause 3.1 wherein VC Investor has agreed to support the projectsand extend or arrange Project Development Expenses to be incurred bythe first respondent-Company for the identification, development andprocurement of the BOT projects identified. The said ProjectDevelopment Expenses include the fixed organizational expense agreedto by the Board of the first respondent-Company and also the expensesincurred by the Company in developing the various projects identifiedunder the Broad Business Plan to be agreed between the parties.12.3. Even as per the petitioners the only two projects of thefirst respondent-Company which were undertaken after itsincorporation were the Machilipatnam Port Project of Government ofAndhra Pradesh and Subarnarekha Port Project of Government of Orissa.As far as Machilipatnam Port Project is concerned, as I have analyzedin detail earlier, the complaint is that in respect of Rs.10 Croresclaimed against the Consortium Agreement by its Lead Member-Maytas,the second respondent, being one of the members of the Consortium,has not contributed towards performance security. It is not thecomplaint of Maytas, the Lead Member, against the second respondentthat the second respondent has not performed its function as per theConsortium Agreement. Even if such complaint is made by Maytas, inthe context of my holding that Machilipatnam Port Project cannot betreated as a project of the first respondent-Company, any suchcomplaint by Maytas against the second respondent cannot be madeavailable either to the first respondent-Company or the petitionersto bring home the complaint of oppression under Section 397 of theAct towards the first respondent-Company by the second respondent.Even the petitioners as partners of Creative Infrastructure or asDirectors of the first respondent-Company to contribute the share ofthe second respondent to the extent of 38% arose only from theInvestment Agreement dated 26.5.2006. Inasmuch as under theInvestment Agreement Maytas is not a party, there is nothing to inferthat in respect of the affairs of the first respondent-Company therehas been oppression on the part of the second respondent in non-furnishing of performance security in accordance with the letter ofintent by the Government of Andhra Pradesh dated 20.1.2007.12.4. There is nothing on record to show that in accordance withthe said Clause 3.1 of the Investment Agreement, there has been anydecision of the Board of the first respondent-Company regarding theexpenses to be funded by the second respondent as VC Investor. It isonly in the email of the first petitioner dated 20.2.2007, being aDirector of the first respondent-Company, addressed to the secondrespondent, by which based on the terms and spirit of the InvestmentAgreement, the first petitioner has referred for the first time aboutthe requirement of Rs.50 Crores towards strategic expenses and bankguarantee margin. In the said letter, he has also chosen to referabout Rs.25 to 30 Lakhs as strategic expenses for Subarnarekha Port https://hcservices.ecourts.gov.in/hcservices/ Project complaining about the second respondent in not forwarding thesame.12.5. The Company Law Board in the impugned order, whiledealing about the said strategic expenses and other allegation ofnon-funding of the second respondent, decided that the secondrespondent has not performed its obligation of funding as per theInvestment Agreement and having found that there was no approval fromthe Board of the Company for such request for funding has concludedthat such approval from the Board has been waived by the secondrespondent. The Company Law Board has also relied upon theprinciples of legitimate expectation arising from the agreement andundertaking to decide that the conduct of the second respondent hasinfringed the proprietary rights of the petitioners which wouldconstitute an act of oppression in the affairs of the firstrespondent-company.12.6. The judgment which has been relied upon by the Company LawBoard for arriving at the above-said conclusion in order to passappropriate orders under Section 402 of the Act is Government of WestBengal v. Chatterjee Petrochem (Mauritius) Co. and Others, [2008] 143Company Cases 837 (Cal). In that case the issue involved was relatingto the question of transfer of 155 million shares held by West BengalIndustrial Development Corporation Ltd. to Chatterjee Petrochem(Mauritius) Co. and that transfer was effected as per the agreementdated 12.1.2002 between Haldia Petrochemicals Limited and suchtransfer was sought to be effected hurriedly on the basis of circularresolution and that was contended to be a conduct against the affairsof Haldia Petrochemicals Limited in a manner prejudicial to thepublic interest and oppressive to the petitioners before the CompanyLaw Board. It was also contended that such transfer would bring amaterial change in the management of Haldi Petrochemicals Limitedwhich will be prejudicial to the interest of the members. On suchfactual matrix, the Calcutta High Court has held that the same is notrelating to the affairs of the Haldia Petrochemicals Limited andtherefore, the petition under Section 397 of the Act cannot bedecided by the Company Law Board on such factual circumstances. Therelevant portion of the judgment is as follows:"In my view, the question is whether regarding thequestion of transfer of the said 155 million shares bythe WBIDC in terms of the agreement dated January 12,2002, the HPL was competent or supposed to do anything;and if the answer is in the affirmative, then it must beheld that it was one of its affairs. Mr.BimalChatterjee, in my opinion, is right in saying thatthough the HPL was a party to the agreement datedJanuary 12, 2002, it was not competent or supposed totake any decision or to do any other thing regarding the https://hcservices.ecourts.gov.in/hcservices/ question of transfer of the said 155 million shares bythe WBIDC to the CP(M)C, or to its nominee the CP(I)PLthat entered into a separate agreement dated March 8,2002, with the WBIDC. The agreement dated March 8, 2002,was not an agreement between shareholders of the HPL,the CP(I)PL that was deemed to have pledged the deemedtransferred and delivered shares was not a shareholderof the HPL. Simply because the HPL subsequently wroteletters seeking confirmation from the WBIDC whether ithad transferred those shares, and seeking the IDBI'sdecision regarding approval of the transfer, I do notthink it can be said that the matter became an affair ofthe HPL. To my mind, the Board committed an error of lawby holding that the question of transfer of the said 155million shares was an affair of the HPL.......I therefore do not see how the question of transfer ofthe said 155 million shares could be considered anaffair of the HPL. Hence, I hold that the board was notcompetent to decide anything connected with thatquestion while considering the company petition underSection 397."12.7. The Division Bench of the Madras High Court in ShoeSpecialities P. Ltd. and others v. Standard Distilleries andBreweries P. Ltd. and others, MANU/TN/0114/1996, while consideringabout the term "affairs of the company" under Section 397 of the Actwith the corresponding Section 210 of the English Companies Act,relied upon its earlier Division Bench judgment in Syed Mahomed Aliv. R.Sundaramurthy, [1958] 28 Company Cases 554 = [1958] ILR 838(Mad), observed that the decision of the English Court and itstechnicalities cannot be made applicable in the Indian context andheld that Section 402 and 406 of the Act give ample jurisdiction tothe Court to dispose of the matter in the interest of the Company.The relevant portion is as under:"34. A Division Bench of our High Court considered asimilar question and the decision is Syed Mahomed All v.R. Sundaramurthy [1958] 28 Comp Cas 554; [1958] ILR 838(Mad). At page 845, the corresponding sections of theEnglish Act and the Indian Act were compared and theBench held thus: "The learned Advocate-General referred to thedecision in Antigen Laboratories Ltd., In re[1951] 1 All ER 110 (Ch D) and a passage fromBuckley's Company Law at page 1091, in support ofthe proposition that a petitioner seeking relief https://hcservices.ecourts.gov.in/hcservices/ under section 210 of the English Companies Actwhich corresponds to section 397 of the (Indian)Companies Act should state in the prayer in clearterms the general nature of the relief sought,whether it be for the appointment of a directoror of some other kind. His contention was that inthe petition the only relief prayed for wasregulation of the conduct of the affairs of thecompany in future and not in regard to any actionagainst the directors for the alleged malfeasanceand misfeasance. That may be so, but the petitioncontains an elaborate statement of the chargesagainst the directors and an investigation intothose charges would be necessary even for thepurpose of regulating the affairs of the company.We do not think that the absence of any formalprayer in the petition under section 397 wouldentitle the court to refrain from investigatinginto the various charges levelled against thedirectors. In Gower's Modern Company Law (secondedition), at page 513, the scope of section 210of the English Act which corresponds to section397 of the (Indian) Companies Act is discussedand referring to the Cohen Report, on which thesection in the English Act was based, the learnedauthor says 'that it was the intention that thecourt should "have power to impose upon theparties whatever settlement the court considersjust and equitable". While recognising that thecourt could not be expected in every case to findand impose a solution it was thought that itsdiscretion must be unfettered for it isimpossible to lay down a general guide in thesolution of what are essentially individualcases'. Referring to the decision in AntigenLaboratories Ltd., In re [1951] 1 All ER 110 (ChD), the learned author says 'that it has beenheld that the petitioner cannot just ask thecourt to exercise its discretion but mustindicate the nature of the relief wanted. Thisdecision though perhaps inevitable seemsregrettable and inconsistent with the intentionthat the court should have power to find andimpose a solution'. The decision of the Englishcourt was, as pointed out by the learned author,the result of the procedure of the English HighCourts 'which was ill adapted for the exercise ofthe inquisitorial and constructive role thusimposed upon the court'. We are not hampered by https://hcservices.ecourts.gov.in/hcservices/ such rigid technicalities of procedure and if theminority in a company complains of an oppressionand discloses certain grounds of complaint in thepetition which are made the basis follow therelief, we would hold that the court shouldordinarily investigate the charges. Suchinvestigations may in certain cases be necessaryeven to regulate the future conduct of thecompany for providing against recurrence of suchabuses of power by the majority. We are,therefore, of opinion that notwithstanding theomission in the petition to pray for reliefagainst the delinquent directors, an enquiry intothe charges against them was properly within thescope of the petition. Sections 402 and 406 ofthe (Indian) Companies Act give amplejurisdiction to the court to dispose of thematter in the larger interests of the company.""It was also further held that:"36. ........ In our view, therefore, the position isclear that while acting under section 398 read withsection 402 of the Companies Act, the court has amplejurisdiction and very wide powers to pass such ordersand give such directions as it thinks fit to achieve theobject and there would be no limitation or restrictionon such power that the same should be exercised subjectto the other provisions of the Act dealing with normalcorporate management or that such orders and directionsshould be in consonance with such provisions of theAct."12.8. In Needle Industries (India) Ltd. and others v. NeedleIndustries Newey (India) Holding Ltd. and others, AIR 1981 SC 1298=[1981] 3 SCC 333, while referring to Section 397 of the Act andSection 210 of the English Companies Act and also taking note of thedictionary meaning of the word "oppression" in the light of thedecision of the House of Lords in Scottish Co-op. Wholesale SocietyLtd. v. Meyer, [1959] AC. 324 wherein it was termed as "burdensome,harsh and wrongful", observed as follows:"46. Coming to the law as to the concept of“oppression”, Section 397 of our Companies Act followsclosely the language of Section 210 of the EnglishCompanies Act of 1948. Since the decisions on Section210 have been followed by our Court, the English https://hcservices.ecourts.gov.in/hcservices/ decisions may be considered first. The leading case on“oppression” under Section 210 is the decision of theHouse of Lords in Scottish Co-op. Wholesale Society Ltd.v. Meyer [1959] AC. 324. Taking the dictionary meaningof the word “oppression”, Viscount Simonds said at page342 that the appellant-Society could justly be describedas having behaved towards the minority shareholders inan “oppressive” manner, that is to say, in a manner“burdensome, harsh and wrongful”. The learned Law Lordadopted, as difficult of being bettered, the words ofLord President Cooper at the first hearing of the caseto the effect that Section 210 “warrants the court inlooking at the business realities of the situation anddoes not confine them to a narrow legalistic view”.Dealing with the true character of the company, LordKeith said at page 361 that the company was insubstance, though not in law, a partnership, consistingof the society, Dr.Meyer and Mr.Lucas and whatever maybe the other different legal consequences following onone or other of these forms of combination, one resultfollowed from the method adopted, “which is common topartnership, that there should be the utmost good faithbetween the constituent members”. Finally, it was heldthat the court ought not to allow technical pleas todefeat the beneficent provisions of Section 210 (page344, per Lord Keith; pp. 368-69, per Lord Denning)."After analyzing the various decisions and construction of Section 397of the Act, the Supreme Court has held as follows:"54. It is clear from these various decisions that on atrue construction of Section 397, an unwise, inefficientor careless conduct of a Director in the performance ofhis duties cannot give rise to a claim for relief underthat section. The person complaining of oppression mustshow that he has been constrained to submit to a conductwhich lacks in probity, conduct which is unfair to himand which causes prejudice to him in the exercise of hislegal and proprietary rights as a shareholder. It may bementioned that the Jenkins Committee on Company LawReform had suggested the substitution of the word“oppression” in Section 210 of the English Act by thewords “unfairly prejudicial” in order to make it clearthat it is not necessary to show that the act complainedof is illegal or that it constitutes an invasion oflegal rights (see Gower’s Company Law, 4th Edn., page668). But that recommendation was not accepted and theEnglish law remains the same as in Meyer and in Re H.R.Hartner Ltd., [1959] WLR 62 as modified in Re Jermyn https://hcservices.ecourts.gov.in/hcservices/ St. Turkish Baths, [1971] 3 All ER 184 (CA). We have notadopted that modification in India."12.9. It is by referring to the said judgment of NeedleIndustries (India) Ltd. and others v. Needle Industries Newey (India)Holding Ltd. and others, referred supra, the Division Bench of theMadras High Court in Shoe Specialities P. Ltd. and others v. StandardDistilleries and Breweries P. Ltd. and others, referred supra, hasheld as follows:"39. Even if the unlimited powers expounded by thevarious decisions are not exercised, the decision inNeedle Industries (India) Ltd. v. Needle IndustriesNewey (India) Holding Ltd. MANU/SC/0050/1981 will be ofsome help. In that case, their Lordships said that in agiven case even if the case of oppression is not proved,substantial justice must be done between the parties andthe parties must be placed as nearly as may be in thesame position if they could have been placed. Therelevant portion of the said paragraph 172 reads thus(at page 845 of 51 Comp Cas) : "Even though the company petition fails and theappeals succeed on the finding that the holdingcompany has failed to make out a case ofoppression, the court is not powerless to dosubstantial justice between the parties and placethem, as nearly as it may, in the same positionin which they would have been, if the meeting ofMay 2, were held in accordance with law.""12.10. In Sangramsinh P.Gaekwad and others v. ShantadeviP.Gaekwad (Dead) through Lrs. And others, referred supra, whiledeciding about Section 397 read with Section 402 of the Act and thejurisdiction of the Court, it was observed that there are wide powersto the Court while exercising jurisdiction under Section 402 of theAct, but it is not in all cases relief can be given and the same mustbe depending upon the exigencies of the situation and a decision canbe arrived at only on analyzing the materials. The observations areas follows:"181. The jurisdiction of the court to grant appropriaterelief under Section 397 of the Companies Actindisputably is of wide amplitude. It is also beyond anycontroversy that the court while exercising itsdiscretion is not bound by the terms contained inSection 402 of the Companies Act if in a particular factsituation a further relief or reliefs, as the court maydeem fit and proper, are warranted. (See Bennet Coleman https://hcservices.ecourts.gov.in/hcservices/ & Co. v. Union of India, [1977] 47 Comp Cases 92 (Bom)and Syed Mahomed Ali v. R. Sundaramoorthy. AIR 1958 Mad587). But the same would not mean that Section 397provides for a remedy for every act of omission orcommission on the part of the Board of Directors.Reliefs must be granted having regard to the exigenciesof the situation and the court must arrive at aconclusion upon analysing the materials brought onrecord that the affairs of the company were such that itwould be just and equitable to order winding up thereofand that the majority acting through the Board ofDirectors by reason of abusing their dominant positionhad oppressed the minority shareholders. The conduct,thus, complained of must be such so as to oppress aminority of the members including the petitioners vis-a-vis the entire body of shareholders which a fortiorimust be an act of the majority. Furthermore, the factsituation obtaining in the case must enable the court toinvoke just and equitable rules even if a case has beenmade out for winding up for passing an order of windingup of the company but such winding-up order would beunfair to the minority members. The interest of thecompany vis-a-vis the shareholders must be uppermost inthe mind of the court while granting a relief under theaforementioned provisions of the Companies Act, 1956."It was also held in that case that when a complaint is made on thecontractual right, for initiating action under Section 397 of the Actan extraordinary situation must be brought to the notice of the Courtsince the power of the Court under Section 402 of the Act is far-reaching in its character. The relevant portion is as under:"185. It has to be borne in mind that when a complaintis made as regards violation of statutory or contractualrights, the shareholder may initiate a proceeding in acivil court but a proceeding under Section 397 of theAct would be maintainable only when an extraordinarysituation is brought to the notice of the court keepingin view the wide and far-reaching power of the court inrelation to the affairs of the company. In thissituation, it is necessary that the alleged illegalityin the conduct of the majority shareholders is pleadedand proved with sufficient clarity and precision. If thepleadings and/or the evidence adduced in the proceedingsremains unsatisfactory to arrive at a definiteconclusion of oppression or mismanagement, the petitionmust be rejected."It was also held by the Supreme Court that even in cases where noinstance of oppression has been made out relief can be granted to https://hcservices.ecourts.gov.in/hcservices/ render substantial justice, as under:"199. In a given case the court despite holding that nocase of oppression has been made out may grant suchrelief so as to do substantial justice between theparties."12.11. These legal principles which have been crystallized byhierarchy of judgments are not in dispute. But, the question is, onthe facts and circumstances of the case, when the allegation made bythe petitioners is that there was improper funding by the secondrespondent as per the Investment Agreement, while the secondrespondent being a party to the Investment Agreement had theobligation of funding in respect of Machilipatnam Port Projecttowards the Lead Member, Maytas, as per the Consortium Agreementdated 25.3.2006, there is absolutely no reason to conclude that inrespect of the affairs of the first respondent-Company there is anextraordinary situation to grant relief which is far-reaching in itsnature by holding as if the affairs of the first respondent-Companyhave been prejudicially conducted by the second respondent being themajority shareholder particularly with reference to the MachilipatnamPort Project.13.1. In respect of Subarnarekha Port Project, the Memorandum ofUnderstanding dated 18.12.2006 entered between the Government ofOrissa and the first respondent-Company imposes an obligation on thefirst respondent-Company to furnish a security deposit in the form ofbank guarantee for a value of Rs.2.50 Million within three weeks ofsigning of the Memorandum of Understanding and that Memorandum ofUnderstanding is attested by the fourth respondent as one of itsattesting witnesses. Ultimately, the Concession Agreement fordevelopment of Subarnarekha Port was entered only on 11.1.2008 givingconcession period of 34 years, including maximum period of four yearsfor construction and the commencement date is mentioned in Clause 2.1as date on which items (1) and (2) of the port premises as per Clause2.20 along with land for adequate road connectivity is given to thefirst respondent by the Government of Orissa. The said Clause 2.1 isas follows:"2.1. Commencement Date: Commencement date means thedate on which the physical possession of items (1) and(2) of the port premises as defined in clause 2.20alongwith Land for adequate road connectivity for portconstruction purposes is given to CPDP by Government."13.2. The formation of Special Project Company has been https://hcservices.ecourts.gov.in/hcservices/ contemplated under Clause 2.4, which is as follows:"2.4. Formation of Special Project Company (SPC): It isrecognized by the parties that the CPDP is in theprocess of promoting a Special Project Company(hereinafter called SPC) which will be a body corporateincorporated under the Indian Companies Act, 1956, withits registered office in the State of Orissa. CPDP andits Subsidiaries shall hold not less than 51% (fifty onepercent) of total equity capital subscribed of the SPCwhich shall be locked till In-Operation Date. This bodycorporate shall be duly incorporated prior to thecommencement date. It is agreed by the parties heretothat the CPDP shall be entitled to subrogate all itsrights and obligations under this agreement in the formof an instrument in favour of the said body corporatewhich the Government consents. Before granting thesubrogation, the CPDP shall inform the Government inrespect thereof and all necessary steps shall be carriedout by the parties to give effect to the saidsubrogation within 30 days from the date of suchinformation.After the subrogation, the new body corporate (SPC)shall be recognized by the Government for all legal andoperational purposes. It is further agreed that theCPDP shall cause to provide suitable required letterfrom the new body corporate (SPC) consenting to theabove arrangement and for the smooth implementation andthe SPC shall be the successor to the rights, duties andobligations under this agreement of CPDP."13.3. The term "Port Premises" as referred to in Clause 2.1, isdefined in Clause 2.20 as follows:"2.20 Port Premises: Port premises means and include (1)land (including submerged land) and water area asnotified by the Government as port limit given on leaseto the CPDP (2) all structures and facilitiesconstructed or provided by the Government on premisessub component (1) above; (3) land reclaimed by the CPDPduring the pendency of this agreement (4) additionaltenanted land acquired or to be acquired by theGovernment for providing of port service during thependency of this agreement, (5) all structures andfacilities including modifications constructed or https://hcservices.ecourts.gov.in/hcservices/ provided by the CPDP or its sub-contractors or any otherassignees on port premises sub components(1) to (4)above during the pendency of this agreement and (6)economic corridor including road and rail facilities,wayside amenities."13.4. It is not in dispute that Government of Orissa has not yetallotted the lands as per the said Concession Agreement andtherefore, the same is in a preliminary stage. However, for thepurpose of providing the performance guarantee since the secondrespondent has not come forward, it is the case of the petitionersthat they have raised the amount personally by creating encumbranceof their own property, which includes that of their near relatives,and raised an amount of Rs.1 Crore to pay the same to Government ofOrissa. Therefore, as far as the Subarnarekha Port Project isconcerned, the basic contention of the petitioners is that they havebeen made to raise funds of their own initiative at the cost of theirpersonal properties due to the failure of the second respondent infunding for the project as per the Investment Agreement. Hence, thequestion is whether that can be treated as an instance of oppressionwhich will be otherwise available as a ground for the extreme step ofwinding up of the company under Section 433 of the Act on just andequitable grounds. 13.5. In this regard, it is relevant to note that the secondrespondent in the letter dated 23.1.2008 has replied to the firstpetitioner stating that they continue their commitment towards theinvestments in respect of the projects. As far as the SubarnarekhaPort Project is concerned, as it is revealed from the communicationsexchanged between the first respondent-Company and the Government ofOrissa, it is clear that it is in the preliminary stage, but it isnot known as to what prompted the petitioners to take the pain ofcreating encumbrance of their private properties for raising Rs.1Crore to pay to the Government of Orissa. While there are nodocuments to show that the second respondent has deliberately refusedto fund for Subarnarekha Port Project, there are records to show thatthe second respondent has taken objection regarding the strategicexpenses of Rs.50 Crores. It is not the case of the petitioners thatthe second respondent in its funding position is not capable ofextending funds. A consideration of the said fact along with theletter of the second respondent dated 23.1.2008 makes it clear thateven though Subarnarekha Port Project is a project of the firstrespondent-Company and the funding obligation of the secondrespondent is in relation to the affairs of the company as perSection 397 of the Act, inasmuch as the entire project itself is inpreliminary stage and no damage has been caused to the project, onecannot come to a conclusion that due to the said isolated incident an https://hcservices.ecourts.gov.in/hcservices/ extraordinary circumstance is in existence to warrant interference bythis Court normally to wind up the company and in order to avoid thesame to invoke the powers under Section 397 read with Section 402 ofthe Act.13.6. It is apposite to point out at this stage the resolutionof the Board of Directors of the first respondent-Company dated7.11.2007 authorizing to avail Bank Guarantee from AXIS Bank,R.K.Salai to the extent of Rs.10 Millions (Rupees One Crore) infavour of the Government of Orissa. The said resolution is as under:"RESOLVED THAT the consent of Board of Directors of theCompany be and hereby given for applying for andavailing Bank Guarantee from AXIS Bank, R.K.SalaiBranch, Chennai (hereinafter referred to as "Bank"), tothe extent of Rs.10.00 Millions (Rupees Ten Millionsonly) in favour of The Government of Orissa, in terms ofthe Memorandum of Understanding entered with theGovernment of Orissa, a precondition to signing of theConcession Agreement.RESOLVED FURTHER that the consent of Board of Directorsof the Company be and hereby given for depositing a sumof Rs.10,00,000/- (Rupees Ten Lakhs only) in FixedDeposit Account with the Bank, and the bank is herebyauthorised to mark lien on the same, towards MarginMoney payable by the company in respect of the abovebank guarantee.RESOLVED FURTHER that a banking account for the Companybe opened with AXIS Bank Ltd at R.K.Salai Branch inChennai and following persons are responsible to operatethe account in the manner given below:Mr.Ramani Ramaswamy..DirectorORMr.R.Rangarajan..DirectorAndMr.Naveen Bansal..DirectorRESOLVED FURTHER that Sri R.Rangarajan and Sri RamaniRamaswamy, Directors, are individually authorised tosign/execute the applications, undertakings and allother documents as may be required by the Bank in thisregard. https://hcservices.ecourts.gov.in/hcservices/ RESOLVED FURTHER that the common seal of the company beaffixed on the documents, wherever required, in thepresence of Sri R.Rangarajan and Sri Ramani Ramaswamy,Directors, who shall countersign the same in witnessthereof.RESOLVED FURTHER a copy of the resolution, dulycertified by one of the Directors, be furnished to theBank for their records."13.7. The above referred to resolution dated 7.11.2007 showsthat the amount authorised relates to Subarnarekha Port Project andit is also significant to note that the petitioners are individuallyauthorised to give undertakings and sign/execute all documents as perthe requirement of the Bank. By the time the said resolution waspassed, the Subarnarekha Port Project has come into existence byaward of the same in the form of Memorandum of Understanding with theGovernment of Orissa dated 18.12.2006, while the Concession Agreementwith the Government of Orissa in respect of the said project wasentered long afterwards, viz., on 11.1.2008.13.8. It is immediately after the passing of the saidresolution dated 7.11.2007, a Memorandum of Understanding was enteredon 14.11.2007 by which it is stated that the second respondent hasopted to come out of the first respondent-Company for aconsideration, coupled with the subsequent email of the thirdrespondent – Naveen Bansal dated 15.11.2007 addressed to thepetitioners. Therefore, it is clear that in respect of SubarnarekhaPort Project, the petitioners have taken up the personalresponsibility at their own risk on the mortgage of the flats ownedby them and accordingly, a Concession Agreement was obtained from theGovernment of Orissa on 11.1.2008. This is also factually found bythe Company Law Board in its impugned order. While so, it cannot besaid that there has been any oppression on the part of the secondrespondent, since the petitioners have consciously taken a decisionto involve themselves in the Subarnarekha Port Project by excludingthe second respondent probably based on the Memorandum ofUnderstanding dated 14.11.2007, as stated above, along with thesubsequent letter of the third respondent dated 15.11.2007. 13.9. In such view of the matter, there is no question of anydetriment suffered by the petitioners as the members or promoters ofthe first respondent-Company in whatever name they are called. But,that is not the issue. The real issue lies in the Memorandum ofUnderstanding dated 14.11.2007 stated to have been entered between https://hcservices.ecourts.gov.in/hcservices/ the petitioners on the one hand and the second and third respondentsas Infrastructure Project Development Fund (IPDF) on the other hand,in which the second respondent which is managing IPDF has expressedits intention to sell its investment in the first respondent-Companyto the petitioners. The said Memorandum of Understanding is as under:"It is hereby agreed between the Parties as follows:1. Infrastructure Project Development Fund, (IPDF) afund managed by SREI Venture Capital Ltd (SVCL) (awholly owned subsidiary of SREI Infrastructure Financeltd), having its registered office at "Vishwakarma" 86C,Topsia Road (South) Kolkata-700 046, intends to sell itsinvestments in Creative Port Development Pvt Ltd (CDCP),having its registered officat at "Mahalakshmi", 1stFloor, New No.290, Peters Road, Gopalapuram, Chennai-600086, to prospective investors / Investment Company to bebrought in by M/s.Ramani Ramaswamy, residing at NewNo.84, Old No.50, DAKSHIN, 1st Avenue, Indra Nagar,Adyar, Chennai – 600 020 and R.Rangarajan residing at149, Krishnamachari Nagar, V Street, Alapakkam, PorurPost, Chennai-116.2. The potential investors would be starting their duediligence for the investments in CDCP by 15th November2007 and will complete by 31st January 2008.3. Once the due diligence is completed to thesatisfaction of the investors, the payment will be madeby 28th February, 2008 at a consideration to be mutuallyagreed upon.4. M/s.Ramani Ramaswamy and R.Rangarajan will get theConcession Agreement signed with the Government ofOrissa for the Subarnarekha Port Project within thirtydays from the date of issue of Government Order and takeall necessary steps to take the project forward.This Undertaking will be valid till 28th February, 2008,within which if the transaction of the investments doesnot get concluded, then this Understanding will becomenull and void."13.10. In the above said Memorandum of Understanding dated14.11.2007, there is no reference about the consideration to be https://hcservices.ecourts.gov.in/hcservices/ received by the second respondent for the purpose of sale of itsinterest in the first respondent-Company. The words in paragraph (3)of the said Memorandum of Understanding are to the effect that oncethe due diligence is completed to the satisfaction of the investors(the second respondent), consideration has to be mutually agreedupon. The said Memorandum of Understanding also authorised thepetitioners to get Concession Agreement signed with the Government ofOrissa. Admittedly, immediately thereafter the Concession Agreementhas been signed with the Government of Orissa on 11.1.2008, duringthe time when the Memorandum of Understanding was kept valid, whichwas up to 28.2.2008.13.11. From the above, it is clear that the petitioners haveacted upon the Memorandum of Understanding signed by the thirdrespondent on behalf of the Infrastructure Project Development Fundand that the negotiations between the parties have fructified into aconcrete term of consideration to be paid to the second respondentfor the exit of the second respondent from the first respondent-Company, as it is seen from the email of the third respondent sent onbehalf of the second respondent-Company addressed to the petitionersdated 15.11.2007, in which it is stated as follows:"This has reference to the MOU that we signed on14/11/07 between us for the takeover of IPDF portion ofthe investments. In this regard please note that thetotal consideration for this stake sale inclusive of allequity, preference shares, convertible bonds issued andfunding / work undertaken by SREI Capital Markets forthe DPR for Subarnarekha Port shall be Rs.52.5 Crores(Rupees fifty two crores and fifty lakhs only).This total amount shall be paid as per mutually agreedbreak-up." 13.12. The sequence of events make it clear that the secondrespondent has consciously accepted for the Memorandum ofUnderstanding dated 14.11.2007 and has agreed to receive theconsideration of Rs.52.50 Crores to sell the equity, preferenceshares, convertible bonds and funding/work undertaken by the secondrespondent in respect of the Subarnarekha Port Project, which is theonly other project of the first respondent-Company.13.13. In this regard, the contention of Mr.Sudipto Sarkar,learned Senior Counsel appearing for the petitioners is relevant. Itis his submission that when once the second respondent underMemorandum of Understanding dated 14.11.2007 has decided to go out of https://hcservices.ecourts.gov.in/hcservices/ the first respondent-Company at least in respect of the SubarnarekhaPort Project, no useful purpose will be served in continuing the saidrespondents with the first respondent-Company. Further, thecategoric terms by which the second and third respondents in theemail dated 15.11.2007 agreed to receive an amount of Rs.52.50 Croresin consideration for the sale of all their rights in the firstrespondent-Company relating to Subarnarekha Port Project arecertainly binding upon the said respondents, who cannot rescind fromthe undertaking specifically given by them. Therefore, the contentionraised on behalf of the appellants by their respective counsel,including the Senior Counsel – Mr.S.N.Mookherjee, Mr.A.L.Somayajee,Mr.P.Raman and Mr.P.Arvind Datar that the direction of the CompanyLaw Board in the impugned order directing the second respondent totransfer its shares and go out of the first respondent-Company onconsolidated price of Rs.52.50 Crores would amount to specificperformance of the Memorandum of Understanding dated 14.11.2007,cannot be accepted.13.14. A reference to the Memorandum of Understanding dated14.11.2007, as extracted above, makes it clear that there is nothingto be enforced as per its terms. But the parties have acted upon thesaid Memorandum of Understanding which is evidenced from the factthat the petitioners have approached the AXIS Bank for raising fundfor the purpose of providing Bank Guarantee for Subarnarekha PortProject on their own and that the third respondent on behalf of thesecond respondent by email dated 15.11.2007 has agreed to receive theamount of Rs.52.50 Crores in full and final claim towards all therights in the first respondent-Company at least in respect ofSubarnarekha Port Project. Therefore, it cannot be said that theCompany Law Board has directed the parties to enforce the Memorandumof Understanding dated 14.11.2007. The Memorandum of Understandingis not an enforceable one, but the subsequent conduct of the thirdrespondent makes it clear that the second respondent has agreed toexit from the first respondent-Company and it is only the undertakingof the second respondent which has been directed to be performed bythe second respondent in the impugned order of the Company Law Boardwhich is well within its jurisdiction. The relief granted by theCompany Law Board in paragraph 9(i) of the impugned order is only asper the undertaking of the second respondent and cannot be said to bea decision that there has been any oppression committed by the secondrespondent and therefore, the second respondent has been directed togo out of the company as a matter of penalty for such oppression.13.15. In Shanti Prasad Jain v. Kalinga Tubes Ltd., AIR 1965 SC1535, when a question arose while deciding about the conduct underSection 397 of the Act based on a finance agreement in respect ofwhich the allotment of share of the company should be made, while inthe agreement the company was not a party and the agreement was not https://hcservices.ecourts.gov.in/hcservices/ also adopted in the Articles of Association, it was found:"20. The main plank of the appellant's case to proveoppression is the agreement of July 27, 1954, betweenhimself and Patnaik and Loganathan. At that time he wasnot a member of the company. It is not disputed that thecompany was not a party to that agreement and is thusstrictly speaking not bound by its terms. Bat even apartfrom this strict legal aspect of the matter, let us seewhat exactly the agreement provides. At that timePatnaik and Loganathan groups held shares of the valueof Rs. 21 lakhs in the company, and the main provisionof the agreement is that the share capital would beincreased and the appellant would be given shares of theface value of Rs.10,50,000 so that his holding should beequal to the holdings of the other two groups. It alsoprovides that the three groups would have an equalnumber of representatives on the board of directors andthe appellant would be its chairman. Other provisions ofthe agreement refer to matters of detail to which it isunnecessary to refer. It will be seen, however, thatthere is no provision in the agreement as to what wouldhappen if and when the share capital was actuallyincreased beyond the increase envisaged at the time ofthe agreement. There is also no provision in theagreement to the effect that the articles of associationof the private company as it then was would be amendedsuitably to bring the provisions of the agreement withrespect to shareholding and the board of directors intoline with the agreement. Thus there is nothing in theagreement about the future in the matter of allotment ofshares in case capital was actually increasedthereafter."The Supreme Court, on the facts of the said case, held that the hastewith which the allotment of shares has been made cannot be held to bean oppression in the following words:"27. It is, however, urged that the haste with which thenew shares were issued on July 30, 1958, shows a designto harm the appellant as a minority shareholder. It isno doubt true that the shares were issued in haste. But,as we have already indicated, the company was in need ofmoney for expansion and its getting the loan from theIndustrial Finance Corporation also depended upon theincrease of subscribed share capital. Therefore, thehaste with which the shares were allotted on July 30,1958, cannot really be said to be a part of a design tooppress the minority. The haste became necessary becausethe interim injunction was vacated on that day and it https://hcservices.ecourts.gov.in/hcservices/ was felt that if immediate action was not taken and thenew shares allotted, there might be further injunctionwhich would further delay the issue of shares andgetting the loan from the Industrial FinanceCorporation. The haste therefore appears to haveoccurred because of the action taken by the appellant inbringing a suit and getting a temporary injunction. Itwas feared that even after the vacation of the temporaryinjunction the appellant would go in appeal and getanother injunction from the appeal court. This fear wasjustified because the subordinate judge's court twohours later withheld the operation of its order vacatingthe temporary injunction. The haste in the particularcircumstances of the case in allotment of shares cannottherefore lead to any inference of oppression but aroseout of circumstances brought about by the appellant'sconduct.",and ultimately, it was held as follows:"30. The case of oppression, therefore, based on theagreement of July, 1954 as the sheet-anchor of theappellant's case must fail. In the first place thatagreement was strictly speaking not binding even on theprivate company--it was much less binding on the publiccompany when it came into existence in 1957. Theagreement did not contain any specific provision as tofuture issue of capital. Further, at the time when theagreement took place the appellant was not even a memberof the private company and it was really an agreementbetween a non-member and two members of the company,which would go to show that the agreement could in nocircumstances bind the company."Therefore, there is nothing to conclude on the facts andcircumstances of the case on hand as if the Company Law Board underthe impugned order has directed specific performance of theMemorandum of Understanding dated 14.11.2007.13.16. It is well established that even in cases where onanalyzing the facts while deciding an issue under Section 397 of theAct it is decided that oppression has not been made out, it is not asif the Courts are powerless in giving solution since the remedy underSections 397 and 402 of the Act is equitable in nature. That was thelaw laid down by the Supreme Court in Needle Industries (India) Ltd.and others v. Needle Industries Newey (India) Holding Ltd. andothers, referred supra, in the following words: https://hcservices.ecourts.gov.in/hcservices/ "174. We must mention that we have rejected the chargeof oppression after applying to the conduct ofDevagnanam and his group the standard of probity andfairplay which is expected of partners in a businessventure. And this we have done without being influencedby the consideration pressed upon us by Shri Narimanthat Coats and NEWEY, who were two of the three mainpartners, were not of one mind and that NEWEY nevercomplained of oppression. They may or they may not. Thatis beside the point. Such technicalities cannot bepermitted to defeat the exercise of the equitablejurisdiction conferred by Section 397 of the CompaniesAct. Shri Seervai drew our attention to the decision inBlissett v. Daniel, 68 E.R. 1024, the facts of which asthey appear at pp 1036-37, bear, according to him, greatresemblance to the facts before us. The followingobservations in that case are of striking relevance: As has been well observed during the course ofthe argument, the view taken by this Court withregard to morality of conduct amongst allparties-most especially amongst those who arebound by the ties of partnership- is one of thehighest degree. The standard by which parties aretried here, either as trustees or as co-partners,or in various other relations which may besuggested, is a standard, I am thankful to sayso, far higher than the standard of the world ;and, tried by the standard, I hold it to beimpossible to sanction the removal of thisgentleman under these circumstances. (p 1040)Not only is the law on the side of Devagnanam but hisconduct cannot be characterized as lacking in probity,considering the extremely rigid attitude adopted byCoats. They drove him into a tight corner from which theonly escape was to allow the law to have its full play.175. Even though the company petition fails and theappeals succeed on the finding that the Holding Companyhas failed to make out a case of oppression, the courtis not powerless to do substantial justice between theparties and place them, as nearly as it may, in the sameposition in which they would have been, if the meetingof 2nd May were held in accordance with law." https://hcservices.ecourts.gov.in/hcservices/ As enumerated above, in that judgment, the Supreme Court hasdistinguished Section 210 of the English Companies Act where theinterference under the caption "oppression" was permissible only incases where the issue is "burdensome, harsh and wrongful", whileunder Section 397 of the Act such technicalities are held to be notapplicable.13.17. That was the consistent view of the Supreme Court asconfirmed in the later judgment in Sangramsinh P.Gaekwad and othersv. Shantadevi P.Gaekwad (Dead) through Lrs. And others, referredsupra, wherein the Supreme Court has held in no uncertain terms,after analyzing the entire case law on the said issue including theEnglish and Indian Law, as follows:"199. In a given case the court despite holding that nocase of oppression has been made out may grant suchrelief so as to do substantial justice between theparties."13.18. The said position has also been reiterated in Kamal KumarDutta and another v. Ruby General Hospital Ltd. and others, 2006 AIRSCW 4594=[2006] 134 Company Cases 678 (SC), wherein the Supreme Courthas distinguished Sections 397 and 398 of the Act, and held asfollows:"As per Section 397, any person who is eligible to applyunder Section 399, can apply before the CLB that theaffairs of the company are being conducted in a mannerprejudicial to public interest or in a manner oppressiveto any member or members and that to wind up the companywould unfairly prejudice such member or members, butthat otherwise the facts would justify the making of awinding-up order on the ground that it was just andequitable that the company should be wound up. If theTribunal is satisfied that there exists a situationwhere the business of the company is being conducted ina manner prejudicial to the interest or in a manneroppressive to any member or members and that winding upof the company would unfairly prejudice such member ormembers but that otherwise the facts would justify themaking of a winding-up order on the ground that it wasjust and equitable that the company should be wound up,it may with a view to bringing to an end the matterscomplained of, make such order as it deems fit.Therefore, what it transpires in the present context is,we have to examine whether the acts of the company wereoppressive to any member or members justifying thewinding up as just and equitable. It is not necessary https://hcservices.ecourts.gov.in/hcservices/ that in every case, the relief of winding-up should bemade. It is an option with the Tribunal if it considersthat in order to bring to an end the matters complainedof, it can pass orders for winding-up if it is just andequitable or it can pass such order as it thinks fit. Itdoes not necessarily mean that in every case suchwinding-up order need be passed. Similarly, underSection 398 also, if the affairs of the company arebeing conducted in a manner prejudicial to publicinterest or in a manner prejudicial to the interests ofthe company or that a material change not being a changebrought about by, or in the interests of any creditorsincluding debenture holders, or any class ofshareholders, of the company has taken place in themanagement or control of the company whether by analteration in its Board of directors, or manager or inthe ownership of the company's shares, or if it has noshare capital, in its membership, or in any other mannerwhatsoever and that by reason of such change, it islikely that the affairs of the company will be conductedin a manner prejudicial to public interest or in amanner prejudicial to the interests of the company, theTribunal can order winding-up of the company in order tobring to an end of all these mismanagement or make suchorder as it thinks fit. The condition of Section 399 ofthe Act is also equally applicable in the present case.In fact, Section 398 talks much about the mismanagement,or apprehension of mismanagement in the affairs of thecompany. As against this, Section 397 deals withoppression of the members. Therefore, both Sections 397& 398 to some extent have commonality for the purposelike, prejudicial to public interest and application forwinding-up can be made by members as per Section 399.Apart from this commonality, for the purpose of Section397, if the company acts in a manner oppressive to anymember or members and if it otherwise justifies on theground of just and equitable, then Tribunal can wind upthe company or pass such order as it thinks fit. Whereasin Section 398 the basic features are that themanagement is working in a manner prejudicial to theinterest of the company by bringing about the materialchanges in the management or by alteration in its Boardof Directors, then in that case, if it is found by theTribunal that in order to bring to an end or preventingfurther mismanagement, it can pass such order as itdeems fit including that of winding-up. Therefore, theparameters in both the Sections i.e. Sections 397 & 398are very clear. It will depend upon case to case. Nohard and fast rule can be laid down. In the case of https://hcservices.ecourts.gov.in/hcservices/ oppression to the interest of member or members, if theTribunal is satisfied that the winding-up is just andequitable then it can do so or pass any order as itthinks fit. Likewise in Section 398 if the managementwants to bring any material change in the management andcontrol of the company prejudicial to the interest ofthe company, then in that case, appropriate order can bepassed by the Tribunal. The acts which would amount tooppression to the members or mismanagement or materialalteration in the control of the company or prejudice tothe interest of the company would depend upon facts ofeach case."The Supreme Court has confirmed the decision in Sangramsinh P.Gaekwadand others v. Shantadevi P.Gaekwad (Dead) through Lrs. and others,referred supra, with approval.13.19. The Supreme Court in M.S.D.C.Radharamanan v.M.S.D.Chandrasekara Raja and another, AIR 2008 SC 1738=[2008] 143Company Cases 97 (SC) held that while dealing with a case ofoppression under Section 397 of the Act, there should be a finding offact to the effect that there has been oppression, but thejurisdiction of the Company Law Board to pass any further order inthe interest of the Company is still available. S.B.Sinha,J. in thesaid judgment has reiterated the legal position once again in thefollowing words:"13. Ordinarily, therefore, in a case where a case ofoppression has been made a ground for the purpose ofinvoking the jurisdiction of the Board in terms ofSections 397 and 398 of the Act, a finding of fact tothat effect would be necessary to be arrived out. But,the jurisdiction of the Company Law Board to pass anyother or further order in the interest of the company,if it is of the opinion, that the same would protect theinterest of the company, it would not be powerless. Thejurisdiction of the Company Law Board in that regardmust be held to be existing having regard to theaforementioned provisions. The deadlock in regard to the conduct of the business ofthe company has been noticed by the Company Law Board asalso the High Court. Keeping in view the fact that thereare only two shareholders and two Directors andbitterness having crept in their personal relationship,the same, in our opinion, will have a direct impact in https://hcservices.ecourts.gov.in/hcservices/ the matter of conduct of the affairs of the company.When there are two Directors, non-cooperation by one ofthem would result in a stalemate and in that view of themater the Company Law Board and the High Court haverightly exercised their jurisdiction. Before us, learned Counsel for the parties, havereferred to a large number of decisions operating in thefield. We may notice the legal principle emerging fromsome of them." In fact, in that case, the Supreme Court has made an elaboratediscussion about the entire case law on the subject, apart from thejurisprudential aspect of oppression and observed as follows:"32. This Court noticed that although the IndianCompanies Act is modelled on the English Companies Act,the Indian Law is developing on its own lines. It wasopined that the principle of 'just and equitable clause'is essentially equitable consideration and may, in agiven case, be superimposed on law. The Court in arriving at the said conclusion consideredthe decision of House of Lords in Re:Ebrahimi andWestbourne Galleries Ltd. 1973 AC 360 whereupon strongreliance has been placed by Mr. Sundaram as also inRe:Yenidje Tobacco Co. Ltd. (1916) 2 Ch. 412 amongstothers. What is important is not the interest of theapplicant but the interest of the shareholders of thecompany as a whole. If such a principle is applied in acase of winding up of a company, we do not see anyreason not to invoke the said principle in a case underSection 397 of the Act, subject of course to theapplicability of the well known judicial safeguards."13.20. The Company Law Board in the impugned order whilereferring to a similar contention of Mr.S.N.Mookherjee, learnedSenior Counsel appearing for the appellants has, in fact, found thatin the Memorandum of Understanding dated 14.11.2007 the proposedinvestor – M/s.Clear Water Fund was not a party, that the contents ofthe Memorandum of Understanding regarding the transfer of shares bythe second respondent in favour of the petitioners does not relate tothe affairs of the company, that the consideration of Rs.52.50 Croreshas not been crystallized in the Memorandum of Understanding, thatthe Memorandum of Understanding was not supported by consideration,that the Memorandum of Understanding has not been approved by the https://hcservices.ecourts.gov.in/hcservices/ Board of Directors of the first respondent Company and that itsuffers from various other legal infirmities, but still came to aconclusion that they are not relevant for granting relief underSection 397 of the Act, holding that by virtue of the said Memorandumof Understanding dated 14.11.2007 and the subsequent email dated15.11.2007, the second respondent has clearly made out its intentionto go out of the first respondent-Company, especially relating toSubarnarekha Port Project and that the petitioners have acted uponthe Memorandum of Understanding by furnishing the Bank Guarantee bythemselves to the extent of Rs.1 Crore in favour of the Government ofOrissa and ultimately, the Concession Agreement came to be enteredwith the Government of Orissa on 11.1.2008 based on the Memorandum ofUnderstanding dated 14.11.2007.13.21. As crystallized by the established judicial precedents,as referred to above, to the effect that even in cases whereoppression is not made out under Section 397 of the Act, the powersof the Company Law Board are wide enough while enforcing equitablejurisdiction, in my view the Company Law Board has correctly heldthat the second respondent having decided to go out of the projectexpressly has to necessarily act upon his own written undertaking andthe same cannot be said to be outside the powers of the Company LawBoard under Section 397 of the Act.13.22. At this point it is relevant to note the historicjudgment of the House of Lords in O'Neill and another v. Phillips andothers, [1999] 97 CC 807. By referring to the binding nature ofcontractual obligation and enforceability of promise as a matter ofjustice even though the same would not be enforceable in law, it washeld as follows:"This is putting the matter in very traditionallanguage, reflecting in the word "conscience" theecclesiastical origins of the long-departed Court ofChancery. As I have said, I have no difficulty withthis formulation. But I think that one useful cross-check in a case like this is to ask whether the exerciseof the power in question would be contrary to what theparties, by words or conduct, have actually agreed.Would it conflict with the promises which they appear tohave exchanged? In Blisset v. Daniel the limits werefound in the "general meaning" of the partnershiparticles themselves. In a quasi-partnership company,they will usually be found in the understandings betweenthe members at the time they entered into association.But there may be later promises, by words or conduct,which it would be unfair to allow a member to ignore. https://hcservices.ecourts.gov.in/hcservices/ Nor is it necessary that such promises should beindependently enforceable as a matter of contract. Apromise may be binding as a matter of justice and equityalthough for one reason or another (for example, becausein favour of a third party) it would not be enforceablein law."13.23. At this juncture it is relevant to refer to Sections 397,398 and 402 of the Act, which are as follows:"Section:397. Application to Company Law Board forrelief in cases of oppression.- (1) Any member of a company who complain that theaffairs of the company are being conducted in a mannerprejudicial to public interest or in a manner oppressiveto any member or members (including any one or more ofthemselves) may apply to the Company Law Board for anorder under this section, provided such members have aright so to apply in virtue of section 399.(2) If, on any application under sub-section (1), theCompany Law Board is of opinion-(a) that the company's affairs are being conducted in amanner prejudicial to public interest or in a manneroppressive to any member or members; and(b) that to wind up the company would unfairly prejudicesuch member or members, but that otherwise the factswould justify the making of a winding-up order on theground that it was just and equitable that the companyshould be wound up,the Company Law Board may, with a view to bringing to anend the matters complained of, make such order as itthinks fit.""Section:398. Application to Company Law Board forrelief in cases of mismanagement.-(1) Any members of a company who complain-(a) that the affairs of the company are being conductedin a manner prejudicial to public interest or in amanner prejudicial to the interests of the company; or(b) that a material change (not being a change broughtabout by, or in the interests of, any creditors https://hcservices.ecourts.gov.in/hcservices/ including debenture holders, or any class ofshareholders of the company) has taken place in themanagement or control of the company, whether by analteration in its Board of directors, or manager, or inthe ownership of the company's shares, or if it has noshare capital, in its membership, or in any other mannerwhatsoever, and that by reason of such change, it islikely that the affairs of the company will be conductedin a manner prejudicial to public interest or in amanner prejudicial to the interests of the company,mayapply to the Company Law Board for an order under thissection, provided such members have a right so to applyin virtue of section 399.(2) If, on any application under sub-section (1), theCompany Law Board is of opinion that the affairs of thecompany are being conducted as aforesaid or that byreason of any material change as aforesaid in themanagement or control of the company, it is likely thatthe affairs of the company will be conducted asaforesaid, the Company Law Board may, with a view tobringing to an end or preventing the matters complainedof or apprehended, make such order as it thinks fit.""Section:402. Powers of Company Law Board on applicationunder section 397 or 398.-Without prejudice to the generality of the powers of theCompany Law Board under section 397 or 398, any orderunder either section may provide for-(a) The regulation of the conduct of the company'saffairs in future;(b) The purchase of the shares or interests of anymembers of the company by other members thereof or bythe company;(c) In the case of a purchase of its shares by thecompany as aforesaid, the consequent reduction of itsshare capital;(d) The termination, setting aside or modification ofany agreement, howsoever arrived at, between the companyon the one hand; and any of the following persons, onthe other, namely:-(i) the managing director,(ii) any other director,(iii) and (iv) [ *** ] https://hcservices.ecourts.gov.in/hcservices/ (v) the manager, upon such terms and conditions as may, in the opinion ofthe Company Law Board, be just and equitable in all thecircumstances of the case;(e) the termination, setting aside to modification ofany agreement between the company and any person notreferred to in clause (d), provided that no suchagreement shall be terminated, set aside or modifiedexcept after due notice to the party concerned andprovided further that no such agreement shall bemodified except after obtaining the consent of the partyconcerned;(f) the setting aside of any transfer, delivery ofgoods, payment, execution or other act relating toproperty made or done by or against the company withinthree months before the date of the application undersection 397 or 398, which would, if made or done by oragainst an individual, be deemed in his insolvency to bea fraudulent preference;(g) any other matter for which in the opinion of theCompany Law Board it is just and equitable thatprovision should be made."13.24. Sections 397 and 398 of the Act, which relate tooppression and mismanagement respectively, ultimately enable theCompany Law Board to pass orders with a view to bring to an end thematters complained of or to prevent the apprehended conduct, ofcourse subject to the procedural restrictions under Section 399 ofthe Act. In addition to the inherent and general powers which areconferred on the Company Law Board while deciding the issue ofoppression and mismanagement under Sections 397 and 398 of the Act,express powers are given to the Company Law Board under Section 402of the Act. A combined reading of it makes it very clear that thepowers of the Company Law Board are wider, but the intention is tobring to an end the matter complained of. 13.25. By applying the basic purport and intent of Sections 397,398 and 402 of the Act based on the very terms of the provisions andalso the interpretations made by the Hon'ble Apex Court and otherCourts in India when compared to similar concept in English Law, itis clear that, on the factual matrix of the present case, thedirection given by the Company Law Board in paragraph 9(i) is well https://hcservices.ecourts.gov.in/hcservices/ within its powers. Even though the act of the second respondent iscomplained of by the petitioners as a matter of oppression, since thefunding as required has not been done in accordance with theInvestment Agreement dated 26.5.2006 and due to the said improperconduct the petitioners had to suffer by creating encumbrance inrespect of their personal properties for raising an amount of Rs.1Crore to be paid to the Government of Orissa for Subarnarekha PortProject, that itself may not in strict sense be claimed as anoppression due to various reasons including that by such act of thesecond respondent complained of by the petitioners there is no muchdetriment suffered either by the petitioners or the first respondent-Company and particularly, the public purpose which is the basicobject of the project undertaken by the first respondent-Company hasnot been thwarted.13.26. In any event, the continuous association of the secondrespondent with the first respondent-Company in respect of the saidproject would only hamper the project which is of public importance,since the cordial relationship between the parties has becomestrained to an irrecoverable position and looking from that angle, Iam of the view that the order of the Company Law Board insofar asparagraph 9(i) directing the second respondent to sell its shares,etc. to the petitioners for Rs.52.50 Crores or any other amount thatmay be fixed by the Valuer is just and equitable and that part of thedecision needs no interference by this Court.14.1. One other submission raised by the learned Senior Counselappearing for the appellants in all these cases that by the impugnedorder of the Company Law Board the majority shareholders are directedto sell their shares to the minority shareholders and that is notpermissible under the Act, deserves to be rejected. The main focusof the contention is that when the second respondent is holding 70%of the shares with utmost control over the affairs of the firstrespondent-Company and the petitioners are holding only 30% of theshares, having not invested monetarily to a large extent and claimingstake only based on their merit and ability in the port project, thedirection of the Company Law Board in paragraph 9(i) is reallyagainst the basic principles of Corporate Law that the majority rulewill prevail.14.2. At the outset, as elicited above, the relevant provisionsof the Act dealing with the concept of oppression, mismanagement andpowers of the Company Law Board, nowhere restrict the Company LawBoard in appropriate cases to direct the majority shareholders tosubmit to the minority shareholders. It is of utmost importance tounderstand that the concept of oppression and mismanagement itself is https://hcservices.ecourts.gov.in/hcservices/ an exception to the general rule that majority shall rule thecompany, which is acceptable in normal circumstances. Therefore,under Sections 397 and 398 of the Act, the minority who feel asoppressed in the hands of the majority, of course subject to therequirement under Section 399 of the Act, complain to the Company LawBoard for appropriate relief. While granting such relief since thepowers of the Company Law Board are wider, which are always in theangle of bringing an end to the matter complained of with anequitable jurisdiction, it can never be said that under the facts andcircumstances of the case, the Company Law Board cannot compel themajority to submit itself to the minority with the sole object ofbringing an end to the matter complained of.14.3. On the factual matrix of the present case, the saiddirection of the Company Law Board under paragraph 9(i) has beengiven basically on the premise that the second respondent has agreedto go out of the project, based on which the parties have acted uponresulting in certain consequences, and it was in those circumstances,such relief has been granted by the Company Law Board. Contrary tothe submission of Mr.Vedantham Srinivasan, learned Senior Counsel itis immaterial as to whether the said Subarnarekha Port Project is ascheme which forms part of the life and blood of the petitioners andthe second respondent-investor can always find some other person tofinance in some other project. But the issue here is as to whetherthe project has to be continued in the public interest asspecifically enshrined under Section 397 of the Act.14.4. The factual circumstances show that there is no meetingpoint between the petitioners and the second respondent which iscertainly a grave circumstance warranting the Company Law Board toinvoke the just and equitable ground for winding up of the company.But, on winding up of the company, greater prejudice will be causednot only to the first respondent-Company but also to the publicinterest and in such view of the matter, the relief granted by theCompany Law Board cannot be said to be unjust or unreasonable.14.5. Further, as rightly submitted by Mrs.Nalini Chidambaram,learned Senior Counsel appearing for the petitioners when themajority shareholders have shown no interest in the projects of thefirst respondent-company and in the absence of such legitimateinterest, certainly the Company Law Board was right in permitting theminority shareholders to purchase the majority rights.14.6. The impugned of the Company Law Board in that regard is inconsonance with the decision of this Court in Syed Mohamed Ali v. https://hcservices.ecourts.gov.in/hcservices/ M.R.Sundaramurthy and others, referred supra, wherein the DivisionBench presided over by P.V.Rajamannar,C.J. has held as under:"We are not hampered by such rigid technicalities ofprocedure and if the minority in a company complains ofan oppression and disclosed certain grounds of complaintin the petition which are made the basis for the relief,we would hold that the Court should ordinarilyinvestigate the charges. Such investigations may incertain cases be necessary even to regulate the futureconduct of the company for providing against recurrenceof such abuses of power by the majority."14.7. Apropos the said issue it is also apt to refer to thedecision in Ramashankar Prosad and others v. Sindri Iron Foundry (P)Ltd. and others, AIR 1966 Calcutta 512, wherein a Division Bench ofthe Calcutta High Court held that there is no lower limit ofqualification of any shareholder or group of shareholders forcomplaining of oppression and mismanagement and further observed thateven the majority shareholders can apply under the said provisions,in the following words:"56. Relying on the English cases and ShantiprasadJain's case 1965-1 SCA 556: (AIR 1965 SC 1535) beforethe Supreme Court it was argued that the right to applyunder Section 397 or 398 must be confined to cases wherethe complaint is by a minority against the majority andnot vice versa. It was further said that the majorityhad the power to put things in order by calling meetingsand passing necessary resolutions. I however find myselfunable to accept this argument. So far as the Englishsection and English cases are concerned, it cannot begainsaid that the Judges have laid down in nounmistakable terms that the right is given to aminority. So far as the English section is concerned itis the heading 'minorities' which affords some clue toits interpretation. The English Act does not contain asection like Section 399 of the Indian Act which is acode by itself as to the qualification necessary forapplication under Sections 397 and 398. I see no reasonfor holding that Section 399 was only aimed at fixingthe lower limit of qualification of any shareholder orgroup of shareholders complaining of oppression andmismanagement. If the legislature has fixed a lowerlimit but no upper limit as to qualification for reliefand if the object of the section be to prevent amischief and to remove oppression and mismanagement ofthe company. I see no reason why an upper limit shouldbe implied so as to bring the section in line with the https://hcservices.ecourts.gov.in/hcservices/ English section. If the section is of a remedial nature,its proper construction should be to give the words usedtheir widest amplitude. Probably the legislature inEngland did not contemplate belligerent and unprincipledshareholders like the appellants before us in this case.The facts in this case show very clearly that there isno chance of redress in the domestic forum of thecompany. If a Board meeting was to be called, one groupwould contend that there were five directors, whereasthe other group would urge that there were seven. If ameeting of the shareholders was to be convened,according to one group there would be only sixteenshareholders while according to the other the numberwould exceed twenty-five. One group would contend thatthe number of shares issued was 8606, while the othergroup would assert that another lot of 2113 had beenissued. There is no certainty even about the registeredoffice of the company. According to one group theregistered office is at Dr. Abani Dutta Road, whileaccording to the other it is at Jogendra Mukherjee Road.There would be complete chaos and confusion if anymeeting was to be summoned."It was further held that if a Court arrives at an equitableconclusion based on evidence even if certain facts are lackingjustice will not suffer, as under:"64. It must be admitted that a strong case was not madeout in the petition and what view the court would havetaken if a point of demurrer had been argued it isdifficult to say. But once all the evidence is beforethe court and the case of oppression clearly emergesfrom the facts disclosed, it would not be proper tomeasure the rights of the parties only in terms of theassertion made in the petition. In Firm Sriniwas RamKumar v. Mahabir Prasad, AIR 1951 SC 177, the courtobserved that "there would be nothing improper in givingthe plaintiff a decree upon the case which the defendanthimself makes. Again in Kedar Lal v. Hari Lal, AIR 1952SC 47, it was observed by Bose,J. (paragraph 51) "Iwould be slow to throw out a claim on a meretechnicality of pleading when the substance of the thingis there and no prejudice is caused to the other side,however clumsily or inartistically the plaint may beworded. In any event, it is always open to a court togive a plaintiff such general or other relief as itdeems just to the same extent as if it had been askedfor, provided that occasions no prejudice to the otherside beyond what can be compensated for in costs." Inthis case the respondents ought not to be heard to https://hcservices.ecourts.gov.in/hcservices/ complain that the case of oppression had not been fullymade out in the petition if it transpires as a result ofthe hearing that the petitioners were oppressed so as tobring the case under Section 397 of the Companies Act.The case of justice will not suffer by the courtarriving at a conclusion on a consideration of all theevidence before it even if the original plaint waslacking in particulars. Moreover in cases like this thedictum of Lord President Cooper in Elder's case, 1952 SC49 that "the section warrants the court in looking atthe business realities of a situation and does notconfine them to a narrow legalistic view" adopted byJenkins, L. J. in (1958) 3 All ER 689 at p. 701, oughtto be borne in mind."In the said decision, while considering the argument that the learnedSingle Judge has not evolved a method to put an end to the permanentevil of the company, viz., conflict between two groups ofshareholders, the Division Bench held as under:"66. A complaint was justly made that the learned Judgefailed to evolve a formula for remedying the permanentevil of the company, namely, the conflict between twogroups of shareholders. In my opinion, the companycannot function properly if these two warring groupscontinue to hold the shares. As a matter of fact, at theearly stage of the hearing of the appeal, a suggestionwas made that one of the two groups should buy up theother's holding but nothing tangible came out ofattempts made by counsel on that behalf. In my opinion,the special auditor should be directed to find out thefair value of the shares at the date of the petition aswas directed by Lord Denning in Scottish Co-operativeWholesale Society Ltd.'s case 1959 AC 324. We also orderthe oppressor i.e. the respondents to the petition tobuy the shares of the petitioners. In case therespondents are unable or unwilling to buy the shares,the petitioners should have an option to buy therespondent's shares at the same price. The price is tobe arrived at on the basis of the break-up value of theshares. The respondents should be given three monthstime after the submission of the report of the specialauditor and the ascertainment of the value of the sharesto buy out the petitioners'. In default the petitionerswill have the right to buy up the respondents' shareswithin a further period of three months from that date.Except for this modification the order made by thelearned trial Judge will stand." https://hcservices.ecourts.gov.in/hcservices/

15.1. As far as the last submission complained about oppressionand mismanagement which relates to the alleged locking of thepremises of the registered office of the first respondent-Company bythe second respondent-Company and others and freezing of the accountsof the first respondent-Company, it is no doubt true that there wasactually no transaction conducted on behalf of the first respondent-Company. I have already found that there are only two projects ofthe first respondent-Company and the Machilipatnam Port Projectcannot be termed as the project of the first respondent-Company,while in respect of Subarnarekha Port Project even though it is theproject of the first respondent-Company, the entire project is in thepreliminary stage since the lands required have not even beenallotted by the Government of Orissa and therefore, it cannot be saidthat the first respondent-Company's affairs have been conducted in amanner oppressive to the petitioners by virtue of the closure of theregistered office premises, which admittedly belonged to the secondrespondent.15.2. Further, it was found in the Advocate Commissioner'sreport that some of the documents which were found in the registeredoffice of the first respondent-Company, which belonged to the secondrespondent-Company, are relating to the private transactions of thepetitioners. It is no doubt true that the learned counsel appearingfor the petitioners have submitted that those papers areintrinsically connected with the port projects and therefore, cannotbe said to be private affairs of the petitioners, so as to draw aconclusion that the petitioners who have undertaken to work full timefor the projects of the first respondent-company have been doingtheir private works in a commercial manner.15.3. Again, in respect of the alleged freezing of the bankaccounts by the second respondent which is complained as an incidentof oppression, it is not the case of the petitioners that the fundshave been diverted by the second respondent by freezing the account.The controversy between the parties erupted only after the middle ofthe year 2007. As found by the Company Law Board, in my viewcorrectly, when the bank account has been jointly operated by thepetitioners along with the third respondent there can be no scope forwrongful withdrawal of funds by the petitioners, which is also notthe case of the petitioners against the second and third respondents.15.4. In the absence of any factual finding by the Company LawBoard in the impugned order that by virtue of either locking of theregistered office of the first respondent-Company or by freezing ofthe accounts, the objects of the first respondent-Company have beenhampered by any impediment or the petitioners have suffered any loss,it is not possible to accept the view of the Company Law Board thatthe said two incidents would amount to oppression and mismanagement.It is true that by virtue of the strained relations between the https://hcservices.ecourts.gov.in/hcservices/ petitioners and second and third respondents there has been adeadlock created in the first respondent-company's affairs and thereis a loss of mutual trust and lack of probity. Such incident itselfis not sufficient, in my view, to constitute oppression which shouldbe tested in the light of the powers of the Court under Section 433(f) of the Act to take the extreme step of winding up of the companyunder just and equitable ground, as such extreme step would be moreprejudicial to the affairs of the company and also the interest ofits members and therefore, remedial measures are given under Sections397 and 402 of the Act and hence, the relief given in that regard inparagraph 9(i) of the impugned order is quite within the jurisdictionof the Company Law Board for rendering substantial justice betweenthe parties. In fact, the Company Law Board has given a proper reasonfor arriving at such conclusion, which is as follows:"The only Board meeting, which was held on 21.5.2008 inthe course of the present proceedings amidst thecontroversies raised by the petitioners could not serveany purpose in view of non-implementation of any of theresolutions passed at the aforesaid Board meeting. Thesemutual steep differences do pave the way for the exit ofone group of shareholders from the Company to ensurethat the port projects are timely implemented withoutaffecting the public interest. The end situation wouldshow that the parties cannot any more work together andtherefore, the relationship should be ended, as claimedby the petitioners, especially when they are not solelyresponsible for the present situation. It is,therefore, evident that the proposal of the respondentsfor setting up a Project Co-ordination Committee withparticipation of the representatives from both sideswill in no way be feasible for carrying forward theSubarnarekha Port Project. The CLB is even otherwiseempowered to grant reliefs under section 397 in order todo so substantial justice between the parties, in thefacts of the present case, in the light of theprinciples enunciated in (a) Kamal Kumar Dutta and Anr.Vs. Ruby General Hospital Ltd. and ors. and (b) M.S.D.C.Radharamanan Vs. M.S.D.Chandrasekara Raja and Anr."15.5. Therefore, there is absolutely no reason to interfere withthe said finding and the consequential relief granted under 9(i) ofthe impugned order.16.1. Coming to the next direction given by the Company LawBoard under the impugned order under paragraph 9(iii) of the impugnedorder, the Company Law Board is no doubt well within its right andjurisdiction to direct the petitioners to reconstitute the Board of https://hcservices.ecourts.gov.in/hcservices/ Directors of the first respondent-Company in exclusion of the secondrespondent and its nominees and carryon business in terms of itsArticles of Association, since the same is consequential to therelief granted under paragraph 9(i) of the impugned order of theCompany Law Board.16.2. As submitted by the learned Senior Counsel on the side ofthe appellants, inasmuch as a statutory appeal is available to theaffected parties before this Court under Section 10F of the Act, theCompany Law Board should have directed the reconstitution after therelief granted under paragraph 9(i) of the impugned order iscomplied with. As it has been held in hierarchy of judgments, aselicited above, the power of the Company Law Board to grant relief ison just and equitable ground and it is in that sense the power iswider. Still, while passing such orders by exercising the widepowers conferred, the Company Law Board is certainly bound toconsider the interest of all the parties concerned before giving suchfar-reaching directions. When once the second respondent and itsnominees are directed to go out of the first respondent-Company onreceipt of the consideration which is well within the powers of theCompany Law Board under Sections 397 or 402 of the Act, the CompanyLaw Board ought to have secured the interest of the second respondentand its nominee Directors at least insofar as it relates to therelief granted under paragraph 9(i) of the impugned order. 16.3. As rightly submitted by the learned Senior Counsel for theappellants, the exercise of such power by the Company Law Board in afar-reaching manner has certainly resulted in causing detriment torespondents 2 to 6 even in implementing the relief granted underparagraph 9(i) of the impugned order. In that view of the matter,the relief under paragraph 9(iii) of the impugned order ought to havebeen granted only after securing the interest of the secondrespondent, which has been directed to go out of the firstrespondent-Company.16.4. It is under such circumstances that the subsequent conductof the petitioners is relevant as to how it has sought to make theimplementation of the relief granted under paragraph 9(i) of theimpugned order, even if it is accepted by the second respondent,impracticable and otiose. While it is true that by virtue of thesaid relief the petitioners are entitled to reconstitute the Board ofDirectors of the first respondent-Company and carryon the business interms of the Articles of Association, such right should be permittedto be exercised by the petitioners only after protecting the interestof the second respondent and other nominee Directors.17.1. It is to reveal the subsequent conduct of the petitionersas well as the second respondent, both the parties sought to adduceadditional evidence in the form of documents and filed M.P.Nos.2, 3 https://hcservices.ecourts.gov.in/hcservices/ and 4 of 2009 in C.A.No.11 of 2009, M.P.Nos.2, 3, 4 and 6 inC.A.No.12 of 2009, M.P.Nos.2, 3 and 6 in C.A.No.13 of 2009,M.P.Nos.2, 3 and 7 in C.A.No.14 of 2009 and M.P.Nos.2, 3, 4 and 7 inC.A.No.15 of 2009. The said miscellaneous petitions are ordered.17.2. The Company Law Board which has directed the secondrespondent to transfer all its shares and interest in the firstrespondent-Company for a consideration of Rs.52.50 Crores or for anyother fair value to be fixed by an Expert Valuer and has furtherdirected the case to be posted after filing of appropriate affidavitby the parties for completion of such formalities in fixing theconsideration as per the Expert's value, ought not to have directedthe reconstitution of the Board of Directors of the first respondent-Company even before such exercise could be completed.17.3. It is relevant to point out that after the Company LawBoard passed the impugned order on 27.5.2009, the present appealshave been filed well within the statutory period of limitationprescribed by presenting the appeals on 18.6.2009. As statedearlier, when the matter came up for admission before this Court on24.6.2009, Mr.T.V.Ramanujun, learned Senior Counsel appearing for thepetitioners has submitted that pursuant to the impugned order of theCompany Law Board, the Board of Directors have been reconstituted,but he has undertaken that the newly constituted Board of Directorswill not convene any meeting.17.4. It is seen that even during the pendency of theproceedings before the Company Law Board, the petitioners havefloated the said Subarnarekha Port Private Limited on 23.9.2008 assubscribers to the Memorandum and Articles of Association and thecompany was incorporated on 1.10.2008, constituting it as a SpecialPurpose Vehicle of the first respondent-Company and the petitionershave signed as signatories to the Memorandum and Articles ofAssociation, each having been allotted 5000 equity shares as it isalso evidenced from Form 32 filed before the authorities under theAct. In Form 1 filed by the newly constituted Company - SubarnarekhaPort Private Limited on 1.10.2008, the authorised capital of thecompany is stated as Rs.10 Lakhs with number of equity shares as onelakh of Rs.10/- face value.17.5. In Form 18 filed by the newly constituted Company as perSection 146 of the Act on the same day, viz., on 1.10.2008, theregistered office of Subarnarekha Port Private Limited has beenstated as at Bhubaneswar, Orissa. On fact it is true that thesefactual things, which were in existence at the time when theproceedings before the Company Law Board were pending, were notbrought to the notice of the Company Law Board nor were informed tothis Court at the time when the appeals came up for admission. https://hcservices.ecourts.gov.in/hcservices/

17.6. Pending the Company Petition, the Company Law Board passedan interim order on 18.9.2008 in C.A.No.136 of 2008 in C.P.No.13 of2008 to the following effect, based on the statement made on behalfof the second respondent and others that the petitioners have beencorresponding with the Government of Orissa without informinganything to the majority shareholders:"(a) the petitioners shall make available to therespondents 2 to 6, copies of the entire correspondenceso far exchanged between Government authorities and thepetitioners, in connection with the land requirement fordevelopment of Port at Subarnarekha Mouth;(b) the petitioners shall henceforth mark, in favour ofthe respondents 2 to 6, copy of any correspondence whichmay be sent to Government authorities in connection withthe land requirement, for development of Port atSubarnarekha Mouth. The respondents are at liberty tomove the Bench, if needed, on receipt of any such copyof the communication from the petitioners;(c) the respondents shall not directly correspond withGovernment authorities in connection with the landrequirement for development of Port at SubarnarekhaMouth, until further orders; and(d) the petitioners shall ensure that the project of theCompany is in no way be prejudiced on account of any oftheir actions."17.7. The first petitioner, by letter dated 20.4.2009, informedthe Deputy Secretary to Government, Commerce and TransportDepartment, Government of Orissa about the allotment of lands,renewal of Bank Guarantee, etc., but has not chosen to revealanything to the Government of Orissa, even at that stage, about theconstitution of a new company - Subarnarekha Port Private Limited bythe petitioners themselves.17.8. Immediately after the impugned order dated 27.5.2009 waspassed by the Company Law Board, it is seen that the third respondentsent an email dated 29.5.2009 to the petitioners informing them thatthe respondents are taking legal action against the order of theCompany Law Board. On the same day, the third respondent has sent aletter to the petitioners stating that the meeting of the Board ofDirectors of the first respondent-Company will be held on 6.6.2009 todecide about the impugned order passed by the Company Law Board.17.9. By a letter dated 29.5.2009 addressed to the ChiefSecretary, Government of Orissa, the first petitioner as a JointManaging Director of the first respondent-Company has informed theGovernment about the order of the Company Law Board and requested foran appointment to meet the Government officials in person. On the https://hcservices.ecourts.gov.in/hcservices/ same day, by another letter addressed to the Commissioner-cum-Secretary, Department of Commerce and Transport, Government ofOrissa, the first respondent has enclosed a copy of the order of theCompany Law Board and requested the said official to confirm theappointment on 3.6.2009 at 2.30 pm. On the very same day, a similarletter was addressed to the Principal Secretary to the Hon'ble ChiefMinister, Government of Orissa.17.10. On the same day, viz., on 29.5.2009, the petitioners havepassed a resolution on behalf of the first respondent-Company withoutnotice to the second respondent, who is the majority shareholder, andinducted (i) Ilangumaran Matchendran, (ii) Prabhakar Ram Tripathi,and (iii) Ashok Bhatnagar as Additional Directors and furtherresolved that respondents 3 to 5 cease to be Directors of the firstrespondent-Company by virtue of the order of the Company Law Boarddated 27.5.2009 and that the registered office of the company bechanged to New No.84, 'Dakshin', 1st Floor, 1st Avenue, Indranagar,Adayar, Chennai – 600 020 with effect from 29.5.2009. It was alsoresolved to authorise the first petitioner to operate all bankaccounts and file statutory forms like Form 32, etc. Accordingly, itis seen that Form 32 has also been filed on the same day, viz.,29.5.2009, however in the said form, the registered office of thefirst respondent-Company is stated as "Mahalakshmi", 1st Floor, NewNo.290, Peters Road, Gopalapuram, Chennai-600 086. It is not thecase of the petitioners that for passing such resolution notice hasbeen given to the second respondent and other nominee Directors.17.11. On the next day, viz., on 30.5.2009, the first petitionerhas communicated to the Government of Orissa about the reconstitutionof the Board of Directors of the first respondent-Company byinducting the new Directors and informing the cessation of the secondrespondent and its nominee Directors as Directors of the firstrespondent-Company as per the Company Law Board order dated27.5.2009.17.12. It is really surprising that on the very next day, viz.,on 31.5.2009, which is stated to be a Sunday, the first respondent-Company passed a resolution resolving to subrogate the rights andobligations of the first respondent-Company in the ConcessionAgreement entered with the Government of Orissa dated 11.1.2008relating to Subarnarekha Port Project in favour of the newlyconstituted Subarnarekha Port Private Limited.17.13. On the same day, viz., on 31.5.2009, the newlyconstituted company - Subarnarekha Port Private Limited, representedby the petitioners themselves passed a resolution accepting thesubrogation of the Concession Agreement which stood in the name ofthe first respondent-Company and authorising the petitionersthemselves to execute necessary documents of subrogation. It is https://hcservices.ecourts.gov.in/hcservices/ further astonishing to note that, on the same day, on behalf of thefirst respondent-Company the petitioners addressed to the Governmentof Orissa about the constitution of Subarnarekha Port Private Limitedwith its registered office at Bhubaneswar, even though the company-Subarnarekha Port Private Limited came to be floated much earlier,viz., on 1.10.2008 itself, stating that "M/s.Subarnarekha PortPrivate Limited will hereafter undertake all aspects of the projectenvisaged in the Concession Agreement. This letter is for yourinformation as per Clause 2.4 of the Concession Agreement". The saidletter was signed by the first petitioner as Joint Managing Directorof the first respondent-Company. 17.14. On the same day, viz., 31.5.2009, the first petitioner,as Director of Subarnarekha Port Private Limited, has intimated theCommissioner-cum-Secretary, Department of Commerce and Transport,Government of Orissa consenting to all the terms of the subrogation.The contents of the said letter are as follows:"This has reference to the Clause 2.4 of the signedconcession agreement for the Subarnarekha Port Project.We wish to introduce ourselves as the Special PurposeCompany incorporated for this project. Our Company hasalready entered into a Deed of Subrogation on 31st May2009 with M/s.Creative Port Development Pvt. Ltd.In this regard we confirm and consent to all the termsof the Subrogation as in the deed mentioned above withCreative Port Development Pvt. Ltd. We also confirm andconsent to being the successors to the rights, dutiesand obligations of M/s.Creative Port Development Pvt.Ltd. as per the terms of the signed Concession Agreementon 11th January, 2008.All activities for the project as per the aboveConcession Agreement shall be undertaken by ushereafter.This information is being submitted to your office asper the clause 2.4 of the concession agreement."17.15. The first respondent-Company, which has been taken overby the petitioners by virtue of the reconstitution within a matter oftwo/three days, on 31.5.2009 filed Form-2 before the authorities asrequired under Section 75(1) of the Act, stating about re-allotmentof shares in the first respondent-Company, by allotting 75000 equity https://hcservices.ecourts.gov.in/hcservices/ shares to each of the petitioners of Rs.10/- each and 25000 ofpreference shares to each of the petitioners of Rs.100/- each in theshare capital of the said company.17.16. The Deed of Subrogation entered by the petitioners onbehalf of the first respondent-Company in favour of Subarnarekha PortPrivate Limited, represented by the petitioners themselves, which isstated to have entered on 31.5.2009 as per the resolution, has beenin fact signed by the petitioners themselves on behalf of the firstrespondent-Company only on 1.6.2009 and the non-judicial stamp papersalso shows that the stamp papers have been purchased on 1.6.2009.Therefore, it is clear that having signed such a deed of subrogationon 1.6.2009 the petitioners have chosen to create records statingthat everything has been done on 31.5.2009 itself. This only showsthe hurried way in which the entire act has been done by thepetitioners, probably to complete the entire issue taking advantageof the order of the Company Law Board to frustrate the claim of thesecond respondent and its nominee Directors.17.17. The more shocking of all the conducts of the petitionersis entering of Memorandum of Understanding dated 4.6.2009 betweenSubarnarekha Port Private Limited, represented by the petitioners andSignature Group International Limited, Cayman Islands of U.A.E., bywhich the said company has agreed to be responsible for arranging theentire equity which is estimated at around Rs.6000 Million or aroundUS$ 125 Million. The said Memorandum of Understanding entered into bythe Subarnarekha Port Private Limited has also been communicated bythe first petitioner, as a Director of Subarnarekha Port PrivateLimited, by letter dated 5.6.2009, to the Deputy Secretary toGovernment, Department of Commerce and Transport, Government ofOrissa.17.18. All these acts are, no doubt, well within the powers ofthe petitioners since they are empowered by the impugned order of theCompany Law Board. But, they are relevant for the purpose ofdeciding the correctness of the direction given by the Company LawBoard in the context of the magnitude of implications caused by theconduct of the petitioners.17.19. By virtue of the subrogation of the Concession Agreementin respect of Subarnarekha Port Project, all the rights have beentransferred to the newly constituted - Subarnarekha Port PrivateLimited consisting of the petitioners alone, who in their turn havecompletely made it over to the Signature Group International Limited,Cayman Islands of U.A.E., thereby leaving nothing to be recovered bythe second respondent even in respect of the relief given by theCompany Law Board under the impugned order under paragraph 9(i) fromthe first respondent-Company. This is not an ordinary situation to https://hcservices.ecourts.gov.in/hcservices/ be lightly taken by any judicial forum. This can only be treated asone of the apt instance as to how the consequence of a judicial ordercan be disastrous if the same is passed without any sense ofanticipation, even though the same is consequential and within thejurisdiction of such forum, as happened in the present case. In myconsidered view, at least for the purpose of giving effect to its ownorder in relief 9(i), the Company Law Board ought not to have grantedsuch far-reaching relief under paragraph 9(iii) which has been takenadvantage of by the petitioners to the maximum possible extent whichhas definitely resulted in great hardship to the second respondenthaving invested major share in the first respondent-Company. Theconcept of justice and equity which has prompted the Company LawBoard to grant relief under paragraph 9(i) should have been appliedequally while granting the relief under paragraph 9(iii).17.20. It is true that by such hasty conduct of the petitioners,the petitioners have simply created a big vacuum in the legal andfinancial status of the first respondent-Company to which the secondrespondent, as a financial partner having majority shareholding tothe extent of 70%, has invested substantial amount. It is nowlegally possible for the first respondent, as on date, to even saythat by virtue of the Company Law Board order the first respondent isceased to exist and therefore, there is no obligation on the part ofthe first respondent even to make such payment to the secondrespondent as found in paragraph 9(i) of the impugned order of theCompany Law Board. This is really a status of deadlock which hasbeen created by the order of the Company Law Board by granting reliefunder paragraph 9(iii).17.21. As it is well settled principle that an equitable andworkable order has to be passed in the interest of the members of thefirst respondent-Company, especially with reference to respondents 2and its nominee Directors, and at the same time the public interesthas to be preserved since the project, namely Subarnarekha PortProject is a project which is to be enjoyed by the public at large,this Court is empowered to pass an equitable order by striking abalance between the two extremes and the virtual deadlock which hasbeen created by the impugned order of the Company Law Board in thisregard. While arriving at such conclusion, this Court is of the viewthat at any cost the public project should not be invalidated.18.1. As far as the last relief granted under paragraph 9(iv) ofthe impugned order of the Company Law Board which states that thepetitioners shall inform the second respondent about the majordevelopments in the Subarnarekha Port Project every month, by virtueof the additional documents which are stated to have been received bythe second respondent as well as the documents filed on behalf of thepetitioners, all material facts required from the date of passing ofthe order by the Company Law Board till 25.6.2009 are available https://hcservices.ecourts.gov.in/hcservices/ before this Court either by way of information obtained under theRight to Information Act by the second respondent or otherwise. Itis also relevant to point out that in compliance of the directions ofthis Court dated 10.7.2009 extracted above, Mr.T.V.Ramanujun,learned Senior Counsel appearing for the petitioners has alsoproduced copies of the documents in the form of typeset relating tothe subsequent events starting from 1.8.2008 till 25.6.2009.18.2. After perusal of the said documents filed in the form oftypeset of papers by Mr.T.V.Ramanujun, learned Senior Counsel copieswere directed to be given to the learned counsel for the secondrespondent, which has been complied with and based on the informationand documents obtained, the second respondent has filed miscellaneouspetitions for receiving additional documents, apart from thepetitioners themselves filing applications for receiving additionaldocuments, which are all allowed, as already stated, and therefore,there is nothing more to be communicated to respondents 2 and othersby the petitioners up to the last communication dated 25.6.2009.19. Taking into account all the findings given by me in respectof each and every point raised in the light of the enlightened legaland factual submissions by M/s.S.N.Mookherji, A.L.Somayajee,P.S.Raman, P.Arvind Datar, learned Senior Counsel and Mr.P.H.ArvindhPandian, learned counsel on the side of the appellants andM/s.Sudipto Sarkar, Vedantham Srinivasan, T.V.Ramanujun, Mrs.NaliniChidambaram, learned Senior Counsel and Mr.V.Raghavachari, learnedcounsel on the side of the respondents, but for whose assistance itwould not have been possible to decide the issues in a precisemanner, the issues raised are answered as follows:(i) the fourth respondent (P.K.Misra), being the nomineeof the second respondent (SREI), is a promoter of thefirst respondent-Company (Creative Port DevelopmentPrivate Limited);(ii) Machilipatnam Port Project granted by Government ofAndhra Pradesh in favour of the Consortium in accordancewith the Consortium Agreement dated 25.3.2006 and theletter of intent dated 20.1.2007 is not a project of thefirst respondent-Company (Creative Port DevelopmentPrivate Limited);(iii) there is no obligation on the part of respondents2 to 6 (appellants in these company appeals) toreimburse 30% of benefits enjoyed by the secondrespondent (SREI) to the petitioners or the firstrespondent-Company (Creative Port Development PrivateLimited);(iv) the alleged conduct of the second respondent (SREI)in relation to Machilipatnam Port Project cannot be heldto be oppressive towards the petitioners or towards the https://hcservices.ecourts.gov.in/hcservices/ first respondent-Company (Creative Port DevelopmentPrivate Limited) under Section 397 of the Act;(v) the Subarnarekha Port Project granted by Governmentof Orissa entered by way of Memorandum of Understandingdated 18.12.2006 and subsequent Concession Agreementdated 11.1.2008 is a project of the first respondent-Company (Creative Port Development Private Limited);(vi) the non-funding by the second respondent-Investor(SREI) on the said project cannot be treated asoppressive or against public interest in the light ofMemorandum of Understanding dated 14.11.2007 and theconsequent conduct of the petitioners who have chosen tocontribute an amount of Rs.1 Crore towards theGovernment of Orissa and the third respondent who hasagreed to receive Rs.52.50 Crores as a consideration forleaving from the first respondent-Company in respect ofthe said project respectively;(vii) by virtue of the Memorandum of Understanding dated14.11.2007 read with the categoric letter of the thirdrespondent dated 15.11.2007, by which the secondrespondent has agreed to receive a sum of Rs.52.50Crores to leave the first respondent-Company relating toSubarnarekha Port Project is binding on the secondrespondent and by applying the principle of estoppel, itis not open to the second respondent to go back fromsuch letter, especially when the same has been actedupon by the petitioners; and the impugned order of theCompany Law Board is not in effect enforcing theMemorandum of Understanding dated 14.11.2007 since theorder of the Company Law Board in that regard is only togive effect to the letter of the third respondent dated15.11.2007, which is certainly binding upon the secondrespondent;(viii) the directions of the Company Law Board under theimpugned order against the second respondent to transferits shares and interest in the first respondent-Companyin favour of the petitioners for consideration ofRs.52.50 Crores or any such fair value as to be decidedby the Expert Valuer is well within the powers of theCompany Law Board and the same cannot be held to bewithout jurisdiction, perverse or illegal;(ix) the direction of the Company Law Board permittingreconstitution of the first respondent-Company and thesubsequent conduct of the petitioners, as brought to thenotice of this Court by way of additional documents,have caused great impediment to the rights and interestof the second respondent in the first respondent-Companyeven in respect of implementation of the direction ofthe Company Law Board to sell their shares and interest https://hcservices.ecourts.gov.in/hcservices/ for a consideration stated above and therefore, requiresa proper and equitable order taking into considerationthe interest of both the parties and the public purposefor which the Subarnarekha Port Project is intended for;(x) the relief of disclosure of subsequent events havebeen in effect complied with by production of variousdocuments as on 25.6.2009; (xi) the closing of the registered office of the firstrespondent-Company by the second respondent and othersby putting an over lock and the freezing of the accountsof the first respondent-Company cannot be said to be aninstance of oppression and mismanagement since the sameis not so grave for the Company Court to decide for anultimate order of winding up under Section 433(f) of theAct on just and equitable grounds for the reasonsexplained; and(xii) since the Company Law Board has decided the entireissue as a whole and due to the reasons arrived at bythe Company Law Board, there is no necessity for theCompany Law Board to give a separate finding in theContempt Application while disposing the CompanyPetition.20. For the foregoing reasons, the appeals are partly allowedin the following terms:(i) the order of the Company Law Board in respect ofrelief granted under paragraph 9(i) is confirmed with adirection to the second respondent to transfer itsshares and all other interest held in the firstrespondent-Company (Creative Port Development PrivateLimited)to the petitioners either at an agreedconsolidated price of Rs.52.50 Crores or any fair valueto be arrived at by an independent Expert Valuer as at31.3.2009, whichever is higher. The Company Law Boardshall appoint, on an application by the secondrespondent within a period of thirty days from the dateof receipt of a copy of this order, an independentExpert Valuer and decide about all other formalities inthat regard;(ii) the relief granted by the Company Law Board underparagraph 9(ii) stands set aside, holding that thesecond respondent shall not have any obligation toreimburse any benefit accrued by it under MachilipatnamPort Project either to the petitioners or the firstrespondent-Company;(iii) all further acts of the petitioners pursuant tothe order of the Company Law Board dated 27.5.2009 are https://hcservices.ecourts.gov.in/hcservices/ directed to be kept in abeyance, except those vital actswhich require the petitioners to act for the purpose ofretaining the Subarnarekha Port Project with theGovernment of Orissa, till the formalities in respect offixing the consideration for exit of the secondrespondent is fixed by the Company Law Board, as statedabove, and the entire amount is paid to the secondrespondent; and(iv) the petitioners who have disclosed the affairs ofthe Subarnarekha Port Project as on 25.6.2009, shallcontinue to disclose any further developments andcommunications by sending copies to the secondrespondent periodically once in a month commencing fromthe end of August, 2009 till the formalities for exit ofthe second respondent are completed in full and tillsuch formalities are completed respondents 2 to 5 shallbe deemed to continue as the Directors of the firstrespondent-Company.No costs. With regard to the miscellaneous petitions to impleadSubarnarekha Port Private Limited, viz., M.P.Nos.10 of 2009 inC.A.No.11 of 2009, M.P.No.5 of 2009 in C.A.No.12 of 2009, M.P.No.10of 2009 in C.A.No.13 of 2009, M.P.No.6 of 2009 in C.A.No.14 of 2009,and M.P.No.5 of 2009 in C.A.No.15 of 2009, since as per thediscussions Subarnarekha Port Private Limited is found to becontrolled by the petitioners themselves who are before this Courtand the documents have also been produced and discussed in detail, itis not necessary to implead Subarnarekha Port Private Limited as aparty and hence, these miscellaneous petitions are closed asunnecessary. All other miscellaneous petitions seeking injunctionand direction, viz., M.P.Nos.5 to 9 in C.A.No.11 of 2009, M.P.Nos.7to 11 in C.A.No.12 of 2009, M.P.Nos.4, 5 and 7 to 9 in C.A.No.13 of2009, M.P.Nos.4, 5 and 8 to 10 in C.A.No.14 of 2009, and M.P.Nos.6and 8 to 11 of 2009 in C.A.No.15 of 2009, are closed.Sd/Asst.Registrar/true copy/Sub Asst.Registrarsasi https://hcservices.ecourts.gov.in/hcservices/ To1.The Company Law Board,Addl. Principal Bench,Chennai.2.The Section Officer,VR Section, High Court,Madras.+1cc to Mr.K.Moorthy, Advocate Sr 7176KG(CO)km/5.10.C.A.Nos.11 to 15 of 2009