Mrs. Michelle Jawad-al-fahoum Vs. Indo Saudi (Travels) Pvt. Ltd. and - Court Judgment

Excerpt:
1. in the petition filed under section 397/398 of the companies act, 1956, in the matter of indo saudi travels private limited, when arguments were in progress, considering the facts and circumstances of the case, we had advised the parties that they should try to resolve the dispute amicably. accordingly, the matter of settlement was discussed in our presence on a few occasions without any final result.on july 8, 1997, the parties finally agreed that the petitioner would sell her group's shares to respondent no. 2 or his nominees or to the company for a consideration of rs. 2.3 crores. this settlement was reached in our presence and a draft order containing various terms of compromise was dictated in the presence of both the parties and their counsel and was also signed by the parties along with their counsel.before the fair order could be issued, respondent no. 2 made an application for incorporating certain terms in the consent order. the fair order was issued on august 14, 1997, wherein we have also mentioned about this application.2. this application, c. a.no. 196 of 1997, was heard on september 2, 1997. shri ramachandran appearing for the respondents submitted that, at the time when the amount of rs. 2.3 crores was agreed, respondent no. 2 was under the impression that certain dues payable by the petitioner to the company as well as to the respondents would be adjusted against this amount of rs. 2.3 crores and to make it more explicit he stated that the same should be incorporated in the consent terms. he further stated that the application for amendment was filed without much loss of time, i.e., within four days from the date of entering into the consent terms. according to him, the consent terms incorporated only the broad agreement between the parties and the parties should have later filed a joint memo with an affidavit before the same could be treated as binding on the parties. he, therefore, sought for incorporating, in the consent terms, the various issues raised in the application. he also submitted that, in case his prayers are not incorporated in the consent terms, then the petition may be heard on the merits.3. shri choudhary appearing for the petitioner submitted that the application should be straightaway rejected. he submitted that while the petitioner is not averse to some of the items in the application, yet the question of reducing the amount of rs. 2.3 crores would not arise at all inasmuch as the same was agreed after detailed discussion in the presence of the company law board. he questioned the contentions of shri ramachandran that the amount of rs. 2.3 crores was subject to any adjustment inasmuch as not only had the amount been specified in the consent terms but even the instalments of payment of the said amount has been indicated. in other words, even the respondents could not have any perception as contended by him that there would be some adjustment against this amount. therefore, he submitted that, in the absence of concurrence of the petitioner, the consent terms should not be modified and should be allowed to stand as they are and the question of hearing the petition on the merits would not arise after the company law board had disposed of the petition on the basis of the consent terms.4. before we could issue our order on this application, another application, viz., c. a.no. 202 of 1997, was filed by the respondents which was considered by us on september 10, 1997, when we directed the petitioner to file a reply so that the matter could be considered on october 1, 1997. on october 1, 1997, respondent no. 2, who was present in person, submitted that his counsel was not in a position to appear on that day and as such sought for adjournment. while allowing the prayer for adjournment, we also imposed a cost of rs. 5,000 on respondent no. 2. this application, namely, c.a. no. 202 of 1997, was heard on november 17, 1997, on which date certain shareholders of the company filed an application, c.a. no. 261 of 1997, seeking permission to be impleaded as parties to the proceedings and also seeking stay of further proceedings in the matter in view of the civil suit that had been initiated by them in the high court of bombay.5. in c.a. no. 202 of 1997, filed on september 8, 1997, by the second respondent, the applicant has stated that the payment of rs. 2.3 crores was subject to the fulfilment of an understanding that had been arrived at between respondent no. 2 and the petitioner as detailed in para. 2 of the application. the parties were to reduce the understanding into writing which was also to be incorporated in the consent terms before an order on the terms of consent was issued by the company law board.thus, when respondent no. 2 signed the consent terms, he was under the impression that it was only a draft agreement to bind the parties, and the same was not to be acted upon till such time, as all the terms of understanding are incorporated as indicated in para. 2 of the application. since the petitioner has disowned the understanding after signing the draft consent terms, the draft consent terms signed by the respondent would not be binding on the respondent inasmuch as the parties were not ad idem when the consent terms were signed.6. shri srivastav, appearing on behalf of the applicant, submitted that the draft consent terms signed by the parties on july 8, 1997, is not binding on the respondent inasmuch as the payment of rs. 2.3 crores without adjustment of various dues by the petitioner to the company would make the terms of consent unconscionable. if the draft consent terms were to be worked out, it would mean payment of rs. 9,200 per share for 2,500 shares held by the petitioner's group while the actual net worth per share in the company comes to only rs. 1,500. it is inconceivable that the respondent would have agreed to pay more than six times the net worth per share, but for other adjustments that were to be made by the petitioner. such an amount was agreed only under an understanding that all the amounts payable by the petitioner to the company working out to more than a crore of rupees would be adjusted before payment of rs. 2.3 crores. therefore, according to counsel, the company law board should declare that the consent terms are bad in law and as such not binding upon the. respondent and should be cancelled.he further submitted that in proceedings under sections 397 and 398 of the companies act, the parties may not be flowed to compromise the disputes as they wish, as the interest of the company is of paramount importance. in view of the fact that, as per the consent terms, the share price works out to more than six times its net worth, such payment by the company would definitely be against the interests of the company. as such even if the consent terms were to be acted upon, since the same is against the interest of the company, the company law board should not accept such consent terms. on this proposition he relied on syed mahomed ali v. sundaramurthy [1958] 28 comp cas 554 ; air 1958 mad 587. he also submitted, that since the managing director has entered into the consent terms which are-obviously against the interest of the company, without consulting the other members (who have, actually filed a suit in the bombay high court questioning the right of the managing director to enter into a compromise), the consent terms should not have been accepted by the company law board. as held in jai kulbir singh (l.) v. kelly and henderson pvt. ltd. [19801 50 comp cas 646 (bom), the compromise may be examined by the company law board to ascertain whether such compromise will be in the interest of the company.obviously, for the reasons stated earlier, he submitted that the compromise is not at all in the interest of the company and as such should not be accepted by the company law board. he also submitted, referring to narayanan (s.) v. century flour mills ltd. [1985] 3 comp lj 209 (mad), that any agreement or compromise entered into without the leave of the court would be void and consequently non est in the eyes of law. since the compromise terms are against the interest of the company, entered into by the managing director, without the consent of other shareholders, the company law board should not grant leave for the consent terms.7. adverting to his plea that in the compromise, the parties were not ad idem, he submitted that before a court records a compromise between the parties, it should examine whether the same has emerged from a willing and voluntary act of the parties and that the parties are ad idem with regard to the terms as contained in the consent terms. any compromise which is forced on the parties loses the very essence of its being a valid and lawful agreement. he submitted that if the company law board were to insist then the draft compromise reached between the parties be implemented, it would mean that it is imposing a compromise on unwilling persons which would be invalid and for this proposition he relied on chand kaur v. raj kaur, air 1997 punj 155. he also submitted that in view of "non-fulfilment of various obligations on the part of the petitioner as elaborated in c.a. no. 202 and c.a. no. 267 on the basis of which the respondent has agreed for the compromise, the compromise was not legally binding and as such was unlawful. the company law board has ample power to examine the issue and if satisfied, can recall the compromise between the parties, as decided in banwari lal v. chando devi, air 8. summing up his argument, shri srivastav stated that the draft consent terms recorded by the company law board and incorporated in the order of the company law board dated august 14, 1997, should be recalled for the reasons that the said consent terms are not in the interests of the company, the parties were not ad idem at the time of entering into the agreement and that respondent no. 2 being the managing director entered into such an agreement without the explicit approval of other shareholders. accordingly, he sought for adjudicating the disputes in the petition by hearing the parties on the merits.9. shri u. k. chaudhury, appearing on behalf of the petitioner, reiterated the arguments that he had made earlier with reference to c.a.no. 196, which we have already recorded. further, he submitted that once consent terms had been signed, which the company law board has also recorded in its order dated august 14, 1997, the company law board cannot review its own orders since there is no such power of review.secondly, the consent terms can be varied or modified only if and when all the parties to the consent terms agree for such modification/variation. since the petitioner is not agreeable for any change/modification the consent terms should be implemented. he has submitted that if the respondents are aggrieved on the consent terms, they may institute necessary proceedings, but the company law board cannot entertain any such request. he cited the following cases :s. c. nandy v. g. m. bhattacharjee, air 1951 cal 507 : the final consent decree cannot be altered by the court unless the parties thereto agree to do so. (ii) b.g. maikap v. janaki dei, air 1980 orissa 108 : when there had been a lawful compromise the objections raised by the plaintiff in that petition on the date of consideration of the petition for compromise of the suit under order 23, rule 3, did not authorise the court to refuse to record the compromise. (iii) m. d. boral v. d. j. p. boral, air 1980 bom 235 : the compromise order could not be set aside unless both the parties agreed. (iv) j. pindok v. nusserwanji, air 1936 sind 99 : aright to institute a separate suit to set aside a decree passed by consent is limited and existed only in cases where the decree incorporates an agreement which is void or voidable at the instance of one of the parties to that suit on the ground of fraud, mistake, influence or other similar grounds which would invalid a private agreement not incorporated in a decree. (v) union of india v. raghubir saran, air 1957 all 120 : order 23, rule 3, does not provide an enquiry into disputed facts collateral to the terms of compromise. a partly alleging fraud cannot be allowed to void a compromise admittedly executed by it in miscellaneous proceedings. the court is bound to give effect to it forthwith, if it is lawful having regard to its own terms.10. we have considered the pleadings and arguments of counsel. even though the parties had decided for settling the dispute amicably and certain attempts were made towards this end, on july 8, 1997, they desired that one more attempt should be made to settle the dispute amicably in the presence of the vice-chairman, company law board.accordingly, he held discussions with the parties individually, along with their counsel and later collectively with the parties and their counsel. while the petitioner originally demanded a sum of rs. 3 crores and the respondents were agreeable to pay only a sum of rs. 1.4 crores, finally it was agreed by the parties that the shares held by the petitioner group would be purchased by respondent no. 2/his nominees or by the company for a sum of rs. 2.3 crores. the parties are also agreed on the schedule of payment. the terms of consent agreed between the parties were dictated and the same was signed by the petitioner and respondent no. 2 and their counsel with certain additions/modifications as suggested by them. at the time when the consent terms were signed, there was no indication either from the petitioners' side or from the respondents side that they had an understanding on certain other adjustments. the only prayer made by both the parties at the time was that, before an order incorporating the consent terms was issued, they should have an opportunity of consulting their tax experts so that the terms of consent could be drafted to provide for possible tax relief that could be available to both, the parties. this was the reason why no formal order incorporating the consent terms was issued immediately after the same was signed by the parties. however, the application, c.a.no. 196, was filed seeking incorporation" of certain terms in the consent order which was not earlier a part of the same. after this application was heard, c. a.no. 202 was filed and arguments were advanced on the same which we have already elaborated earlier.11. now, the issue for our consideration is whether the order dated august 14, 1997, incorporating therein the consent terms signed by the parties on july 8, 1997, should be recalled and whether we should proceed with the merits of the case. the main arguments of counsel for the respondents in this regard are that the terms of compromise are against the interest of the company, that the parties were not ad idem when they entered into the compromise, and that the compromise cannot be imposed on an unwilling person. for the first argument, that the compromise is not in the interest of the company, the ground is that, as against the net worth value of rs. 1,500 per share, the company is required to pay a sum of about rs. 9,200 per share. according to the respondents if such a huge sum is to be paid, it would completely erode the net worth of the company which may also result in the company losing its only business, namely, gsa agreement with saudi arabian airlines. in this connection, it is relevant to point dut that the consent terms themselves record that the shares would be purchased for rs. 2.3 crores either by respondent no. 2 (md)/his nominees or by the company. if the consent terms had recorded that the shares would be purchased only by the company, then perhaps the arguments of counsel for the respondents may have some merit. but since the consent terms record that respondent no. 2 or his nominee could purchase the shares, the company may not have to purchase the shares at all. as a matter of fact, as it is recorded in the consent terms itself as suggested by the parties, putting an end to the disputes between the parties itself would enable the company to run smoothly. therefore, on this score we do not think that the consent term should be impugned. in case the company, for any reason, is unable to purchase the shares, as per the consent terms, respondent no. 2 would have to purchase the shares.12. as regards the argument that the parties were not ad idem when they entered into the compromise, as we have recorded in the earlier paragraphs regarding the deliberations which took place before the consent terms were signed, no indication as to any understanding between the parties which also would have to be incorporated in the consent terms was ever made. if the consent terms were subject to any further adjustment relating to the quantum of money to be paid for the shares, then the question of agreeing to a schedule of payment for the entire sum of rs. 2.3 crores did not arise at all. therefore, on this account also, we do not find any merit in the argument of counsel for the respondents.13. regarding his argument that the compromise cannot be imposed on an unwilling person, we have already recorded in para. 9 as to how the compromise was arrived at. the compromise came out of willingness shown by both the parties to settle the disputes amicably as is evident from the first sentence of the consent terms signed on july 8, 1997.14. further, we also find that we do not have any powers to review our own order. perhaps by exercising inherent powers, we could have recorded modification in the consent terms if both the parties had agreed for such modification. but, in the present case, the petitioner is not agreeable for any modification. counsel for the respondent made a submission, that if the consent terms were unlawful then notwithstanding the absence of powers of review, the company law board could review its order. unfortunately, he has not been able to indicate as to how the said consent terms are unlawful. therefore, considering the facts and circumstances of the case, we find that there is no scope for us to either modify the consent terms or recall the same.accordingly, we dismiss both these applications and direct that the consent terms be acted upon. while doing so, we have also taken note that certain shareholders of the company have sought for impleading them as parties before us and they have also sought for staying the proceedings before us during the pendency of a suit filed by them in the bombay high court. we do not propose to accede to their prayers for the reason that they have already chosen an alternative remedy of approaching the bombay high court and they have come before us only at the last minute.15. before parting with this order, we also note, that, a sum of rs. 50 lakhs has been deposited by the respondent-company in the name of the petitioner. the issue before us is whether we should order payment of this sum to the petitioner. it is relevant to note that when the respondents deposited this amount, it was made clear, as recorded in our order dated august 14, 1997, that the amount was being deposited only to establish the bona fides of respondent no. 2 that he was interested in an amicable settlement, and the same was without prejudice to the contentions of both the parties. neither he undertook to pay this amount to the petitioner towards the first instalment nor we recorded in our order anything to that effect except to state that the same was not to be withdrawn by any one without our specific authority. therefore, we do not consider it appropriate to order that this amount of rs. 50 lakhs should be paid to. the petitioner. even otherwise we are unable to order payment of this amount to the petitioner, in view of the undertaking recorded by the bombay high court in the suit, that the company would not make any payment to the petitioner in terms of the compromise arrived at before us. in other words, any payment to the petitioner in terms of the consent by the company has now become a subject-matter of the suit in the bombay high court and necessarily both the respondents and the petitioner will have to abide by the decision of the bombay high'court in this regard.16. we would also like to record that after the hearing on november 12, 1997, respondent no. 2 addressed certain communications to the chairman of the company law board indicating therein that the former was still prepared for an amicable solution to the dispute on reasonable terms, and as such sought for one more personal meeting in the presence of the bench, between respondent no. 2 and the petitioner. he made the same submission when he met the chairman and vice-chairman in their chamber later. however, when counsel for the petitioners, shri u. p. mathur, was informed of the request by respondent no. 2, he submitted that his client was not willing for any further discussion on the matter of compromise. accordingly, this order is being issued.17. all the applications are dismissed and the parties be bound by the consent terms as recorded in our order dated august 14, 1997, subject to whatever order may be passed by the bombay high court. a copy of the memo signed by all the parties on july 8, 1997, will also form the part of this order. no order as to costs.

Judgment:
1. In the petition filed under Section 397/398 of the Companies Act, 1956, in the matter of Indo Saudi Travels Private Limited, when arguments were in progress, considering the facts and circumstances of the case, we had advised the parties that they should try to resolve the dispute amicably. Accordingly, the matter of settlement was discussed in our presence on a few occasions without any final result.

On July 8, 1997, the parties finally agreed that the petitioner would sell her group's shares to respondent No. 2 or his nominees or to the company for a consideration of Rs. 2.3 crores. This settlement was reached in our presence and a draft order containing various terms of compromise was dictated in the presence of both the parties and their counsel and was also signed by the parties along with their counsel.

Before the fair order could be issued, respondent No. 2 made an application for incorporating certain terms in the consent order. The fair order was issued on August 14, 1997, wherein we have also mentioned about this application.

2. This application, C. A.No. 196 of 1997, was heard on September 2, 1997. Shri Ramachandran appearing for the respondents submitted that, at the time when the amount of Rs. 2.3 crores was agreed, respondent No. 2 was under the impression that certain dues payable by the petitioner to the company as well as to the respondents would be adjusted against this amount of Rs. 2.3 crores and to make it more explicit he stated that the same should be incorporated in the consent terms. He further stated that the application for amendment was filed without much loss of time, i.e., within four days from the date of entering into the consent terms. According to him, the consent terms incorporated only the broad agreement between the parties and the parties should have later filed a joint memo with an affidavit before the same could be treated as binding on the parties. He, therefore, sought for incorporating, in the consent terms, the various issues raised in the application. He also submitted that, in case his prayers are not incorporated in the consent terms, then the petition may be heard on the merits.

3. Shri Choudhary appearing for the petitioner submitted that the application should be straightaway rejected. He submitted that while the petitioner is not averse to some of the items in the application, yet the question of reducing the amount of Rs. 2.3 crores would not arise at all inasmuch as the same was agreed after detailed discussion in the presence of the Company Law Board. He questioned the contentions of Shri Ramachandran that the amount of Rs. 2.3 crores was subject to any adjustment inasmuch as not only had the amount been specified in the consent terms but even the instalments of payment of the said amount has been indicated. In other words, even the respondents could not have any perception as contended by him that there would be some adjustment against this amount. Therefore, he submitted that, in the absence of concurrence of the petitioner, the consent terms should not be modified and should be allowed to stand as they are and the question of hearing the petition on the merits would not arise after the Company Law Board had disposed of the petition on the basis of the consent terms.

4. Before we could issue our order on this application, another application, viz., C. A.No. 202 of 1997, was filed by the respondents which was considered by us on September 10, 1997, when we directed the petitioner to file a reply so that the matter could be considered on October 1, 1997. On October 1, 1997, respondent No. 2, who was present in person, submitted that his counsel was not in a position to appear on that day and as such sought for adjournment. While allowing the prayer for adjournment, we also imposed a cost of Rs. 5,000 on respondent No. 2. This application, namely, C.A. No. 202 of 1997, was heard on November 17, 1997, on which date certain shareholders of the company filed an application, C.A. No. 261 of 1997, seeking permission to be impleaded as parties to the proceedings and also seeking stay of further proceedings in the matter in view of the civil suit that had been initiated by them in the High Court of Bombay.

5. In C.A. No. 202 of 1997, filed on September 8, 1997, by the second respondent, the applicant has stated that the payment of Rs. 2.3 crores was subject to the fulfilment of an understanding that had been arrived at between respondent No. 2 and the petitioner as detailed in para. 2 of the application. The parties were to reduce the understanding into writing which was also to be incorporated in the consent terms before an order on the terms of consent was issued by the Company Law Board.

Thus, when respondent No. 2 signed the consent terms, he was under the impression that it was only a draft agreement to bind the parties, and the same was not to be acted upon till such time, as all the terms of understanding are incorporated as indicated in para. 2 of the application. Since the petitioner has disowned the understanding after signing the draft consent terms, the draft consent terms signed by the respondent would not be binding on the respondent inasmuch as the parties were not ad idem when the consent terms were signed.

6. Shri Srivastav, appearing on behalf of the applicant, submitted that the draft consent terms signed by the parties on July 8, 1997, is not binding on the respondent inasmuch as the payment of Rs. 2.3 crores without adjustment of various dues by the petitioner to the company would make the terms of consent unconscionable. If the draft consent terms were to be worked out, it would mean payment of Rs. 9,200 per share for 2,500 shares held by the petitioner's group while the actual net worth per share in the company comes to only Rs. 1,500. It is inconceivable that the respondent would have agreed to pay more than six times the net worth per share, but for other adjustments that were to be made by the petitioner. Such an amount was agreed only under an understanding that all the amounts payable by the petitioner to the company working out to more than a crore of rupees would be adjusted before payment of Rs. 2.3 crores. Therefore, according to counsel, the Company Law Board should declare that the consent terms are bad in law and as such not binding upon the. respondent and should be cancelled.

He further submitted that in proceedings under Sections 397 and 398 of the Companies Act, the parties may not be flowed to compromise the disputes as they wish, as the interest of the company is of paramount importance. In view of the fact that, as per the consent terms, the share price works out to more than six times its net worth, such payment by the company would definitely be against the interests of the company. As such even if the consent terms were to be acted upon, since the same is against the interest of the company, the Company Law Board should not accept such consent terms. On this proposition he relied on Syed Mahomed Ali v. Sundaramurthy [1958] 28 Comp Cas 554 ; AIR 1958 Mad 587. He also submitted, that since the managing director has entered into the consent terms which are-obviously against the interest of the company, without consulting the other members (who have, actually filed a suit in the Bombay High Court questioning the right of the managing director to enter into a compromise), the consent terms should not have been accepted by the Company Law Board. As held in Jai Kulbir Singh (L.) v. Kelly and Henderson Pvt. Ltd. [19801 50 Comp Cas 646 (Bom), the compromise may be examined by the Company Law Board to ascertain whether such compromise will be in the interest of the company.

Obviously, for the reasons stated earlier, he submitted that the compromise is not at all in the interest of the company and as such should not be accepted by the Company Law Board. He also submitted, referring to Narayanan (S.) v. Century Flour Mills Ltd. [1985] 3 Comp LJ 209 (Mad), that any agreement or compromise entered into without the leave of the court would be void and consequently non est in the eyes of law. Since the compromise terms are against the interest of the company, entered into by the managing director, without the consent of other shareholders, the Company Law Board should not grant leave for the consent terms.

7. Adverting to his plea that in the compromise, the parties were not ad idem, he submitted that before a court records a compromise between the parties, it should examine whether the same has emerged from a willing and voluntary act of the parties and that the parties are ad idem with regard to the terms as contained in the consent terms. Any compromise which is forced on the parties loses the very essence of its being a valid and lawful agreement. He submitted that if the Company Law Board were to insist then the draft compromise reached between the parties be implemented, it would mean that it is imposing a compromise on unwilling persons which would be invalid and for this proposition he relied on Chand Kaur v. Raj Kaur, AIR 1997 Punj 155. He also submitted that in view of "non-fulfilment of various obligations on the part of the petitioner as elaborated in C.A. No. 202 and C.A. No. 267 on the basis of which the respondent has agreed for the compromise, the compromise was not legally binding and as such was unlawful. The Company Law Board has ample power to examine the issue and if satisfied, can recall the compromise between the parties, as decided in Banwari Lal v. Chando Devi, AIR 8. Summing up his argument, Shri Srivastav stated that the draft consent terms recorded by the Company Law Board and incorporated in the order of the Company Law Board dated August 14, 1997, should be recalled for the reasons that the said consent terms are not in the interests of the company, the parties were not ad idem at the time of entering into the agreement and that respondent No. 2 being the managing director entered into such an agreement without the explicit approval of other shareholders. Accordingly, he sought for adjudicating the disputes in the petition by hearing the parties on the merits.

9. Shri U. K. Chaudhury, appearing on behalf of the petitioner, reiterated the arguments that he had made earlier with reference to C.A.No. 196, which we have already recorded. Further, he submitted that once consent terms had been signed, which the Company Law Board has also recorded in its order dated August 14, 1997, the Company Law Board cannot review its own orders since there is no such power of review.

Secondly, the consent terms can be varied or modified only if and when all the parties to the consent terms agree for such modification/variation. Since the petitioner is not agreeable for any change/modification the consent terms should be implemented. He has submitted that if the respondents are aggrieved on the consent terms, they may institute necessary proceedings, but the Company Law Board cannot entertain any such request. He cited the following cases :S. C. Nandy v. G. M. Bhattacharjee, AIR 1951 Cal 507 : The final consent decree cannot be altered by the court unless the parties thereto agree to do so.

(ii) B.G. Maikap v. Janaki Dei, AIR 1980 Orissa 108 : When there had been a lawful compromise the objections raised by the plaintiff in that petition on the date of consideration of the petition for compromise of the suit under Order 23, Rule 3, did not authorise the court to refuse to record the compromise.

(iii) M. D. Boral v. D. J. P. Boral, AIR 1980 Bom 235 : The compromise order could not be set aside unless both the parties agreed.

(iv) J. Pindok v. Nusserwanji, AIR 1936 Sind 99 : Aright to institute a separate suit to set aside a decree passed by consent is limited and existed only in cases where the decree incorporates an agreement which is void or voidable at the instance of one of the parties to that suit on the ground of fraud, mistake, influence or other similar grounds which would invalid a private agreement not incorporated in a decree.

(v) Union of India v. Raghubir Saran, AIR 1957 All 120 : Order 23, Rule 3, does not provide an enquiry into disputed facts collateral to the terms of compromise. A partly alleging fraud cannot be allowed to void a compromise admittedly executed by it in miscellaneous proceedings. The court is bound to give effect to it forthwith, if it is lawful having regard to its own terms.

10. We have considered the pleadings and arguments of counsel. Even though the parties had decided for settling the dispute amicably and certain attempts were made towards this end, on July 8, 1997, they desired that one more attempt should be made to settle the dispute amicably in the presence of the Vice-Chairman, Company Law Board.

Accordingly, he held discussions with the parties individually, along with their counsel and later collectively with the parties and their counsel. While the petitioner originally demanded a sum of Rs. 3 crores and the respondents were agreeable to pay only a sum of Rs. 1.4 crores, finally it was agreed by the parties that the shares held by the petitioner group would be purchased by respondent No. 2/his nominees or by the company for a sum of Rs. 2.3 crores. The parties are also agreed on the schedule of payment. The terms of consent agreed between the parties were dictated and the same was signed by the petitioner and respondent No. 2 and their counsel with certain additions/modifications as suggested by them. At the time when the consent terms were signed, there was no indication either from the petitioners' side or from the respondents side that they had an understanding on certain other adjustments. The only prayer made by both the parties at the time was that, before an order incorporating the consent terms was issued, they should have an opportunity of consulting their tax experts so that the terms of consent could be drafted to provide for possible tax relief that could be available to both, the parties. This was the reason why no formal order incorporating the consent terms was issued immediately after the same was signed by the parties. However, the application, C.A.No. 196, was filed seeking incorporation" of certain terms in the consent order which was not earlier a part of the same. After this application was heard, C. A.No. 202 was filed and arguments were advanced on the same which we have already elaborated earlier.

11. Now, the issue for our consideration is whether the order dated August 14, 1997, incorporating therein the consent terms signed by the parties on July 8, 1997, should be recalled and whether we should proceed with the merits of the case. The main arguments of counsel for the respondents in this regard are that the terms of compromise are against the interest of the company, that the parties were not ad idem when they entered into the compromise, and that the compromise cannot be imposed on an unwilling person. For the first argument, that the compromise is not in the interest of the company, the ground is that, as against the net worth value of Rs. 1,500 per share, the company is required to pay a sum of about Rs. 9,200 per share. According to the respondents if such a huge sum is to be paid, it would completely erode the net worth of the company which may also result in the company losing its only business, namely, GSA agreement with Saudi Arabian Airlines. In this connection, it is relevant to point dut that the consent terms themselves record that the shares would be purchased for Rs. 2.3 crores either by respondent No. 2 (MD)/his nominees or by the company. If the consent terms had recorded that the shares would be purchased only by the company, then perhaps the arguments of counsel for the respondents may have some merit. But since the consent terms record that respondent No. 2 or his nominee could purchase the shares, the company may not have to purchase the shares at all. As a matter of fact, as it is recorded in the consent terms itself as suggested by the parties, putting an end to the disputes between the parties itself would enable the company to run smoothly. Therefore, on this score we do not think that the consent term should be impugned. In case the company, for any reason, is unable to purchase the shares, as per the consent terms, respondent No. 2 would have to purchase the shares.

12. As regards the argument that the parties were not ad idem when they entered into the compromise, as we have recorded in the earlier paragraphs regarding the deliberations which took place before the consent terms were signed, no indication as to any understanding between the parties which also would have to be incorporated in the consent terms was ever made. If the consent terms were subject to any further adjustment relating to the quantum of money to be paid for the shares, then the question of agreeing to a schedule of payment for the entire sum of Rs. 2.3 crores did not arise at all. Therefore, on this account also, we do not find any merit in the argument of counsel for the respondents.

13. Regarding his argument that the compromise cannot be imposed on an unwilling person, we have already recorded in para. 9 as to how the compromise was arrived at. The compromise came out of willingness shown by both the parties to settle the disputes amicably as is evident from the first sentence of the consent terms signed on July 8, 1997.

14. Further, we also find that we do not have any powers to review our own order. Perhaps by exercising inherent powers, we could have recorded modification in the consent terms if both the parties had agreed for such modification. But, in the present case, the petitioner is not agreeable for any modification. Counsel for the respondent made a submission, that if the consent terms were unlawful then notwithstanding the absence of powers of review, the Company Law Board could review its order. Unfortunately, he has not been able to indicate as to how the said consent terms are unlawful. Therefore, considering the facts and circumstances of the case, we find that there is no scope for us to either modify the consent terms or recall the same.

Accordingly, we dismiss both these applications and direct that the consent terms be acted upon. While doing so, we have also taken note that certain shareholders of the company have sought for impleading them as parties before us and they have also sought for staying the proceedings before us during the pendency of a suit filed by them in the Bombay High Court. We do not propose to accede to their prayers for the reason that they have already chosen an alternative remedy of approaching the Bombay High Court and they have come before us only at the last minute.

15. Before parting with this order, we also note, that, a sum of Rs. 50 lakhs has been deposited by the respondent-company in the name of the petitioner. The issue before us is whether we should order payment of this sum to the petitioner. It is relevant to note that when the respondents deposited this amount, it was made clear, as recorded in our order dated August 14, 1997, that the amount was being deposited only to establish the bona fides of respondent No. 2 that he was interested in an amicable settlement, and the same was without prejudice to the contentions of both the parties. Neither he undertook to pay this amount to the petitioner towards the first instalment nor we recorded in our order anything to that effect except to state that the same was not to be withdrawn by any one without our specific authority. Therefore, we do not consider it appropriate to order that this amount of Rs. 50 lakhs should be paid to. the petitioner. Even otherwise we are unable to order payment of this amount to the petitioner, in view of the undertaking recorded by the Bombay High Court in the suit, that the company would not make any payment to the petitioner in terms of the compromise arrived at before us. In other words, any payment to the petitioner in terms of the consent by the company has now become a subject-matter of the suit in the Bombay High Court and necessarily both the respondents and the petitioner will have to abide by the decision of the Bombay High'Court in this regard.

16. We would also like to record that after the hearing on November 12, 1997, respondent No. 2 addressed certain communications to the chairman of the Company Law Board indicating therein that the former was still prepared for an amicable solution to the dispute on reasonable terms, and as such sought for one more personal meeting in the presence of the Bench, between respondent No. 2 and the petitioner. He made the same submission when he met the chairman and vice-chairman in their chamber later. However, when counsel for the petitioners, Shri U. P. Mathur, was informed of the request by respondent No. 2, he submitted that his client was not willing for any further discussion on the matter of compromise. Accordingly, this order is being issued.

17. All the applications are dismissed and the parties be bound by the consent terms as recorded in our order dated August 14, 1997, subject to whatever order may be passed by the Bombay High Court. A copy of the memo signed by all the parties on July 8, 1997, will also form the part of this order. No order as to costs.